Hate to say it, but the press will soon be having a field day with head counts – especially those who have passed on
By Marc. L. Flaster
AUSTIN, Texas (Texas Insider Report) — Social distancing is about the only protection we have now. Every day is a new beginning, and the impact is spreading – slower than the virus unfortunately. Unprecedented? Of course! Why even debate the degrees of impact. The virus has taken the world by storm. At this particular time, there's more to fear than fear itself.
Jig-saw puzzles are hard to find, and the kids are learning some discipline. Rhode Island State Police are turning back cars with N.Y. license plates. The state doesn't have the health facilities to support an increase in needs from an out-of-stater.
Hate to say it, but... the press will soon be having a field day with head counts – especially those who have passed on. It's been lost in translation that most of those who have passed were on the way already. The virus just accelerated the result. Sorry, the truth hurts. The markets are over-whelmed with fear, and if this is the calm before the storm, I hate to think of what's coming. Let this be a lesson for all: Nothing stays the same. And, as the Boy Scout's Moto says... "Be Prepared."
But thank goodness we've seen a change in the White House. While the Trumpster's found his stride, his effort to suggest that the cure is going to be worse than the disease is undermining the integrity of his advisors. No longer the critic, he's re-found his leadership qualities and is learning to express them. Somewhere in the not too distant future expect a NATO-type meeting to discuss how to manage a weakened world. At the end of WWII, Winston Churchill remarked that the New World Order recognized America as its strongest leader. Today, America's Mayors & Governors have taken to the front lines.
Going forward, the needs of the Social Community will take precedence over military and political stomping grounds. The coming holidays of Easter & Passover are usually recognized as times of family togetherness – but this year, many gatherings will be by internet. A temporary change in life-style is warranted. Separation is important, but just as important is resisting the desire to touch... both other people, and other things. As more industries, businesses and companies close or arrange to provide their services and information through the internet, a totally new clearing on the horizon will appear.
On the Economic Front
For the the economy, future unemployment reports will be scary. But more important, putting Americans back to work may be more challenging than expected. The statistics we've come to rely upon to confirm the strength of our economy are now to be of limited value. The hurt is running faster than the recording. Numbers can't and don’t tell the whole story. The stock market indices do not reflect confidence in the return to normalcy, but rather an expression of relief or caution as it rises and falls from day to day. What's important is that investors are scrambling to husband cash from their resources. Job uncertainty – and the threat to health – have moved to the front row.
At first blush in the collapsing interest rate bubble was a lagging Fed. Then there was a brief spike in Mortgage Refinance Applications. Now there are reports that these applications have been denied. Why? The credit of the borrower has been destroyed overnight, as has their job status and the value of their real estate as collateral. With unemployment insurance extensions and money available just for the asking, you can't expect much less than lots of hands reaching into that cookie jar.
Bernie’s call for a guaranteed supplement may not be too far from reality. The calls for warehouse workers, delivery agents, and re-stockers may not be a temporary event. The CoronaVirus Outbreak has accelerated the economic realignment trends that were in place already. When the extent of the damage is known – and the adjustment to work and home has been accepted – we'll have to adjust expectations and commitments. There's a lot more to learn about how business is adjusting – both at home, and abroad.
For the Political Number Crunchers in the Crowd
Expect a plunge in GDP growth for both the 1st and 2nd Quarters. There could be negative numbers right into the Fall. Inflation is obviously no longer a concern. Its all about credit and liquidity from here on out. For instance, the average place of worship has a congregation of less than 100 members. With attendance restricted, collections will suffer. Many may not survive.
As for Congress's response, it doesn't pay to spend much time criticizing the Bail-Out Bills, as there may soon be another right behind them. Congress cannot go without some blame. Instead of thinking about the American worker and economy, Speaker Pelosi and Senate Democrat Leader Schumer thought only about their political agenda "To Remake America in Our Vision" – buying votes with even bigger handouts! And with four Republican Senators quarantined at home with the virus, Republicans have lost their majority. Or to put it another way, the Democrat's challenge to the White House has faded into the CoronaVirus.
Politically, Democrat front-runner Joe what's-his-name is falling further behind in terms of gathering the critical mass it'll take to win in November. The most admired Republican or Democrat right now may in fact be New York Gov. Andrew Cuomo. At the Dem's Convention, the committed delegates are only obligated for their first vote. After that, they're free to trade and all bets are off. Insiders may already be planning for a draft of the Cuomo to be the standard bearer.
Bernie's off the table, and if there's any playing time left for Biden, his amateurish home-brew speaker's podium confirms he has little to work with. His current blast that the country should go cold turkey for 6-10 weeks does not show much thought. How about no place to spend it. Expect bank deposits to increase, for economic relief money will be in hand while the county is still on lockdown. This should make the Fall Election very interesting.
And Away from the Immediate Concern for Life
There's a real change emerging on the world's landscape. No country has escaped the CoronaVirus, and both a Social & Humanitarian Response will be required in each. Nobody's talking about it, but in the Middle East – where the wealth of oil has allowed a tight circle of wealth to retain its leadership – oil at $20 dollars a barrel puts each nation's leadership at risk. Saudi Arabia needs $80 oil just to meet its budget needs. As the price goes lower, borrowing increases. And here at home, fracking is now actually expensive (relatively,) and many companies are at risk. The next thing to watch for... over there... is for the people to take to the streets. Is there such a thing as Democracy in a Muslim country? Tune in, it may not take much longer to find out.
There are many similarities to a wartime experience in this pandemic – and one that will soon emerge is that the world won't be similar to the one we experienced before it. Some dream of the way things are; I dream of what is yet to be.
And don't forget, the school year is (by state mandates) dictated by a certain amount of days of instruction. If you add holidays, the current school year gets extended. Come summertime, every family's plans get upended. What a mess.
Recognize that we're all caught up on the minutia of each day... in the face of a virus epidemic.
Marc L. Flaster serves as chairman of the Texas Insider's Economic Council.