Snatching Victory

 It's 9:30 on 9/30.   

I've been mulling over the Congressional Democrats blunder on linking the American Jobs Plan with the $3.5 trillion Build Back Better plan.

There was an agreement coming out of the Senate to pass the AJP and to support a budget that included the BBB.   There was an understanding that the Senate would not pass a BBB with $3.5 trillion in new spending but that the "process" should be allowed to proceed.

Biden originally said the bills were linked but one day after saying that they were.  He pulled back and said he wanted to sign both bills but realized he made a mistake by linking them too tightly.

In the House things quickly got more complicated.   The House leadership wanted to pass the budget, then work on crafting the BBB legislation and then voting on both bills.  The moderates in the House balked.  They would not support the budget unless the AJP was voted on first.  Pelosi then negotiated a deal where the budget would be passed and the AJP would be voted on by Sept. 27 irrespective of the BBB legislation.  She hoped that Congress would create the BBB by that time.

Well they couldn't.  The bill was too big, too controversial and too complicated.  Pelosi reneged on her commitment to vote on the AJP on Sept. 27.  The moderates did not make a big deal on this as Pelosi recommitted to a vote on the AJP that was "delinked' from the BBB.

In the meantime as today is the last day of the fiscal year Congress had to shift priorities to pass a continuing resolution to prevent a government shutdown.

So what's the path to victory?

Pass the AJP.   Reconstruct the BBB to align with Biden's original American Family Plan.  Include in the bill universal per-K, make the child credits permanent, make post high schools college education and jobs training affordable, subsidize child care,  implement paid family leave - all except pre-K - with generous means testing.

Drop from the bill altogether anything to do with immigration, climate change, and Medicare expansion.

Pay for the new spending with increases in corporate tax and personal income taxes on the wealthy.  The increase in revenues should slightly exceed the new spending so that this bill reduces the deficit by a small amount.

Then declare victory!

Snatching defeat

 
 
"Sanders wanted a large number and Manchin wants a smaller number and we’re going to work this process to try to reach common ground," said a source familiar with the White House's thinking.
 
Note the verb tense Sanders “wanted”; Manchin “wants”.
 
As an aside.. I heard on a recent Podcast the Mark Zandi (he’s a professional economist, not an academic) that many of the provisions in the AFP have been worked on for a number of years.  This somewhat deals with my concern about creating a $3.5 trillion bill in a couple of weeks. 
 
On the other hand on the same podcast (link below) his counterpart pointed out that since it is clear that the final number will not be 3.5 trillion there should be a real debate on priorities.  There’s just not enough time to have this debate.   Maybe they will use Biden’s original $1.8 trillion plan as the baseline.   This is no way to run an airline. 
 

Here’s the podcast  https://podcasts.apple.com/us/podcast/intelligence-squared-u-s-debates/id216713308

 

And a link to Biden’s original plan. 

 

What's in Biden's American Families Plan? (investopedia.com)

 

Snatching Defeat - continued

 The debate on the American Family Plan  is nicely summarized here:

Opinion | Corporate America Is Lobbying for Climate Disaster - The New York Times (nytimes.com)

The argument is something like this

- The GOP will win the 2022 election because of voter suppression and just because the party is power always loses mid-term elections.

- Therefore the Dems need to "go big" now.   If the GOP wins the election then Biden can veto all attempts to "un-do" the policies.

Krugman also makes the case to "do something" on climate change even though he knows these policies are inefficient and will have minimal impact on the global climate.   He's correct that a policy that might work - carbon tax, tariff and dividend cannot be passed now.

While Joe Manchin offers an alternative view:

Manchin Jolts Democrats by Urging ‘Pause’ on $3.5 Trillion Bill (msn.com)

The argument is something like this:

- We can win the 2022 election if the party runs on achieving results.  The economy will be strong next year with unemployment around 4% and the stock market at all time highs.  We will not have any of the military in a war zone.   We win as long as we don't get pinned by the GOP as tax and spend liberals whose policies have resulted in higher inflation, higher taxes and higher budget deficits.

- We were not elected with a mandate for massive change.  We were elected to deal with the pandemic but mostly to not be Trump.  Biden simply by returning to norms with respect to language and style, embodies this.

- But if we "go big" we will certainly lose the midterm elections.  Biden will then have to spend the next two years vetoing bills.  We then will lose the 2024 POTUS election.

- On the other hand if we go slow we will win the 2022 elections, expand the majorities in both houses and take advantage of a good economy to then continue to press for progressive policies.

The reaction to Manchin's position was immediate:

The chair of the Congressional Progressive Caucus, Representative Pramila Jayapal, replied “Absolutely not” on Twitter to Manchin’s idea of a pause.

Snatching Defeat - continued

Written: Aug 25 after House reached a compromise

Looks like a decent compromise.   I wish that no one would claim a “win” – much better for everyone to say that they didn’t get what they hoped for but that they can live with the outcome.

 

Perhaps the best part of the deal – if I understand it – is that Pelosi will direct the House to pass a bill that the Senate will also pass.     That means negotiating up front prior to bringing it to a vote in the House.

 

I don’t see how they can get this done in a month.   You would think that a 3.5 trillion dollar spending bill that presumably will also be a 3.5 trillion dollar tax increase would require  deep analysis on taxes, cost/benefit analysis of elements of the plan, overall economic impact, budget impact, etc.  This should properly take months to do this with open hearings with testimony from experts.  Instead they seem like they want to get this done in Sept along with raising the debt limit and presumably passing spending bills for fiscal 2022.  

 

My guesstimate is that AFP will come in closer to 1 trillion or 100 billion/year over 10 years.   That would be quite a victory and as Bob referred to it as “a down payment”.   

 

Last comment

 

What the press calls “moderates” voted for

 

900 billion In Covid relief in Dec, unfunded
1.9 trillion in Covid relief in Feb (ARP) also unfunded
1 trillion in infrastructure partially funded but no increase in taxes or fees
3.5 trillion budget to be funded primarily by tax increases

 

 

Snatching Defeat - continued

 Written: Aug. 11

For a brief time I thought the Dems in DC had come up with a good plan.

 

Pass the bipartisan American Jobs Plan (AJB) , pass a budget without the GOP which “outlined” the American Family Plan with the implicit promise from the Manchin wing of the party that they would pass the American Family Plan (AFP) using reconciliation to bypass the filibuster.

 

The Sanders wing of the party could tell their supporters that the AFP would solve all the countries problems.  The Manchin wing could tell their supporters that  the actual AFP bill would be much smaller than 3.5 trillion.  Both sides could claim victory.  All that was needed was for the House to pass the American Jobs Plan and approve the budget.   The details of the AFP would be hashed out over months of intraparty negotiation.  In the meantime Biden gets another big win.

 

But then as I understand it the House will not vote on the AJB until the AFP passes in the Senate.   I just don’t understand the thinking.  The AFP will be a messy intraparty conflict  which will play out over the next 2-3 months.  In the meantime the AJB is blocked by the House.   Does anyone understand this?  What’s the plan – to put pressure on the Manchin wing of the party so that all of the
“progressives” in the House get their way?    I don’t see how that can work.  Manchin has the leverage and he’s been a team player up to now.  

 

If the next elections decide whether we have a functional democracy it may be the biggest threat is not the state legislatures in Georgia or Arizona.    The biggest threat may the House of Representatives in DC.

Snatching Defeat from the Jaws of Victory

 Written Jul 22:

A short time back I was very optimistic about Biden’s administration policies and the outlook for the next election.   His focus on vaccinations was working.  His 3-way policy of America Rescue Plan, Jobs Plan (infrastructure) and Family Plan (anti-poverty and social safety net improvements) made sense.

 

The first part American Rescue Plan was done through reconciliation which was the right move.  The final bill had only a few concessions to the more moderate Dem Senators.   Biden said it might be “too big” but that was a risk he was willing to take as opposed to it being too small.  Not it looks like it was a too big and we have some “transisent” inflation but by and large this was a progressive, pragmatic and popular bill.

 

Next up was the American Jobs Plan which Biden negotiated as a bipartisan bill.   This was also a good idea.  It may be a little smaller than some wanted but it looked progressive, pragmatic and popular.

 

The next step would be to take bows for an improving job market, a strong stock market, reduction in child poverty from the American Rescue Plan’s child tax credits.   Then take another bow for negotiating a bi-partisan infrastructure bill which eluded Obama and Trump.  Then take another bow for having a sane foreign policy and trade policy.

 

The American Family Plan should have been on the back burner with the idea that the Senate would use reconciliation to pass a Dem bill in 2022.  The Dem caucus would be informed that this bill would be passed and would include some of the non-physical infrastructure elements that the Jobs Plan left out.  But the Dem leaders should have kept a low profile on this and given vague answers.   Eventually  the bill would strike a balance of Sanders and Manchin which no matter how it turned out would be a victory for Biden in 2022.  No one who wants to win in 2022 wants Sanders to write this bill.

 

Then the unforced error.  Publicly tying the bipartisan American Jobs Plan with the upcoming partisan American Family Plan.

 

So now we have uncertainty over the Jobs plan.  The Rescue plan is being critized for temporarily high inflation and some dislocations in the job market.   The Family Plan is being critized for the large increase in spending and in the deficit even before the size of the bill has been determined.   We know that it is hypocritical for the GOP to complain about deficits but we also know that the general public has a short memory.    

 

Bottom line -  The Dems gave the GOP some actual policy talking points.   Unforced error.

 

 

Update on COVID Relief

 In some ways it has gone as expected.  The House Dems pass the full bill with no concessions to the GOP.   The bill had some non-COVID relief items.   They get no GOP votes and the GOP used these non-COVID elements as a talking point.

The Dems have one chance this fiscal year to pass a spending bill through reconciliation so they added these non-COVID elements.  It is either this bill or wait until next year.

In the Senate they are sure to remove the minimum wage increase which not only doesn't belong in a COVID Relief bill it's presence will prevent passing the bill in the Senate using reconciliation.

Actually this is not a good timing for passing a minimum wage bill when unemployment is so high.  But the bill was going to gradually phase in the increases.  But what is good is to have the GOP vote against it again and again.

Some left wing members of the House want the Senate to put the minimum wage increase back in the bill.  Once again they show no common sense, no political acumen.  Let's hope the make their little point and then cooperate.

Re getting the GOP to work with Biden.   The vote in the House and the comments from the Senate seem to indicate that the GOP is not at all interested in working with the Biden administration.

In the meantime Trump made a speech to CPAC.  The speech attacked members of the GOP.  This is turning out right now the way I hoped.  Trump splits the party. 

Tie Maker, COVID Relief, the Biden Administration and the GOP

 I wrote this in early Feb.

Some musing about politics -channeling my inner Heather Cox Richardson

 After the GA runoff election all the talk was about the 50-50 Senate split and that VP Harris would be the tie-breaker.  Perhaps more important are the two Senators who are the tie-makers, Angus King (Maine) and Joe Manchin (WV).  The GOP has their RINOs.  The Dems have these two who are BAD – Barely a Democrat.  

 My first thought about Manchin was positive.  I’ve thought for awhile that the Dems have been too focused on cultural issues, global warming  and identity politics.  Instead I’d like to see a focus on economic justice.  Dems needs to push policies that help the working poor.  Who would be a better spokesperson for the working poor than a Dem Senator from WV? Then I looked at Manchin’s voting record with some dismay.  He is Barely a Democrat.

 

But it is what it is.   Manchin may be the decisive vote on a number of progressive policies.  The good news is that this makes the Bernie-wing of the party less able to torpedo the conversation.  I don’t see how Sanders will be able to move Biden from his pragmatic, progressive policies. 

 

The other item on my mind is how Biden’s penchant for unity and compromise will play out with this version of the GOP.  The first test will be Biden’s COVID relief bill.  This bill can be passed without any GOP votes using budget reconciliation but it will need Manchin’s vote.  There are two options for Biden.  Make some amendments to the bill on the fringes to get 10 GOP Senators to vote for the bill.   The obvious choices are to target the direct payments and to remove the minimum wage (which has little to do with COVID emergency relief).   Perhaps even adjusting the additional unemployment payments so that they start at $400 and are reduced to $300 after the unemployment rate hits say 6%.  Then eliminate the payments when unemployment hits 4.5%. 

 

What should be non-negotiable is extended unemployment benefits, aid to state and local governments, some targeted individual direct payments, aid for school openings and aid for vaccination roll-out. 

 

If the GOP doesn’t go along then just make small changes so that Manchin votes for the bill and use reconciliation to pass it 51-50. 

 

The important take-away is Biden and the Dems should not make concessions to the GOP and then have them vote overwhelmingly against the bill.  This is the lesson to be learned from Obama’s first two years as POTUS.

 

I think Biden, Pelosi and Schumer get it.  Let’s hope.

How to win in 2022. Pragmatic, progressive and popular policies

Since the election I have turned to looking at how the Democratic party under Biden's leadership can move the country towards more progressive policies.

It's no secret that I dislike  some of the policies of the populist left.  The press simply uses the term progressive wing of the party but it is more than that - it is populist and tribal.  That's one reason I favored Biden from the outset.  He was always my first choice to be President even when he wasn't my first choice to be the Democratic nominee.

So Biden won and the Senate is 50-50 and here we are. 

The idea now is to pass pragmatic, progressive policies - no overreach and no concessions to the populist wing or to the GOP.   The idea is to pass a set of policies that are not only popular to the voters that matter but will be popular in practice because they are good policies.

The voters that matter are the center-left independents and the voters in WI, PA, OH, GA and AZ.  The goal is to win a more effective majority in the Senate and then work push more progressive policies in Biden's last two years.  Looking at 2022 Senate races the Dems have to defend seats in GA and AZ just to maintain the 50 seats.  But there are opportunities in WI (Ron Johnson) and OH, PA and NC will not have GOP incumbents.

So what are the policies

- the COVID relief bill even if paired down a little from the current 1.9 trillion House bill
- successful management of COVID vaccinations

- expansion of ACA
- modest infrastructure bill
- immigration reform focused on Dreamers

And a set of executive orders to support:

- racial justice
- climate change
- environmental protections
- immigration reform

- restore US role in foreign affairs

What are the threats?  Basically overreach in government spending, immigration reform and climate change.   

Current Issues Prioritized

1. Covid pandemic.  The first choice is obvious.  
2. Economy.  I am not referring to GDP growth or the stock market.  The #1 economic issue is the labor market.  Headline unemployment greater than 6% but that understates the issue.  Labor force participation rate is also down.  Second concern is small business bankruptcies.  And, a new term "scarring" caused by the pandemic.
3. Democracy.  Without dealing with the threats to democracy none of the items below can be addressed.  Threats are legal voter suppression, illegal voter intimidation, gerrymandering, peaceful transfer of power, disenfranchisement of citizens in DC and the territories,
4. Domestic  terrorist, white supremacism,   racism and police violence.
5. Poverty.  This may be the biggest issue and the hardest to solve.  Need for access for affordable health care, housing, child care and post-high school education. Note affordable does not mean free.  Other needs are increase to minimum wage, food security and free pre-K schooling. 
6. Immigration reform.  Path to citizenship for Dreamers and path to legal status short of citizenship for immigrants who have settled in the US.
7. Investments in infrastructure and basic research.  Short term objectives are to create jobs.  Long term objectives are to increase labor productivity which will create jobs and increase wages.
8. Climate change.  This is a global issue not a US issue.  Also this is a long-term issue.
9. Restoring US diplomatic role in the world.  Also a long-term issue.  

I will from time-to-time update a score card for the Biden administration.

Tracking the GOP

 Leading Trumpers

Ted Cruz*
Josh Hawley*
Marco Rubio*

Lindsey Graham

Tom Cotton*

Ron Johnson

Rick Scott*

Tommy Tuberville

John Kennedy

Dissenters

Mitt Romney
John Kasich*
Liz Chaney*

Lisa Murkowski

Pat Toomey

Ben Sasse*

Susan Collins

Bill Cassidy

Rob Portman

Nikki Hawley*

On the Fence/Weasels

Mitch McConnell

Kevin McCarthy

* potential 2024 candidates

Election Celebrations

What a mess!

On the other hand this charade has given us a number of celebrations in lieu of a simple, one time, election night celebration.

Early election eve the hopes for a Biden electoral landside was squashed when Florida was called for Trump   But there were hopeful signs - Biden was leading in NV and AZ, in range in MI and WI and he won one electoral college vote from eastern Nebraska.  This last was key because it meant if Biden could win MI and WI and maintain his leads in other states then he had 270 without the remaining swing states of PA, GA and NC.

In the early AM Biden pulled ahead in MI.  It was now all about WI.  At about 3:00 AM Milwaukee county updated their numbers, mostly from mail-ins and Biden was now ahead!   Recall that a poll about 2 weeks prior Biden up by 17 percentage points!?  He was now ahead by less than 1 percent. But that was enough.   This was celebration number 1.

As the days passed it seemed likely than Biden would also win PA.  Meanwhile he maintained his lead in AZ and NV and now looked like he had a shot in GA.  On Saturday the media outlets called PA and declared Biden the winner.  (Most outlets had not called AZ, some had not called NV).   Now NV and PA were called and we were are 279 and climbing.  This was celebration number 2.  People literally danced in the streets.

Biden was leading in GA but the margin was close enough to require an automatic recount.  A few days later  the recount confirmed GA.  About the same time AZ was called.   All states now called and we were are 306.  Celebration number 3.

Meanwhile all of Trump's court cases were being summarily dismissed.   Trump backers claimed fraud in press conferences but not in court.  This was capped by Giuliani making unfounded claims at the Four Seasons landscape company in an industrial section of PA.  It was a riot.  Celebration number 4.

Second recount in GA and Trump paid for a partial recount in WI.  Both confirmed Biden's win.  Celebration number 5.

Another presser with the crazy Sidney Powell and the melting Giuliani.  This was a howler.  Not much to celebrate but certainly something to laugh about.

With all the law suits and recounts no votes were disqualified.  It is now Dec 8. "safe harbor" day and it's over.  That Trump and some of this crazed supporters think that it isn't but there is nothing to worry about.  It just continues to get more embarrassing for Trump and the alt-right.

But we get at least two more celebrations.  Dec 14th when the electors vote and then again on inauguration day.  

Economy and the Market

Well the stock market is doing very well despite the incredible surge in COVID cases, deaths and hospitalizations.   The economic rebound has stalled and we may now be headed for a second wave of increased unemployment.  

So why is the market up?

1)  The market is not the economy.

2) The market is often wrong.

3) The market is looking ahead 12 months and assuming that we will have a vaccination and that enough folks will get vaccinated.  This could lead to an expanding economy - more jobs, more demand, growth globally.

But uncertainties exist:

Government funding ends on Dec 11.  No one can predict with role Trump may play in a CR.

Over fiscal relief spending ends on Dec. 31.  The prospect of a covid relief package - even a minor one will remain in doubt as long as Trump continues to fight the election results.

The pace of vaccination may not keep up with the Covid surge in the next 3-6 months. 

Post election snapshot

On election night I was a nervous wreck.  I stayed up until 5:00 AM.  It was about 3:00 AM that I started to feel hopeful.   Results came in from Milwaukee and Biden who had been behind by 100,000 votes was now ahead.  He was also ahead in Michigan, Arizona and Nevada and with the one elector from Nebraska he was on track to exactly 270.

At the same time the Biden camp expressed confidence about PA even though we were down by over 600,000 votes in the early returns.  Hour by hour Biden cut into the lead.  By 8:00 AM the lead was down to 64,000.

As the days went by the results in Wisconsin and Michigan firmed up and the PA gap closed relentlessly.  Nevada looked secure.  Arizona less so.  For some reason Arizona was the outlier with the mail-in votes.  AP and Fox News called Arizona but the other news outlets did not.  In the meantime Biden was gaining in GA.

Finally on Saturday the news outlets called PA.  The one of two who had not called Nevada now called that as well.  Biden was at 279 with Arizona and Georgia still a little unclear.  We all celebrated along with a huge sigh of relief.  

Of course, Trump did not concede.  At first his strategy seemed to be to file law suits in 6 or so states trying to get votes thrown out.  None of this worked.  The next plan seemed to be a recount.  GA had already decided to do a recount and Wisconsin seemed likely to do so.  But those two states would be insufficient to change the outcome.  On Nov. 19th Georgia finished the recount and Biden was the winner.  

The electoral college remained at 306 to 232. The popular vote had Biden up by 6,000,000.

On Thursday, Giuliani had a presses with a bunch on new bogus allegations.  The legal fight looks over.

That leaves the last hurdle.  Certifying the election state by state and voting for the electors.

Timeline:

By Nov 30 the majority of the "swing states" will have certified the election.

Dec. 8 is the safe harbor day when the electors are finalized.

Dec 14 the electors vote.  I see no chance of "unfaithful" electors changing the result.

Trump's last chance, and he's trying today by meeting with Michigan GOP state legislators is to have the state legislators ignore the vote in their state and try to elect GOP electors.  Would the GOP leadership in Congress go along with this.

At this point the following GOP Senators have congratulated Biden: 

Romney, Collins, Murkowski, Sasse, Rubio (partial)

Tesla

Tesla fascinates me, first, as a company and secondly, as a stock.

I wrote this back in Sept 2018.

Seems to me the question is, if Tesla stops all R&D and focuses on producing and selling the high end Tesla 3 (you can forget about the $35,000 version) can Tesla turn a profit?

Even if they can and can stave off their debt issue by 2020 they will have lots more competition and will be producing cars that are 3-5 years old.

Currently Tesla, like Apple, has brand name appeal that will attract buyers even if the product is not competitive (see Mac PCs).  What I've read about the Tesla 3 is mixed.   Great car but some material quality issues.  If they focus on the Tesla 3 they should be able to correct the quality issues.

Worse case is that the Tesla 3 even at $70,000 is not sufficiently profitable.

So what happened:

Tesla overcame the challenges in 2019.  They became profitable Sept 2019 and remained profitable for the next 3 quarters making 2019 the first year of profitability in their history.  They reduced R&D but did invest in a new plant in China funded by a bank loan from a Chinese bank.  So they staved off the financing issues.  They raised $2 billion by issuing new shares in Feb 2020.  

Competition did not arrive in 2019.

However Tesla did not make a profit by selling Model 3s.  They made a profit by selling energy credits.

Current company analysis: Pros

Tesla remains the technology leader in EVs.  The Model S remains the best EV in the market.  The Model 3's quality issues do not seem to have impacted sales though they have had to reduce prices to retain sales.   The Model Y which is a modified Model 3 is now available.  The low-end Model 3 now sells for $38,000 so we are finally close to the promised $35,000 EV.  

Reviews about the driving experience of Teslas are very positive. 

China production is fully online and they will be exporting cars made in China to other markets including Europe.

Tesla may have a big lead in battery technology and in autonomous driving.

Current company analysis: Cons

Competition did not arrive in 2019 but has arrived in 2020.  Volvo now outsells Tesla in Europe.  In fact sales in Europe are down and overall sales are flat.  VW is about to launch a competitor in the US.  Lucid is getting close to selling a high end competitor to the Tesla S.  

Growth is slowing or perhaps non-existent.  They sold 90,000 cars Q4 2018 and 90,000 cars Q2, 2020.  Revenue has plateaued at $25 billion TTM.   

Tesla does not make money selling cars!  The company is now 17 years old - founded in 2003.  Went public in 2010.  Has received billions in government subsidies.  Has had a huge technology advantage and still do not make a profit selling cars!  They made a profit in 2020 only because they were able to sell energy credits which they get for free to other car makers.

Tesla reduced capital investment.  Some analysts have claimed that they have accounting issues related to underfunding their warranty offset account.  This combined with the sales of the energy credits cast some doubt on the companies income statement. 

Prognosis

Tesla may become a profitable car maker with domination in the EV market.  They need to start making money selling cars which means they either need to scale up despite the increased competition, improve their operational efficiency or develop a new high-value cars.

Tesla may become a successful niche car manufacturer.    They turn profitable but not dominant.  Sales grow sluggishly and are highly dependent on the economic cycle like the rest of the industry.

On the other hand they may completely fail as a car maker if they do none of the above of if GM or VW or Toyota develop competitive cars with scale that Tesla can't match.

Tesla may succeed as a company even if they don't succeed as a car maker.  Other possibilities are to develop and license autonomous driving or to develop battery technology.  They are about to make a "battery day" announcement.  I will be tracking that though Tesla has frequently over-promised and under-delivered, e.g. full self driving by 2019, $35,000 Model 3 in 2018.  

Still waiting on both.

Corona Virus: The New Normal

 This past week

Sunday - Point Lookout Vineyard with Pete and Tess
Tuesday - Hike with Pete
Wednesday - Ben and Joanna over for cocktail hour
Thursday - Beers at Southern Appalachian with Bob, Diane and Ben
Friday - Music at Appalachian Ridge with Mina
Saturday - Dinner at Sol Y Luna with Phil and JoLyn
Sunday - Hosted dinner with Bob and Diane

What we haven't done; played bridge, eaten at a restaurant indoors, no gym, no church, no indoor gatherings at all.

Don't see anything changing in the near term.

Corona Virus: A Macro look

 We are now 5 1/2 months into the pandemic.  A few thoughts on the macro trends.

1)  The Pandemic itself.

The initial surge was in the North East.  The response was late and inadequate to the crisis.  The number of new known cases was averaging 30,000 day but the actual number was much higher.  Much of the country went into various levels of stay at home orders, closing businesses and restrictions on gatherings.  What was missing was a nation-wide order to wear masks and social distancing.  The pandemic eased from April through the middle of June. 

Then states began to re-open businesses and ease restrictions.  States that did not experience an initial surge and loosened restrictions were soon hit with surges, specifically AZ, FL, TX and CA.  The number of new known cases soon surged and eclipsed the numbers from the north east.  But the number of deaths did not jump nearly as high.  The general thesis was that younger folks were catching the virus but those folks with elevated risk where avoiding the virus.  

I expected that as soon as cases surged folks would quickly and voluntarily change their behavior.  Well is wasn't so quick.   For the next month. mid-June to mid-July cases continued to surge. Deaths also increased dramatically but did not get back to the levels of April and May.  Deaths which had declined to 500 day rose to 1000 day (rolling average).  As I write this deaths are slowly declining.  

The conclusions are that the virus is highly contagious is precautions are not taken.  However the virus seems not to be as deadly as once feared especially in the general population.  Treatments also seem to have progressed.

It now seems that closing the economy was not the optimum public approach.  Restrictions on businesses were and are still needed but closing the economy was probably unwarranted.  At the same time there should have been more restrictions in certain areas - especially senior citizen housing.  And a national policy on wearing face masks and socially distancing should have been enacted in March.   

Testing policy is still a mess.  Most folks should not be tested.  Only those who are vulnerable or who interact with the public need to be tested.  There are far too many cases for contact tracing.

2)  The North Carolina experience

NC is unusual.  Stay at home orders and business closures were ordered in mid-March well before we had any significant outbreaks statewide.  That meant that like other southern states we had a high number of Susceptibles and a low number of Recovered.  But unlike the other southern states we re-opened slowly and carefully.  We are still in "phase 2" which is now scheduled to end on Sept 11.

As a result NC is well below average in cases and deaths per capita.  But at the same time we haven't seen much change in the numbers in the last 4  months.   Basically unlike the rest of the country we aren't seeing any improvement.

2)  The economy

Unemployment surged to 20% and then quickly rebounded.  It is now at 10% and looking "sticky".  Airlines, hotels, restaurants, etc. won't recover for a long time.  The number of people out of work will also impact overall demand; consumer spending and business investment will also suffer.  State and local governments will also have to retrench due to decreases in tax revenue.

Congress passed a massive CARES Act in May.   Most of the provisions have now elapsed.  A second fiscal recovery plan is needed but Congress is stale-mated now.

3) The stock market

Partially due to the massive government fiscal and monetary policies the market recovered from the March debacle.

What we (may have) learned.

 The stock market is not the economy.

 The stock market index does not represent the stocks in the index.  It stock market index measures the success of Apple, Amazon, Microsoft, Google, Facebook and Netflix.  According to one source 292 members of the S&P 500 still are down year to date (YTD).

And the economy is not the only measure of how well the country is doing.

Some additional observations about the economy.

 The stock market is being propped up by near-zero interest rates.   Current acronym for buying stocks TINA – There Is No Alternative”.  

 The bankruptcies will hit small business and very few large, public corporations.

The market has not priced in any bad news regarding either a worsening of the pandemic or a failure of Congress to support the economy.  The overall market looks risky to me.

On a special note Tesla looks like the biggest equity bubble since the dot com bubble. It split and the split shares are selling at $500/share.  I expect this stock to drop by 50% or more.  But like most bubbles it is hard to predict the timing.  

Corona Virus: Four Months In

On March 10 I went to the FCUCC Book Club and the gym.  By the end of that week we had a stay at home order.   So it has now been 4 months living under covid restrictions.

This has lasted much, much longer than I expected.  I thought by now we'd be going our to restaurants and entertaining.  Not yet.

And, we've been fine.

We have been out to eat once - on the patio of Sol Y Luna.  Other than that it's been takeout.

We have been out to listen to music a few times at Southern Appalachian Brewery, Point Lookout and St. Paul's. 

As far as my list I am still reading my backlog of Economist and Foreign Affairs but the rest of my list has been completed.

Corona Virus: NC Phase 3

North Carolina was scheduled to begin Phase 3 on June 26.  Phase 3 would reopen business like bars, gyms, bowling alleys, etc. to open.  Other businesses and gatherings to be able to increase capacity.

Since Phase 2 the pandemic cases and deaths have been largely steady - perhaps a small rise.  The percentage of positive cases also remains steady at 10% and it should be decreasing over time.  So Cooper delayed Phase 3 and also mandated wearing masks in public spaces.

I thought he might implement a Phase 2 1/2.  He did not. 

I thought he would be criticized by the right.  He was.

I thought this might hurt him politically but then surges in TX, FL and AZ have shown that a rapid reopening is a big mistake. 

Corona Virus: June 6

Well we are definitely in a new stage.

On May 22, NC moved to stage 2.   Since then the number of nee cases has increased.  There is some noise over new deaths.  NY Times shows an increase.   NC dashboard shows a decrease.

I've been to two restaurants both times outdoors.  Karel went shopping on Main Street.  The demonstrations over police violence has pushed news about the corona virus "below the fold".  Stock market is surging.  Unemployment for May was surprisingly good.

Re tracking.  I wrote last time that I switched to tracking deaths not cases.  I have finally deciphered the fallacy of "Herd Immunity".  It doesn't apply once the reproductive rate < 1 and country-wide we are just about there.

Still missing from the "New Normal" are returning to the gym - which should happen no later then the end of June, playing bridge and going to church.  The last two are more doubtful.

The level of concern in my circle is mostly consistent.  Folks are not worried but they are taking precautions.  There are a few that are much more worried - even scared.

As for my projects
- yard work complete
- lecture series complete
- Spong lecture series complete
- India pictures uploaded and copied but not categorized
- Finished 12 of the 14 volumes of Civil War