RUTHFULLY YOURS

https://www.forbes.com/sites/richkarlgaard/2020/03/08/covid-19-and-the-economy-as-seen-from-a-technology-investment-conference/#4c13a064fc7c

COVID-19 infected the American psyche and stocks rather suddenly during the final week of February. Last week I attended at large technology investment conference in California — The Montgomery Summit 2020 — and was eager to see whether investors and entrepreneurs were pulling in their horns. I also moderated two discussions on the pandemic’s likely damage to the economy, markets and supply chains around the world.

My first session was with Michael Milken, the noted financier and philanthropist. Milken was cautious for the short term, but generally optimistic. Computer power for gene sequencing and AI models to predict infection spread, he said, are vastly more capable than during the SARS scare of 2002-2003 and the H1N1 epidemic of 2009-2010, when 700 million to 1.4 billion people became infected worldwide and upwards of 500,000 died. Technology can identify and solve problems much faster today.

Milken cited the U.S. polio epidemic of 1952 and the HIV/AIDS panic of the late 1980s as times when fear gripped the population. “People were afraid to be in the same room with someone infected with HIV.”

Fear, of course, is hard to break. The polio fear persisted a few years after the Salk vaccine. Milken said it was popular figures like Elvis Presley, photographed during his Army vaccine, that broke the spell. What lifted the clouds for AIDS were new drug cocktails that eliminated the death sentence, along with thriving patients such as basketball star Magic Johnson.

Capitalism, reasonably regulated, Milken reminded us, has remarkable recuperative powers.

https://asiatimes.com/2020/03/this-is-a-not-a-panic-but-adjustment-to-a-mild-recession/

Financial panics occur when investors sell what they can, not what they want to. And that happens when they can’t finance their positions. Credit remains freely available for sound borrowers, and the rise in the cost of credit has been orderly – except for energy companies below investment grade.

There is no sign of sudden liquidation from popular exchange-traded funds that buy high yield debt, despite steep price declines. Equity multiples shrank and probably will shrink further as the market prices in a mild recession during 2020. But that’s a far cry from 2008, when major banks levered $2 trillion worth of phony AAA-rated securities sixty-to-one.

The stock market’s 15% fall from its February peak is painful, but not panicky. The coronavirus probably will cause a mild contraction of US economic activity during the second and third quarters, as travel and hospitality businesses shrink, consumers avoid shopping malls, and Americans, in general, save rather than spend as a precaution.

Consumer spending was the only significant source of US growth during 2019, as investment and manufacturing shrank in response to the incipient trade war. Strong economic data for the first two months of 2020, including an exceptionally large increase in February employment, indicated that the US economy was improving after the conclusion of a “Phase One” trade deal with China – before the coronavirus problem emerged.

https://amgreatness.com/2020/03/08/california-is-a-cruel-medieval-state/

One way of understanding California is simply to invert traditional morality. What for centuries would be considered selfish, callous, and greedy is now recalibrated as caring, empathetic, and generous. The current ethos of evaluating someone by his or her superficial appearance—gender or race—has returned to the premodern values of 19th-century California when race and gender calibrated careers. We don’t pay medieval priests for indulgences of our past and ongoing sin, but we do tweet out displays of our goodness as the penance price of acting amoral.

A paradox ensues that Californians both have a high, indeed smug, view of themselves and yet do a lot of damage to their fellow human beings. Their haughtiness is based largely on the reality that Silicon Valley, sandwiched between Stanford University and University of California, Berkeley, became the birthplace of the global computer, internet, social media, and a high-tech revolution. For progressives who deprecate the capitalist lifestyle, having a lot of money still allows one to say one thing and live out the opposite.

The state’s multi-trillion-dollar companies have hired tens of thousands of seven-figure, mid-level executives and computer experts who assume that life in the California coastal corridor is a birthright paradise.

The resulting tax revenue bonanza to the state allows one-party-rule to rid California of the old bothersome Reagan-Deukmejian-Wilson working- and middle-classes by embracing not-in-my-backyard zoning, identity politics, anal-retentive regulations, steep tax rates, utopian green agendas, open borders, and decriminalization of things that used to be felony offenses.

Indeed, the bigger and wealthier California became, the more the rich sought to privatize their lives and to give up on public services, the more the middle classes left the state, the more the poor from Mexico and Latin America crossed the southern border illegally, the more its schools deteriorated, and the more its infrastructure ossified and became decrepit, from century-old power transmission towers to pot-holed and jammed highways.