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It would be great if we could all retire to our homes, suspend time and allow this virus to pass. However, the risk of living our lives in complete/total disregard of the virus is too great because it would thin out too many who comprise the world's population. So the best we can do is construct a statistical compromise where we try to get a bit ahead of the virus's impact, accept the inevitable that a certain number will die so that those who survive still have a functioning society.
Nietzsche, as with nature, believed in the survival of the fittest. Aryans (blonde beasts) were deemed superior and nature weeds out the weak. Thus the rationale for the Coronavirus.
Economics, like nature, also weeds out the weak, the over-leveraged so here is the the negative argument:
Scott Minerd: The Great Leverage Unwind
Why You Should Read: Clarity and candor are rarely found in the same place, but Guggenheim CIO Scott Minerd delivers both in this short outlook. He thinks the global economy is in deep trouble and markets will feel the pain for a long time… but not forever.
Key Points:
- We entered the current crisis with an excessively leveraged financial system. The turmoil is about unwinding that leverage.
- Massive monetary and fiscal stimulus is necessary to keep the system functioning smoothly.
- Minerd expects the Fed’s balance sheet will reach at least $9 trillion, about 40% of US GDP.
- Highly leveraged firms are in massive dislocation, causing problems in the corporate bond market.
- Many BBB-rated corporate bonds are in danger of downgrade to junk status.
- The asset securitization market has essentially stopped functioning. Used airliner prices are now lower than post-9/11.
- Since we have not yet seen capitulation, Minerd would not buy either stocks or credit assets at current levels.
- If this follows the 2008-2009 pattern, markets will stay vulnerable for many more months.
- Minerd thinks we are entering a period that will be as severe as, if not worse than, the financial crisis.
- He expects a 6-18 month recession and about four years before affected industries fully recover.
Bottom Line: The most important point here is the one about leverage. You may be personally debt-free but the companies whose stocks and bonds you own probably aren’t. Collectively, we have so much debt that our options to get out of this crisis are quite limited. We already spent the reserves that would be really handy to have right now. The result: deeper recession and longer recovery time.
-Patrick Watson
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From Shutdown to Coronavirus Phase Two
From Shutdown to Coronavirus Phase Two
The shift will have to be a transition, and will have to be explained.
Our editorial last week on the costs of our government-mandated national economic shutdown struck a chord with readers, including perhaps at the White House. President Trump is now saying he wants the country back to normal by mid-April. While this is right as a direction, the shift to a sustainable health and economic strategy will require a transition and a credible explanation to the public.
The initial 15-day national period of mass social distancing ends Monday, which is a chance for reconsidering the anti-virus shutdown strategy. The challenge will be finding a balance between protecting against the virus and resuming commerce and business that is crucial to getting people back to work.
The current at-home quarantines across the country are buying time to slow the coronavirus spread, as well as to surge masks, protective equipment and ventilators to hospitals and hot spots. This hospital surge is crucial to saving lives and reassuring the public that America’s cities aren’t on a path to Italy’s scenes of tragic triage. New York, Seattle and perhaps New Orleans will have to cope in coming days and weeks with hundreds and perhaps thousands of critically ill Covid-19 patients. Americans will want to know how a sustainable strategy prevents similar scenes around the country.
Mr. Trump and other leaders will also have to be candid about the limitations of what we know. Because of the lack of widespread testing, we don’t know how many people are infected with few or only mild symptoms. This information would help us get a better fix on the real death rate, not least by group and health status, and thus to know how under siege our hospitals will be over weeks and months. More accurate testing data will also reassure the public.
Some degree of social distancing and self- or mandated quarantines will also have to continue. This is especially true for the elderly and those who are immuno-suppressed. The public education on those points can’t let up.
The health experts will have a vital role here, especially when it comes to different distancing regimes by region or by demographic group. The public-health goal is to limit the virus spread now and later this year if there is still no vaccine or better treatments. The public-education goal is to assure Americans that we can reduce the virus threat even as millions of Americans return to work.
But sooner rather than later, Mr. Trump and governors will have to explain the huge human and economic cost of continuing the shutdown. Those costs will start to appear Thursday when initial jobless claims are likely to record one of the biggest one-week leaps in history. They will rise by the millions as the shutdown goes on.
Congress may ease some immediate pain if it passes the Senate’s $1.8 trillion spending bill this week, but no amount of public money can compensate for the trillions of dollars in lost private employment and production. Low-income workers who had recently begun to see wage gains will suffer the most. These workers need employers back in business and finding customers and revenues again. Government loans can only maintain these businesses for so long, and even then they will burden the companies with more debt for years.
The human cost will be the greatest. The economic and social-science literature is replete with studies that document the harm to people from recessions and economic hardship—including higher rates of suicide, opioid abuse, alcoholism and domestic violence.
A Lancet study found “4,983 excess suicides” between 2007 and 2009 (that is, before and during the recession) based on population and economic data from 2000-2011. A 2013 study in the BMJ medical journal found similar suicide increases, especially in men: “Rises in national suicide rates in men seemed to be associated with the magnitude of increases in unemployment, particularly in countries with low levels of unemployment before the crisis.”
A 2019 study in Clinical Psychological Science found “individuals who had experienced even a single financial, job-related, or housing impact during the recession still had higher odds of symptoms of depression, generalized anxiety, panic, and problematic substance use 3 or 4 years after recession had ended.” And a St. Louis Federal Reservestudy in 2013 found that drug-abuse rates were 10 points higher among the unemployed.
None of this will surprise readers who have watched friends or loved ones spiral down after a bankruptcy or job loss. The point here is that the policy tradeoff for Mr. Trump and the governors isn’t between saving lives and a higher stock market, as our editorial’s critics asserted. And it isn’t a choice between pandemic expert Anthony Fauci and economists in the White House. There is great public-health damage from both the virus and from mass unemployment and recession.
The challenge for political leaders is to consider both and make decisions in the larger national interest. This is what Mr. Trump means when he tweeted Tuesday, in his unsubtle fashion, that “We can do two things together. THE CURE CANNOT BE WORSE (by far) THAN THE PROBLEM!”
The urgent choice isn’t pitting public health against financial health. Both matter, and the latter is essential to the former. The country needs a sustainable strategy for both.
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More but still not enough: https://www.foxnews.com/
And:
Two articles by Salena Zito:
Rural Pennsylvania county with NYC Commuters struggles with coronavirus
STROUDSBURG-When Pennsylvania Gov. Tom Wolf issued his stay-at-home order Monday afternoon for the seven counties hardest hit by the coronavirus in the commonwealth, many wondered why the sleepy little rural county of Monroe in the northeastern corner of the state was one of them.
All of the others made sense. Allegheny County surrounds Pittsburgh, and the collar counties of Philadelphia — Bucks, Chester, Delaware, Montgomery, and Philadelphia — are all high-risk because they are densely populated and represent the types of regions where the coronavirus spread has accelerated. Of the 851 cases of the coronavirus in the state, most are concentrated in those six highly populated counties and Monroe, which has 45 confirmed cases.
The question is, why?
The answer is a sizable number of Monroe’s 160,000 residents, around 20,000 or so, don’t just commute back and forth from New York City for work — they do their commute in crowded buses several times a day.
At least they used to.
“A tremendous number of people who are residents here moved here after 9/11 but realized that the money they were making in the city they could not duplicate in good old Monroe County,” said John Moyer, one of three county commissioners who run the county government. “So, they kept their jobs in the city and the urban areas of New Jersey and commute back and forth. We've got five or six major pickup spots for buses that start running at about 5 in the morning and, on a typical day, don't end until 11 at night. And it's shoveling people back and forth from New York and New Jersey to Monroe County.”
“So, it's fairly easy, even though I'm not an epidemiologist, to figure out that we're being hit with the people in the metropolitan area that have contracted the virus somehow and are bringing it home,” he said.
“We’ve had a very difficult time,” he said, pausing. He received word late Monday from the Monroe County coroner regarding the death of a 56-year-old man due to complications from the disease.
Moyer said the estimate of how many commute is “roughly upwards of 20,000” in a county of “around 275” hospital beds.
Monroe County is mostly known for its sweeping scenery and a tourism industry that thrives off of visitors who utilize trail hiking the thousands of acres of mountains and valleys that make up the Delaware Water Gap National Recreation Area, as well as the Big Pocono State Park, the Delaware State Forest, and the Tobyhanna State Park.
It is the land of the Pocono Mountains — so many resorts Moyer could not put a number on them or where people pass through along the Appalachian Trail.
Mark Cuban steps up; my interview on his passionate plea to help small businesses survive coronavirus & what drives his love for the working man and women in our country
Businessman Mark Cuban has never been the guy to hold back whenever he sees something unfair, flawed, and shady or, if he's sitting courtside, a foul.
The Dallas Mavericks owner and Pittsburgh native was one of the first owners of a professional sports team to pledge to support hourly arena workers after the NBA was suspended indefinitely. Not only that, but the Mavericks organization and some of the players are now paying for child care for the healthcare workers who are on the front lines fighting against the coronavirus pandemic.
Tuesday morning, he didn't hesitate to call out Congress for their shameless politics in failing to provide relief for a frightened country, tweet-shaming both Senate Minority Leader Chuck Schumer and Sen. John Cornyn, a Texas Republican: "BOTH OF YOU NEED TO DO YOUR F---ING JOB!"
His tweet voiced the same frustrations many feel about what seemed to be a bipartisan package that swiftly became a wish list of ideological prizes.
In times of crisis, businessmen have not just spoken out. Like Cuban, they've stepped up and put their fortunes where their mouths are. For example, during the Great Panic of 1907, when the Dow saw a 50% decline in the stock market over three weeks, the business community responded by pulling together to brainstorm how to help keep weaker financial institutions afloat.
In an interview with the Washington Examiner, Cuban discussed his deep concerns for small businesses, solutions that business leaders can provide, and his optimistic vision that the great connector in this country, sports, will once again pull us together when this crisis is over.
Click here for the full story.
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