Sunday , July 12 2020
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Articles by Yves Smith

Another Town Is Possible: Community Wealth Building in the Basque Country

2 days ago

Yves here. Readers sometimes ask for success stories to show that there are possible paths out our present economic and social morass. The Basque has long operated a collective ownership model centered around Mondragon. And it has been successful in protecting the community from economic crises. I was in Portugal and Spain, by happenstance doing an austerity tour when post financial crisis unemployment in Spain was 27%. The locals in every town I visited could not keep themselves from making at least a passing mention of how bad things were…except in the Basque, where unemployment was only 12%.
The article also highlights local citizen’s concerns that the Basque economic model might be nearing its sell-by date. Unlike the Anglosphere, those issues seem to be getting real consideration.
By

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Why Relentless Labor Rights Enforcement Will Make or Break the New NAFTA

2 days ago

Yves here. One of the reasons the so-called Nafta 2.0 was touted as better than its predecessor was that it contained protections for labor bargaining rights in Mexico. The argument was that stronger labor rights in Mexico would reduce the level of labor arbitrage and hence the harm to US workers.
The deal has only just come into effect, so it’s an open question as to whether these provisions were a big headfake or will turn out to have teeth.
By Tom Conway, the international president of the United Steelworkers Union (USW). Produced by the Independent Media Institute
When thugs gunned down Óscar Ontiveros Martínez in May, they did more than silence a promising figure in Mexico’s beleaguered labor movement.
The 29-year-old’s killing sent a warning to anyone still thinking about

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Biden Defends Undying Allegiance to For-Profit Healthcare During Interview With Dying Medicare for All Advocate Ady Barkan

2 days ago

Yves here. I suppose I should not be surprised to see that Biden is such a heartless pol that he could stare down someone who was dying and has had to spend too much of his precious remaining time fighting with insurance companies to defend private health insurance. And the bought and paid for loyalty of people like Biden means that if we ever get an expansion of public healthcare, every effort will be made to crapify it so as to make private coverage look not so terrible by comparison.
By Jon Queally, staff writer at Common Dreams. Originally published at Common Dreams

Medicare for All advocate Ady Barkan along with his wife, Rachael, and his two young children Carl and Willow, as they speak via conference with presumptive Democratic Party presidential nominee Joe Biden and his wife, Dr.

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Unemployment Claims Hit New Record: 32.9 Million State & Federal. Week 16 of U.S. Labor Market Collapse

2 days ago

Yves here. The bizarre veneer that things are still kinda-sorta normal despite the labor market imposing and widespread non/underpayment of residential and commercial real estate obligations is beyond me. Admittedly, hitting the pause on evictions and propping up businesses (and employment) with PPP loans, CARES Act stipends, and topped-up unemployment is helping maintain spending in the economy. But the PPP job-maintenance requirements are rolling off for the early borrowers. How much more jobs bleed will we see from that alone? And that’s before you get to the panic about rising Covid-19 rates in many states.
By Wolf Richter, editor of Wolf Street. Originally published at Wolf Street
The data chaos persists, and the unemployment numbers keep getting worse. The torrent of newly unemployed

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Let the Predation Begin! CFPB Rolls Back Obama-Era Payday Loan Protections

2 days ago

The Consumer Financial Protection Bureau took a long-expected move earlier this week, of continuing to be responsive to payday industry lobbying to free itself of an Obama-era reform, that of requiring the lenders to verify whether presumably-desperate borrowers had any capacity to pay these loans back. We’ve embedded the CFPB rule at the end of this post. This is the most important change:
The Bureau revokes the 2017 Final Rule’s determination that it is an unfair practice for a lender to make covered short-term loans or covered longer-term balloon-payment loans without reasonably determining that consumers will have the ability to repay the loans according to their terms. For the reasons discussed below, the Bureau withdraws the Rule’s determination that consumers cannot reasonably avoid

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Beneficiary Uproar Over CalPERS Fraudulent Investment Strategy Claims in E-Mail Blast

3 days ago

CalPERS has long been relying on the Democratic Party strategy of thinking that every problem can be solved with PR.
The problem is that CalPERS isn’t very good at PR.
Today’s example is how CalPERS beneficiaries are up in arms about the offensively false claims the giant fund made in an e-mail about its plans to blow its brains out, um, load up on risk in an overvalued market in a desperate effort to earn its way out of its underfunding hole. We’ve provided a high-level treatment about why this gamble is likely to end badly; we plan to post on additional less obvious but just as important defects in this scheme.
The announcement of the CalPERS plan, which is to lever the entire portfolio so the fund can increase its investments in private equity and make a new plunge into private debt,

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“Warren’s Eviction Bill Is Economically and Politically Savvy”

4 days ago

Yves here. I’m the first to admit that I don’t have a good answer to the question of what to do about the problem of millions of tenants and homeowners being unable to keep up their housing payments and facing eviction. But Warren’s unduly simple-minded eviction bill, which provides for a one-year eviction freeze, is not it.
First, as even the fan of her plan, Eric Kramer, concedes, it doesn’t work on a stand-alone basis. He argue it would require bankruptcy reform and bank bailouts to work. But these recommendations reflect a lack of understanding of bankruptcy and housing debt.
Anyone who is keen about bankruptcy is almost certain not to have gotten close to it. The best thing that can be said about bankruptcy is that it (often but not alway) is better than the alternatives (I know

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Private Equity and the Pandemic: Brace for Impact…Investing

4 days ago

Yves here. This short series shows why private equity’s efforts to jump on yet another investment fad bandwagon, that of “environmental, social, and governance” driven investing, is all optics, no substance. Sebastien Canderle starts by documenting at length how private equity has done great harm though its rent-extraction practices in the health care industry.
By Sebastien Canderle, a private equity consultant, a lecturer at Imperial College London, and the author of The Good, the Bad and the Ugly of Private Equity
PART I – PRIVATE EQUITY IN HEALTH CARE
Increasingly, governmental investors exercise significant pressure on all of us to act more responsibly. Canada’s initiatives towards sustainable finance aim to couple healthy economic growth with long-term environmental (i.e.,

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Brexit: Running Down the Clock?

4 days ago

The Brexit front has seemed positively dull compared to the horrors of Covid-19 (the disease proper, the spectacularly bad responses in the US and UK, and the economic fallout), and US protests and rising social tensions. However, the lack of much apparent action, aside from the Groundhog Day sort, is a bit misleading, since letting the clock run has consequences of its own.
Even though you’d not discern it from the tone of the press coverage, with the transition period over on December 31, both sides ought to be in “time is of the essence” mode.
Yet the first face to face negotiating session since March, which took place last week, ended a day early, which was clearly a bad sign. Four big issues remain outstanding: the so-called level playing field (which is shorthand for “if the UK

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After Years of Underfunding, Now Public School Teachers Are Supposed to Save the Nation’s Economy?

5 days ago

Yves here. This piece on the difficulty and risk of reopening public schools covers a lot of ground, but a couple of additional points. First is that China and other countries that got their infections down have reopened their schools, and they have stringent processes to protect teachers and students. Obviously specifics vary but they include sanitizing shoe bottoms and sometimes backpacks and clothing (with a disinfectant spray), temperature checks, issuance of new masks or face shields, plastic barriers at each desk and seat in the lunch room, required hand washing or sanitizer use when changing classrooms, cleaning of the desk and doorknobs between classes (often by some students supervised by a student monitor). It is easy to see snowflake American parents objecting to having

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COVID-19 ‘Please Tell Me My Life Is Worth A LITTLE Of Your Discomfort,’ Nurse Pleads

5 days ago

Yves here. A companion piece to this account of the Covid-19 mask wars in the US is News media and distrust in scientific experts at VoxEU. However,  I wish this article gave more practical advice as to how to talk to mask refusniks. One might be to start with, “How do you keep your family safe from Covid-19?” but that might simply elicit a response like, “The risk is overhyped, the media makes money from scaring people.”
By Anna Almendrala of Kaiser Health News, who previously worked at HuffPost. Originally published at Kaiser Health News
Health care workers on the front lines of the COVID crisis have spent exhausting months working and self-quarantining off-duty to keep from infecting others, including their families. Encountering people who indignantly refuse face coverings can feel

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Links 7/7/2020

5 days ago

Scientists Discover Extremely Tiny Dinosaur Ancestor in Madagascar ScienceAlert (Kevin W)
A Surprise Comet Is Coming to Put on a Spectacular Sky Show — and It Won’t Be Visible Again for Over 6,000 Years Travel and Leisure
Marine Life Found in Ancient Antarctica Ice Helps Solve a Carbon Dioxide Puzzle From the Ice Age Gizmodo (Kevin W)
Rare night clouds may be warning sign of climate crisis Guardian (Leroy)
A heat wave thawed Siberia’s tundra. Now, it’s on fire. National Geographic (Geoff)
How Your Heart Influences What You Perceive and Fear Quanta (leeto)
Rare brain-eating amoeba case discovered in Florida Independent. Resilc: “Must be widespread. Totally explains Florida.”
#COVID-19
Note Melbourne has a population of 4.9 million, just like Alabama. Our new cases in the last four days?

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Key CIA-Backed Ally Indicted for Organ Trade Murder Scheme

5 days ago

Yves here. This recap of a sordid bit of history, of the US, and specifically, CIA support of the brutal Kosovo Liberation Army during the civil war in what had been Yugoslavia, may seem wide of our usual beats. However, this detailed account is important not simply because it describes US sponsorship of an accused war criminal, former Prime Minister Hashim Thaci of Kosovo. It is also a media critique, of how the press initially accepted the US spin, but even US officials and journalists who witnessed key events started challenging these claims. It is an unfortunate reminder of what NC readers likely know all too well: that when US geopolitical interests are at stake, getting at the truth of what happens in contested areas is extremely difficult. And as Lambert points out, organ trade is

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Universities in a Mess Over Upcoming Year; Some Reopenings Meeting Fierce Resistance

5 days ago

US universities and colleges are already in serious financial trouble due to coronavirus, and the coming fall season won’t do much to improve matters. Schools were already all over the map about what they are doing for the coming school year. And some of them are changing course midstream as infections rise in their state.
It isn’t just that schools had to refund room and board fees for their aborted spring terms. Universities make about $50 billion from non-tuition charges, not just room and board but also renting out university space and tickets to sporting events. That has evaporated and is not coming back any time soon.
Even at the campuses that say they are reopening, things will not go back to the old normal. Foreign students only account for 5.5% of the student population, but over

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Time for the West to Embrace Chinese Industrial Policy, Not Eliminate it

6 days ago

Yves here. We’ve pointed out that the US does have an industrial policy, even if it comes out by default through which groups manage to extract the most subsidies. Favored sectors include housing, the defense-surveillance complex, financial services, higher education, oil and gas, and niche interests like sugar. So the umbrage about China (and Japan and the Asian tigers) being deliberate about it and getting better results is perverse.
By Marshall Auerback, a market analyst and commentator. Originally published at Triple Crisis
Robert Atkinson of the Information Technology and Innovation Foundation has just written a very compelling analysis of China’s national industrial policy, especially in relation to the exponential growth of its telecommunications industry. Some of the key findings

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Hubert Horan: Can Collateralizing Frequent Flyer Programs Help Save the US Airlines?

6 days ago

Yves here. Hubert does his usual detailed job of explaining what it would take to “save” the US airlines and why the approach the US is using instead, of saving their investors, is fundamentally at odds with taking the required operational measures. But the part I find staggering is that anyone with an operating brain cell would buy the airlines’ effort to depict their frequent flyer programs as an asset separable from the airline proper that can be pledged as collateral.
And on top of that, the value of those frequent flyer perks has diminished in the eyes of their main market, business travelers. As the Financial Times pointed out:
Frequent flyers grounded by the growing number of corporate travel bans are unable to collect the number of loyalty points they would expect from premium

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Links 7/4/2020

8 days ago

Dead fish are popping up all along the Hudson River New York Post (David L). Eeew.
Nagaland dog meat: Animal rights groups hail ban as ‘major turning point’ BBC (David L)
Take a Flight Over Korolev Crater on Mars Universe Today (Kevin W)
After Fighting Plastic in ‘Paradise Lost,’ Sisters Take On Climate Change New York Times (David L)

NEW by me: #Arizona reels as three of the biggest #wildfires in its history ravage state, which have now reached #NavajoNation as #COVIDー19 also spreads like fire. This is #climatechange. https://t.co/MkBq8oLP8r @amywestervelt @ChampPR @RedCrossAZ @HirokoTabuchi @kthalps @lhfang
— Steve Horn (@SteveAHorn) July 3, 2020

Microplastic in terrestrial ecosystems Science (David L)
#COVID-19
Mexico vastly underestimating virus death toll, studies say Financial

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How Largely Hidden Trends Are Shattering the Global Trade System

8 days ago

Yves here. We’ve been pointing out since virtually the inception of this website, that for many and perhaps most companies, the case for outsourcing and offshoring was weak, particularly if you took risks seriously, assuming the goal was profit. However, the most important effect of moving important activities to areas where labor is cheaper is to effect a transfer from lower-level workers to middle and senior management. Indeed, the higher-ups can argue for more pay both due to the alleged cost saving plus the fact that they’ve made their jobs more complicated. But as Marshall Auerback and Jan Ritch-Frel point out, both new concerns about the risk of extended supply chains plus technology reducing the cost of changing production locations is making far-flung trade networks less

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Is Donald Trump Likely to Resign?

9 days ago

By Thomas Neuburger. Produced by DownWithTyranny!

Thanks to Trump’s mismanagement of the Covid-19 outbreak, the U.S. is on the verge of becoming the Typhoid Mary of major industrial nations
Donald Trump’s resignation is a topic on many lips these days. Chris Hayes, in a dramatic moment at MSNBC, called for Trump’s to resign over his mishandling of the coronavirus epidemic (deservedly so), and at least one newspaper editorial board has called for Trump to step down, as has Washington Governor Jay Inslee.
Michael Gerson at the Washington Post called for Trump’s resignation because of “diminished moral capacity” related to his alleged callous indifference to the alleged Russian bounties offered for American lives in the Afghan theater of war.
Note that there are a lot of “if”s in these

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Links 7/3/2020

9 days ago

Yves here. We are on a holiday schedule through Monday. I nevertheless am busy with eldercare matters (interviewing new agencies, gah) which is why no original posts today. Hope your 4th is fun or at least restful.
A ‘Viral’ New Bird Song in Canada Is Causing Sparrows to Change Their Tune Gizmodo (David L)
Elk Return to Kentucky, Bringing Economic Life New York Times (resilc)
5 Minutes That Will Make You Love Mozart New York Times
World’s Pile of Electronic Waste Grows Ever Higher: Study Associated Press
Climate change threat to tropical plants PhysOrg (Kevin W)
Scientists make light ‘flow’ like a river in incredible breakthrough experiment RT (Kevin W)
#COVID-19
Czech Republic scraps face mask rule as Prague hosts outdoor party Guardian (resilc). Hope vlade will pipe up.

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“A Scandal’: Contracts Show Trump Giving Big Pharma Free Rein to Price Gouge Taxpayer-Funded Coronavirus Drugs

9 days ago

Yves here. You could see the plan to let drug companies feed at the coronavirus trough a mile away with the hyping and now US stockpiling of remdesivir. More is sure to come.
BTW, Common Dreams has a mini-fundraiser on. If you are feeling a bit flush, please consider donating.
By Jake Johnson, staff writer, Common Dreams. Originally published at Common Dreams
Government contracts obtained by consumer advocacy group Knowledge Ecology International show that the Trump administration is giving pharmaceutical companies a green light to charge exorbitant prices for potential coronavirus treatments developed with taxpayer money by refusing to exercise federal authority to constrain costs.
Through the Freedom of Information Act, Knowledge Ecology International (KEI) last week got hold of a number

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Education 101: Don’t Open a New Charter School in the Middle of a Pandemic

9 days ago

Yves here. You have to read a fair bit into the post to encounter a bombshell: an analysis that finds that charter school economics have a lot in common with Enron
By Jeff Bryant, a writing fellow and chief correspondent for Our Schools, a project of the Independent Media Institute. He is a communications consultant, freelance writer, advocacy journalist, and director of the Education Opportunity Network, a strategy and messaging center for progressive education policy. His award-winning commentary and reporting routinely appear in prominent online news outlets, and he speaks frequently at national events about public education policy. Follow him on Twitter @jeffbcdm. Produced by Our Schools, a project of the Independent Media Institute.
While sheltering with her family during the

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Some New Climate Models Are Projecting Extreme Warming. Are They Correct?

10 days ago

Yves here. Readers may be surprised to learn that independent science groups review major climate models on a regular basis. Nevertheless, and I hate to seem like such a naysayer, but between Covid-19 and greater social divisions, the ability of many advanced economies to change course on climate change seems very much diminished.
By Jeff Berardelli, a meteorologist and climate contributor to CBS News in New York City, and a regular contributor to Yale Climate Connections. Originally published at Yale Climate Connections
For the past year, some of the most up-to-date computer models from the world’s top climate modeling groups have been “running hot” – projecting that global warming may be even more extreme than earlier thought. Data from some of the model runs has been confounding

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How Much More Cash Can Uber Burn?

10 days ago

Yves here. Although this post does not answer the headline question, about how deep the Uber money pit will prove to be, it is gratifying to see more commentators taking up Hubert Horan’s skepticism about the local transportation company and focusing its continuing-to-be-Gawdawful cash flow prospects. I’m still amazed after extension gimmicks like scooters proved to be a bust, that investors somehow are convinced that combining two deeply unprofitable businesses with illusory synergies makes any sense.
By Michael Scott, a news editor for Safehaven.com and Oilprice.com. Originally published at SafeHaven
Eternally unprofitable and burning cash because the name of the game is now consolidation or bust, Uber has made an offer to buy rival food delivery company Postmates as the mobility war

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Lots of Brain-Dead Misreporting About the Case-Shiller Home Price Index this Morning

10 days ago

Yves here. Those of you who remember the financial crisis and its aftermath no doubt recall how persistent real estate cheerleading was. So the notion that the flogging of Case-Shiller, very much a lagging real estate indicator, was merely the result of ignorance and laziness is charitable.
By Wolf Richter, editor of Wolf Street. Originally published at Wolf Street
OK, dear reader, I feel like I’m fighting a one-man battle against media misinformation or something. I didn’t want to descend into housing-data purgatory with you, and you didn’t want to either, but now we’re on the way after the horrifically brain-dead misreporting in the media about the Case Shiller Home Price Index this morning by lazy-ass reporters, or increasingly by spaghetti-code algos, who didn’t bother to read the

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New Complaint With California Watchdog Charges CalPERS Board Member Theresa Taylor With Perjury for Filing False Declarations that Hid Over $30,000 of Income; Follows Fines of Board President Jones for Campaign Violations

11 days ago

People in glass houses should not throw stones. We’ve reported on how CalPERS is engaged in what Pulitzer Prize winner Mike Hiltzik called a “witch hunt” against board member Margaret Brown by restricting her ability to perform her duties on fabricated grounds.1 Yet it has ignored an apparent felony among its own board members, in this case Theresa Taylor, who is the Vice President of the CalPERS board and its Investment Committee chair.
As we’ll show, Taylor has made a cut-and-dried violation of California requirements for California officials to report all income and assets received from non-government sources in their jurisdiction. Specifically, Taylor hid at least $30,000 of income she received as Vice President/Secretary-Treasurer of SEIU 1000 from 2016 to 2018.
Taylor failed to

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The Good, the Bad, and the Ugly About the Fed’s New Credit Allocation Policy

11 days ago

Yves here. This article by Ed Kane addresses a long-standing pet peeve in the context of the coronacrisis: how credit is an inefficient way to encourage economic activity. Look at how student loans served almost entirely to foster higher educational adminisphere bloat and facilities gold-plating, while doing squat to improve the caliber of teaching. And as we know all too well, it did harm by creating debt slaves and overallocating resources to an now-unproductive sector.
By Edward J. Kane, Professor of Finance, Boston College. Originally published at the Institute for Economic Thinking website
Evidence emerged last week of a drug that can help improve outcomes for some patients with severe Covid-19 infections. A stock market rally confirmed that this was good news. In similarly certified

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Links 7/1/2020

11 days ago

Yves here. Lotta eldercare time sinks this week. Some get into regulatory issues so you may hear about them once I get things under control.
Russia’s famous corgi cop calls it a career Asia Times (J-LS)
SAN FRANCISCO POLICE INTERRUPTS SEX PARTY INVOLVING MIDGETS, EMUS AND A FOUNTAIN OF SPERM, 71 ARRESTS World Daily News Report. Looks inspired by the late great Weekly World News.
Incredible Amber Fossils Reveal the True Colours of Ancient Insects Gizmodo (Kevin W)
An oarfish in Hong Kong is a bad omen for Japan’s earthquake watchers South China Morning Post (J-LS)
Chuck L: “Where is FDR when you need him?”

I had no idea Carl Reiner was on a path to being a sewing machine repairman until his brother told him about a free New Deal acting class. What a different country we could have if we

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Beneath the Bluster, Boris Johnson’s ‘New Deal’ Offers Nothing New

11 days ago

Yves here. Boris Johnson’s paltry “New Deal” gimmick has been thumbs down outside his hard core fanbase. For instance:

Forensic, understated, devastating from @BBCRealityCheck https://t.co/COoYGkChDO
— Emma Dixon (@EmmaDixon_EU) July 1, 2020

Forensic, understated, devastating from @BBCRealityCheck https://t.co/COoYGkChDO
— Emma Dixon (@EmmaDixon_EU) July 1, 2020

Johnson and Trump now share the same covid policy: Pretend it doesn’t exist and urgently wrap it up. The coronavirus, for all intents and purposes, no longer exists. In both countries public relations have trumped public healthBy @jonlis1 https://t.co/axHJmQMhrg
— Alfons López Tena (@alfonslopeztena) July 1, 2020

This isn’t a joke or an Onion headline, this is a real article and Johnson said this within the last 24 hours.

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Los Angeles Hit Hard by Implosion of Freelance Work

11 days ago

Those long enough in tooth to have been working in the later 1990s may remember the hyping of going freelance. The growth of the gig economy precariat has tarnished that allure, but there was a large contingent of high-end, high-skill workers who either went from project to project or had their own clientele and now are in diminished to desperate straits.
A new Wall Street Journal story focuses on Los Angeles as the city hardest hit by this unwind, due particularly to the prevalence of short-term, well-paid work in creative professions related to film, commercial, and TV production, as well as less top-of-mind fields such as hospitality and international trade. Another group laid low are personal service professionals, such as fitness trainers, voice and music coaches, and tutors.
An irony

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