RUTHFULLY YOURS

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.

https://www.city-journal.org/coronavirus-and-the-economy

The spread of the coronavirus has led to fears of a worldwide economic slowdown. China, where the virus first leaped into the human population, has quarantined large sections of the country, virtually shutting down economic activity. In South Korea, several companies—including the automaker Hyundai—closed facilities when workers there tested positive for the virus. The Italian government, meantime, has shuttered schools and universities and banned public attendance at sporting events—including the nation’s popular soccer league—for 30 days. Such responses, likely to spread to other countries as the virus itself travels, have led to estimates that containment efforts could cut worldwide economic growth in half this year. Whether that prediction proves accurate, or whether the toll proves even worse, may depend on how the economic impact of the virus plays out in the United States, the world’s largest and most consequential economy.

The U.S. has already taken several basic steps to stem the spread of the virus, including suspending flights from China and quarantining those returning from areas of the world where the infection is most intense. But as the virus spreads, officials contemplate stricter measures. These include banning public gatherings such as concerts, movies, and sports events; advising businesses to keep workers home; or even shutting down firms where the virus is detected.

It might be easy to justify such draconian measures based on the toll that the coronavirus can take on society. But what’s also worth contemplating is the human toll that a potentially sharp decline in economic activity would exact. While the simplest way to measure an economy may be in dollars and cents, economic activity also produces well-being. A decline in the economy sparks deterioration in public welfare. Those are human costs that must be measured against the inevitable cost of the virus itself. Extended school closures, for example, place a burden on employed parents, who must miss long periods of work; on households living paycheck-to-paycheck; and on the self-employed.