In the government’s final press conference Chris Whitty, the Government’s chief medical officer, said““I would be surprised and delighted if we weren’t in this current situation through the winter and into next spring.” The significance of that statement cannot be overstated. Deaths in the UK from the virus are currently running 100 every day. (The true total may be higher.) The chief medical officer is saying don’t expect to see deaths running at an order of magnitude lower before the Spring of next year. I fear we have become desensitized over coronavirus deaths. We keep being told by the government that they are at a much lower level than they used to be, every graph shows deaths are much lower than they were at the peak, … [Read More...]
Competency
Competency by Ken Melvin What is the first criteria when a Board of Directors goes looking for a new CEO? When the construction firm goes looking for a project manager? Of late, too often, US Politics seems to have a new standard for selecting officeholders. We have been, are, watching this horror of a Pandemic […] [Read More...]
Did the UK really almost go bankrupt?
I normally publish posts in the first half of the week, but two separate attempts were overtaken by events, and they will have to wait for another day. I finally wrote somethingfor the Guardian on the Governor’s interview that led to nonsense headlines about the UK almost going bankrupt. The piece explains why they are nonsense, but I should note here that the headlines are classic mediamacro, appealing to the idea that governments are like households. Frances Coppola makesthe same point a different way. You could describe what happened in March this year as a short term liquidity problem. There is no suggestion the UK is insolvent. And the thing about countries with their own currencies is that they never have a liquidity problem because they create … [Read More...]
The Troubles of Hedging Inflation in Retirement
Photo Credit: frankieleon || Even with low inflation, money shrinks. Wages move with inflation, few assets do. There’s no free lunch. The ideal of an inflation-protected defined benefit plan was indeed wonderful, but the costs were prohibitive. Few companies were willing to shoulder the costs of them, and what few were willing ran into the roadblock of the IRS telling them they could not put too much into their defined benefit plans — for the IRS feared it was a tax dodge. By nature the IRS is shortsighted, and could not appreciate the idea that you needed more assets than the liberal (meaning you don’t need to contribute much today) funding formulas said they would need. The IRS wants taxes now. They don’t … [Read More...]
Pandemic boundaries
Via the Boston Globe comes the consideration of boundary problems this pandemic poses between US states. Worth a discussion. Also, on the world stage, the EU and other countries consider relaxing travel restrictions from ‘safe’ countries, the US not among them. Visitor quarantines may seem like a smart intervention to keep the virus from crossing […] [Read More...]
The Federal Holiday Polls via Twitter
Photo Credit: GPA Photo Archive || FIreworks over New York City — beautiful, huh? Though my adopted children were all black to some degree, I had not heard of Juneteenth until yesterday. When I read a little more about it, and the efforts of some to make it a Federal Holiday, I thought, “Okay, if Juneteenth became a Federal Holiday, which other Federal Holiday would likely disappear?” Now some might ask, “Why not just add another Holiday?” I don’t think there’s a free lunch there — if there is less labor, people would get paid less, and that would affect poor people more than those better off. Anyway, that made me think of doing a Twitter poll to see what holiday … [Read More...]
What lockdowns do and what they don’t do
Just a short post to advertise my Guardian article‘Fear of coronavirus, not lockdown, is the biggest threat to the UK’s economy’. The key point I make is that the economy would suffer badly even if there was no lockdown. People, once they realised the extent of the threat, would stay at home. The three reasons I give for imposing a lockdown are classic reasons in economics for state intervention. The state has an information advantageThe government, because it talks directly to top scientists, can see the pandemic coming a lot faster than the majority of people. That didn’t work out too well in the UK, where people were leading the government, but if the state functioned well this would be true. The state deals with externalitiesWhile the … [Read More...]
“The Boss” Tells Trump . . .
Springsteen: “I had another show prepared for broadcast this week on this strange and eventful summer, but with 100,000+ Americans dying over the last few months and the empty, shamed response from our leaders, I’ve been simply pissed off. Those lives deserved better than just being inconvenient statistics for our President’s re-election efforts. It’s a […] [Read More...]
Locking down too late but ending lockdown too early
The major reason we have one of the highest death rates as a result of the coronavirus pandemic is that Johnson/Cummings had an intense aversion to imposing a lockdown, and an unusual disregard for human life. Any decent politician, after being told at the end of February that 500,000 of their citizens might die, would have moved heaven and earth to stop that happening. Anyone watching the recent Despatches documentarywould have heard about scientists worrying about how to stop the pandemic, with little pressure from politicians to do so. It may have been an ultimatum from French president Macron that finally forced Johnson/Cummings to enact a full lockdown on March 23rd. Unfortunately the same factors that delayed a lockdown have led Johnson/Cummings to relax the … [Read More...]
Saving, Investing, and Storage
Photo Credit: Jason Woodhead || Forget the United States Oil Fund — if you want to own oil, buy a tank and store the oil on your own property. This should be a short post. Buffett likes to own T-bills when he doesn’t have anything that he wants to buy. Why? He is storing value until the time comes when he can buy something that he thinks offers a superb return over the long haul. And now for something that seems completely different: commodity investing, when it was introduced in the nineties, offered “yield” from rolling the futures contracts from month-to-month. That ended when the trade got too crowded, and the “yield” went negative. The ETFs that pursued these strategies were … [Read More...]
Coronavirus dashboard for June 12: the costs of recklessly reopening begin to come due
Coronavirus dashboard for June 12: the costs of recklessly reopening begin to come due – by New Deal democrat It is pretty clear now that in general those States (but not all) which left lockdowns the earliest and with the most lax continuing restrictions are suffering renewed outbreaks of the coronavirus, *possibly* in several cases […] [Read More...]
How Cummings continues to gaslight the nation
There is little sign of anything that can dislodge Dominic Cummings, the Prime Minister’s adviser in chief, from his boss’s protection. Yet there is no doubt the episode has been costly in terms of the popularity of the Prime Minister and his government. It is dangerous for the gang who say they are on the side of the people against the elite to reveal themselves as an unaccountable elite who couldn’t care a damn about the sacrifices others have been making during a crisis whose severity is largely that gang’s fault. The cost goes beyond popularity. The government is desperate, far too desperate, to end lockdown well before the experts thinkit is safe and before common sense says it is safe. The Cummings affair will only make … [Read More...]
Weekly Indicators for June 1 – 5 at Seeking Alpha
by New Deal democrat Weekly Indicators for June 1 – 5 at Seeking Alpha My Weekly indicators post is up at Seeking Alpha. The interest rate-sensitive long leading indicators largely turned positive as soon as the coronavirus crisis hit. As lockdowns have eased, several of the short leading indicators have also now turned – or at […] [Read More...]
A government without common sense, and with class arrogance
Recently the Prime Minister urged workers and employers to use their ‘good solid British common sense’ to decide what was safe with the recent relaxation of the lockdown. Which prompts an obvious question (thanks @SuffolkJason). What has happened to the government’s common sense in dealing with coronavirus? When you see a pandemic sweeping China and with every chance of it coming to the UK, isn’t it common sense to prepare for that possibility by Checking your PPE stockpile and ordering what is missing Exploring how you could ramp up testing capacity quickly if that was needed When the first cases arrive in the UK, isn’t it common sense to do some things to help your test, trace and isolate (TTI) infrastructure by, for example, stopping flights coming … [Read More...]
April personal income and spending: considering the extreme circumstances, a good report
April personal income and spending: considering the extreme circumstances, a good report April personal income and spending, reported this morning, showed the impact of both the lock downs and the stimulus that was passed by the Congress. To cut to the chase, spending in real inflation-adjusted terms declined -13% (red), while real income rose 11%(blue): […] [Read More...]
On V shaped recoveries, and where the Treasury’s deficit obsession will matter
I should perhaps go through some of the thinking that lay behind my Guardian articleabout not repeating austerity, because I fear there is a danger of worrying about the wrong thing. I have always been reasonably confident that we would not get an exact repeat of 2010, where the Chancellor says at the low point of a recession (i.e. before a recovery has begun) that we have to start cutting back spending because the deficit is too high. There are two reasons for that confidence. First, the circumstances that allowed 2010 were uniquely advantageous. We had just had a global financial crisis, so false claims about what financial markets might do seemed plausible. There was also a Euro crisis. Everyone was saving more (or borrowing less) as a … [Read More...]
Weekly Indicators for May 18 – 22 at Seeking Alpha
by New Deal democrat Weekly Indicators for May 18 – 22 at Seeking Alpha My Weekly Indicators post is up at Seeking Alpha. Many of the indicators are bouncing off their worst levels, especially those like mortgages that are affected by lower interest rates. On the other hand, employment losses continue to spread out. As usual, […] [Read More...]
The government is responding to pressure and not thinking clearly about defeating coronavirus
In this articlein the Guardian I lay out what the optimal strategy for handling COVID-19 should be for a country like the UK. How does the Prime Minister’s statement on Sunday evening compare to that strategy? The key to relaxing a lockdown is having a test, trace and isolate infrastructure in place, and very low infection levels. We do not have either. So why was Johnson talking to the nation on Sunday? He set out a general framework for relaxing the lockdown, all conditional on some function of infection levels and R. (He didn’t specify what the function was.) To set out an approach makes sense. To not tell anyone what exactly the conditions for relaxation are does not make sense, but it gives him flexibility … [Read More...]
The Challenge for Warren Buffett
Photo Credit: Javier || THis is a much younger version of Buffett. Has the present Buffett learned to adapt? Barron’s ran an article called Why Berkshire Hathaway Stock Has Rarely Been This Cheap. It was written by Andrew Bary, a man that I respect. I wrote a comment at the article, and it reads as follows: So long as the government & its commercial paper financing arm (The Fed) is willing to create grants and credit out of thin air to rescue businesses, Buffett will not get opportunities to buy stock at the discounts that he has liked to see in the past. The cash pile will grow, & BRK stock will likely muddle. Buffett’s justification for the cash pile changed at his last annual … [Read More...]
Jobless claims show new damage ongoing, but some damage repaired
Jobless claims show new damage ongoing, but some damage repaired ; Now that we have more than one month of data from initial and continuing jobless claims since the coronavirus lockdowns started, we can finally begin to trace whether the economic impacts of the virus are being contained, or are continuing to spread out into […] [Read More...]
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