Pajama Republic

March 31, 2020

Hello Everybody!

Social distancing is March's phrase of the month. Citizens across the globe locked themselves indoors in March. Most forced into isolation via Government decree as COVID-19 officially reached pandemic classification. Corporations released millions of workers or sent them home. Many workers now adjusting to remote work during an ongoing worldwide pandemic. Maybe workers will reflect, ponder the existential questions about the nature of work versus individual independence. Wonder how many will choose to leave corporate life behind in 2020. Perhaps more folks will move out of urban cities and major metropolitan suburbs for the diamonds in the rough, such as suburban Cleveland. Once it's safe to leave home again, perhaps we'll see a few more familiar faces out on the lake.

Jokes aside, for anybody new to working in your home for extended lengths, here are a few suggestions: (1) Stand, stretch, and walk each hour; (2) Master your water, espresso, coffee, tea, cooking, and diet capabilities; (3) Don't wear pajamas every day; (4) Naps are a sacred gift from the heavens; (5) Master a new skill (writing, electrical engineering, coding, piano, painting, meditation, etc.); (6) Keep contact with former co-workers you won't see face-to-face anymore.

For the remainder of 2020, our way of life will (and should) adjust in order to survive COVID-19. We should expect the mortality rate to surge upward in April. The virus was no hoax. It remains far more dangerous than the common flu or pneumonia. Even the conservative models expect the mortality rate for America in 2020 between 60,000 - 200,000 (or more). In the event that governance fails to plan and execute accordingly, we may witness the largest comprehensive public health system overload in American history. Special shout out to all the essential healthcare workers who have been working bravely during this historic period of time. You are true heroes. We are so incredibly thankful. Hope folks also keep in mind groups of unseen Americans: homeless, undocumented, uninsured, those living in extreme poverty, etc. If you have surplus economic resources during this time, please consider donating to the organization of your choosing.

We receive grocery delivery each week. Cook ourselves healthy meals aimed at boosting our immune system 6 - 7 days per week. On Sundays, we order delivery from our favorite restaurant(s). Continue to support our favorite small businesses even while stuck indoors. On all but two occasions in March, we have not even ventured beyond our property line. Lifting kettlebells and running miles on the treadmill in our basement. Decided to cancel our two-week trip to California. It’s important to help keep family members (especially Grandma) and the community at large, safe. It’s not about whether any of us can personally survive this virus -- we probably can; it's about protecting those less able. We as global citizens are all in this fight together. We're on the same team. Let's please do our best to help keep everybody alive.

Over time and certainly on nobody’s timetable, humans will return outdoors and to work. Like the virus itself, humans study, adapt, and persist. It’s what we do. However, 2020 will inevitably go down in the history books. Cannot help but think of the hundreds of thousands affected by the 1918 H1N1 Pandemic over a century ago. How would they react to watching us stuck in our homes with reliable electricity for washing machines and dryers and the internet with its unlimited streaming music and moving pictures on demand and our personal devices to chat with family, friends, and perfect strangers from across the world.

Now for notes about the financial market...

While citizens were so deeply focused on Coronavirus, (un)employment, personal debt, and their kid(s), most probably failed to fully grasp the magnitude of several historic events in the finance world in March. These are important to discuss because they are certain to impact every citizen and worker in the years ahead. First, despite actions taken by the Federal Government, the stock market bubble finally popped and we entered a bear market. Unfortunately, not before hundreds of nearly bankrupt companies with crippling debt were allowed to enter the public markets over the past few years. Hundreds of other companies (WeWork) came mere hours away from becoming public companies. The result will be massive losses for investors; some in their retirement accounts and pensions.

In direct response to the massive drop in the stock market, the Federal Reserve panicked and gave away tons of money. First, the Fed pumped $1.5 Trillion into banks to secure repurchase agreements. Then, while in a state of absolute panic one Sunday, the Fed announced they will cut interest rates to 0% for the first time AND purchase at least $700 Billion in government and mortgage-related bonds. The very next day, the Fed pumped an additional $500 Billion into banks. Finally, Congress rushed to pass a historic $2.2 Trillion aid package called the CARES Act, which was marketed as "Coronavirus relief" despite willingly providing nearly $800 Billion for financial markets and distressed businesses. None of the actions taken by the Federal Reserve are long-term solutions but rather placing a band-aid on a gushing wound. It is reasonable to argue citizens, not banks or troubled companies, ought to have received the bulk of these monies. After all, who is truly responsible for corporate debt, unrealistic executive compensation packages, stagnant worker wages, and fraudulent balance sheet reporting?

The market will continue to fall in March and April; potentially into summer months. We are due for a re-test of the lows established in March. Wait patiently to assess the damage inflicted in upcoming company earnings reports. Analysts will adjust their price targets. Funds will release their required purchase and sales filings, and so forth. Expect to watch historic weekly and monthly unemployment numbers rise, adding inevitable additional stress to the U.S. financial market. Expect to see U.S. capitalism crack further until the pandemic subsides.

It's important to take a minute to discuss the CARES Act in a bit more detail. In the blink of an eye, Congress approved $2.2 Trillion in taxpayer spending. We saw 0 national town hall debates wherein taxpayers could merely voice their opinions on alternative ways to spend the Trillions. Perhaps citizens would actually prefer to see pure capitalism -- let large corporations fail, thus giving citizens the opportunity to start their own small businesses. Perhaps citizens would instead prefer to spend Trillions on ending homelessness and poverty, ensuring medical insurance for all citizens, reducing costs for college education, etc. Instead, while the CARES Act marketed itself as a response to Coronavirus (in fairness, portions of it truly are), 25% of all relief, a sum total of $500 Billion, will directly benefit large corporations, many of which engaged in forms of financial recklessness and mismanagement. An additional $350 Billion is reserved for smaller businesses. Unfortunately, the CARES Act might not fully satisfy the appetite of large corporations and impacted businesses. We might see a sequel in 2020...and it won’t be any prettier.

So, who benefits from the CARES Act?

Grand Prize Winner: Large corporations will receive $500 Billion in loans and offerings. Consider this: large corporations including (but not limited to): Exxon Mobil, Chevron, Boeing, American Airlines, and Ford Motor Company spent over $3.5 Trillion dollars since 2010 in stock buybacks, which led to (1) an illusion of prosperity via (2) artificial price pumping on their stock price. It’s no secret stock buybacks added major fuel to the recent market bubble. So, in March, when a significant amount of those stock buybacks fell underwater, those companies took a tremendous, yet long overdue, dip in stock price. Bright lights suddenly highlights shady practices. Rather than face the harsh reality of laissez-faire capitalism, large corporations lobbied for bailout funding...and got it.

Beneficiary: Public Health will receive $100 Billion in funding, a mere 20% of what large corporations will receive. Community centers which provide health care services for approximately 28 Million citizens will receive just $1.32 Billion from the CARES Act, a mere 0.264% of the amount available to impacted businesses. State and local governments are set to receive nearly $340 Billion. However, details on precisely how those funds will be disbursed across the nation remain scarce - Governors who are political allies with the current administration will receive special treatment by way of funding and medical resources, while critics receive less. Stay tuned to see how this unfolds.  

Participation Ribbon: Citizens will literally pay for years of corporate recklessness and reap few, if any, rewards. Citizens should prepare for the effects of soaring national debt and hyperinflation, as increased supply of the U.S. dollar could lead to decreases in buying power. It would be reasonable to expect the cost of goods and services in America to increase while the dollar simultaneously buys less and less with each passing month. Citizens should not be surprised if all goods and services, from groceries to healthcare providers and insurance companies, attempt to increase their prices and premiums in 2020. It could take months before we see attempts to increase the federal minimum wage, which has not happened in over a decade. On the bright side, it's not all bad. Some very minimal relief may temporarily be available for those in student debt.  The new Pandemic Unemployment Assistance (PUA) program was created to expand benefits for some non-traditional workers. However, some limitations are likely to apply for freelancers, gig economy workers, those who make tips, etc. Some citizens might (or might not) receive between $1,200 and $4,400.

In the end, is a one-time check really worth it? Or does it all just seem like a cheap bribe to look the other way?

It's time for me to sign-off. One final note: please remember to text and call your friends and family. Make sure they're doing okay. We are living in truly historic times. Life is precious, do not take any part of it for granted.

Let’s hope April showers bring May flowers.

Peace & love worldwide ✌🏼❤️🌍

- anthony