July 22, 2020 | The Big Infection

Could Covid take out the leaders of both Canada and the US?

The virus that just won’t quit has lasted longer than most people imagined, continues to chew its way through society, has levelled economies, erased the jobs of hundreds of millions, has public finances circling the drain and now, spectacularly, weakened both Trump and Trudeau. Could this be fatal? Actually, yes.

(A note: Okay, so this is a canine-investing-economic-real estate blog. Got it. But politics are integral to macroeconomics, markets and taxes, and never more so than during a pandemic when politicians turn off the economy. States of emergency have morphed democracies into benign dictatorships, with leaders assuming historic powers. Sometimes they go too far. We may be there.)

First, Mr. Trudeau. He’s been accused of having an ethical blind spot. That’s too kind. He’s sinking into a moral morass of his own making, highlighting a breathtaking lack of judgement.

In short, he awarded a contract of almost $1 billion to an outfit which stood to gain $43 million in payments, and did this without public tender. That’s just weird and unusual. Then it became known the organization in question had hired Trudeau’s mom and brother, paying them almost $300,000 personally. His wife also worked with the same group and had expenses compensated. In fact it was during a WE junket to the UK that Sophie caught the virus which kept the prime minister of Canada holed up in his house for a month as the pandemic raged.

But there’s more. The ‘charity’, WE, owns $50 million in commercial real estate in downtown Toronto and elsewhere through a tangle of corporate offshoots which apparently mingle personal and charitable activities. Where did this money emanate from? The finance minister, Bill Morneau, awarded WE $3 million in funding when his own daughter was an employee. And for years the two bros at the centre of this, the Kielburgers, have been viewed curiously as they raised tens of millions from the pockets of schoolkids and snorfled government money.

Conflict-of-interest does not begin to describe these actions. Trudeau, his spouse, his mother and his brother have been in a relationship with the Kielburgers that bolstered political fortunes while it helped line WE’s pockets. The awarding of a massive untendered government contract that would give these benefactors tens of millions in income seems like a payoff. Perhaps it isn’t. But it doesn’t pass the smell test. Under the cover of a pandemic, when public finances were a mess with millions suffering from virus fallout, did our prime minister reward friends with tax dollars and think that was okay? A blind spot, indeed. In politics, in normal times, this would be a death sentence.

Doubts? Take a look at what Justin Trudeau did for WE – appearing in a video that is an advertisement and an endorsement, as our elected head of state.

At the end of June a healthy 40% of Canadians said they’d vote Lib and T2 had a 74% approval rate. Now he has 36% support in a new survey, and the scandal is just unfolding. This,” the pollster said, “was an example of using a crisis and public funds to help friends and supporters.”

Now, Trump. The polls have turned against him as well. Unless public opinion sampling is as flawed as it was in 2016, he will lose in November. Joe Biden’s lead is double-digits, and seems to be growing stronger as the US body count increases. As of this week there have been four million cases of Covid in the US with 145,000 deaths. Yesterday 65,512 new infections were identified and 1,127 more people passed.

The president downplayed this when the pandemic arrived, then disappeared, then complained there was too much testing going on (the only way to identify, trace and stop infections), then he dissed his top medical guy and, while upholding the Confederate flag and sending scary paramilitary dudes to fight BLM protestors in Portland, said wearing a mask was patriotic after defending the right not to. He has blamed state governors. He blames China. He blames testing.

Trump needs the economy opened since GDP growth and the stock market are proxies for his success. But haste to do so has caused infections to mount, and voter anxiety to grow. His supporters, some of whom hang out here in their camo underwear and mullets, purposefully diminish the virus and claim deaths are falling (they aren’t, apparently) because Covid is killing the Trump presidency. Now that he’s done the mask pivot, he has likely hurt his own base support.

Some say Trudeau will have to resign before the next election. There’s no way out of this ethical mess. WE is in deep trouble. The Liberal brand is being tarnished. Now that we have a $350 billion deficit and a $1 trillion debt, there are only more taxes and hard choices ahead. Meanwhile Trump has helped polarize American society in a way unseen since perhaps the Civil War. The virus just threw one more log on this national bonfire of passions and poisons.

You will long remember 2020. Largely for what’s yet to happen.

Garth Turner July 22nd, 2020

Posted In: The Greater Fool

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