By David Glenn Cox
The world holds its breath over the corona virus. The irony, as the orange ape plays on his tire swing. In retrospect, all the things he’s done in this ham-handed presidency. The crimes, the mistakes, the foolishness, pettiness and mean spiritedness and in the end…it wasn’t his fault. Just as blameless as a baby, but he will be remembered for this. The music stopped and now the orange ape can’t find a chair.
When Glass-Steagall was first passed the point was to keep bankers from putting your money on Wall Street. You were saving for your old age or your kids education. Retail banking was for lending and saving. Car loans, small business loans and mortgages. Investment banks were for Wall Street, Stock offering, mergers and speculation. If you allowed Retail banks to speculate, ah the siren’s song. More money can be made and faster. Let Joe Six-pack get his car loan elsewhere. Community? Did you see what the market did today?
Uncle Sugar was insuring deposits, so for a while Uncle Sugar had their way. I awoke this morning and turned on the business news. The analyst was explaining that after the Bubonic plague and the Spanish Flu the economy came roaring back. God bless their pointed little heads. It occurred to me that it was too late to go back to bed, and I would have to deal with this nightmare…standing up.
The Center for Disease Control says the death rate from the corona virus is 2%. The World Health Organization says 3.2 % The Cheeto says, “All is well! Go ahead and go into work!” Nervously whistling passed the graveyard. Currently, we have 132 confirmed cases and eleven deaths. I don’t have a calculator handy, but that’s way more than 3.2%. Most of the deaths can be attributed to old age and health problems. The actual problem is we don’t know the number of people infected. The Moe, Larry and Curly Administration is stuck on the horns of a dilemma. Tell the truth or please Trump.
So, they will try and please Trump, they will use all of the incompetence at their command to present the appearance of calm. South Korea has tested several hundred thousand of its citizens while Mike Pence isn’t certain how many test kits are actually available. The US has tested 1,500 people. Remember that scene in Independence Day, where the Alien spacecraft was parked over the White House? Well, its come to pass only as a virus.
Farmers already struggling, now must deal with falling prices locked out of foreign markets by Cheetonomics. The Orange Ape’s tariffs now constitute and anvil around the neck of the economy. The good news…fracking is an expensive proposition with oil prices under fifty dollars a barrel fracking will soon cease. The companies will go broke, and their employees will be unemployed long term. OPEC and Russia are negotiating a production cut, but it will be awhile before oil comes back. Damn oil, when the market’s good it causes trouble and when the market’s bad it causes more trouble.
The Stock Market has been off 2% a day for five days. That’s what Wall Street calls a “Correction,” but that’s not the “C” word. The Cheeto’s solution is to hide his eyes and say it ain’t so but Cheeto’s not the “C” word.
Because of Glass -Steagall banks were forced out of the Wall Street Heroin. Forced to offer the cannabis of car loans and mortgage banking. Their capital was tied up in tangible, concrete assets unlikely to unwind. But we did away with Glass – Stegall and the investment market exploded. Yelp, a company that offers restaurant coupon deals had an initial public offering in 2012. The market capitalization was nearly $1.5 billion dollars, does anyone believe a company that offers restaurant coupons is really worth a billion and a half dollars? Repeat as necessary as speculation inflates values. Now those chickens are coming home to roost. What is a restaurant coupon company really worth in the face of a worldwide pandemic?
Like a house of cards, ring around the rosy, pocket full of posies, ashes, ashes, all fall down.
The “C” word is Crash. The world is suddenly changed, as FDR warned us, “We have always known that heedless self-interest was bad morals, we now know that it is bad economics.”
The string has been pulled on the sweater, and we’re in for a frailing as it unravels. All these companies suddenly worth billions will now suddenly be worth nothing again. The weather forecast is for fair and moderate, with a chance of stockbroker precipitation. The big mouth President swings sullenly on his tire swing, nothing to say and nothing to do. It’s not his fault, but he stands naked in illustrating his incompetence.
The business news puts their best spin on it. Maybe a 90% drop in the restaurant business will only be temporary. Maybe after being quarantined and unemployed for a month the consumer will be anxious for a night out. Maybe a 15% decline is stock prices isn’t that bad. Maybe it’s only temporary not more than a year or two. If there was any hope for Wall Street joy it would be in the Super Tuesday results, the avowed Democratic Socialist was drubbed by a bowl of vanilla ice cream. The ice cream is Wall Streets friend and the Socialist would take all their profits and squander it on healthcare. You’d think that would make Wall Street very happy. So, happy the market lost 969 points.
I think, and I heard this years ago the best investment in hard times would be in handguns and whiskey. There will always be a market for handguns and whiskey. Cash only, no credit!