Zero Interest Rates, Zero Confidence

Disclaimer: I am not an economist nor possess any special knowledge of economics or finance.

As I write: the number of coronavirus infections worldwide is 169,552. 6,516 people worldwide have died. In the United States, approximately 3485 people have been infected with coronavirus. 65 people in the United States have died. Widespread testing has not taken place in the United States so the infection rate numbers are expected to rise dramatically.

The Dow Jones average is 23,185 or about a 21.5% drop from its high in February. The S&P is 2711 and has declined 20.1% from its high in February.

The federal reserve has reduced interest rates to 0%.

The following analysis represents my thinking and should not be used as a guide for investing etc.

What does this interest rate cut mean?

  1. It is the last remaining bullet in the Fed arsenal and intended to bolster the faltering stock market and economy, as I indicated in the summary above, Both indices have dropped over 20% since their highs last month. Many financial experts are expecting another 20-25% drop given the projected rise of the coronavirus infections and further disruptions to businesses and the U.S. economy in general. There are some financial analysts insisting that the stock market will come roaring back by the end of the year and recover much of its 2020 losses. I doubt it. One also needs to see the rate of recovery accomplished in China and Europe. If you have pulled out of the stock market and are now in cash, you are very limited as to how you can earn a return.
  2. Reflects the politicization of the Fed. President Trump has insisted on lower interest rates and just yesterday threatened to remove Chairman Powell from his job. The president is ever mindful that the November election is less than eight months and how a recession will adversely affect his chances of being reelected. Trump has done a very poor job of communicating what measures need to be taken and has miscommunicated the severity and urgency of this emergency. I would not be shocked that Trump would not be re-nominated as the GOP candidate if the country experiences higher than projected infections and death within the next four months. Seniors and retired people (part of the Trump base) will be panicked when their investment funds settle to significant losses.
  3. Trump’s priorities are investors and stock prices. He is leaving the dirty work of dealing with managing the pandemic and health issues to state governors and local communities. He has no choice. Trump has no bench of competent leaders or administrators to guide his actions. His “by the seat of his pants” decisions on travel bans have angered our allies and American citizens caught in Europe.
  4. Reflects the realization that the coronavirus emergency is not a two week or one month issue. There are no quick fixes and this virus will not disappear overnight. It is going to have a bad long term effect on the economy, corporations, small businesses and workers.
  5. Confirmation that the economy is not well and that strong measures were needed to prop it up. Seems obvious to me that many businesses are going to require bail outs in order to survive if the length of the coronavirus bands continue past May. Due to lower sales and cash flow issues, businesses will be forced to access available lines of credit creating capital and risk management concerns for banks and financial institutions. Airlines and the cruise industries are looking at 3-6 months minimum of travel dislocations and cancellations. Regrettably individuals who will become unemployed will also be accessing their available credit card lines of credit but they will not be receiving any bailout money from the government other than temporary unemployment insurance.

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6. The country is seeking a hero, someone who displays competence, communication skills and leadership. Don’t be surprised if the next serious Presidential candidate comes from a governor who protects his state and ensures that the necessary medical care and resources are available. (Cuomo from NY??)

 

What You Don’t Know May Hurt You

Many experts, professionals and officials communicate in two ways. First, they tell you what they want you to know. Second, they don’t tell you or they lie and obfuscate what you need to know. The latter form of non-communication may be the most important as it often hides what is critical information regarding motive, fact and truth so you can respond accordingly.

The Only Thing We Have to Fear…

“I am certain that my fellow Americans expect that on my induction into the Presidency I will address them with a candor and a decision which the present situation of our people impel. This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. I 

Franklin Delano Roosevelt 1933

In my lifetime, I have experienced events that made me fearful. The first one that I recall was the Cuban Missile Crisis in 1962. I was ten years old. I remember that we were on the brink of war with the Soviet Union. At school, we were all instructed on how to get under our desks, cover our heads and close our eyes. I believe there was a CONELRAD system which also provided an early warning if missiles were being fired. I remember they tested air raid sirens as part of the rehearsal. Fortunately we were led by a very smart president, John F. Kennedy and the crisis passed.

I have experienced stock market crashes (1987, 2008-2009), hurricanes with landfalls in New Jersey, urban riots (Camden), 9/11, and unemployment. Personally I have survived cancer scares for myself and my wife. I don’t like apocalyptic horror stories but I feel like I am in one.

That being said, I don’t know if I’ve ever experienced the type of chronic fear related to this coronavirus pandemic. Some of it may be due to my age and my susceptibility if I should be infected with the virus. This is so different. I don’t see solutions. I don’t see a quick end to this disaster. A lot of my fear and discomfort comes from factors other than my vulnerability.

The United States government and in particular the Trump administration have done a horrible job of communicating the status of the pandemic, the number of people infected and what steps are being taken to ensure the safety of the citizens of the United States. I think the Trump administration has made it a priority to focus on the effects to the economy.  To hell with people, “how do we both prop up the stock market and the Dow?” Where are the tests that people need to take? That should be the priority.

This is obviously a crisis that needs to be adequately addressed by scientists and medical personnel. Instead we have politicians literally falling all over themselves to politicize this catastrophe. This is a time when we urgently need smart and responsible leadership. Regrettably over the past month, I have seen no one with the credibility, leadership and communication skills to provide confidence to the public.

The media has also done a poor job. They are doing more to frighten people than they are to responsibly inform us of latest developments. I am tired of watching news conferences provided by local government officials and health agencies each time an individual is infected. They keep urging the public to remain calm but they do a very poor job of answering questions and providing guidance as to what the public may expect. Many officials appear reluctant to speak candidly and honestly about what they know.

Lord knows we desperately need a Franklin Delano Roosevelt. Unfortunately we are saddled with a Donald Trump and his administration that appears clueless on how to manage this crisis. My sense is that we have not even begun to experience the severity and breadth of this pandemic. We have no idea how long that we must remain vigilant. My sense is that the pandemic will be with us for a few years and that we need desperately for science to develop the necessary vaccine so that we can get back to living a routine life again.

Tuesday November 3, 2020

Author’s Note: Science fiction? Horror? Or Cautionary Tale? You the reader decide…

He awakened, startled by the noise outside. It was 3:00 AM. Normally he would be up and writing his first tweet. However no one wanted to hear from him anymore. Even the Fox Morning show was not taking his calls. Here it was the morning of a scheduled election day that was not going to take place. “Too dangerous” he argued and the election date was postponed. Plus his septuagenarian opposition candidate had contracted the virus and now was in serious condition. He wondered about the crowd outside – – it still sounded very loud and angry. Thankfully he was able to count on the military to place a perimeter around the White House grounds. That did not stop a few people from attempting to breach the White House grounds. Occasionally there was a sound of gunfire and the smell of tear gas. He remembered videos of the last days of Hitler hunkered down in his Berlin bunker while Russian troops closed in. It wasn’t tanks or troops he was avoiding but the utter catastrophe that was occurring during his watch. He was alone. His wife and young son sought refuge in a Caribbean island that had not been affected by the virus. 

How could things go so wrong and so quickly in nine months! He was assured by people in his administration that there was no huge threat to the American people. Regrettably those people were not scientists nor were they medical experts who could’ve provided the proper expertise and advice. His initial primary concern was the falling stock market and its effect on the economy and on his reelection chances. He now regretted the cuts to the budgets of the CDC and other medical projects. Testing for the virus had been delayed and many low income individuals with no health insurance could not afford the $3,000 charge and did not get tested. Maybe the Medicare for All was not such a bad idea?

The catastrophe started slow. He even bragged that this was all a hoax and that the virus would disappear shortly. However pockets of infection started to grow at a steady pace. Once infection pockets were found in large cities like New York, Chicago, Los Angeles and Atlanta, the virus spread rapidly. Just about every state with a large population center  was overwhelmed with sick and infected. The stock market mirrored the infection rate plaguing the country. The Dow dropped below 2500 and continues to decline. The Fed attempted to staunch the bleeding and even dropped to negative rates at his insistence but all it did was panic investors more. No one was worried about their 401Ks anymore.

He initially appointed his vice president to spearhead the effort to manage the crisis. But with each report of a 25,000 or more dying, he appointed new people starting with his son in law and then a Fox News personality to take over crisis management. In desperation he asked his daughter to take over but she also fled to an island resort not affected by the virus. Responsible people avoided him and his administration as much as they did the virus.

Being a germaphobe, he was always skittish around people with coughs and colds. He curtailed any outside campaigning or outside exposure when the rate of infections rose dramatically in the spring. No more MAGA rallies. No golf outings. He had found it hard to find people to play golf with when the infection rates spiked. Except for Lindsey. Even the summer national party conventions were cancelled for health concern reasons.

The infection rate overwhelmed hospitals and medical capabilities. Many doctors, first responders and nurses were among the first victims of the rising infection rate as protocols had not been adequately developed or communicated. Those doctors and health officials who did not die found themselves too sick to treat other patients. Infected people, usually the elderly, passed away in their homes. They received no medication and no treatment. He realized that he lost the country when even Fox News broadcast pictures of elderly people dying uncared in nursing homes.

For those who did not have the virus, life was very hard with plenty of disruptions. There were food shortages as many stores and groceries were closed. There was no gas for cars. Most civil and government services were suspended or terminated. No mail was being delivered. Law enforcement and the judicial system ground to a halt. Violent crime rose dramatically everywhere. Desperate people seeking food, medication and household supplies preyed on those neighbors who had them. Banks and the financial systems were at a standstill. ATMs did not dispense cash. The country was in financial, commercial and social gridlock.

City streets were largely empty. Those who were seen walking wore masks. Places where people tended to congregate socially were closed including churches, movie theaters, malls, restaurants and gyms. Neighbors stayed to themselves in their homes fearful to venture outdoors. Schools and universities closed in the Spring and remained closed. Unemployment exceeded Depression era levels. Manufacturing plants were shuttered. The service industry ground to a halt. No pizza deliveries. Fast food chains were dark. If you had problems with your internet or cable, there were no home repair calls.

There were no diversions to distract those who were still healthy from all the bad news. The World Series was completed overseas in Aruba. The college and professional football seasons had been cancelled. There was a limited Olympics in late summer but U.S. athletes were prohibited from entering Japan, the site of the games.  As a further insult, Mexico and Canada blocked their borders to prevent Americans from coming in. Countries around the world including China, Japan and South Korea did not allow flights emanating from the United States. Mexico was beefing up their borders to keep Americans out and planning to build a wall.

His poll numbers were in the low single digits. His businesses suffered too. His resorts and golf courses were closed. Diplomats and business people were no longer making any reservations at his hotels. It seemed the only business being done was by some of his prayer partners who were urgently requesting seed money through various media ads to prop up their flagging enterprises. A donation of $1,000 was guaranteed to protect you from the virus, or if you were infected, to survive it.

The Federal government was bankrupt, financially, morally and in operation. State and local governments were left to deal with the catastrophes. Some states also issued their own travel restrictions prohibiting citizens from “high risk” areas from coming into the state. There were countless stories of citizens and charities taking care of the sick and dying and attempting to rebuild. The virus adversely infected the American immune system  but did not destroy the American spirit.

He grimly understood that he did achieve one thing that many in the country had insisted upon. He leveled the playing field between rich and poor. The virus did not differentiate between those who had money or did not. Some of the rich tried to flee to other countries but found themselves turned away. He sighed. All of this was Obama’s fault. He did reach out to the former President but Obama did not take his call.

He realized that his aide and butler had not knocked on his bedroom door to deliver briefing papers that he rarely read and breakfast. No more McDonald meals as the local store was closed. He poked his head out his bedroom door and saw there was no activity, no one in sight, not even Secret Service. He turned on the TV but it was not working. He could not access his Twitter account either. Suddenly, the din from the crowd outside was being replaced with a rumble by the gates…

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Whenever I Close My Eyes, I Still Can See Your Smile

You never forgot my birthday. I will never forget yours. (I still remember you getting diners at Cinelli’s to sing me Happy Birthday.)

It’s been a little over 25 years since you have been gone. The pain in my heart from your death is not as severe but there are always reminders of what I miss. Christmas has never been the same. I remember your unbridled joy for the holidays. You loved the lights, decorating the tree and playing all the Christmas songs (starting with Thanksgiving dinner.)  We loved counting all the presents under the family tree on Christmas Eve. However you always held one gift back for everyone—-the one that you knew would bring the most surprise and the most joy.

Even though I was four years older, you were the wiser. Yeah, I had the better grades in school  but you were so good and so loved by so many people. You loved life. You took chances. You traveled. You risked your heart. You always smiled. You had so many friends! You were an inspiration to me.

You and I did have some battles. We both knew how to needle one another and sometimes we would have huge verbal wars. But we always had each others back and woe to those who would say something bad about one of us if the other was present.

At my wedding, you happened to get lost finding the park where we were going to take pictures. The wedding photographer wanted to take pictures without you there and I refused to take any pictures till you showed up. It did not make my new wife, Chris happy. However, you did show up, a bit late and had started to party before the rest of us did. 

At your funeral service, one of your neighbors mentioned to me how you told them that there was no one else you trusted more than me. I told your neighbor that no one’s opinion or judgment meant more to me. We both leaned on each other for support and that support and love are what I missed so much the past 25 years.

You were my kid sister that I had to protect. I remember you calling me in my early 20s. You were working alone at a Dunkin Donuts, frightened from being harassed by some guys. I hung up the phone and sped to your job wielding a baseball bat and rushing through the store door like a scowling Buford Pusser. Fortunately for them (and me) they had left but you knew I would did my best to always protect you.

However I could not protect you when the nurses told me that you had died during your surgery to have a tumor removed from your brain. It was not an easy surgery. You had noticed my concern prior to your surgery and were even amused that you heard that I, a committed agnostic, had gone to mass. I would have made a deal with the devil if it would have kept you alive. You passed away 10 days after Christmas and a month before your 39th birthday.

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A Bit of Nostalgia

I have maintained a journal since college (1970). A reader may be amazed and amused by entries I wrote forty to fifty years ago about purchases I made or prices that existed decades ago. Below is a brief sampling of entries…

August 9, 1973

Pair of glasses cost me $44.

Friday, March 22, 1974

Bought an $85 suit on Monday. Pretty snazzy!

Tuesday, April 17, 1979

It’s very hard to find encouraging news. Gasoline prices are close to $.80 for unlimited, $.74 for regular. Many gas stations are gouging consumers and raising prices higher than what the government guidelines call for.

Tuesday, July 31, 1979

Prices:

Flounder $2.29 a pound

Eggs one dollar a dozen

Bread $.53 a load

Steak $2.49 a pound 

Pepsi 64 oz. $.99 

Lettuce $.59 a head

Milk $.86 for a half-gallon

Hamburger $1.99 lb.

Movies $3.50

Saturday, April 12, 1980

Price trivia:

Gas $1.27 per gallon unleaded

Egg McMuffin, hash browns, OJ $1.94

Sunday Inquirer $.60

Sunday Courier $.35

Gatorade $.69 a bottle

Thursday, January 15, 1981

I paid $1.49 for a 45 RPM record today. Only a couple years ago, you could buy a 45 for $.79.

My Life is an Open Book

“It is with books as with men: a very small number play a great part.”

 Voltaire (1694-1778)

When my father died at age 7, I had no older brother or sister for guidance. Essentially I had to rely upon my own resources as I grew up. I also lost my religion fairly early so I was neither a believer or reader of The Bible. I know that many people find comfort, guidance and wisdom from their religious beliefs. However I chose to go a different way. Reading was a critical element in my life. Books provided me entertainment, knowledge, guidance and perspective. I’m estimating that I have read over 5000 books in my life.

There were a number of books that inspired me in my personal life. There were stories (real and fiction) of people who overcame challenges and provided examples and lessons on how one should conduct their lives.

Here is a list of books that made a significant impression on how I view life, death, relationships and morality.

Not Fade Away: A Short Life Well Lived by Lawrence James and Peter Barton

Learning To Fall: The Blessings of an Imperfect life by Philip Simmons

The Wisdom of Insecurity by Alan Watts (I always encourage people just to read the first chapter which is powerful, if they can’t read the entire book.)

Tuesdays with Morrie by Mitch Albom

Running to the Mountain by Jon Katz

Meditations by Marcus Aurelius

Eureka (A Novel) by Jim Lehrer

The Way of the Ronin by Bev Potter (changed my view on work and just being labeled an employee)

Mortality by Christopher Hitchens

Winter Journal by Paul Auster

Chasing Death: How my Forthcoming Death Changed My Life by Eugene O’Neill

Stoner by John Williams

Levels of Life by Julian Barnes

All Quiet on the Western Front Erich Maria Remarque

Creating the Good Life by James O’Toole

If Stupid was a Stock

Analysis: Stupid continues to grow faster than coronavirus. It’s contagion has spread rapidly into our politics, culture, entertainment, business and religions. Anticipate no correction anytime soon for Stupid. Expect that it will be around for at least another four years.

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Six Quick Observations from the 2-19-20 Democratic Presidential Debate

For full disclosure, I have watched all the Democratic Presidential debates. This debate was the most meaningful and all the knives came out tonight that were held in all the candidates’ scabbards prior to tonight.

  1. With each Democratic debate, the better the chance that Donald Trump will be re-elected. The longer the nomination process goes undecided, again, the better the chance that Trump will be re-elected. The debates and some of the inane questions presented by the debate moderators only hurt the Democratic candidates. Some of the questions were just meant to rile up the candidates. Case in point, questions to Amy Klobuchar for not knowing the name of the President of Mexico. Really?
  2. Elizabeth Warren should be the Democratic nominee. She’s smart, articulate, energetic and her verbal takedown of Mike Bloomberg was the template on how a candidate should confront and challenge Donald Trump in a debate and during the election cycle. She had the best debate performance tonight by far.
  3. Mike Bloomberg was very unimpressive. He badly fumbled responding to issues about “stop and frisk,” his support of Obamacare, non-disclosure agreement releases from his employees and failure to release his tax returns. The Democrats badly need his money—-just not Mike.
  4. Prior to this debate, I viewed Amy Klobuchar as the best candidate for VP. The ticket will need a strong woman with legislative experience and from a Midwest state. She exhibited some thin skin and loss of poise when pressed by Pete Buttigieg on her voting record. She does have a reputation for having a bad temper and it flared onstage. I noticed she stalked off the stage when the debate was over, not stopping to shake anyone’s hands. Maybe Pete is angling for the VP nomination over Amy.
  5. I sense 1972 again. The Democrats nominate a candidate who has a huge appeal to young people but who will frighten off more moderate and older voters. Say what you want about Bernie Sanders, he does exhibit a lot more energy and acuity than septuagenarians Joe Biden, Mike Bloomberg and Donald Trump. However, he’ll get crucified with the socialist label by the GOP and Fox. I think Trump will, in boxing terms, be able to “rope a dope” his way past Bernie in a debate. Warren won’t let Trump out of the corner.
  6. Joe Biden looks old. He had a decent debate. He attacked Mike Bloomberg effectively. But I can’t see him having the energy to run hard for the election. Good man. But time has passed him by.