Many countries are planning to lift the corona virus lockdown gradually, which is a relief.
Still, there is a lack of perspective, so also understanding, of why it was imposed in the first place and why it is being lifted now, as the system delivers such events with regularity. We have corona virus every year as part of the flue season, but there is no reference provided as to how this one compares.
In the end, I believe, money talks and forces the right behavior (it is the world’s smallest violin, no?). And you know I like the sound of a violin.
We need to be open for business, but for now the entire world is still under lockdown and quarantine.
I may get a nice deal on a Harley-Davidson out of that, but it doesn’t make me feel good.
The damage to the household sector is so severe that it is going to impair living standards for a long time. This problem is compounded by the fact that the most financially vulnerable are experiencing the majority of layoffs. As of this writing US jobless claims soar past 30 million (out of a work force of 164M). France's economy shrank an eye-popping 5.8%, the biggest quarterly drop since 1949. In Spain, the contraction was 5.2%. Germany is projecting that its economy will shrink 6.3% this year.
Fiscal and monetary programs that are being put in place are redefining how the government interacts with us, and they will remain in some form or fashion forever. There is no return to free market economy from here.
The central banks have essentially created a new moral hazard by socializing credit risk, but the real danger is elsewhere. The amount of money pumped into the financial system doesn’t have the ability to create inflation - the European Central Bank has been creating money for the last few years like it is going out of style, but they just can’t get any inflation going.
It just shows that the quantity theory of money is wrong.
Problem is that the bankers are also in control of the cost of money in the form of interest rates. By manipulating rates they violate the natural laws of supply and demand. They can create money at will and price it at 0%, which ruins the savers and retirees, impairs capital formation.
The next financial crisis is coming from pension funds that are not able to meet their obligations, have no doubt about that.
In the end, money is just a mental concept represented by computer entries. The few percent of it’s stock that exists in physical form is mostly for convenience. What follows, is that inflation is also a mental concept and once it’s triggered there is no stopping it – in the 1920’s in Germany people were paid twice a day, this is how quickly the money value was going down the drain.
Money has value as long as the people have trust in the government.
This may now be broken as we're looking at the most tragic case of governmental, medical, and media malpractice in the history of the world.
Now for the good news - supply lines have been cut. The world will become way more local.
Amazon’s dumb-ass business model will sink with the oil and trucking industries.
Tesla posted 16M profit, which is laughable in any universe given the company stock market capitalisation. The board should be out in the parking lot looking for new jobs by now.
The real thing is that commerce will persist in human life, of course, it will just be reorganized differently.
There are huge opportunities for smart, young people who recognize this.
I know I think in terms from before they invented political correctness.
And you know what? I like it that way.
In the Cambridge something-something dictionary the title means my true thoughts, and this essay is supposed to be just that, which is not easy since I have a one-track mind and a double standard.
I learned my weaknesses quite well as my life passed by.
Let’s get down to business now.
West Texas Intermediate, the oil grade most associated with American production, plunged down to -$40 April 20. For a while yesterday, sellers had to pay people forty bucks to take a barrel of crude.
As of this morning, there are still at least 24 supertankers carrying at least 50 million barrels of Saudi crude en route to the U.S. Gulf Coast. Most will arrive in May, seeking to fill up as much of what remains of U.S. storage as possible.
But the big show will happen when the world runs out of storage capacity.
Most folks in the know are now musing that what storage remains, will be filled up completely sometime in May or early-June.
All this flies in the face of the theory that fossil fuels are finite, that they somehow are a product of dinosaurs dying and forests and threes from before.
Like dinosaurs went to one place in the desert to die? Why there? And why we’re getting so much from the oil from under the bottom of the oceans? How did the fossil get there?
Whenever the West catches a cold, Africa catches pneumonia. The Middle East is in the process of being destroyed and Asia remains a pit of slave labor, crowded living conditions, and inadequate infrastructure.
This is not right, something is wrong. The problem is that the media have psychologically terrorized people and broken one of the critical ties in civilization, where everybody comes together and we all benefit from the synergy. All this is gone now because of a virus that has maybe 10% mortality rate of a regular flu.
And we have an economy that is 70% service oriented, so interaction is critical, not silly social distancing for no reason at all.
I age gracefully but I am still surprised with what is happening, the Covid-19 hoax, the climate change hoax and so on, and how seriously some people take it.
What disappoints me is folks wearing facemasks and bypassing me in a wide circle on the grass as I limp on the sidewalk.
There is no pandemic people, it’s just nonsense from TV, nothing dangerous out there.
This is how God protects his children, he allows them to think. Be one of them.
For the moment, we don’t have an economy. Nor does much of the rest of the world and nobody has the slightest idea how to bring it back.
Believe me, that’s a problem.
Gas is cheap, I was out on my motorcycle today, it was about 2 degrees and snowing from time to time. It cost me $15 to fill up the tank.
In my life I made a long journey from an altar boy in a small village in Eastern Europe to the “one percenter” crowd, you know, the ones that don’t fit and don’t care.
Reading lots of good books likely kept me safe.
Writing one even more.
You’re hearing now from someone who’s seen it all.
From the category “I can’t believe what I’m hearing”, comes a statement by Margrethe Vestager, Executive Vice President of the EU and Commissioner for Competition, who said that EU states should now nationalise companies in the fight against China.
Consider, that the European Central Bank has been buying stocks in selected blue chip companies, which flies in the face of fair market competition and her role, but I will let that one slide. Just don’t whine that Apple got a tax deal in Ireland.
Let me tell you something about nationalized industries, as I was a born and raised in a communist country. Nationalized companies are painfully inefficient and uncompetitive. They go down in flames in a matter of time, there is no exception. There is only one way for them – down.
Back in the Iron Curtain days, the joke was that if they introduce our economic model in the Sahara, they would run out of sand within a month.
If a ship is going through a storm on the ocean, do the passengers make decisions by committee, or do they let the captain decide what to do? You need a boss, not government running businesses.
But there is more to the statement by Ms. Vestager, and it’s serious.
Who in their right mind would invest in European companies if they were to be nationalized? The stock market sell off would be brutal at the first indication of this idea getting traction. This would ruin retirees, who already suffer from ultra low bond yields.
If a long bond (say 30 years) pays 5% coupon, for every million you save in your retirement fund you get $50K a year. If, as right now in Switzerland, the same bond yields -0.129%, you simply are getting taxed, there is no income (a bond yields negative if the market price exceeds the face value of it and all coupon payments combined).
It’s quite possible that I am losing touch with reality, I just have trouble getting it anymore.
As Mark Knopfler had it “the right becomes the left and the left becomes the right.”
Perhaps the Covid-19 scare is here to keep us at bay and focused on something else. Somehow Bill Gates is outspoken now and he is voicing his concerns about overpopulation and availability of vaccine to fight the virus.
Well, you can’t have both, you can’t be long and short the same trade (in market terms).
He is also a contributor to WHO, an organization that has been asleep at the wheel, and president Trump is right pointing out this fact and cutting payments ($116 million a year). This should kick the organization into a higher excitement, as money is the language everybody understands.
Meanwhile, countries opted for flat-out medical Gestapo action. Stories are coming out of Switzerland that a doctor, Thomas Binder, who has spoken against the coronavirus fraud, was arrested. He’s been brutally attacked by the Swiss SWAT team in his medical practice.
I am of the opinion that we have become utterly intolerant of uncertainty.
This is not good, it kills the entrepreneurial spirit and appetite for risk taking, both essential factors of a successful economy.
But in the absence of certainty, that age-old human cognitive skill called pattern recognition, which has made us such a successful species, kicks into high gear scanning the field-of-view for answers. They will not be pretty, but this is the way out from current mess – life will eventually find a way to normal.
It is essential to understand that our only deterrent against war was the strength of the American economy, which everyone relied on to sell products.
I hope they teach kids this obvious fact elsewhere too, I know they do in Canada – I am impressed with the level of thinking that goes into education here, it’s really that good.
Germany exports 50% of what they make, a totally misguided national policy. China is not even remotely able to absorb internally what they produce. There are more exporting countries I can name which are doomed to failure. And they will fail.
It’s the paying customer that saves the world, always.
And it’s us here, but we will buy local, no issue.
America’s engagement in the world trade is only about 10% of the GDP, so really nothing.
If we choose a reset, the MAGA (making America great again), which I think we’ve already did, a number of countries will go into tailspin, as in the toilet, direction down.
Make no mistake – this is what the Trump controversy is all about, the rest is just blubbering.
China, South Korea and Japan get most of their energy supplies through the Hormuz Strait (two miles waterway in each direction plus two miles buffer in the middle). Iran is on the other side, aggressive and hungry for power. And you know what? You can’t beat the Persians, their geography makes war in Afghanistan look like a walk in the park.
Obviously the Iranians know that.
It takes all of US 5th fleet stationed in Bahrain to keep the Strait open, a huge amount of firepower unmatched by the rest of the world’s navy combined, but it takes only one destroyer to shut the passage down if the Americans leave. And they’re leaving.
At about $20 dollars per barrel of oil, the budgets in the Middle East are getting busted, the Saudis budgeted $100 from here to eternity. They have many princess’s to pay off.
You don’t hear about them much, no? You know what happens when children in the next room are quiet for too long.
And how come Putin is not being blamed for Covid-19? He used to be the pouching bag for whatever goes wrong in the world. How did he manage to dodge that one?
A disease that has 10% fatality rate of a regular flu has shut down the worlds’ economy and it will take years to recover.
And where is Geneva’s WHO in all of this? Weren’t they supposed to be the health organization? Worldwide, no less.
Or are they the definition of “asleep at the wheel”.
They’re actually privately sponsored, not a government organization. Dig into that one at your own risk.
I will be 51 tomorrow, the time just flew by.
Here is Bob Dylan again:
“There must be some way out of here
Said the joker to the thief
There's too much confusion, I can't get no relief.”
And now the hour is getting late.
Sheikh Mohammed bin Rashid Al Maktoum is the Vice President and Prime Minister of the United Arab Emirates (UAE), and ruler of the Emirate of Dubai.
Dubai has been ruled by the Al Maktoum family since early 19th century.
Under Sheikh Mohammed it became a phenomenal development story - between 1995 and 2015 the GDP increased from $11 billion to $101 billion, all while reducing the contribution of oil revenues to GDP from 18% to 1.2%. Dubai export saw a 645% increase during the same period, while gross fixed capital formation increased by 733%.
The Sheikh has built Dubai into a local hub, with the economy mostly driven by services, trade, transportation and logistic, retail and tourism.
The Dubai International Airport beats Heathrow in the number of international passengers, and the quality of living in the city ranks above that of Tokyo and Seoul, to name a few.
“There is no looking back, and anything less than number one is not acceptable”, he said.
He also owns the third largest ocean going yacht in the world – a very nice piece of machinery.
In an example how well Dubai is managed, the Sheikh ordered setting up drive-through stations for Covid-19 testing and regular disinfections of the streets.
On that note, I always thought that it is good to hear both sides of the story, and I recently came across a talk on corona virus by an American epidemiologist with impressive credentials.
He said that, as in every respiratory disease, we should protect the elderly and the fragile, because if they get pneumonia, they have a high risk of dying.
On the other hand, children do well with these types of diseases, their immune system is evolutionary and designed to be exposed to various sorts of diseases as they go through life. They should keep going to school, which will strengthen their immune system. In fact containment only prolongs effect of the virus.
What people are trying to do is “flatten the curve” and it’s not easy to figure out why, as it only prolongs and widens it, and the respiratory disease will stay in the population longer than necessary.
This is not the first corona virus and it won’t be the last, it’s a part of every flu season. Normally it peaks after about two weeks, then declines, and after one month it’s all over.
The professor was of the opinion that if it hadn’t been for government intervention the epidemic would be over by now.
Let’s take Sweden as an example of a different thinking, a country which has not locked down its economy and society.
Sweden has not closed the bars. Shopping malls are open. Schools and companies are open too. There are some restrictions such as on gatherings of over 50 people. But, in comparison with most European countries, life in Sweden is relatively normal.
As of this writing, Sweden has the death rate from corona virus of 33 per million of the population. In France it is 83, in Italy 230, in Switzerland 101.
Whether the professor is right or not, I can’t judge, but what’s clear to me is that we were all been caught off guard.
In a world with this level of people connectivity, the government needs to have a buffer and plan to handle crisis like this, call it insurance policy, and the absolutely worst thing one can do with insurance is try to time it.
But the officials did, and by now the whole world is in a damage control mode.
There is no reliable data on the number of cases (that would require testing EVERYONE), or deaths (the official line usually is “possibly corona virus related”) and so the governments shut down the economy without knowing exactly what they’re doing.
Dubai is a quiet place these days, I saw a picture of gazelles roaming the empty streets, replacing the booming Bentleys and boxy Mercedes G-Wagen.
The way it works there, the shorter the number on the license plate the richer the owner– two digits could mean a billionaire.
The hotels on Jumeirah, the palm island, are empty, beaches and water tours cancelled. The magnificent Burj Khalifa, the tallest building in the world is closed to visitors, if there are any.
The population there consists of about 80% expats. The rest of them, the locals, when they get married, they get a piece of land from the Sheikh to build a house - he doesn’t want his subjects to rent a home.
Significance, not just success.
Strong leader, and a cool guy.
If this title sounds familiar, it should. I took it from Charles Dickens novel, I just substituted cities for bikes.
As Bono, the one of the U2 fame, famously said every poet is a thief and every writer is even worse.
I stole a lot of my writings from others over the years, but I added some original content to it, I am sure.
I am convinced that’s how progress happens and besides, science works the same way. You build on what is already there, it doesn’t make any sense otherwise.
I stole most of my texts from Kurt Vonnegut, he is gone now, but I don’t think he would mind. I like his dry sense of humor, just read “God bless you Mr. Rosewater” and you will see what I mean.
A bit of an issue is that I am running out of things to read, and so I write.
People seem to like it.
Now for the bikes, and let’s keep it light in these confused times - I have two, one in Europe and one in Canada.
The red bimmer in Switzerland is a masterpiece of technology, it shows on the display really everything, from temperature to tire pressure and all the stuff in between. It’s got the boxer engine, which nobody understands how it works except for the people who make it. It’s also pretty rough when you start it up.
It just sounds like nothing. Half the experience with motorcycles is how they sound, that’s what made Harley-Davidson big.
I crank it up entering the highway to the point that the front wheel gets light, but I still can’t hear much. Goes very fast though.
The Yamaha in Canada is a perfect opposite of it, it shows just the speed and the lights comes on if it just a gallon of fuel in the tank. I think the word to describe the experience is “visceral”.
The world describes me too, and it takes two to tango.
And the bike sounds amazing, so guess my preference.
One day a black 911 Turbo pulled beside me at the stop light.
The young guy behind the wheel was looking at me smiling.
I thought “You really want to flex with me? – don’t be silly. I can do 0-100 in three seconds.”
Kids these days.
And I think a Porsche is a girl car, can’t take a guy in it seriously.
I am a fan of British sport cars, but I make the exception for the Lamborghini Urus.
The business are closed, it’s an eerie feeling, my two-for-one favourite pizza lunch is not happening, lights are out.
Tom Kubiak is the author of The Traveler