Ruminations

As I write, the Dow has plunged to 19898 and the S&P to 2398. Currently there are 8700 reported cases of coronavirus in the United States. Watching the evening news, there are increasing signs of panic. People who need tests and can’t get them. Lines of cars stretched miles as they await testing at mobile test sites. Streets are empty. Little traffic even in New York City. I turned on my cam for Times Square last night and noted the empty streets. Broadway is dark and restaurants are closed.

Some ruminations:

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I bet there is a think group or collection of scientists and medical people who have a very good estimate of how far this virus will spread and how many people will become infected, become seriously ill and die. I also bet that people running the Federal government and state governments also know and are circumspect with their knowledge as to not create any additional panic.

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Historians (if they are still around 10 years from now) will find that widespread mistakes and poor judgment led into millions of people dying and hundreds of millions of people being infected with the coronavirus. Currently there is little time and appetite to review the mistakes that have been recently made.  Another development they will cite is the lack of expertise and good judgment by many officials in the Trump administration.

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I would nominate and elect the governor of a state who has displayed the best results and judgment in protecting the citizens of his/her state. Forget debates and speeches, we need the best man or woman to rebuild the country and the economy. Joe Biden is not up to it. Trump certainly isn’t either.

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What will the level of panic be when test results show millions of U.S. citizens infected? When bodies lie outside nursing homes and morgues? When grocery shelves are empty as supply chains fail? When celebrities and other famous people die? When banks fail and ATMs don’t work?

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I feel like I’m living through the story of the 1959 movie On the Beach starring Gregory Peck and Ava Gardner. In the movie, nuclear war has wiped out most of the world and the radiation clouds are approaching Australia where survivors wait grimly for the bitter end. “There is still time, brother.”

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.

Stock Market Graph.jpg

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??)

 

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.

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

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.

The Myth of the Trump Economy

I think it’s time to put a pin in the Trump balloon about his success with the economy. He and his supporters have used the relatively good economic metrics that exist as rationale for his poor behavior as president and as the primary rationale for his reelection. Many Trumpers seem to think that Donald is a resurrection of FDR saving us from a depression or worse. I’m surprised that Trump did not take credit for the US Women’s Soccer Team In winning the World Cup.

Listed below are five considerations when viewing the economy:

#1 The unemployment rate is 3.5% which is excellent. There are more jobs than qualified people to fill them. I’m not quite sure what credit the president or Congress can take for that result. I’d give more credit to America’s entrepreneurs, small business owners and CEOs for the job success. Trump inherited a growing economy from the Obama administration. Trumpers need to remember that the unemployment rate went from 10% to 4.8% during Obama’s tenure. The fate of the economy was much more tenuous in 2009 when Obama assumed the presidency than it was on January 20, 2017. In addition, Obama did not have the favorable political environment where his party possessed the numbers or clout to push through his agenda or bidding, at will. Obama did the heavy lifting for the economy. Trump was the relief pitcher in the ninth inning protecting a 8-0 lead.

#2 The passage of the 2018 Corporate tax bill helped promote an increase in the Dow Jones industrial average by 49%. This is great metrics – – if you are fortunate enough to have invested in Dow Jones companies. So Trump and the Republican Congress made a decision – – they helped improve the fortunes of the large investors to buy new mansions, and new yachts. At whose expense? Our country badly needs improvements in our infrastructure – – we need to fix up roads, bridges, airports, etc. The federal debt has gone up $2 billion under Trump and is now 78% of this nation’s entire gross domestic product. The Republicans have approved the credit card  and issued an unlimited credit limit and our gleefully spending it. This is the party who wanted to cut up the card and freeze spending when the previous President was a Democrat. The problem is that the bill will be paid further down the road by future generations.

#3 The fed funds rate is 1.75%. Why is this important? For consumers, it affects the borrowing rate for your car, your mortgage and any other consumer debt that you may have. Currently, you are able to borrow money relatively cheaply. However, if you are interested in saving money, you are in a conundrum. Anyone who has a checking account, money market fund or certificate of deposit is probably realizing an annual rate of less than .05%. In order to make money or get the best return on your investment, you probably have to enter the financial casino known as the stock market or equities. One of the primary reasons why the Dow, S&P and NASDAQ have and continue to do well is that consumers are investing their money in stocks, bonds and mutual funds. There is no other game in town. If you are a retiree and on a fixed income, you will earn about as much money stuffing it under your mattress as you would depositing it in a bank. One last point, the president expressed he “could get used to” in a  negative interest rate environment. Under this scenario, depositors would pay banks to maintain their cash deposits. If the country enters a recession, the Fed has very few options to bolster the economy given the very low interest rates now. A negative interest rate environment is not impossible.

#4 Remember the President’s promise during the 2016 election to replace Obamacare with a better healthcare program that was cheaper and more efficient? I do. The only thing that the president and the Republican Party have tried to do is to eliminate Obamacare. You never heard what program they were proposing to a replace it. During the Trump administration, the number of people lacking health insurance rose by 2 million. Prescription costs continue to rise and many people each day struggle to gauge whether to eat or to use the money for drugs they need to stay alive or healthy.

#5 Strangely enough, there are consequences to a full employment economy. For this observation, I will speak from several recent personal experiences in trying to conduct business with various companies. First, due to the lack of attracting qualified applicants, many companies are forced to hire unqualified or less than qualified people. Many of these employees require extensive training and follow-up. Second, there is a huge turnover in personnel particularly among businesses that are unable to provide competitive salaries and benefits. In various instances, applicants who accept job offers don’t show up for their first day at work and don’t have the decency to notify the employer that they have accepted another position or simply lost interest in the job they accepted. Third, dealing with combination of unqualified and unmotivated employees is a horrible experience for those of us trying to conduct business with a company. Because many employees do not possess good business judgment or have the ability to resolve issues on their own, they are forced to follow a script. Beyond reading the script, many frontline employees are clueless in resolving billing, delivery and service issues. 

Why Trump will be Re-Elected

It may be hard to believe that a President currently experiencing an impeachment hearing in the Senate and with favorable poll numbers no higher than the mid to high 40s would be a favorite to win reelection. However I see trends that support my belief that Trump will be reelected and it’s not because of any great achievements by his administration.

First, after watching the Democratic debates, I don’t see a winning candidate that can roll in the mud with Trump and come out victorious. All the Democratic candidates are genteel, proper and appropriately reserved in their speech and conduct. In other words, they are all roadkill for Trump. Trump will bully, bluster and lie his way around opposition campaign strategy. Debating Trump is a waste of time. Anyone who watched the three Trump-Clinton debates realized that she wiped the floor with him. He was inarticulate, ill prepared and totally outclassed on knowledge of foreign and domestic policies. Yet he was elected President after three disastrous debate performances.

Second, the number of no and low information voters may be higher than those who have a grasp of current events and policy considerations. These voters are more influenced by memes and insults which are Trump’s forte. Many Trump voters do not wish to be informed, they wish to be entertained. They also want a spokesman who will confirm and support their prejudices, feelings of religious persecutions and class oppression.

Third, there is very little long range thinking in government and that also applies to many voters. They are content to kick the cans of global warming, income inequality, affordable health care for all, immigration reform and education reforms down the road. Trump voters show little concern for the impacts of regulation pullbacks and corporate tax cuts on future generations.

Fourth, Trump has a united cabal behind him called the Republican party. He faces no internal opposition from Congress and no serious political opponent emerged to contest his nomination. The Democrats, on the other hand, are showing signs of fracture between the moderates (Biden, Bloomberg, Buttigieg, Klobuchar) and the liberal/socialists (Warren and Sanders). This division and the resultant lack of enthusiasm, support and turnout will doom the Democratic ticket.

Fifth, the role of the press has been critical in past elections. The press would uncover scandals and other stories that could doom a candidates’ chances. In 2016, the Access Hollywood tapes did not change the minds of many Trump supporters. His moral failings and bizarre behavior did not hurt him at all, especially among white Christian evangelicals. The press has been marginalized. Today a Republican woman senator refused to answer an appropriate question about the impeachment proceedings from a reporter labeling him a “liberal hack.” Trump has deflected many of the charges against him by citing “fake news.” It appears that many voters have bought into this fraudulent tactic.

Today there are no editorials calling for Trump’s resignation of removal from office. Democrats have failed to go after Trump like he has attacked them. There is no Democratic spokesperson with the exception of Nancy Pelosi who has blunted Trump’s attacks. I don’t see things changing by November. Four more years…

12 Things That No Longer Interest Me

As one gets older, one tends to downsize interests, activities and that one pursued or took part in throughout their life. Here is an initial list of things that were important earlier in my life but not so much now…

  1. Advertising: As my need to buy and own things lessen so is my interest in advertising or sales pitches. I hate commercials on TV and ads when I’m watching something on Youtube.
  2. Gossip: I’ve pretty much lost the ability to be shocked even surprised by the behavior of people especially celebrities, athletes and politicians.
  3. Long books and articles: I don’t have the same mental stamina that I had years ago. I tend to avoid books over 300 pages.
  4. Snow since I don’t go to school and I don’t have to drive to go to work, snow has become largely irrelevant except when I have to shovel it
  5. Winning At Contests Or Competition: When I play pickleball, I can’t tell you what my wins and losses were that day. My ultimate criteria is whether I had fun.
  6. Making New Year’s Resolutions While there are things I need to improve, I don’t need to formalize or plan how to do it.
  7. Diets: Too old, too late for me to discipline my taste buds and eating habits.
  8. Local Sports Talk Radio: The dumbest things ever said are mentioned on political social media sites and sports talk radio shows.
  9. Expensive Meals: A great tasting pizza can blow me away more than the priciest lobster. Dining out is the opportunity to socialize and connect with friends. Food is often incidental.
  10. Attending professional sporting events: With the exception of high school sports, I have lost interest in attending pro and college football, baseball and basketball games at the various venues. No interest in paying for parking and squeezing my big butt into an expensive seat when I could be comfortable at home watching the game.
  11. Ego: I no longer feel the need to impress. I don’t need to worry about what people think of me. I feel more authentic, more comfortable with who I am.
  12. Wealth: Health and time are more important than money. One always needs money but if your health is bad and you are not enjoying time due to pain, loneliness, boredom or infirmity, your life is poor.  You can’t buy contentment.

Eric’s Pickleball Partner’s Handbook

Will never be mistaken for Tyson McGuffin

With apologies to my past and future pickle ball partners, here’s what you may expect from playing with me:

  1. I will continually forget the score and you will have to remind me what the score is.
  2. I will poach at the most inopportune moments and leave you to cover the entire court.
  3. I will chase “out balls” like a dog chasing a flung chew toy
  4. My eyes are not what they used to be so my line calls may need a second review.
  5. I will play with anyone and at any level. Win or lose, I want my partner to have fun and to be willing to play with me again.
  6. I am not good enough to offer advice. My best and only advice to most players is to continue to play, have fun and your game will improve over time.
  7. When I “tag” someone on the opposite team, I will generally apologize and check to ensure they are OK.
  8. My hearing is as reliable as my third shot drop – – so you may have to repeat things to me.