Tag Archives: Covid-19 consequences

Coronavirus Counterfactual: A True Enemy Would Have Alerted Us In 2019, by John Tamny

What if there had been no official response to coronavirus other than advice to wash your hands, blow your nose, cover your mouth when you sneeze or cough, and stay at home if you felt sick? Odds are the disease would have come and gone with very little notice and very little damage to the economy and society. From John Tamny at realclearmarkets.com:

With the coronavirus, the most frustrating counterfactual of all is to think about how much better off we all would have been if politicians had done nothing. Stop and think about it for a minute. The more desperate the situation, the more freedom makes sense.

The reality is that well before the needless lockdowns began, Americans had started to adjust their behavior. This included staying at home for some. Notable about this is that it was in the U.S. states that locked down the latest that citizens adjusted the most. In a global sense, it was reported by the great Holman Jenkins that the supply of masks had run out before major action by Merkel et al in Germany. People get it. They don’t need a law. Fear of sickness or death concentrates the mind.

Remember how restaurants started to clear somewhat before the lockdowns? People were adjusting. Imagine if businesses, including restaurants, had been left free to meet the needs of customers (or not at all) free of business tips from those who brought us the DMV.

No doubt some businesses would have gone under amid fear of the virus, but they were already going under before that. Particularly retail. Remember all the hand wringing about Amazon and the internet “hollowing out” shopping malls? While the nailbiters will eventually regret the association of their names with such alarmism, the reality in a dynamic economy is that the roster of names in shopping malls and town centers is constantly changing.

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We Destroyed the World’s Greatest Economy for No Reason, by James Rickards

The economy will be weaker than it was before Covid-19 for many years. From James Rickards at dailyreckoning.com:

 

Everyone knew the second quarter of 2020 was going to be a disaster, and it was. The U.S. economy fell by 31.4% (annualized) in the second quarter.

But, the expectation was that we’d have a V-shaped recovery with a sharp bounce-back in the third quarter, a reopening of closed businesses, rehiring of the unemployed and a rising stock market.

But so far, the economy is not following the script laid out for it by the politicians and experts.

The stock market did rally, but that was mainly because the stock index components are heavily weighted to companies least affected by the pandemic including Amazon, Apple, Netflix, Alphabet (Google), Facebook and Microsoft.

Of course, it didn’t hurt that the Federal Reserve printed $4 trillion of new money and backstopped money markets, corporate bonds, municipal bonds, foreign central banks and other facets of capital markets with direct purchases, guarantees or currency swaps.

Even at that, stocks have been struggling since hitting new highs on September 2.

And yes, there was growth in the third-quarter (the best estimate is that the economy will grow at about a 35% annualized rate, but we won’t have official figures until October 29).

The 35% third-quarter recovery was to be expected as Americans got back to work after the lockdown. That 35% rate might sound like the third quarter will basically make up for the second quarter, but it won’t.

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Economic Doom Due to the Covid Response Is on the Horizon and Beyond, by Gary D. Barnett

The coronavirus cure, particularly its economic aspects, will be far worse than the disease. From Gary D. Barnett at lewrockwell.com:

“Only a psychopath would ever think of doing these things, only a psychopath would dream of abusing other people in such a way, only a psychopath would treat people as less than human just for money. The shocking truth is, even though they now have most if not all of the money, they want still more, they want all of the money that you have left in your pockets, they want it all because they have no empathy with other people, with other creatures, they have no feeling for the world which they exploit, they have no love or sense of being or belonging for their souls are dead, dead to all things but greed and a desire to rule over others.” 

~ Arun D. Ellis, Corpalism

Covid-19 as it is called, was invented for many reasons, none of which are more evident than as cover for the coming economic collapse. Long before the fake pandemic, that collapse was already imminent, but now it can take place in plain sight, as the eyes of the masses will remain blind to the truth. The planned global reset is in the works, and in order to accomplish such a task as this, the current economic system will have to be eliminated in favor of a digitized system designed for total control over the current monetary order and the people themselves. This dystopian nightmare is well underway, but the American people are not prepared for the destruction of the economy at every level from money to food. What is coming is an economic nightmare.

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COVID Financial Pain ‘Much, Much Worse’ Than Expected, Warns Harvard Study, by Tyler Durden

Some of us expected Covid’s financial pain to be very bad indeed, but that certainly wasn’t the mainstream media line. From Tyler Durden at zerohedge.com:

New findings from a survey by the Robert Wood Johnson Foundation and the Harvard T.H. Chan School of Public Health, published by NPR News on Wednesday, reveal low-income minority households have experienced the most financial hardships in the virus-induced recession.

The pandemic heavily impacted Black and Latino households across America’s four largest cities (New York, Los Angeles, Chicago, and Houston) with massive job loss or reduction in hourly wages or a decline in working hours.

The survey, conducted from July 1 through Aug. 3, found Latino households (77%) and Black households (81%) in the Greater Houston area incurred “serious” financial problems.

Houston

As for the three other major cities, the survey showed 73% of Latinos in New York City experienced severe financial hardships, 71% of Latinos in Los Angeles, and 63% in Chicago. Black households in New York City (62%), Los Angeles (52%), and Chicago (69%) also reported severe financial distress because of the downturn.

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The Economy Continues To Unravel Despite All Stimulus Measures, by Brandon Smith

You don’t get a lot of production out of an economy when producers have to lock themselves up, fire their employees, and close their businesses. Who knew? From Brandon Smith at alt-market.com:

Since the pandemic lockdowns were first implemented in the US I have been more concerned with the government and central bank response than the virus itself. As I have noted in past articles, the pandemic restrictions and subsequent economic and social crisis events they help to create will cause far more deaths than Covid-19 ever will. Not only that, but the actions of the Federal Reserve continue to con the American public into believing that there is some kind of “plan” to stop the crash that THEY engineered.

The only agenda of the Fed is to increase the pain in the long term; they have no intention of actually preventing any disaster.

This is evidenced in comments by voting members of the Fed, including Neel Kashkari who recently argued for the enforcement of hard lockdowns for at least six weeks in the US, all because the US savings rate was going up. Meaning, because Americans are saving more in order to protect themselves from economic fallout, Kashkari thinks we should be punished with an economic shutdown that would force us to spend whatever we have been able to save.

Do you see how that works?

Fed members and government officials demand hard lockdowns, depleting public savings and destroying small businesses. Then, the public has to beg the Fed and the government for more and more stimulus measures so that they can survive. The people and the system become dependent on a single point of support – fiat money creation and welfare. Yet, the evidence suggests that this strategy is failing to do much of anything except stall the inevitable for a very short time.

If the goal was really to reduce the pain of the pandemic as much as possible, then the strategy should be to keep the economy as open as possible and let the virus run its course.  By initiating lockdowns, all we are doing is extending the economic damage over the span of years instead of months.  We can deal with the comparatively minimal deaths associated with the virus; we cannot handle the disaster that is about to befall the financial system.

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Airlines, Trying to Dodge Bankruptcy with Air Travel Still Down 70%, Threaten Oct. Jobs Massacre Unless they Get 2nd Bailout, by Wolf Richter

The airlines are in a world of trouble. From Wolf Richter at wolfstreet.com:

“Unfortunately, we see few catalysts over the next six months to meaningfully change this trajectory”: Delta.

October 1 and the days that follow are going to be rough in terms of tens of thousands of well-paid service jobs – that’s what airlines are threatening unless they get another $25-billion bailout. Airlines have been trying to shed employees by offering packages that induce employees to depart voluntarily because the $25-billion bailout package under the CARES Act banned “involuntary” furloughs or layoffs through the end of September.

The air passenger business is still down roughly 70% in the US, six months after the initial collapse of traffic began, according to TSA airport screenings of air travelers entering into security zones. And demand has hardly improved any since early July, and airlines continue to slash costs and cash-burn to survive:

“It was assumed that by Sept. 30, the virus would be under control and demand for air travel would have returned. That is obviously not the case,” American Airlines CEO Parker and President Robert Isom told employees in a grim message on Tuesday.

Under its buyout, early retirement, and long-term leave-of-absence programs, 23,500 employees had already voluntarily departed. But that wasn’t enough. So the executives told employees what the next step would be: 19,000 “involuntary” furloughs on October 1.

American, which started the year out with about 140,000 employees, expects to have fewer than 100,000 employees in October.

“The one possibility of avoiding these involuntary reductions on Oct. 1 is a clean extension” of the bailout package, they said. So if given another bailout, American, which received $5.8 billion under the first bailout package, will then not lay off those employees on October 1 – but instead on the date when the second bailout package would expire?

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Save Yourself: Stop Believing in Lockdown, by Stacey Rudin

Lockdowns have been not only unnecessary and ineffective, they’ve been counterproductive. From Stacey Rudin at aier.org:

Storied minds have argued that a failure to critically examine our beliefs makes us culpable for adverse outcomes. Beliefs lead to actions, which impact other people.

As Voltaire wrote during the Enlightenment — when society still had time away from the screen to reflect on philosophy, morality, and fundamental truth — “those who can make you believe absurdities, can make you commit atrocities.”

This has never been more true than in the age of social media, when information and opinions constantly bombard us from all sides, isolating us from our own thoughts and values. We have a moral duty to critically examine our beliefs — especially our belief in “lockdown,” the most oppressive and universally destructive public policy implemented in our lifetimes.

Is it the least-restrictive means available to minimize casualties in this pandemic?

Our belief in it was formed when we felt legitimate fear — this can lead to irrationality — so we really cannot answer this question in good conscience unless and until we take the time to conduct a proper, honest examination with the benefit of hindsight.

Any number of atrocities can occur when human beings act on unfounded, unexamined beliefs.

Consider the example of the shipowner in William Kingdon Clifford’s 1876 essay, “The Ethics of Belief.” Troubled by the condition of his aging ship, which others have suggested is not well-built and is in need of repairs, he eventually pacifies himself with these comforting thoughts: “She had gone safely through so many voyages and weathered so many storms that it was idle to suppose she would not come home from this trip also.” The shipowner develops a sincere conviction that she will not sink, and acts on his belief.

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The Most Dangerous Period for Your Savings and Individual Freedom We’ve Ever Seen, by Chris MacIntosh

Will capital and opportunities shift to the East from the West? From Chris MacIntosh at internationalman.com:

Doug Casey’s Note: There aren’t too many newsletters that I can recommend wholeheartedly. Chris MacIntosh’s is one of the few. It covers the entire investment waterfront, it’s thoughtful and well-written.

Let me add I’m completely on the same page with Chris and his views. I urge you to read what he has to say.


International Man: I’d like to introduce Chris MacIntosh.

After working for many top-tier investment banks, Chris left the corporate world. He has since built and sold multiple million-dollar businesses, built a VC firm allocating $35m into early-stage ventures, and become a full-time trader.

He now manages money for clients of Glenorchy Capital; a macro focused hedge fund. Chris is the founder of Capitalist Exploits, with its flagship investment subscription letter called Insider.

Alright, let’s get into our discussion.

As countries destroy their national currencies, middle- and lower-class individuals will disproportionally be affected.

Are we seeing global destruction of private savings? What are the implications?

Chris MacIntosh: There’s a lot to unpack there.

What we’re seeing is the wholesale destruction of the middle class, certainly in Western democracies.

I think it’s by design.

We’re also seeing a wave of neo-Marxism taking place across the Western world, and they see it as an opportunity.

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Bankruptcies Rise Despite Trillions Of Liquidity, by Daniel Lacalle

There is illiquidity and there is insolvency, and gushers of new debt-based liquidity won’t make the insolvent solvent. From Daniel Lacalle at dlacalle.com:

Misguided lockdowns have destroyed the global economy and the impact is likely to last for years. The fallacy of the “lives or the economy” argument is evident now that we see that countries like Taiwan, South Korea, Austria, Sweden or Holland have been able to preserve the business fabric and the economy while doing a much better job managing the pandemic than countries with severe lockdowns.

One of the most alarming facts about this crisis is the pace at which bankruptcies are rising. Despite an $11 trillion liquidity injection and government aid in 2020, stocks and bonds at all-time highs and sovereign as well as corporate yields at all-time lows, companies are going bust at the fastest pace since the Great Depression. Why? Because a solvency crisis cannot be disguised by liquidity.

Trillions of liquidity are giving investors and governments a false sense of security because yields are low and valuations are high, but it is a mirage driven by central bank purchases that cannot disguise how quickly companies are entering into long-term solvency issues. This is important because soaring bankruptcies and the rise in zombie companies means less employment, less investment and lower growth in the future.

Liquidity only disguises risk, it does not resolve solvency issues driven by collapsing cash flows while costs remain elevated.

According to the FT, large US corporate bankruptcy filings are now running at a record pace and are set to surpass levels reached during the financial crisis in 2009. As of August 17, a record 45 companies each with assets of more than $1bn have filed for Chapter 11 bankruptcy. In Germany, about 500,000 companies are considered insolvent and have been zombified by a pointless “insolvency law” that simply extends the pain of businesses that are technically bankrupt. In Spain, the Bank Of Spain alerted that 25% of all companies are on the verge of closing due to insolvency. According to Moody’s estimates, more than 10% of businesses in the leading economies are in severe financial stress, many in technical bankruptcy.

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Lockdown Evil, by Tom Woods

The carnage from lockdowns will be far worse than the coronavirus. From Tom Woods at lewrockwell.com:

By now we’ve all gotten the message: you’re selfish if you’d like to do the kinds of things that once gave your life meaning.

For these people, life is about nothing but the avoidance of death.

Virtually everything you’ve looked forward to has been canceled, and nobody will tell you when you can have those things back. “When we have a vaccine,” comes the raving lunatic’s answer.

Nobody was giving you that answer when they were pushing “15 days to flatten the curve.” They didn’t dare.

Instead, they kept us in our homes for those 15 days, and then 15 days after that, and 15 days after that. Each time they pushed the date back we grew more demoralized, more resigned to a barren life without “large gatherings” – i.e., everything that makes life fun – and “virtual” events over Zoom.

Oh, and no hugs, no weddings, 10 people at your father’s funeral, and a long list of other grotesque demands.

What metrics were they using to decide when we’d be allowed back out again, when our businesses could open (and when they could operate at a level that made profit even a remote possibility), and when those life-giving pleasures that bring us meaning and fulfillment could be resumed? Who knows?

All we heard was: everything is canceled.

Maybe you can have it in 2021.

Maybe you can have it when there’s a vaccine – as if there’s a guarantee of that.

Well, a terrifying statistic came out last week showing the grim – if entirely predictable – effects all this inhuman regimentation has been having on the young, particularly those between 18 and 24.

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