What Me Worry?

Some of the headlines just for today:

Trump retweets video saying “only good Democrat is dead Democrat”…

“Haven’t seen black people this upset in 20 years” Van Jones

Total jobless claims top 40 million

Fed: Sharp decline in May leaves business is pessimistic about recovery

Stressed out front line nurses admit they are at breaking point with 68% planning to quit their jobs

United States deaths: 101,573

Q1 contraction worse than thought

The former Minneapolis police officer seen in the video with his knee on Floyd’s neck had 18 prior complaints filed against him

Governor declares state of emergency in Minneapolis

As US deaths top 100,000, Trump’s virus task force is curtailed

A GOP lawmaker had the virus,  Nobody told Democrats exposed to him.

California is re-opening too quickly, posing “very serious risk,” health officer warns

Jim Cramer says market still in for a “rough ride,” suggest sticking with remote tech stocks.

“Sorry, no mask allowed”: Some businesses pledge to keep our customers who cover their faces

 

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??)

 

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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