It’s Just Day 22 of CoronaCrash, and It’s Already Such a Mess

Kissing share buybacks and dividends goodbye.

By Wolf Richter for WOLF STREET:

What an ugly day in the stock market, just after analysts and the financial media proclaimed that the Fed had succeeded with its immense bailout shenanigans to “calm the markets.” It did manage to calm the markets for a day-and-a-half, from Thursday morning through Friday 11 a.m. But then it all came unglued.

By the close on Friday, the S&P 500 was down 4.3%, the Dow Jones Industrial Average was down 4.5%, and the Nasdaq was down 3.8%. All of them carved out new multi-year lows. From the intraday high to the close, the S&P 500 plunged nearly 6%. Over the past 22 trading days, it has plunged 31.9%:

This move put the S&P 500 back where it had first been on February 9, 2017. Over three years of gains gone up in smoke in less than a month.

However, the crazy volatility of the past two weeks seems to have lessened, with the S&P 500 index now not having had a move over 4.3% in a whopping two entire full days (not counting intraday moves).

The prior eight trading days had all been moves, up and down, in the range of 4.9% to 12%, which amounted to historic volatility. So a drop of 4.3%, which would have been a major nerve-rattler until February 20, is practically routine now:

The rug is getting pulled out from under stocks by numerous factors. On top of the list is the simple fact that the historic stock market bubble and the most exuberant stock market euphoria in my lifetime, when stocks are the most precarious, collided with the coronavirus.

After this started to wreak havoc and stocks began to crash, two other huge factors came into play: One, share buybacks have mostly come to a halt as companies are now struggling for liquidity in an effort to survive this. And two, for the same reasons, dividends are getting cut brutally, all around.

The latest to announce suspending its dividend “until further notice” was Boeing. This came as a surprise to no one; the company is in an existential crisis. Boeing made the announcement on Friday evening to keep it as far away from stock trading as possible.

“Boeing is drawing on all of its resources to sustain operations, support its workforce and customers, and maintain supply chain continuity through the COVID-19 crisis and for the long term,” Boeing said, after it had blown, wasted, and incinerated $43 billion in cash since 2012 by buying back its own shares.

This is what Boeing’s shares [BA] have accomplished – and that was before the dividend cut could have any impact: They have plunged 78% from their peak on March 1, 2019, and 72% over the past five weeks, to the lowest level since February 2013.

By the looks of it, Boeing shares are willfully violating the dictum eternalized on our WOLF STREET beer mugs, “Nothing Goes to Heck in a Straight Line”:

The top US-based airlines are also in an existential struggle, with many routes cancelled. For this period of the shutdown of the travel industry – if it lasts six more weeks or six months – revenues are going to collapse, while many expenses, such as aircraft leases and staff that haven’t been furloughed, continue.

Shares of the seven largest US airlines – Delta, Southwest, United, AA, Alaska, JetBlue, and Spirit – have plunged 61% in combined market value since February 12 this year, and are back where they’d been in May 2013, also violating with apparent impunity our WOLF STREET Beer Mug dictum that “Nothing Goes to Heck in a Straight Line” (data via YCharts):

And like Boeing and much of the rest of Corporate America, Delta, United, American, and Southwest blew, wasted, and incinerated together $44 billion in cash on share buybacks since 2012 to manipulate up their share prices. Now, these share buyback queens, just like Boeing and many others, are asking for billions of dollars each, or tens of billions of dollars each, in taxpayer money to bail out their shareholders. Just say no. Chapter 11 bankruptcy restructuring that bails in shareholders and some creditors is the solution.

Here is Fed Chair Jerome Powell, upon seeing the market coming unglued again, after he’d already been credited with having succeeded in calming the markets, as envisioned by cartoonist Marco Ricolli, for WOLF STREET:

The bond market too is showing the biggest stress since the days of the Lehman bankruptcy, as yield spreads are blowing out in the $3.3-trillion category of BBB-rated bonds, which are just above junk bonds, and in the $1.3-trillion junk bond universe. Read… Junk-Bond Spreads & BBB-Bond Spreads Blow Out Past Lehman-Bankruptcy Levels

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  336 comments for “It’s Just Day 22 of CoronaCrash, and It’s Already Such a Mess

  1. kk says:

    The economic damage of this corona-crash will be so large that the government will have to step in on a Roosevelt New-Deal scale if the economy is to survive . It will eventually come to an end and have to be paid for with massive taxes and inflation. Who’d have thought that?

    • Rowen says:

      It’s actually funny watching CNBC when all the pundits and hedge fund manager become full-blown communists, begging for the government to do X, wanting the government to guarantee Y, etc.

      Two months ago, everyone scoffed at the idea of a universal basic income or a federal jobs guarantee, and yet we’re almost there. The covid stimulus FJG is particularly frustrating because these industries beg for the bailouts to guarantee the jobs, yet they keep the benefit of the labor and not the public.

      • David H says:

        I have nothing but antipathy towards these hedge funds

        I laughed out loud when Ray Dalio stated “cash is trash” at the end of January. To be honest it was just like every other bubble, when ‘this time is different’ creeps into the media everywhere

        This is tracking the Great Depression almost precisely and will probably wipe most hedge funds out

        • KPL says:

          “This is tracking the Great Depression almost precisely and will probably wipe most hedge funds out”

          That is of no use meaning to say we will get more of the same. These shameless beggars or their shameless bethrens will rise like phoenix when they get the whiff of the money being thrown at them by the Fed.

          I hope this gets us a new financial system with a limited Fed mandate (lender of last resort).

        • Unamused says:

          I have nothing but antipathy towards these hedge funds

          Hedge funds and PE firms could see what was coming. You could suppose that’s why they started liquidating companies well before the crash, grabbing while the grabbing was good.

          This is tracking the Great Depression almost precisely . . .

          It’s worse than the 1929 crash, faster, with bigger bubbles, and more of them, plus bigger debt, plus a pandemic. The world has changed a lot in the last 90 years.

          It’s worse than the 2008 crash, which was never really resolved. It was just papered over with debt, and that will make the present meltdown that much worse. The Fed did try to raise interest rates, to put on the brakes, but were blackmailed into dropping them again by an ambitious politician. Not that it would have mattered much, because by then it was too little, too late. But I think the Fed did see it coming. Most commenters here did.

          . . . and will probably wipe most hedge funds out

          That’s a good guess, but there’s no way of knowing how they might be backstopped by the shadow banking sector, if at all. Much is hidden. PE firms could survive by bankrupting more companies. I’ve already warned about the likelihood of a binge of hostile takeovers, and those are sure to be destructive.

        • CiT says:

          here we go again, its starting per reuters:

          Goldman injects $1 billion into own money-market funds after heavy withdrawals.

          The bank repurchased securities from its two funds on Thursday after investors withdrew a net $8.1 billion from them during a four-day stretch, according to the disclosure.

          Weekly liquidity levels at the nearly $18 billion Goldman Sachs Fund Square Money Market Fund dropped to 34% on Thursday.

          SEC rules on weekly liquidity dictate that funds have to keep at least 30% of their portfolios in securities that can be converted to cash in five business days.

          Bank of New York Mellon Corp also stepped in twice this week with a total of $2.1 billion to prop up Dreyfus Cash Management.

          somebody is going to break the buck just like lehman…who will it be? does deutsche bank run its own money funds?

      • Fred says:

        I still scoff at universal basic income. It will never work long term. Never. Unless manufacturing is moved back to the US, it will create disasterous inflation. Universal income at that point will buy cat food.

        • sierra7 says:

          Fred: (and others)
          Will we have another “Great Transformation” (Karl Polanyi) And, what will it look like.
          Some hints may come from how the globe handles both the coming (occurring) financial crash along with a humongous medical crisis.
          Will there emerge new priorities for both society and business?
          Already thousands of businesses are taking long, hard looks at how they function now and what the present operating restrictions are forcing them to do.
          Those same restrictions will also work on those who will lose their jobs and those who might retain them but will be asked to function in entirely different modes.
          The globe is rumbling……like a volcano!

        • Hebron's Gate says:

          your lack of imagination paints a picture of intellectual inertia; my humble suggestion would be to start seeing the box and then to try to force yourself out of it, I say that as one who wakes up in a box everyday.

        • The Colorado Kid says:

          Fred, I agree. UBI & SS will approximate the old Soviet Pension post USSR.
          We’re about to enter a new paradigm.

          The worst suffering though is going to be in China- just wait and see. A top down command economy with vast amounts of debt and a lot of it in USD

        • UBI = socialism for capitalism’s sake. “Let’s take money from the middle class and to give to people who don’t/can’t save. That way we can pretend capitalism is still functional.

      • Old-school says:

        It’s pretty easy to get rich if you are going to get bailed out. Excessive leverage is the ticket to building wealth fast, but you go to zero in a recession. If you socialize that wipe out back to taxpayers it’s just very immoral.

        • economicminor says:

          This may just wipe out taxpayers..

          Can you imagine 6 months, a year or maybe 18 months of little to no taxes collected by not only the federal government but worse by the states?

      • rhodium says:

        Yep, greedy always. They’ll support whatever is best for themselves while giving everyone else the middle finger whenever they feel secure, not even an ounce of principle to keep it in check. The hallmarks of true assholes.

      • Hebron's Gate says:

        The NY fed was already bailing out PE and hedgefunds for months before 1 single case of COVID-19 showed up in Italy/Europe/UK/USA.

        According to Hedge Fund Research, 1200+ hedge funds have shut down since 2018 and somewhere around $100 billion was pulled out of these operations in 2019. A mad scramble for cash some 10-12 months before COVID-19 was even a disease.

        Just this past December 2019, in one month, before the COVID-19 pandemic outbreak, York Capital Management and Southpaw Asset Management both limited and/or ended withdrawals and this was on top of Woodford Equity Income Fund in London being liquidated.

        Also in December of 2019, after $1.2 billion in withdrawals M&G Property Portfolio fund based also in London, suspended its operations citing a lock-up in commercial real estate markets.

        All of this was BEFORE 1 single case of COVID-19 had reached the west.

        And yet, even before the outbreak and months before the global shutdown, the New York fed was funneling money to PE and hedge funds and other non-banking entities through primary dealers via its repo market operations which now includes counterparties and units outside the US, hence the extension of dollar swaps lines.

        Less than 2 weeks after the September 17th, 2019 Repo market lock up,

        which kicked off FinCrrash2.0,

        on 1 October 2019, Financial Times quoted a CFO of a top money-center bank:

        “We have plenty of liquidity. We are just choosing not to lend it out overnight to hedge funds.”

        CNBC keeps saying that, Blackstone, KKR, Bain, and cash is trash dalio et al, will be positioned to come in and buy price-cheap stocks once the shares markets bottom…

        it makes you wonder why the fed is taking stocks as collateral, if these guys have all this dry powder and are waiting for bargains;
        AA has to get to sub5? DB is already a $5 dollar stock…

        • Hebron's Gate says:

          Less than a year before JPM kicked-off FinCrash2.0 on 9/17/2019 by pulling out nearly 60% of its reserves from the NY Fed to buy back its own stock in a bull market (and 14 months before covid19) the biggest bank in the US was desperately reaching for cash.

          On August 30 2018, Bloomberg News reported that JPMorgan Chase’s asset management division liquidated

          “a $1 billion credit hedge fund” known as the Palm Lane Credit Opportunities Fund.

          SEC records show that this Hedge fund owned by JPMorgan Chase was set up in 2012,

          a full two years AFTER the Volcker Rule outlawed such ownership by money-center banks.

          This JMPChase fund operated in CLOs, Credit Default Swaps and

          “credit correlation, illiquids and leveraged loan markets”

          Exactly the same type of black-box fasb-157 unquantifiable risk profile products that brought down the economy in 2008 and got bailed out.

          I’m willing to bet other the top money center banks also violated the law by operating hedge funds.

          and since we havent heard Citi, DB, BAC etc closing hedge funds they own as JMPchase did, we can assume THIS is what the fed is deathly afraid of.

          They know if this blows up the economy again, there will be blood on wall street. real blood. this explains the feds panic.

          derivatives are like nuclear reactor cores needing a constant flow of water over them or they will blow up; stupid way to boil water, stupider way to ‘make money’.

      • Mark_2 says:

        “universal basic income”
        this policy plays out in the first couple books/TV seasons of “Expanse.” Lack of opportunity leads to overpopulation, chemical abuse and general mischief.

        Maybe as a short term band aid but we’ve seen how that works in government…

    • Bob Hoye says:

      Many have written that FDR’s “New Deal” made that contraction worse.
      I agree.
      Also, the concepts in the New Deal were mainly governments responding to the natural forces of a post-bubble contraction.
      Haskell’s “The New Deal in Old Rome” describes that Roman policymakers used the same tools when responding to contractions.
      The book can be read in the internet.

      • sierra7 says:

        Bob Hoye:
        “Many have written that FDR’s “New Deal” made that contraction worse.”
        Don’t know how old you are but I was born at the beginning and remember the 1930’s as miseration.
        NO recession after the GP even came remotely near what happened back then.
        Most politicians were doing nothing. At least the Roosevelt admin tried to do many things. Some certainly failed and some succeeded.
        The GP was starting to wane in around ’35-’36 but the retraction of some of the successful programs plunged the country back into another GP in 1937.
        Only those still alive like me have the historical memory of how bad things can get.
        We’re not there yet but we are rapidly deflating into the conditions that prevailed back then. Beware.

        • Root Farmer says:

          Pardon my apparent ignorance but, what exactly is GP? Or are your comments directed at those only “in the know?”

        • DR DOOK says:

          Sierra 7: My earliest and continuing memories of growing up was how we were affected in Appalachia. I warned my friends that what you put in your plate you had better eat it all . My grandfather was an imposing character and you would find out if you did that. His basic answer for all things economic was simple: Neither a lender nor a borrower you be. It was Mr Roosevelt in our house , not FDR. His simple answer has served me well. Most have never seen what hopeless looks like. I was spared and I don’t want to see .

        • sierra7 says:

          Root Farmer and others……
          GP=Great Depression
          I apologize.

        • My Dad, born n 1911, operated a filling station on the highway between San Angelo and San Antonio in 1931. When I used to question the wisdom of the FFR programs, my Dad’s response was “You were not here! In the store on the highway, I fed a hobo in the morning and I fed another one in the afternoon. Hopeless people walking along the road. If FDR hadn’t gotten in there and done something, there would have been a war right here!”

          I did not dispute his statements, as he said: “You were not there.”

          Dad was always truthful and factual with no embellishments or hyperbole. So I studied the history of the time and found the details of the “Bonus Army “ protest of summer 1932 when Hoover ordered MacArthur to disperse the peaceful protesters that were camped near the White House with 500 Infantry, 500 Calvary, 6 tanks and 800 policemen. See:
          I then understood the war that that Dad was talking about.

          It is the bad choices that we make in good times that bring us the unfortunate choices that we have now.

    • MCH says:

      You know, I have to admit I always scoffed at AOC’s Green New Deal, this is now much more likely to become reality. If this crisis lasts much longer GND (cause I am too lazy to type it out) is going to gain real traction and then take off.

      That moment is almost here. The only question is what industry is going to be eliminated in the process.

      • VintageVNvet says:

        Me too MCH, and I will continue to scoff:
        Not because all of the GND ideas are bad, even though some clearly are bad; mostly because as a life long capitalist, starting at single digit age selling newspapers in the streets, then advancing to delivering 125 every morning on my bike, mowing lawns on flat rate/contract, and loving every minute up to my last days as a ”consultant” billing by the hour, IMO THE best thing about USA, and the reason SO many want to come here is the promise of capitalism, if not lately the same as it had been since for ever.
        I hope, for the benefit of all people of USA, rich and poor, and pray that this event will be a trigger/catalyst for major changes I note below, and as specified in many other comments on this site:
        IMHO, if oligarchy does not use this opportunity to level the field once and for all, including: term limits; only public financing of all elections, from starting sort to final, with all interested folks able to start with only a simple verbal declaration, written and oral completely free to make, and free to anyone to access on net, and simple process to proceed from that to final election; all and every law to apply to everyone equally, including all elected and appointed public servant, etc., and on the financial economy side, an equally fair to all and applied to all process that will clearly include getting rid of many of the esoteric financial instruments currently being used to transfer wealth, etc., etc.
        Without significant changes and relatively soon, similar to the significance of the Magna Carta, USA is going to go down as did Rome, and so many other ”beacons on the hill” over the last couple of centuries.

      • Ed C says:

        This plague is the green new deal. Fuel consumption way down. Fewer planes flying. No cruise ships sailing. CO2 emissions down. It was blue skies in China when they were in their lockdown. Too bad it didn’t last. AOC’s green new deal is liberal foolishness that would be rejected as a junior high school science project. Why would this crisis suggest a green new deal? Global warming didn’t cause this virus.

        • MCH says:

          I am not sure I agree completely…

          Back in the depression era, FDR’s new deal was probably a crazy idea when it first came up, likely smacked of socialism and such, but one can’t argue with the results. Well, ok, they also had a shock effect from WWII.

          Just because she doesn’t have any realistic details other than the government spending itself into oblivion. It doesn’t mean that there isn’t a path to doing the GND that is potentially realistic and can be useful. After all, if the current strategy doesn’t work, and we’re already spending money like drunk sailors, may be it is time for a more radical approach.

          All I’m saying is, as much as I like to make fun of AOC and the GND, there is a merit to an intellectual debate and review to see how it can work, who knows… May be it is the right thing to do. But we’ll never get anywhere, if we just shot those ideas down from the start.

          Imagine if Einstein was constantly bombarded with criticism about relativity when he was in the post office… would he have been able to make it happen? Well, ok, in that case, probably, because you know… he was Albert.

        • WES says:

          MCH:. The GND is great as long as you are willing to put more energy in and settle for less energy out.

          For my GND project, I volunteer AOC to input the greater energy required so I can harvest the lesser energy output!

    • Grayce says:

      Two things: First, “tax and spend” is being replaced with “borrow and spend.” How is that better?
      Second, will Donald Trump become the most socialist president, surpassing FDR and the New Deal, and eclipsing LBJ and the Great Society?

      • Gert7to3 says:

        Tax cut and spend has been the basis for Republican voodoo economics since Reagan. It was on his watch that share buy backs were reintroduced.

        • 91B20 1stCav (AUS) says:

          Gert-check and double-check the point of the intellectual abandonment of governmental financial conservatism, traditionally touted as a pillar and mission of the Republican party.

          May we all find a better day.

    • Cruiser says:

      Price inflation is the only politically palatable tax option but enormously destructive to human society, as evidenced by the long history of such collapses.

      Resolving four decades of financial excess/monetary distortion will be profoundly painful.

    • mike says:

      Amen. It will be magnified, because only some states have competent governors and there is no competent US leadership. Without a nationwide lock down, the infections will bounce around like a ball in an old fashioned pinball machine: one state may lock down and burn down its infections bur since once state cannot close its borders to the next, the locked down state will eventually get re-infected by another state that never locked down.

      Everybody, fasten your seat belts! We are in an economic roller coaster and it has just barely started plunging down. Where it will stop, only god knows.

    • California Bob says:

      DJT != FDR

  2. William Smith says:

    With dropping share prices, reducing dividends, job losses and no income from interest rates, what happens when people don’t feel rich any more? Surely there will have to be deflationary pressures where prices will have to chase diminishing demand. But I’ve read that there will be inflationary pressures (maybe price gouging?). I don’t understand. Do I have to go to MBA school? I’ve overheard conversations where people are fretting about how to pay the rent. Normal people are already hurting, they ain’t feeling in the mood to spend at all.

    • raxadian says:

      Food and medicine prices won’t go down. Luxury goods price will most likely fall. Car sales? Hahaha, what car sales?

    • Deanna Johnston Clark says:

      Might be a good time to stop the boomer jokes and be nice to relatives over 65. I live under poverty level moneywise, but am already helping family…even though I made a resolve to help nobody with smart phones and IPads!!
      What the heck, it’s Lent!

      • Nat says:

        “Might be a good time to stop the boomer jokes and be nice to relatives over 65. ”

        I think there is a general hope/expectation from the boomer-joke-makers that the Corona virus will just flush out all the boomers from society and leave behind inheritances.

        • p coyle says:

          i hope there is an app that will tell them where the boating accident occurred…

      • rhodium says:

        If you’re under poverty level, then you’re not the type of boomer that younger folks are mad at. Although I’d like to point out that the opportunity cost of a smart phone or tablet was never a modest house.

    • VintageVNvet says:

      As a dirt guy at heart, especially after watching the stock market since the early 1950s era with an elder, and actually participating in that market until the 1980s, but never since, stopping when he died, and I realized I had never made much money in SM without allegedly insider information, I have watched the boom and bust nature of real estate as closely as I could, and conclude this one too, just like all the others that I know of, including the depression (formerly known as great, apparently soon to be eclipsed by this one,) will end with all markets, including dirt, way down, and then, gradually come back up again.
      Uncle went around CA in the early 1930s buying RE for cash for pennies on the dollar while selling bank supplies he made in his garage; cousin owned dozens of millions of that RE 40+ years later, and sold what he could, (due to guv mint takings, etc.) gave the rest away.
      House we bought in fall of 2015 HAD almost tripled, but will now likely go below the price we paid then; no matter, it’s likely our final home, not intended as investment, and I can only hope others our age are similarly situated with our entire ”nut” approx 1/2 of our SS.
      I can hardly wait to see the bargains in all markets in the near future!

    • Kent says:

      People think inflation is result of “printing money”. It’s not. It’s the result of wages growing faster than productivity. The Fed can print as much as they want. People will just hoard it in savings out of fear, and no one is going to be increasing wages. Deflation coming, except in healthcare.

      • Wolf Richter says:


        There are different kinds of inflation and they move in different directions: consumer price inflation, asset price inflation (including home price inflation), wage inflation, etc. They’re all tracked separately. “Printing money” has definitely created asset price inflation including home price inflation. But it has created no wage inflation.

        • Jdog says:

          I have to disagree with this. Printing money, does not cause inflation, borrowing at interest does. The Fed can print all the money in the world, but if no one borrows it, it is inert, and has no effect.

          This is the deflating of a giant debt bubble, and as more and more debt defaults, it will continue to drive deflation.

        • Hebron's Gate says:

          agree w jdog 100%; commoditized dollars dont cause inflation, in fact they induce deflation, because there is NEVER enough of it for the REAL economy, because ghost-dollars circulate in the financial economy.

          wrap your head around that. cut out the fed. let the treasury issue a 23 trillion dollar coin. neo-chartalism ftw!

      • Cruiser says:

        As with any asset price inflation is determined by the supply of and demand for the currency in question (drop in price of currency in goods and services terms).

        Note, demand can fall very suddenly with a loss of confidence in fiat, which is bound to happen at some point…probably in the not too distant future. The Fed will be mystified. They think employment rates drive inflation (a very popular academic fantasy).

        • backwardsevolution says:

          Cruiser – “The Fed will be mystified. They think employment rates drive inflation (a very popular academic fantasy).”

          No, they don’t. But they do use “employment rates” as a way to keep interest rates low for longer. It’s an “excuse”.

          The Fed manipulates interest rates, inflation, the Consumer Price Index, etc.

          The Fed should be called the “Visible Hand” because they’ve got their hand in absolutely everything. As Wolf says, they have engineered all of the bubbles that have been created.

          To manipulate things, to engineer them takes a “knowing”. One thing, or maybe even two, might be caused by an accident, a coincidence, but to end up with bubble after bubble takes diligence, manufacturing, steering.

          If you think the Fed doesn’t know what it’s doing, then you are the one living in a fantasy.

          The Fed is never mystified; they know exactly what they’re doing.

    • Fred says:

      You are absolutely correct. In the short term, deflationary. The real problems start when commodity prices start to rise. The solar minimum may have a say on that.

      • sierra7 says:

        The only role the FED has and has had and was born to do:
        Save the rich from the pitchforks of the general citizenry when the economy goes into the toilet.
        This time the FED has overdone everything.
        All the “natural” functions of the markets are hugely distorted.
        Somebody is gonna pay and I hope it isn’t me, but I know it will be my children and grandchildren and everybody else’s’ unless you are of the super wealthy. That’s how the game has been played since the advent of the FED. It just gets worse each time we have a downturn.
        The FED is the drunkard; the politicians and the moguls of the financial world are the “enablers.” You can also turn that phrase around; it works both ways!

        • p coyle says:

          my children and grandchildren will not be on the hook. not because i am wealthy, but because i had the foresight to spare them this fate by not having them in the first place.

          today was actually a really nice day. i didn’t go anywhere. i put the final touches on the garden, played with the dogs, had a couple afternoon beers (thanks wolf, kitten and ripp for the mug!). the sooner i am not allowed to go to the office, and get more free time to putter about the yard, the better as far as i am concerned.

        • joe says:

          Geez. I was gonna comment, but you said it better than me.
          How many of us are there?

    • caticorn says:

      It’s called a hyper-inflationary depression.

      • ewmayer says:

        No, it’s not – demand getting crushed unleashes *deflationary* pressures, as it did in 2008-9, when a bunch of “Weimar! Zimbabwe!!”-invoking twits like Peter Schiff were making exactly the same claim, that the dollar would collapse. Against what? I recall using the *rise* of the $US back then against the other leading currencies to buy a case of fine Islay single-malt directly from Scotland on the cheap. Currency collapses are inherently always more political events rather than monetary-printing phenomena – it’s when the world loses confidence in the backer of said currency. And see Wolf’s point about the crucial distinction between wage and asset-price inflation. The Fed has for decades been busy crushing the former while promoting the latter – that’s why just about everything keeps getting less affordable for the bottom 90%. It’s not that “there are too many dollars getting printed”, it’s that those dollars are going to the wrong side of the types-of-inflation ledger, to the financial sector so it can enrich itself by blowing one asset-price bubble after another, each of which boom/bust cycles magically leaves the rich richer and the poor poorer.

        • rhodium says:

          In terms of supply and demand, if lack of wage inflation for the bottom 90% is the case, then we’d have to say the value of work by people in the bottom 90% is not very high. The people at the top have more and more money with which to more affordably hire other people to do whatever it is they want (this includes any indirect means necessary to obtaining a good or service) however they don’t, choosing rather to accumulate rather than spend. What does this indicate? They don’t really need us in order to have enough, and the Fed can’t generate inflation because the relative value of human labor by people in the bottom 90% has been decreasing. Either the proles need to figure out how to do higher value work or if they actually want inflation, then more cash handouts will be necessary (otherwise inflation will stick to assets prone to being accumulated by the rich).

    • Ed C says:

      I see where the price of dog food has gone up. BTW, anyone who gets their dog food at Costco should know this: Costco’s dog food is made by Diamond Pet Food. You can find that available at Costco says “out of stock” in their online store.

    • Old-school says:

      In some ways the Fed conned people into thinking an asset price is wealth, but real wealth is the future income stream which for the sp500 was $58 with a long term future growth rate of low to mid single digits. Now it looks pretty foolish to have paid $3400 for $58 of income. Probably fair value would probably be at max 30 times dividend which is around $1750.

  3. kk says:

    One definition of inflation is too much money chasing too few goods. How much would you pay for a nice restaurant meal in NY tonight? In NY in 6 months time when most restaurants are bankrupt?

    • raxadian says:

      New York has had the problem of having way too many restaurants for decades. Every crisis they get hit hard and yet a few years later idiots are convinced to invest in a restaurant.

      Don’t worry, New York can survive with a third of the restaurants it already has.

    • Cruiser says:

      General price inflation is, by definition, a currency price drop in goods and services terms (price of currency lower in goods and services terms). As with any asset the price of the currency is determined by supply and demand.

      Demand for fiat will drop quickly with loss of confidence, which it the only factor supporting the value of fiat currency (literally IOUnothings). The debasement we will see is bound to result in a drop in confidence at some point.

      • Jdog says:

        This is wrong. We are entering a period of deflation.

        Inflation is caused by the borrowing of money at interest. If a widget costs $100 and you finance it at 10% the actual cost of the widget is $110. Since the money to buy the widget is created at the point when you sign the loan paper, you just created inflation by creating $110 of debt for a $100 widget.

        Deflation happens as a result of you defaulting on the debt you incurred to purchase the widget. The $110 you created to purchase the widget, disappears at the moment you default.

        When deflation happens on a mass scale, money disappears on a mass scale increasing the demand for money. The demand for money necessitates the sale of assets, which lowers the value of the assets as their supply and their sales increase.

        Even with massive printing by the Fed, the destruction of money outpaces the creation. This is why every asset class including gold and silver are devalued by the deflation created by the mass default of debt.

        • Cruiser says:

          Stay tuned and we’ll see what actually happens as central banks massively debase currencies in an attempt to paper over all the bad financial paper. Supply will increase, despite systemic deleveraging, and at some point confidence in fiat will collapse. This isn’t the first time in human history such a scenario has played out.

          The Fed is against a wall due to the zero bound. They can’t foment another financial mania without pushing nominal short rates lower than the last cycle (the “avoid hangovers stay drunk” strategy is over). We should anticipate an inflationary secular financial decline, likely over the next ten years or more.

        • Noelck says:

          It may start out deflationary but if the FED starts giving companies trillions of dollars and helicoptering individuals billions it will end in inflation. If the world loses confidence in the our fiat currency the US Dollar it will end in hyper inflation.

          How do you explain Venezuela?
          “Potential causes of the hyperinflation include heavy money-printing and deficit spending.”

  4. w.c.l. says:

    My god, I just saw where Las Vegas is going dark for at least the next 28 days! In the months to come we are going to see some of the most massive apps of the law of unintended consequences ever. There are going to be financial and emotional fallout from these shutdowns that we can’t even think of. BTW, has anyone else seen the “War of the Worlds” analogy where something that looked invincible, the markets, some politicians, or whatever are going to be brought down by this virus?

    • Paulo says:

      Anyone else waking up at night? 5:38am this morning and just finished a 2 hour talk with my wife. Started at 3:00am. And we’re actually doing okay. Instead, like Deanna said above, thinking about what we can do for family members, how the kids are faring, etc. I have one more town run to do just to get my van out of lockdown. I had a weird fuel gauge problem and the day my van was taken into the shop the place went down in quarantine until the staff could be tested for the virus. (All three of them exposed to a customer ). Luckily, we actually have testing in Canada. I should get it back Monday. Anyway, the only store stop will be the liquor store to pick up a few bottles of hard stuff, actually.

      I have Stock Market friends freaking out. Plus, we get the usual calls like “You guys are doing good where your are” (through this pandemic). My reply is to remind them we built gardens and infrastructure while they were in the Maldives or Cabo. They thought it would never end. Like I have said a zillion times on WS, when working guys are flying to tropical paradise locations for all inclusive weddings, the end is nigh because it is foolish and unsustainable. And it was.

      This upheaval is just the beginning and it is never going back to the levels of wasteful opulence my friends thought was normal western life. Sharpen your pencils and write down some planning steps, imho…..maybe on a calendar if you can get one that goes to 2022. Then, we’ll see how this is going down.

      • QQQBall says:

        Yeah, I go to bed early and usually up by 4:30am, but lately I have been popping awake at 1am or 2am.

        • Frederick says:

          Yeah me too I’m curious just what insanity is going on in the markets around the world and it’s making me a night owl lately

      • RD Blakeslee says:

        “I have one more town run to do just to get my van out of lockdown. I had a weird fuel gauge problem … ”

        Hey Paulo, you’re a practical guy and I have a practical tip for you: Use the odometer instead of the fuel gauge. Been doing that with my ’95 pickup, for years. 300 miles, fill the tank.

        • VintageVNvet says:

          Good start RD, and, I too used the same technique for many years with my 84 chevy 3/4T pickup that I finally passed last year to a couple of younger brothers who gave me $$ I asked.
          How some ever, IMO, it’s best to drive always, or at least as much as possible, on the ”top half” of the gas tank. I learned this the hard way with my first car, a ’56 Triumph TR-3 that, literally, conked out on me somewhere in SoCal every time the tank got below about 1/4; finally found an older English mech, who promply took out the tank and ”boiled” it clean.
          Top half of the tank almost always has less ”stuff” in it to clog and disrupt, no matter how many filters twixt tank and engine.

        • Paulo says:

          I was using the odometer for sure. But it was still freaking me out as we go into the back country. I spent too many years flying for a living and even though I only have about 3 gauges in the beast, I constantly do a scan and listen to all noises. The fuel gauge, I just can’t get past it flopping around. I changed the sending unit and it’s not that. Some weird ground problem the tech thinks.

      • Gene says:

        I woke up at 4:00 this morning and what should pop into my brain but an idea, a good one, about my Thrift Savings Plan (the name for the federal government’s 401(k)). Not something to do immediately, but later this year and next; specifically, taking distributions two years before the Required Minimum Distribution year (2022, in my case) so as to take advantage of the 0% capital gains rate. (Thanks, btw, to GWB in 2008.) My other funds certainly won’t be generating capital gains for at least the next couple of years. The tax savings will offset some of the paper loss.

        • Mark Stafford says:

          0% applies to capital gains and qualified dividends, not distributions from a Thrift/IRA/410K

      • intosh says:

        “This upheaval is just the beginning and it is never going back to the levels of wasteful opulence”

        It’s gonna be a cruel lesson, particularly for those we classify as “collateral damage”, but it’s a necessary one. Joe Blow office drone with four leveraged condo apartments may finally meet his day of reckoning when his AirBnB revenu dries up.

      • Nate says:

        Never happen again eh? So far there are no signs of humans learning anything from history. Yes it’ll happen again after the next big boom. Might take awhile tho.

      • VintageVNvet says:

        Good question Paulo: this old boy, having learned to be waiting on the corner where my newspapers were thrown out of the truck at 0330 about sixtyfive years ago, so that I could get finished by 0530 or so, go fishing, and then get home and washed up and at school on time, has been awake about that time every since… Now, I call it, ”work mode” and, yes, been in that last week or so, but mainly, because of fascination with current events.
        Wolf helps the fascination, as I think I am getting the real news here, and not some pablum predigested propaganda.

      • TXRancher says:

        With no disrespect intended , are you going to take another “test” after the visit and exposure to the liquor store?

    • Ed C says:

      Yeah, even though not official, there won’t be a World Series of Poker this year. How could there be? Not a big time player but that used to be an annual pilgrimage for me to play in a small event or two. I also can’t / won’t play in any local poker tournaments. This plague is a real bummer and I don’t face any immediate financial threats.

    • Old-school says:

      Read a good book on risk a long time ago. Supposedly booming construction of casinos means you are in the final quarter of the risk ballgame as capital flows to the stupid games of gambling your wealth away. When the bust hits and people are scrambling to pay the electricity bill the casino towns get hit the hardest.

  5. KPL says:

    “Kissing share buybacks and dividends goodbye.”

    That is only till these shameless beggars get the alms…

    • MD says:

      They may be brazen and shameless (and lazy), but there’s quite a lot of publicity ATM about corporates who have been spending cash on buybacks – step forward the airlines – it’s certainly something that’s entered the mainstream. So the C-suite may realize it’s not good for the corporate image to be seen to be doing it.

      And let’s face it – the fact it makes them look bad is the only thing that’s ever going to stop them..!

      Crikey they may actually have to invest in product and people development instead! Quelle horreur!

    • Deanna Johnston Clark says:

      They have no honor…sin verguenza…the great Spanish insult.
      We’ll see if the public takes it lying down.

      • Paulo says:

        I’m waiting to see Richard Burr and the blonde bandit be publicly tarred and feathered. The crook is trying to get out in front of it, but they are finished. Maybe they can hide out at a ________ property with Devin Nunes?

        • Shiloh1 says:

          Haha “the blond bandit” should be thrown out of Senate and take up pole dancing at one of those new drive-through “joints”.

          Really a great time for these scumbags to reveal themselves.

        • Nodak65 says:


          Hate to burst your bubble but it turns out that Dianne Feinstein also is also in that category. So maybe they can all hideout together, Oh I forgot her Husband sold the stock!

    • MC01 says:

      KPL: even the most profitable airlines such as British Airways and Ryanair can be killed in a matter of months by lack of cashflow because air transport is a business with extremely high fixed costs. That’s why everybody right now is scrambling to put aircraft in storage and crews on leave.

      If you think everybody will be bailed out, I have my serious doubts: China is presently putting together a massive consolidation plan of their air transport industry. They may have declared victory over Covid-19, but the troubles are just starting, and on top of that they have to deal with HNA Group.
      Dozens of airlines owned by local governments and private concerns will be forced to merge or they will be quietly dissolved, their assets and routes taken over by somebody else. That’s what is coming to Europe and the US as well: the era of making everybody a winner is over.

      • HowNow says:

        MC01 – what do you think the prognosis of the airline leasing companies is likely to be? Toast?

        • MC01 says:

          ACMI (“wet”) lease companies right now are exactly in the same boat as airlines: unless they are freighter-focused, in which case they are making a bundle, fixed costs will eat them alive in no time if they don’t send aircraft into storage and crews into leave.
          Dry lease companies have a better chance of survival because their fixed costs are somehow lower, but they still need to “pay the bills”, chiefly servicing their debt.

          The civil aviation industry will be heavily restructured after this, or perhaps even as this crisis unfolds: mergers and acquisitions will become very commonplace.
          As restrictions will be progressively lifted air travel will pick up again very quickly, perhaps more quickly than many of us would like, and the advantage will go to those who have restructured first and more efficiently.

          As for me I plan to do my bit for the industry as soon as this thing is over by finally going visit two places I have put off in favor of more work for over a decade now. ;-)

      • KPL says:

        I agree. But then the companies that will get the goodies are the favoured ones (by the ed and the government) like TBTF bails in 2008. So well run banks were allowed to go under if they were caught in the storm. This is exactly what this crony capitalism is all about. It does not go the deserving but the unscrupulous.

        Why not look at something like this which will help most people (which is exactly why it will be dumped) if you want to help companies

        1. See their track record (in terms of C-compensation, dividend, buyback) and only help those companies that deserve it (meaning to say – C-compensation does not gobble up the cash flow, dividend does not need to add debt, there have been no buyback in the last 5 years (or has been when the company has been undervalued)
        2. Let everybody bear the pain – Take the median compensation and those below get say 85%, just above get 75% and so on with the top management getting 10%. The logic is the top management have been hogging all along. It will be more just.
        3. Since anyway you are making losses, let some of the top heavy weights furloughed or sacked.

        I assume something on these lines can be done based on payroll data.

        Instead any form of bailout will be subjective and will benefit the favoured unscrupulous few. This is what you get when you have a bunch of unscrupulous few (senators front-running the selling of stocks) running the show for another bunch of unscrupulous few (United, Boeing) in cohorts with a powerful unscrupulous few (the Fed) instead of a system for the people and by the people. Unless there is a way to break this cabal it will be a case of rinse repeat.

      • Tim says:

        In China more generally, GDP just better than doubled (+115% real) between 2008 and 2018, but debt almost quadrupled (+290% real) to enable this to happen.

        We were seeing a lot of signs of severe financial weakness there, well before this happened – defaults (including SOEs), creit rating abnormalities, the collapse of P2P lending, tumbling sales of cars, phones, chips, components, and so on.

        Those who (rightly) describe Western economies as financial Ponzis need to look hard at China.

        Beijing’s primary political concern (which is urban unrest) has pushed them to prioritize volume (= jobs) over profitability (and it’s possible that an understanding of this weakness helped inform Mr Trump’s trade policy towards China). Creating excess capacity has driven RoC below cost of capital.

        Nobody should understate the impact of the virus, but China was getting near the end of a credit-fueled, volume-driven bubble anyway.

        If this means that they fly less, drive less, and pull back from overseas investment, that would be consistent with a failing credit bubble.

        • Wisoot says:

          Tim, your timeline of 2008 to 2018 has more context.

          Wolf the S&P 500 graph above just shows the Everest summit of 3,327.

          Using a 30 year contextual span, the current 2,398 will drop to rest around 1,500.

          If it goes below that, likely heading for a global financial reset.

          Gossip or Fact? Whilst the public spaces are empty, quiet 5G installations under the guise of cleaning companies ordered.

      • GSW says:

        Isn’t the bankruptcy code all but designed for airlines?

        Airlines are usually the ones that use BK habitually to shed bad airplane leases and pension costs. Several airlines have filed 2 and 3 times over their history. I would think they’ll all line up for a quick dip into BK like they have in the past.

        The government bailing out the airlines seems like a bad use of funds. Also, every American has complained ad nauseam about how airline service has gone downhill – maybe this is the perfect time to redesign the industry. Do we really need to save Spirit and Allegiant, or Ryanair who has said they would make people stand up on board if they could?

        • Zantetsu says:

          If you want better service you’ll have to pay more. What you are proposing sounds like forcing people to pay higher prices for services that they actually don’t want to pay for (if they wanted those services they would have been paying for them already).

      • intosh says:

        “ the era of making everybody a winner is over.”

        Love this line. Looks like the rigged monopoly game is being interrupted by a mosquito.

      • Paulo says:


        I know. I can’t believe it how corrupt it is.

        They call it public service.

      • Cas127 says:


        I thought the function of the air lease companies was to offload a lot/some of the risk from the airlines proper…by owning the hugely expensive aircraft and just leasing them to the airlines for set periods.

        Thereby lowering the airlines’ fixed costs in a very major category (the planes).

        If this is the case, what are the fixed costs eating up the airlines? The people can be furloughed when aircraft are not flying, fuel isn’t used, etc. There may be some contractual obligation usage for such categories, but I can’t believe the airlines would have negotiated much flexibility away.

        So which are the killer fixed costs?

        • MC01 says:

          Leasing is in most cases nothing more than financial fiction: a typical case is XYZ Airlines ordering 10 aircraft from Boeing but immediately selling them off to ABC Leasing and dry-leasing them back.
          This means the airline doesn’t have to open a line credit or seek other forms of financing to buy the aircraft themselves and only has to pay lease costs, which are often further broken down in airframe, engines, APU (Auxiliary Power Unit) etc.

          But XYZ Airlines still has to pay the crew, maintenance, insurance etc like they owned the aircraft outright. These are the killer costs, on top of the regular lease payments. Remember: with dry leasing you only get an aircraft.
          To make matters worse for all legal purposes XYZ Airlines doesn’t own their 10 brand new Boeing. This means they cannot be used as loan collaterals, sold to raise quick cash or even subleased unless the contract allows them.
          Dry leasing is basically all the pains of de facto ownership without de jure ownership.

          So why do airlines fall in the trap? When cashflow is strong, leasing makes sense. It’s just like paying bond coupons without having to issue bonds. One less liability. But when cashflow is drying up, or when the company faces any sort of financial issue it does go to Heck in straight line.
          Alitalia runs such massive deficits because they have been flying for years an almost entirely leased fleet: they have even sold the aircraft they owned outright (such as the 777’s) and leased them back.
          Oh, and don’t think you can skip a lease payment: leasing companies can and will repossess their aircraft pretty much the instant the contract allows it, as Jet Airways of India found out.

    • Mark says:

      “That is only till these shameless beggars get the alms”

      You bet….. the 1% War Party Of The Rich takes care of itself, big time.

      They’ll sweep a few crumbs off their plate for the rest of us.

      Like they always do…..


    • Memento mori says:

      Dont blame the companies for the share buy backs, blame the Fed.
      What are the companies supposed to do when interest rates are zero.

      • California Bob says:

        re: “What are the companies supposed to do when interest rates are zero.”

        Um, maybe borrow a couple billion $$$ to finance design, engineering and marketing of a new short-haul, single-aisle, twin-engine aircraft from a ‘clean sheet,’ instead of slapping a couple large turbofans and some software patches on a 30-year-old aircraft that is well past its prime?

  6. Guy Fox says:

    Where are the down grades staying ?

    • Cas127 says:


      Good question…a useful doc would be the most recent list of BBBs…or the equities down the most YTD (a lotta overlap in those lists)

  7. Michael Engel says:

    1) The Wuhan virus main victims are the elderly with chronic disease.
    2) Instead of dying within 5Y, at tax payers expense, they die within a week.
    3) For 3.5Y US indulged itself in the pleasure of building up a strong defense.
    4) The Wuhan war is a new type of war DOD cannot fight, or win.
    5) After raising US gov debt buying planes, tanks and paying troops & vets,
    US gov debt rise vertically in the unexpected Wuhan emergency. Our debt is accelerating to save the elderly.
    6) Extreme measures to stop the spread of virus will destroy the fragile health of the aging US economy. It kill our country.
    7) If the Wuhan battle will end up as an attrition war or lost, US
    will plunge into a prolong depression.
    8) The bottom line is : death to US vs 100K senior citizens saved.
    9) The epicenter is the east and west coasts, the impeachment hot spot.
    9) Ca leaders will always mock and complain in order to squeeze more.
    They will blame for political gains. Saving sinking Ca is “sunk ” effort.
    The more fluid u give them, the more they will hate u get.

    • Lance Manly says:

      Normally I can’t comprehend what you are getting at in your comments. This time I could though and found it pretty disturbing.

      • VintageVNvet says:

        Agree with you Lance that ME can get pretty ”dense” in many of his comments/posts on this site; however, I have found that if I will take the time to interpret/translate, whatever, he does make some really good points most of the time.
        This one, more accessible than usual, especially good points, except that not by any metric is this so called ”Boomer Remover” only deadly to older folks, and IMO we will see this very clearly as a result of the spring breakers taking it back to their homes now that most colleges have shut down dorms, etc.
        I am older than the boomers, so am always on guard for health related challenges, and began taking increased ”maintenance” dose of Vitamin C in Jan when it became apparent it was horrible, and am prepared to follow the clearly reported findings of Linus Pauling re ”remedial” dose if it becomes necessary, meanwhile, STAY HOME!!

      • Shiloh1 says:

        If I’m reading Denninger’s post recent post correctly then the Spring Breakers and similar conducting normal life activity may actually save the day on this. That is if the otherwise young and healthy get the virus and spread it amongst like healthy people in the general population, then this thing will burn itself out sooner rather than later. A virus generally wants to spread, not kill. The more and faster it spreads amongst the healthy the faster this process, and those who get it and recover have built up the immune antibodies. This is like a vacillation from Mother Nature to build herd immunity. The old, infirm, unhealthily, diabetics need to be sheltered / separated however. We can get this done in 90 days, but if this course is not taken then it will run rampantly for 2 years, ultimately kill more people, and destroy whats left of the real economy. The priority should be a test to see if a person already has the antibodies, likely shrugged a brief spell of sickness off thinking it was “the flu” or a bad cold at the time.

      • intosh says:


        “ That is if the otherwise young and healthy get the virus and spread it amongst like healthy people in the general population, then this thing will burn itself out sooner rather than later. A virus generally wants to spread, not kill. The more and faster it spreads amongst the healthy the faster this process, and those who get it and recover have built up the immune antibodies.”

        Such a flawed and dangerous reasoning. First of all, you can’t choose who to “give” the virus to. Second of all, healthy people may still need treatment and visit the hospital. This will tax the already overloaded healthcare system. Didn’t you hear about “the flattening of the curve” yet?

      • Saylor says:

        Sounds like a ‘Putin Puppet’.

        You know, sowing discord and such?

        I’ve seen a lot of this sort of stuff and have realized there is the disinformation spread by a hostile state which then ferments it more within non hostile state attitudes (haters will hate.

    • Deanna Johnston Clark says:

      The only exception to the elderly on many medications already seems to be the party animal celebs and royals and such….fascinatin’, ain’t it?

    • 2GeekRnot2Geek says:

      Michael Engel,

      It disturbs me that you seem to be very concerned with the elderly and chronically ill being unwilling to die quickly and quietly so you can get on with your life.

      The bottom line is not “death to the US vs 100K senior citizens saved.”, and BTW, the number is a crap-ton bigger than 100K using the herd-immunity route. This is about keeping Medical Services from being overwhelmed and collapsing. See what’s going on in Italy right now for more information. That’s where the US will be shortly if there’s an immediate return to life as usual.

      Some waterfall effects from the medical system being overwhelmed will be:
      1. Shortages of necessary medical supplies.
      2. Shortages of medical professionals. When the overworked and stressed medical professionals become ill, less is definitely not more.
      3. Triage for all incoming patients. Not just Covid-19 patients. There may be no ventilators left for that emergency appendectomy you desperately need. Just sayin.

      All that and more is what will be coming to a neighborhood near you if this lockdown effort fails.

      So yes, life is hard right now. It may get much worse. But we’ll get through this together, or probably not at all. So get a heart tin man.

      FWIW I live in Pennsylvania so I’m in a lockdown state. I like my older relatives and neighbors. I enjoy their company, and I want their children and grandchildren to have the pleasure of their company for however many years they have left.

      • Deanna Johnston Clark says:

        Thanks…I learned a lot from my grandparents about the depression and getting along on much less. Now at 72 I can pass it on, if the Starbucksers want to listen!!

        • Brant Lee says:

          Yes, my father talked about the good old days he said that weren’t so good. He lived it. Our bones have forgotten the difficulty of the early 1900s. A reminder may be coming for the early 2000s.

        • WES says:

          Brant Lee:.

          The quickest way to get into my Father’s bad graces, was to talk about how wonderful the “good old days” were!

          He would tell you they “weren’t so good”!

          Starting with central heating and indoor plumbing!

          When I was about 7 or so, I was reading a history book that showed an illustration of an Egyptian pharioh sitting on his throne, being cooled by two men waving palm branches.

          I made the mistake of saying to my Father, “It must have been wonderful to have lived in those times!”

          My Father shot back. “Son, you would have been born a slave!”

          Suddenly, I was now the one waving the palm branches!

      • Kent says:

        Great comment 2Geek.

      • RD Blakeslee says:

        From one oldster to another: Thank you.

        It used to be a truism: “Our elderly built the country”.

        That’s not heard much anymore – probably just as well: I’d hate to take the blame for the excesses I see everywhere in the country today.

    • scott henson says:

      Someone hasn’t really been paying attention to the reality of this situation! “death to US vs 100K senior citizens saved”, naive to say the least ( and I presume you’re NOT a senior citizen)!

    • Steve Graves says:


      Kindly crawl back into your hole while the rest of us try to react to this situation with wisdom, grit, and compassion.

      • California Bob says:

        re: “Kindly crawl back into your hole while the rest of us try to react to this situation with wisdom, grit, and compassion.”

        And, hopefully, with humor.

    • HowNow says:

      Using that logic, Mr. Engel, you may want to have obese people ineligible for medical insurance (unless they pay an exorbitant premium) due to their massive consumption of sugary soft drinks, people who have heart disease due to eating sh*t from fast-food vendors, people who have lung disease due to smoking, and people suffering from depression since we’d all be better off financially if they just killed themselves. And, by the way, you may want to stop using the software, technology, defense capabilities of the U S military, numerous vaccines, health remedies, and more, because they were developed by some of the elderly that you have no compunction about doing-away-with. I imagine that you’re a member of a Master Race because there are many of us who are flawed and may not survive this pandemic and may not qualify for membership in that race.

      • Memento mori says:

        I dont know if I would agree with your logic.
        One of the reasons we are in those dire straits is that we dont talk anymore about individual responsibility , saving for a rainy day, etc. Instead have created a “victim” society where our problems are always someone else’s fault.
        If you are obese, there is a 90% chance that your need to change your lifestyle, exercise and EAT LESS. If you have lung problems, STOP SMOKING.
        People who advocate for the government to give free stuff, do that simply because in their mind its someone else footing the bill and it makes them feel good.
        In fact they wont never buy a lunch to a homeless person with their own money.

    • Gandalf says:

      I propose we call it the “Vail Virus” or “Italian virus”

      A particularly anti-Mexican person I know was ranting (again) about how f——-g Mexico had not shut down its borders to people from China when I showed her this news story about how the LARGEST currently known cohort of corona virus infections in Mexico started with two charter flights of the richest people in Mexico (including the CEO of Jose Cuervo tequila) who had gone skiing in VAIL, COLORADO and got the virus there, bringing it back to the Mexican state of Jalisco. A subgroup of these same people then proceeded to a beach resort in the state of Nayarit.

      The Vail pandemic is being blamed on Italian tourists.

      Rich Italians love to ski on America’s mountains. When I was in Reno, during ski season, I saw a head to toe CT scan of one older Italian man who had been helicoptered in off the Lake Tahoe ski slopes because of a ski accident. The good news – not a single broken bone in his body. The bad news – a big fungating lung cancer! Those Europeans still love to smoke!

      • Thomas Roberts says:

        The new official name for the Wuhan Coronavirus is “the CCP Coronavirus” or “CCP virus” for short.

  8. PGibby says:

    Just wondering – when comparing current stock price to the stock price 7 years ago (like in the airlines chart), should the net reduction in total share outstanding from buybacks be factored in when making the cost comparison?

    • Wolf Richter says:


      To answer your question: No. My airline index chart is not based on stock prices but on market capitalization. It reflects the dollar amount these companies are worth in the market on each day.

      • PGibby says:

        Gotcha – comparing market cap vice share price over time makes it apples to apples. I should have seen that was what you were doing. Thanks.

  9. Michael Engel says:

    10) This little Dr. at the top and his troops put US economy in a coma.
    11) We know how many people die from car accidents,
    drugs overdose, but this is something else.
    12) US health bureaucrats and researchers put US in the surgery room in order to know the unknown.
    13) US will stay comatose until we know.

    • Anthony A. says:

      13) US will stay comatose until we know.

      Yeah, sounds like you haven’t been around too long nor have you spent any time in a real battlefield. The U.S. PEOPLE have a lot of resolve and will come together and get by this bad time. We’ve done it before.

      • MC01 says:

        People here in Italy are behaving magnificently and are putting our so called leadership to shame: instead of threatening to shoot people in the streets or play the blame game our chattering class should bow down in front of the people and work hard to mitigate the effects of this lockdown. It’s a classic case of lions being led by donkeys.

        I have zero doubts the US people (and everybody else) will behave just as admirably during and after the crisis.

        • Nicko2 says:

          The US is on track to have the largest death toll from this pandemic; it’s not looking good. But it may be a cathartic moment in US history.

      • Gian says:

        Thank you Anthony A., for the sensible and logical commentary in an otherwise doom and gloom blogspot. Wake up folks, opportunity abounds if you can think outside your self-imposed prison cell, recall history and realize this too will pass. There will be, “I shoulda, woulda, coulda” moment with this crisis too.

    • David G LA says:

      Based on this poster’s grammar, I’d wager he is not a native English speaker. Michael Engel – where do you live?

    • Wolf Richter says:

      Michael Engel,

      Seems you don’t understand human nature, or the resilience of Americans. Americans routinely go through hurricanes, tornadoes, earthquakes, floods, droughts, wildfires, etc. And we get through each one of them and we rebuild and go on. That’s how we do things in America.

      We’re in this together, and we’re going to get through this together, and we’re going to get out of it together.

      • stan6565 says:

        ME sure has some acerbic and dry commentary. Clearly majority of readers here don’t understand him. I often don’t.

        No need for people to gang up on him because what he’s saying is not plausible or pleasant.

        Freedom of expression and that stuff.

        From lockdown UK

  10. Deanna Johnston Clark says:

    Meanwhile, we will experience what Russians went through in the 1990s and get a new life challenge.
    I love to chat and my town is 60% southern black people…they have the “another day at the office” attitude. Circulate, folks…smile. Perspective is almost everything.

  11. Tom Pfotzer says:

    Is it time to consider what we’ll do if our national situation continues to degrade?

    A plan B might be worth developing now. It may not be necessary to implement plan B yet, but the likelihood of needing a plan B is increasing.

    Selected elements of my plan B:

    instituted “social distance”. Getting rather serious about that one.

    pre-bought most of the materials I need for this summer’s work now, while the supply chains are functioning

    stocked up on non-perishable food

    Installed generator. Stocked in fuel enough to last months (1 hr a day usage)

    Bigger garden. Seeds in-hand. Soil’s already up to snuff. Got tools.

    There are other steps done as well, but that’s enough to give you the flavor. Of course what’s possible/works for me probably isn’t right for you.

    I’m just reporting this to indicate that I’ve decided to act on this incoming threat.

    Please keep in mind that maneuvering room diminishes as things start breaking.

    Reading the tea leaves, it doesn’t look like we’re not going to get a functioning economy top-down (e.g. from our “leaders”).

    That leaves….us. Got ideas?

    • Nicko2 says:

      The answer and solution is the election in November….if the US makes it that far.

      • HowNow says:

        I think people are overly critical of leadership. After all, he’s quite the expert when it comes to bankruptcies.

        • Iamafan says:

          It does not change a thing. We are still on the road to bankruptcy. I don’t think debt solves anything.

        • Old-school says:

          Do you ever notice that both parties embrace money printing by the Fed and bigger deficits? It’s just assumed that easy money is the solution to every problem. It seems we are in such a fix when the only solution to too much debt is more debt.

      • VintageVNvet says:

        Don’t I wish!
        Once again, we appear to be heading for a national election where the leading candidates, so far, the same as 2016, give us a choice between two clearly identified crooks.
        After studying them both as an ”always voting always independent,” I could not and did not vote for either in 2016, and, if the current trend continues, I will not vote for either this time.
        We need some real leaders to step up, but, unfortunately, most real leaders that I have known in military and civilian life have been intelligent people, and know full well how horribly they would be treated these days, so far.
        May the Great Spirits Bless us all!

        • Unamused says:

          I could not and did not vote for either in 2016

          You can always vote for the meteor as a write-in, even though cov-19 is the current favorite.

          May the Great Spirits Bless us all!

          A priest, a rabbi, and an imam walked into a bar. I looked up at them and asked “What is this? A joke?”

          We’re projecting 6k DJIA and $10/bbl oil before the end of planting season. After that, things start to get ugly.

          It’s going to take time for things to get weird ugly. Rome wasn’t built in a day. In point of fact, it was never actually finished.

        • Grayce says:

          You must vote. Even for the lesser of two. That is the one and only way to maintain a rule of law.
          After the election, insist that the 100 Senators and 435 members of the House give us a full Congress of 535 paid representatives. PAID REPRESENTATIVES. We do not need to hand over the country to the last man standing of those two.

        • 91B20 1stCav (AUS) says:

          Grayce-you may be familiar with U.S. Congressional history. There is an interesting long-term effect of the number of House members being limited to 435 in the 1920’s (in the interests of, for lack of a better word, ‘efficiency’). The Constitution limits the population of a Congressional district to 30,000, but, THERE IS NO UPPER LIMIT. Given that the national population in the ’20’s was approximately 150 million, and now is well north of 300 million, the arithmetic indicates a steep discount of the average voter’s actual voice in Congress over that time (Note states that have lost all but the mandated one of their House reps). The ramifications have been many, the most important, imho, the huge ascension of party over local politics (and the concomitant limiting of target outlets for special-interest monies to affect national policies and budgets…).

          May we all find a better day.

      • intosh says:

        15. Systematic “gutting” of public services and governmental agencies, as a continued scheme to sow mistrust in the public sector.

      • Grayce says:

        Have you seen the “Cycle of Civilization”?*
        The average civilization lives about 200 years. They progress through stages: From bondage to spiritual faith
        From spiritual faith to great courage
        From great courage to liberty
        From liberty to abundance
        From abundance to selfishness
        From selfishness to complacency
        From complacency to apathy
        From apathy to dependency
        From dependency back again into bondage
        The USA has already had its bicentennial, but the cycle is not inevitable. It depends on every American to open their eyes.
        *Credited to HW Prentis, Jr.

    • Dan Romig says:

      Yup, got my 150 cc front tine tiller fueled up and ready to go, and will plant a bigger garden this year.

    • Paulo says:


      Like your list and approach. I asked my wife this morning if we should just leave the elk gate closed from now on? (Elk come in a terrorize our gardens). She doesn’t think we’re there, yet.

      Anyway, we live in a rural valley on the stormy coast and your list is pretty much SOP for long time residents. To add to your list you might consider communications. In any real emergency the first thing to fail is the cell phone network. The internet only has a few different hubs. A couple years ago I obtained my Ham radio certification that allows me to build and maintain my own equipment and operate 2250 watts ssb, which is powerful enough to talk to anywhere in the world. For $400 I bought two used hf radios and use one for a home base station and one is portable I keep in a pelican case. The antenna is made from lengths of old speaker wire. I also have a portable Chinese radio which I can program in any frequencies in any band. I can even send text messages by radio from this computer, if I so choose. Fantastic unit. Is this necessary? No. No more necessary than having a generator and gas, tools, or a bigger garden. Plus, keep cash around, at least $1,000 in twenties and smaller bills. The value of peace of mind? priceless. :-) Plus, it was satisfying to learn about radios, and while my skills are pretty basic compared to a commercial or military trained operator, I can at least communicate with others if need be.


      • RD Blakeslee says:

        Paulo, I’ve got a bunch of communications stuff in a Faraday cage, against the day, but I’m going to look into ham radio. At least a good research project during lockdown.

      • Tom Pfotzer says:


        10-4 on the comm suggestion, and thanks. Been considering it…you may have wobbled me over the line of decision-making.


        And to Unamused: That’s a tough list; I’ve been watching that come together for some time. This is what worries me 2nd-most about Mr. Trump – for all his protestations re: Deep State, he’s helped move the list along nicely.

        MC01: the positive, affirmative confidence you display toward your fellow-persons is both well-advised and admirable. I am trying to follow your example.

      • Dos Tacos Mas says:

        Paulo – Serious question – HOW will you use your HAM equipment? I got a license a couple of years ago and worked hard at trying to figure out how it would help in an emergency. The local police and fire have no equipment or interest. I’m not sure how worldwide contact is helpful. There is a local HAM group, and I spent a bunch of time with them, but ended up thinking it’s a solution in search of a problem. I finally gave everything away…

    • RD Blakeslee says:

      Actually our family plan “B” was begun during the Cuban missile crisis – get out of town. But I don’t believe waiting is wise – get out now.

    • economicminor says:

      yep, ready here as much as you can be. Enough solar panels w/ battery back up to run my water pumps and refrigerators and freezers. Large garden area fenced with 21 large raised beds. Drip irrigation. Been getting ready for a long time.

      The real honest truth is that something always breaks and every year I have to replace something. Also I don’t have animals so I have to get fertilizer from somewhere else. There is no way to be prepared for what might be coming. Seeds go bad. Many are hybred and have to be bought new each year.

      The unfortunate reality is that we are all in this together and if the internal supply lines break down we are all in serious trouble.

      Then there are things that really don’t help like a neighbor cutting down a very old bee tree a year ago. Now there are way fewer bees to pollinate my fruit trees. Another neighbor bought some bee hives but bee husbandry is an art/skill and so far I still haven’t seen many bees around. And you really can’t do it all yourself. Especially as you get older.

      • Charles Reese says:

        You can keep seeds for a long time if you save them properly. I have many seeds that are more than 10 years old that still germinate 50%. The most important thing is to keep them dry. Buy a bag of indicating silica gel desiccant, some small muslin bags (4″), some metalized mylar bags (large ones, I use empty splenda and stevia bags). Fill a small bag with the desiccant and put it in a ziplock bag with your seed packets, collect a number such filled ziplocks and put them in a metalized mylar bag along with another desiccant bag and seal it up. Keep the bags in the coolest room in the house or in the fridge or freezer. Inspect the bags every year and replace the desiccant bags if needed. You can reactivate the desiccant. You need the mylar bag as plastic bags are too permeable to moisture to use for long term storage, if you put one of your desiccant bags in one and leave it out you will the desiccant indicate moisture in just a couple months.

        Good Luck

        • Xabier says:

          Thank you for that suggestion, have been pondering seed-saving recently.

        • VintageVNvet says:

          This is very solid advice Charles. We started a farmstead in 99, and soon found out about and contacted Seed Savers Exchange to begin using only heritage and other non hybrid seeds.
          We learned how easy it is to save all vegetable seeds each year, and still have many 5 years later, saved similar to your advice, though I think your method is better.

          Thank you.

  12. xear says:

    Wolf: Your first sentence, “… the financial media proclaimed that the Fed had succeed,” may have meant “had success.”

    As a professional writer, I recommend the free version of “grammarly” which is an easy download. You don’t need the paid version.

    • Ron in Ohio says:

      “I may not be a professional writer, but I did stay in a Holiday Inn once”.

      Quit being so smug. I for one appreciate the great service Wolf provides. Unlike math, language is just a bunch of rules made up by people in ivy towers looking down their noses at the rest of us. The gall. (I know-not a complete sentence). If you don’t like it, don’t read it. And when you need to change a lightbulb or fix a plumbing problem, don’t call me.

      • Wolf Richter says:

        Ron in Ohio,

        Thanks. But don’t let this stuff get to you. I got up at 5 a.m., and I worked all day, and I finished this article (#2 for the day) at midnight my time, and I posted it and passed out. I was so tired I couldn’t even see the letters on the screen anymore. I appreciate it when readers point out typos. Happens all the time. I appreciate it even more when they’re being funny about it.

        • Michael says:

          I personally appreciate your writings typos or not. I could not keep up the pace or quality.

        • Petunia says:

          I hate the grammar police. Everybody knows it was a typo.

          Please contribute more relevantly.

        • Petunia says:

          Sorry Wolf,

          My comment was meant for you know who up above.

      • Ricardo says:

        We often stay at “We R Inn” in Davao City and when we leave we R out.

    • Andrei says:

      I uninstalled free Grammarly plugin after I realized they store and analyze every word I’ve written…

      So, my bet Wolf will hardly like this as well :)

      That said, I’ve always been wondering whether Wolf uses some software – I have to look up a word or two every now and then in his articles. Very seldom on other sites I regularly read.

      • Wolf Richter says:


        I don’t use special software other than Word. Occasionally, when the spellchecker gets me tangled up in my underwear, I resort to my digital dictionary which still works on Windows 10 though it was designed for Windows 98 when I bought it 20 years ago. Some things never die. And I order the guy sitting bored inside Word to get off his ass and read my articles back to me so I can hear what I wrote, which makes a big difference for me. I have an MA in English and used to teach that crap, when I could even get a job, before I got my MBA in finance, back in the Stone Age.

        • RD Blakeslee says:

          I just enter my version of a word in DuckDuckGo (Like Google,only it doesn’t track you). If the spelling is wrong, it will ask you “Did you mean (word correctly spelled)?”

    • Wolf Richter says:


      “had succeeded” — thanks

      As far as the rest of your suggestions, it sounds to me like you tried your hand at humor.

  13. Unamused says:

    Remember when I said everything would be okay so long as everybody could make their minimum monthly debt payments? Well, fled is that music.

    I also pointed out that the system only holds together because most people reliably get up in the morning to go to work so they can pay their bills. It’s still a majority, probably, but it’s not ‘most’ any more, and not nearly enough.

    The debt defaults are coming.

    The 2008 meltdown eventually resulted in a new 12½ year closing low of 6,547.05, on March 9, 2009, for a total loss of 54% in 17 months. It’s worse this time.

    The corporatist powers-that-be lost control for decades because of FDR, and it’s taken them all these years to get it back so they could have themselves a repeat of 1929 and the Great Depression. They’ve sort of overdone it, though.

    This time, there will be no FDR. There will be no ‘New Deal’. Roosevelt co-opted a lot of the socialist agenda of that time to save capitalism from itself, but now there is barely any such socialist movement. After FDR, TPTB went through a lot of trouble to systemically get rid of the old leftist political parties and to make ‘socialist’ and ‘liberal’ into dirty words, in order to gaslight the general population into believing there is no alternative to capitalism, and, by extension, no alternative to crony capitalism, despite the examples to the contrary. Richard Wolff can tell you all about it, if you’re interested.

    You’ve probably noticed that the corporatist class has long been heavily favored over the general population. That’s likely to result in a corporate totalitarianism in short order because the people will be unable to stop it. As Adams, pointed out, there never was a democracy yet that did not commit suicide. You can kiss SS, Medicare, labor unions, and the minimum wage goodbye.

    In the 14th century the Black Death eventually subsided but bubonic pandemics recurred for centuries, and it never really went away. Likewise, the cov-19 pandemic will eventually be brought under control, in a couple of years, but it will also linger. You’ll get used to it.

    In the meantime, resource depletion and climate change will accelerate, resulting in an ecological catastrophe that will prevent any real economic recovery, ever, far from what you’ve gotten used to. Most people are non-performing financial assets anyway. The world will inevitably depopulate rather severely.

    What to do. You could get together with a number of like-minded people, pool your personally-productive resources, and form a private corporation where you and your friends control your own means of production and isolate yourselves from the usual follies. Make ‘social distancing’ work in your favor. That’s pretty marxist, though, and most people are going to be disinclined to do that because they’ve long been conditioned by their masters to actively distrust each other. These days people are dependent on faceless corporations that aren’t at all marxist, which has made it too easy for them to snub thy neighbors, rather than cooperate with them.

    So these are the best of times, such as they are, and the worst of times are still ahead of you. So you might as well enjoy them while you can, if you can, and not worry too much about the future. There is no time but the present.

    • Zantetsu says:

      I agree with a lot of what you say but I don’t think that climate change will lead to the catastrophe you think. Humans already used technology to adapt the world to their needs. We’ll just do the same thing for whatever world climate change gives us.

    • A says:

      Socialism is actually a huge topic of interest to many (perhaps most) younger people, from people who make meme jokes to the ones who actually discuss various branches. Bernie has been written off by a lot of people but he’s done more to spread the ideas that people need to hear than most older people seem to realize.

      I mean no disrespect but the sheer nihilism of your comment brings out the hopepunk in me. The darkness you see coming looks a lot different to me. I see young people who have been in despair for all of their lives struggling against the system they believed in the past. They don’t believe it anymore. They know what it’s like to hurt financially.

      Classism is alive and well; the world has been a bad place for decades for many, many people who didn’t qualify for post-WWII benefits but instead got the short end of the stick re: rising rents and useless albatross college debt. The cards have been stacked against young folks for a while and whatever you think, they haven’t been blind to it. At least a whole hell of a lot of them haven’t been, and aren’t. It’s hard to miss the pain when you live it.

      Anyway, the house of cards is coming down. For some people that means a brighter future. I’m not saying it will be painless, but corporations can’t “just in time” and “stock option” their way out of this. There are consequences they can’t get out of. And however that plays out, whatever it means, there is a chance for the younger generation to actually get some breathing room at some point, to start building a good future.

      One of the most popular games right now (I admit I don’t play video games) is “Animal Crossing” where people get to live in a simple village fantasy world of picking fruit, talking to their neighbors, living a gentle, quiet life. This is not some outlier; it’s an intense feeling a lot of people have — a longing for community, to be able to grow things, to have breathing room and neighbors.

      This is what the young people want. They understand enough socialism to realize that capitalism ain’t shit the way it’s currently run. As more fallout happens, more and more people realize this.

      In general, the folks who haven’t been “winning” for a long time have been ashamed of themselves, have believed they were loser for getting the short end of the stick. People who are doing well don’t want to believe any luck was involved. When a lot of people start doing bad at once for things that don’t seem to be in any way their fault, more and more people are exposed to the dark underbelly of the current economy:


      Even the committed capitalists know there’s a problem. I’ve been seeing articles that admit as much for years. We ALL know there are problems. The status quo isn’t going to work. However this falls out, no benefits and no protections for workers simply isn’t something people are comfortable stomaching. Oh, so now grocery store workers are essential service providers? And bankers and billionaires are more or less unnecessary and useless? I’m telling you, things are changing before your eyes.

      Economic recovery to me would mean a good life for an average person–not a few billionaires and a lot of unhappy people desperately struggling to keep the nihilism at bay. It would men less materialism, but a world where everyone can grow a garden, know their neighbors, have a safe and secure place to live, and not chase the almighty dollar. We’ve been dancing to the tune of psychopaths for far too long. It’s time to build something better.

      A generation is being formed during this crisis. They are not blind, and they will not be powerless forever. <3

    • Root Farmer says:


      Thank you for the lead, I’m following up on your recommendation. Your deeply held convictions are being grossly offended by the events of the day. Hey, welcome to the club, looks like the membership is growing but way too slowly.

      Over the many years I’ve been stalking this site, I’ve always been impressed by the breadth and depth of your writing. You are an essential part (along with many others) of these discussions. Many times, I’ve witnessed your comments replied with arguments made in bad faith or simply ad hominem attacks and personal threats. I know you know this, but recognize the fear these ideas bring to a lot of people. Seems the more personal the pushback, the closer you are getting to the truth. Personally, I like that. :)

      We are on the cusp of great change. “Great” in the sense of large. The quality of the change is, at least in small part, up to us. I doubt you would, but don’t give up on this forum. While you are one of the standard bearers here, there are many readers who are silently inspired by your contributions. I know this because I don’t consider myself to be remarkably unique. To make a too long a post only a little longer … keep it coming.

      Remember, change always starts local and in small communities. This is but one of those communities. Thank you to ALL for your contributions. The combination of wit and honest analysis makes this an incredible place to spend time.

      Best wishes to all in these times …

      • Unamused says:

        Thanks, Root Farmer.

        Your deeply held convictions are being grossly offended by the events of the day.

        Actually my point of view is being confirmed. But it’s not as if all the patrons of this site couldn’t see it coming, except for the pandemic. Every article on this site has been describing for years how squirrelly things were getting.

        The financial markets were starting to crumble months ago. You can tell because the Fed was gearing up more emergency measures back in the fall, on top of the emergency measures it’s had in place since 2008.

        There’s nothing new about my ideas. Monasteries were very popular in the centuries after the fall of the Roman Empire, for example. We’re just not religious about it.

    • Ethan in NoVA says:

      The market hasn’t really been based on fundamentals for a while, right? It’s scripted computers and HFT and insiders playing games. What’s to say the computers won’t start going on a buying spree once a few positive news articles show up in some RSS feeds?

      Why would there be a return to sanity now?

      The stock market is way different than the old days.

  14. former says:

    Wolf, since you started with stock market, there is a segment of industry, that is literally printing money right now. Oil carriers. This economic slow down is causing lots of oil glut, that needs to be stored somewhere. One tanker was just recently being filled with jet fuel.

    Stocks of these carriers are down as well, but looks like, some will have 2020 net income close to equal of their market cap!

    Maybe time to get Kuppy, to contribute an article again? I think you had him here before. (AdventuresInCapitalism)

  15. Iamafan says:

    The biggest difference between 2008 and today is during 08 the Fed bailed out the banks (replacing worthless private MBS with government securities). Today, the Fed is buying (back if I may describe so), government securities used by hedge funds to lever up. They are simply fixing a fire sale of Treasuries due to a huge margin call or deleveraging or bust.

    This is the easiest way to describe what the Fed is doing. After this, the real damage to the economy by coronavirus is next. Message, it ain’t over yet. The bubble pricking just got started. Have a nice day staying at home.

    • NewGuy says:

      I see the virus is spreading rapidly in Greenwich.Ct. Isn’t that poetic justice.

      • Iamafan says:

        I live in the next town beside Greenwich.
        As long as there is not enough testing, we are only guessing. This virus does not eat US dollars. They got plenty of that here.

        • NewGuy says:

          I graduated in New Canaan. After collage I moved west and never went back. The whole family moved away. I don’t miss it one bit.

        • TXRancher says:

          “As long as there is not enough testing, we are only guessing.”

          If you get tested positive, you isolate yourself.
          If you get tested negative, you isolate yourself.
          If you don’t know positive or negative, you isolate yourself.

          Not sure how testing, even with100% coverage, helps the logic.

    • 91B20 1stCav (AUS) says:

      @TX-how do you, as a rancher, define ‘strategic planning’? How much weight do you assign reliable data (‘intelligence’) from your spreads production?

      May we all find a better day.

      • TXRancher says:

        Tip of the hat to you.
        Yes we collect data and we vaccinate 100% but our stock is confined and controlled to finite acreage. In the event of escape to adjacent ranch (rarely) we either verify with adjacent rancher or isolate. And there are too many ways a cow can screw up.

        I understand the importance of testing to obtain statistics but to claim there is not enough testing is the beef. Maybe someone could tell us a statistical way (Bayes) to test without 100% coverage. Or does it really require 100% testing?

  16. Augusto says:

    Of course the market is going to fall, along with the prices of these stocks. These entities are not longer productive or profitable, and their future is uncertain. By definition, they have lost value and its unclear what their future value will be. The Fed and the Government can create any amount of paper money they want, and by doing so redistribute what known value remains in the economy to those in “need” (read “want”). In the process they just dissipate what real savings still exist and destroy those who have been prudent enough not to get so caught up in this stock market mania. The same people you will need when this is over.

  17. wkevinw says:

    I usually don’t go for anecdotal information in decision making, such as investments. However, there is a place for that.

    I do not think this virus is as bad as: The Great Depression, WWI, WWII, and some other events further back that are pretty obvious so I won’t name them.

    As such, while not minimizing the damage, it should be short term. The economy will be changed, but the road to recovery should be pretty straightforward.

    • Gene says:

      The home front did very well in World Wars I and II. There was rationing, but everybody who was home (i.e., not fighting) who wanted a job had a job, women were employed in great numbers, there was high morale, a sense of purpose. The Great Depression comparison is correct, since it hit the home front very hard.

    • intosh says:

      Industries shutting down or close to it: tourism, restaurants and bars, transportation (car purchase, taxi), sports and entertainment. A person’s spending is another’s income.

      Total weekly unemployment claims for 15 states has already skyrocketed to nationwide levels of 2009.

      A vaccine may be available 12 months from now, at earliest.

      Not as bad? I question your optimism.

      • wkevinw says:

        The “services” industry is lower priority than some others. It is important that this return to normal ASAP, obviously.

        The “supply chains” for medical supplies (e.g. medicines) that have been interrupted are far higher priority. This should be corrected after this emergency.

        As far as this being “bad” vs, e.g. WWII? When 400,000 Americans are gone, then I guess it will be as bad.

        • intosh says:

          “As far as this being “bad” vs, e.g. WWII? When 400,000 Americans are gone, then I guess it will be as bad.”

          I assumed you were talking about the economy, not the death toll since you included the great depression in the comparison.

    • Matt says:

      I believe the death rates are very inflated. My hospital isn’t even testing people who are the walking symptomatic. We’re telling them to go home and self isolate and one back if they get worse. We’re only testing the ones requiring hospital admission. The same is going on across the U.S. if anything this is just highlighting the problem that hospitals are run very close to capacity on a regular basis and that there’s a shortage of supplies.

      By the way, if any of you have any extra masks, please consider donating them to your nearest hospital. I’m sure you don’t want us HCP’s to contract COVID and give it to you because we are out of masks.

      • wkevinw says:

        Matt-Yes, the reliable stats are only now becoming available.

        Each situation is different, as they say. That’s why one should reserve too much criticism of decision-makers unless you have been in that situation.

        What if you have a disease where the actual symptoms have an extreme range- some infected show almost no symptoms and others are fatalities? What if it’s more contagious than previous similar illnesses? etc. ….

        The ACTION is no different no matter the testing. Social distancing.

        Note that it’s very difficult to find how many have been tested in the US. It’s somewhere between 10000 and 200000, with a negative (not infected rate) between 60%-90%.

        Even if you have symptoms you are not likely to have coronavirus, AND even if you don’t have symptoms you might have it!

        • Matt says:

          Yes, it’s all very confusing even for us healthcare workers. Information is changing multiple times a day. Hopefully there are some good things that come out of this that will lead to some much needed policy changes.

    • Optimist_Tim says:

      Well said. My family lived in Berlin during WW2. My grandmother lost her hearing in one ear when a bomb destroyed their neighbors. Many people died but eventually Germany pulled through. Hitler ordered Speer to destroy key infrastructure but Speer did not obey, because he new Germany would survive.

      The same is true now. This looks grim but it will get better. My rent has gone up $50 since 2008. I have no debt. Live modestly like Thoreau. I can buy canned goods at the same price as 1988. Gasoline is the same as 15 years ago.

      On topic: Only one of my stocks cut dividends in the last 25 years and quickly corrected that when they were in better shape. Dividend growth far exceeded inflation. They make money every single year. Earnings drive price appreciation. You can find similar companies with good prospects. Look for a payout ratio under 50%, so their earnings can suffer without having to cut the dividend.

      Either the world is ending or this is a one in ten year chance. I’m an optimist.

    • 728huey says:

      My observation is that while the coronavirus is spreading across the country, we’re getting exponentially higher nubers of people being infected simply because we’re finally getting g more testing done (though we’re still woefully short on testing). To me this virus is like the perfect storm of Hurricanes Katrina, Maria, several massive lines of tornadoes ripping though they country as well as several earthquakes happening all at once. While I am optimistic that this virus will pass, and sooner than we probably think it will (though not anytime soon), the after-effects will linger for years if not decades, and it probably fundamentally change the way we currently live.

  18. Michael Engel says:

    1) US + Europe are not China. They cannot follow China footsteps, shutting down the economy.
    2) Premier Xi will be laughing over our open grave.
    3) The enemy lost without a fight.
    4) When I wrote those provocative comments I knew I will make
    a lot of readers mad.
    5) US is in an induced coma. US cannot be shut down by Dr orders. We cannot stay comatose until medical researchers know more.
    6) US will be too weak to recover from its injuries.
    7) I am a senior citizen myself. Compassion and sentiment vs the cold facts. This is one of the few blogs that allow such freedom freedom, right or wrong.
    8) If the curfew cont US will lose without firing a bullet..
    9) Those new media superstars in the boardroom, induce panic. 10) A strong hand have to control them and gently remove them.

    • Bead says:

      I’m not offended. I expect rules to be loosened by May. The pause is simply an opportunity to prepare hospitals.

    • Wolf Richter says:

      Michael Engel,

      You completely underestimate human nature. People are resilient and resourceful. We’re in this together, and we’re going through this together, and we’re going to get out of it together. It will likely change society, business, and technology in many ways — and possibly for the better.

      • I took a course long ago in Lit of the Am West, and the first thing the prof did was debunk the myth of the individual on a horse. He brought us to understand how cooperation is what won the west. We live in an age where cultural overrides, myths about behavior, override reality. People including the president subscribe to bizarre conspiracy theories. Social Darwinism is quaint by modern standards. People in the hold of an ideology are the most passionate. There were similar groups wandering around Europe during the time of the black death. In the end they may call this the deplorable virus, for the people who refuse to recognize it.

        • 91B20 1stCav (AUS) says:

          Ambrose-thank you, thank you, thank you! If we consider how much many Americans think they know about our history is derived from consuming the output of our mass entertainment ‘industry’, there’s little doubt how a false meme of the ‘rugged individualist’ building a great civilization, rather than our general cooperation, has crept into the national zeitgeist. Nature, however, always bats last…

          May we all find a better day.

      • Saylor says:

        I’m really wondering if this is an actual ‘Putin Puppet’ as opposed to your basic garden variety ‘hater’?
        As the P.P. trolls reach out to the more intelligent and productive web forums, I would think Wolf Street would be a target.

        • Wolf Richter says:


          Michael Engel is a long-time commenter here, usually talking cryptically about stocks and the economy, like an Oracle, and readers try to understand what it all means, and his comments are much appreciated. But he derailed here.

  19. Keepcalmevereythingisfine says:

    Good article Wolfe pointing out less volatility this past week. Although we are seeing lower lows and lower highs in the S&P 500 index the steps are getting smaller. Hang in there folks. This is not the end of the world or the end of the US “as we know it.” Every crash is terrifying – but for different reasons. This one, with the real possibility of death, is pretty darn terrifying. The recovery will come, and we will all breathe a sigh of relief this summer. The long term changes to our economy and social life are already becoming apparent. Social distancing is not going to go away overnight, and service businesses will be changed forever. Big, strategic, old economy companies such as Boeing will not find it easy to run up massive debt to do share buybacks without a massive cash pile. Having little diversification in supply chains will be a no-no. The big one: China will have one hell of a time living this one down, and the pressure on them to clean up their act will be enormous.

    It is time to start “buying the dip,” but a little bit each week. We may very well hit 50% down on the S&P 500, but if you dollar cost average through the trough you’ll be in great shape a few years from now. Time passes quickly, and being an optimist is your best bet right now.

    • Zantetsu says:

      It is interesting to think about how the world is going to treat China after this. I wonder if the argument will be made that it was in part caused by China’s poor environmental practices. I wonder if there will be a collective world effort where every country sanctions China until they make changes to how they conduct themselves within and without their country.

      I am not saying that I know whether or not China has poor environmental practices internally or whether or not that is partially to blame for Coronavirus. I am just speculating on what world response will be.

      • Dan Romig says:

        My guess is that the world’s treatment of China will remain unchanged.

        China makes so much stuff that is low quality to medium-high quality that it is difficult to avoid ‘Made in China’ when shopping for household goods.

        My Kingsford brand BBQ grill is a good example. I chose to buy it, even though it’s Chinese made because it is a good value and it’s very functional (when assembling it, I upgraded the fasteners and washers. Plus, I used lock washers.)

        Audio-Technica is a Japanese company that has a long history of quality products, but their flagship turntable is made in China. Now if they had a Japanese ‘table that cost more, I probably would have bought one. Bottom line is if one wants the best quality, rarely will it be made in China.

        And I gotta slam Boeing while I am at it. The 737 was a nice plane 40 years ago. To put a more fuel-efficient engine that’s bigger, heavier and with an adverse effect on balance and aerodynamics on the 737 MAX is just wrong – on so many levels.

        I’d like to get MC01’s opinion on this, but isn’t the only way to improve
        on an airplane of that size and capability is to have a carbon-fibre fuselage and wing structure?

        Last rant: The Boeing 787 is a beautiful plane IMO, but why the hell did Boeing outsource so much of it? Can’t we design and build a state-of-the-art airplane in the USA?

  20. TonTon says:

    The difference in fatalities by country is bizarre.

    Spain 25,000 Confirmed Infections: 1,326 Deaths.
    Germany 20,000 Confirmed Infections: 72 Deaths.
    USA 20,000 Confirmed Infections: 276 Deaths.

    There’s something seriously wrong with the numbers in many places. Unless both USA and Spain have far more infections than they are accounting for. Which is highly likely. I think even Germany is only capturing a fraction of the true number.

    One extra thing. I’m in an Eastern Asian location (expat). You can guess roughly where I’m talking about from that. I went out shopping today, it was 27 Celsius. Shops, restaurants, department stores, pubs, beauty places, etc, were 99% back to normal. It was kind of shocking. Everyone is wearing a mask, but I was kind of shocked how regular it felt. You would hardly remember there was a virus (previously, it didn’t affect here too much), other than the masks and that nobody was bumping into each other these days. Nobody in western media will notice this for 6 weeks. Same amount of time it took them to realise a virus that was 1000 times more infectious than SARS (check research) and way more infectious than the common cold might spread around the world. I’m amazed that people didn’t realise the virus would spread. Every scientific paper made it clear that there was no stopping it. People thought Eastern Asia was on a different planet for some reason… bizarre.. Anyway, no western media will realise that regular businesses are running 99% of normal again (I don’t know how manufacturing is going though, but I can order anything online and get it delivered in less than 24 hours to my door). Students are still in their provinces and still learning online of course, and also, anybody that can work from home is continuing to do so. Businesses are back up and running a lot quicker than was thought, and it will take a long time for people to realise this in the west. Probably worth factoring into your investment strategies. I was all out of stocks from late January (just had tech stocks, well maybe I’m not including PM stocks when I say all out). 94% cash in Pension since early Q4 last year. The virus might not be the armageddon that it is currently feared to be (even on businesses).

    • Wolf Richter says:


      Because of inadequate testing in the US, the “number of infected” in the US is a false number. Testing is finally being increased, but it’s still inadequate, and we still have no idea how many people are actually infected.

      About half of the people who are infected will never have any symptoms, and they’re not being tested at all. Even most people with symptoms are not being tested in the US. So all the figures that are expressed as a percent of “infected people” are therefore wrong — and you cannot compare them from one country to the next because those countries have different testing procedures.

      • VintageVNvet says:

        Entirely correct about lack of early testing so far Wolf, and that is a failure of the current national guv mint for sure, as even Fauci has stated.
        However, after reading through the situation state by state on the site linked below, it appears that this virus is working into USA from the major peripheral ports of entry as would logically be expected; so it also appears many/most of the more interior states have time to very much ”flatten the curve” and I hope they implement the steps do so ASAP.
        The other factor that will make USA different is that we have more ICU beds per 100K people, though I don’t remember the site I saw that comparison on a few days ago.

  21. Paulo says:

    Nicely said, Gorby.

    yeah, grammar is really important when talking about a World changing pandemic. (See if you can pick out my intentional errors for 10 pts). :-)

  22. xear says:

    geez… it was meant as a friendly help to a fellow professional in the spirit of friendliness. Why is everyone so serious these days?

    • VintageVNvet says:

      Cause we are much bigger fans of Wolf than we are fans of grammar?
      As a former contributor/editor of a small ”community/neighborhood” newsletter in Berzerkeley, where most of my time was spent listening to much older and much much more experienced folks discuss how many angels could rest on the head of a pin, I gave up even trying, not to mention worrying about the perfection of grammar, mine or anyone else.
      You might also consider that most grammar is no more than opinion these days, steadily declining in agreement re American English at least, since Websters 3rd took over from Websters 2nd, as one example of what I am talking about.

    • Unamused says:

      Why is everyone so serious these days?

      Their portfolios are tanking and they might have to get real jobs. Bound to create some resentment.

  23. Michael Engel says:

    1) VXX is 100% margin.
    2) UST attacked VXX gambling.
    3) Speculators are scared of VXX. There is too much risk in VXX.
    4) Your broker can liquidate u or shut u down without warning.
    5) Chicago Red Bulls VXX player got a red card.
    6) Speculators can still buy oil, or mall penny stocks with 100% margin.

  24. David Hall says:

    My dad was born in the 1930’s. He told me he heard stories while growing up. People starved to death during the Great Depression. People grew gardens to get food.

    • RD Blakeslee says:

      Me, too. But I didn’t just hear about the hardship, I lived it – my Mom and Dad more so. It profoundly affected how I grew up.

    • pdxmtb says:

      My dad said the same thing. That people moved back from the cities to the farms because that’s where the food was.

      • Wolf Richter says:

        Now the food moves from the farm to the city because that’s where the money (demand) is.

      • noname says:

        I know farmers from Europe who had city-dwellers show up on their doorsteps looking for food during WWII. They needed food immediately before even thinking of moving.

    • Rcohn says:

      The difference between now and the thirties: 400 million guns

      • Jonas Grimm says:

        The majority of which are actually owned by very small numbers of people, many of whom are of the delusion that ‘organized militias’ are a thing that can still exist. Should a full-scale collapse occur, those people will be killed and their armories raided in short order, because despite what they may think, you can only shoot two guns maximum by yourself.

        After that, things will get progressively worse.

    • WES says:

      David Hall:.

      My parents were born in the 1920s so were old enough to remember everything. I heard many stories too.

      My Father grew up in Saskatchewan. He talked about starting tomatoes in the window, transferring to cold frame, to garden, only letting one tomato per plant, pruning leaves to force growth into fruit, harvesting tomatoes green, ripening red in window due to short growing season.

      Harvesting ice blocks and storing in sawdust. Ice fishing. Waiting for midnight train to get newspapers to deliver that night. Towns folks waiting for lone RCMP constable to leave town on train overnight to Regina so they could bring their stills out of hiding and home brew!

      One cent bounty per gopher tail! Homeless men riding railways. Men knocking asking for a sandwich. Every little scrap piece of wood that fell off railway Dad carved into wooden toys.

      My mother grew up in Ontario. She remembered her Father, a farmer and trained mechanic as farming mechanized, always visiting neighbors, widows, lacking food and casually dropping off a few sacks of potatoes, carrots, onions, etc.

      Did his share of moonshining to raise cash. Mom did a lot of canning in summer for winter. They tended big gardens. Picked wild fruits like raspberries to can.

      Life was physically hard.

  25. Ron says:

    At least this pandemic is focusing attention on the present and not sea levels 50 yrs from now; the health benefits of single use plastic; and perhaps, just perhaps, more awareness of personal hygiene on a daily basis.

  26. NewGuy says:

    So the next financial phase will be bankruptcies and credit defaults. Does anyone have input on how that will effect the bond market ? Should I be dumping them now ?

    • economicminor says:

      Logic says that as bonds default, real interest rates should go up. (as what is currently happening in the Junk Bonds). In the last 10 years interest rates steadily declined and the value of bond funds went up.. So if (in a real world) defaults drive interest rates up, then older bond funds will decline in asset value. Shortage of real dollars should do this BUT then we have trillions of new dollars being added to the system.

      We have been living in some alternative universe where everything is manipulated and there is corruption everywhere.. So who knows what happens next. Will the manipulators stay in control or will the system reset? Most all of us want to know that answer.

      • Andrei says:

        Finally, it seems the deflation case Robert Prechter has been steadily predicting for more than 20 years now, since publishing his “Conquer the crash” (good read, especially now :) is now unfolding.

        There he argues that printing won’t help at all since the debt destruction will happen faster.

    • Gandalf says:

      Depends on the type of bonds. Junk bonds are tanking. Barely investment grade BBB corporate bonds going to get downgraded. State and municipal bonds likely to get into trouble. Treasuries probably ok, but wouldn’t go for 10 yr or 30 yr Treasuries yet as the interest rates are likely to keep going up with the ballooning Federal debt, once the pandemic is over. If you bought 10 year Treasuries a year or two ago when they were over 2%, you are good for now (despite Wolf ridiculing them in a column – he’s not always right, neither am I, nobody is)

      If you’re in an ETF junk bond fund, those are likely to crash and go bust and lock out redemptions soon. ETFs of all kinds are bad juju right now, which Wolf explained in a column a while back

    • NewGuy says:

      Thanks for the comeback guys. I’m dumping them come Monday. I got taken to the cleaners in 2008 and it’s not going to happen again. It took 10 years to make up those losses.

    • Rcohn says:

      Depends on the credit spectrum.
      Treasuries have already rallied massively . They could rally a little more in price , but are offering little future return .Real Treasury rates are implying a ridiculously low level of future inflation and are cheap relative to Treasuries
      The highest rated corporate bonds are in fine shape, but do not return much more than Treasuries .Many lower rated bonds will see a higher level of defaults; however many funds which hold these bonds are already down significantly
      The potential for municipal defaults is high , especially for those areas with underfunded pension plans.

  27. Bet says:

    First off. Wolf , your chart is a perfect clear example of a head and shoulders top on BA
    A pattern of distribution. It took so long because BA is a float of under 600 million shares. If they sold harder and earlier it would have fallen much sooner. It takes awhile to offload to the muppets
    I am a born NW ster a true mossback from Seattle. BA was culture, a sterling company
    It just was always a shining example I grew up with engineers, pilots, programmers , we have or maybe it’s going to be had production line people in our family. My brother is a sub contractor with 52 employees and he may have to shutter soon . I understand only too well what led to it’s demise. It renders the heart to see this company go up in smoke or rather in a crash of smoldering greed. I cannot describe the fury I feel that they hold out their hands for a gimme. I have traded in the markets for almost 20 years now. Independent traders have seen this coming although the velocity of destruction has been breathtaking. Shorters are not making a killing. They aren’t in this mess of a market which is another reason it keeps falling so hard. We think the markets get closed soon and shorting will be stopped
    It won’t help. Stocks go up on the promise of growth. Good luck with that now. It was all fake especially the Last five years. I have nothing but contempt for the financial advisors and brokers. Do they ever call you to sell ? Protect yourself? I have neighbors being crushed. I warned an elderly couple last month. Just go to cash. Sweep to your money market. Fight your guy. I think their guy won. I don’t know if we have a market left. There will be no V recovery like before. V recoveries were caused by Fed interventions. The fed is irrelevant now . look at how the DOW traded for decades after 1932. The image in my head is wile e coyote falling off the cliff to the bottom with the small poof of dust. Wallstreet always finds a way to foul its own nest and takes the rest of us with them

    • Wolf Richter says:


      Thanks for your take on Boeing. I agree. It’s an incredible shame. Financial engineering, when it is allowed to make major corporate decisions and become corporate culture, can and does destroy invention and greatness. I hope this is one of the lessons business-decision makers and Wall Street will learn from this. But I may have fallen into wishful thinking.

      • Gandalf says:

        It keeps happening. Money and profit over good engineering. Every generation has an epic failure

        Look up the history of Curtiss Wright, once the largest most dominant aircraft and engine manufacturing in America.

        Or North American, proud manufacturer of the P-51 and B-25 and F-86. The company grew fat on government contracts, and then was blamed (rightfully so) for the shoddy design and manufacturing that led to the Apollo 1 fire that killed three astronauts. It never recovered financially and merged with Rockwell

      • Gandalf says:

        My proposal for Boeing would be to fire all the corporate heads and break the company up. Sell the bankrupt civilian airplane component to Airbus. They can build more 320 neos in America. Nobody wants the inherently unstable 737 Max and Boeing now has no money to design a replacement
        The government can bailout the defense component, in return for 100% ownership, I’m fine with that

        • MC01 says:

          Gandalf: Airbus is in a terrible situation right now. Order cancellations have been pouring in for a year now, led by airlines belonging to the HNA group, but those could be coped with because order books were so thick.
          But right now customers are flat out refusing to take new deliveries and their contracts allow them to do so: all Airbus can do is park the aircraft and hope for the best.
          The two companies are in the same boat right now.

          Neither Airbus nor Boeing will idle assembly lines completely, but monthly production is going to be cut by… how much? 70%? 80%? Remember both companies invested heavily to increase deliveries over the past five years.

          But those who will really take the hit are the contractors who have been pushed hard into taking on mountains of debt to increase production to feed those assembly lines. It’s exactly the same thing as with automotive, with the difference manufacturing turbine blades for a LEAP-1 is even more expensive than casting cylinder blocks for a BMW.

          Airbus and Boeing will get their bailouts, but what about the contractors underneath? Most will survive one way or the other, but in what shape?

        • Wolf Richter says:


          I’d love to have a report on Airbus, if you’ve got a little time in between things. I’d love to hear your take on it — including the Airbus ecosystem of suppliers — and you can use this comment as a base :-]

          Airbus shares are down “only” about 50% since Feb 20, and not nearly as straight down as Boeing’s line, but still.

      • wkevinw says:

        Wolf- the trouble is that it’s not just corporation by corporation. Now it’s standard in basically every one!

        I am not sure of the cure, but again, bankruptcy practices will help a lot.

        I have read business literature/history from the ’80’s and indeed, back then, executive management usually lost their jobs (after bankruptcy).

        I haven’t found the facts on this in recent years.

        A lot of the investment bank execs kept their jobs after 2008.

        That is a big problem.

        • Jonas Grimm says:

          “Rules for thee and none for me.” is the ruling mantra of most corporate culture now.

  28. Danno says:

    Be grateful we have shelter food and present health to be posting here.

    I have friends in tropical mostly import only countries with only enough basic food to last 1 more week. Fruit is not ripe, fish are in low supply. Pets will be sacrificed next.

    Think you have problems? Do you?

    Finally if the laws of finance are not changed immediately…aka risky derivative bets that are too big too fail and continue to be bailed out to the tune of TRILLIONS at our expense all this is for naught.

    Im 58, mad as hell and for one am making the rest of my life waking up people to this fact. What are you going to do? Be a sheep or step up?

    • Tom Pfotzer says:


      Thx for pointing that out.

      I am also feeling that rage and frustration.

      My wife, who is much smarter and more emotionally developed than I am, suggests that it might “do more good” to keep the lid on the anger, and somehow direct that emotion into useful, productive actions that help others.

      And that, of course, makes it all the more annoying.

      What makes it the most annoying, tho, is the realization that

      “no leader can take a people anywhere….they aren’t already”.

      That’s what jams my fusebox. We’re doing this to ourselves.

      • Bet says:

        Agree with your wife. We need to pull together. No finger pointing. Recriminations or I told you so
        We all in this together and need to work together.

        • Gandalf says:

          Totally disagree.


          1. The totally unnecessary corporate tax cut foisted on us which ballooned the Federal deficit by an ADDITIONAL $1 trillion at a time when the economy was BOOMING. Your taxes will be going up to pay for this ginormous Federal debt that is coming soon

          2. Relaxation of the rules preventing corporate stock buybacks which fueled the final two years of this stock market bubble (see Wolf’s articles about who was doing most if the stock buybacks)

          3. Utter failure of this administration AND the bootlickers in his party to prepare the country for the pandemic. In fact he DISBANDED the pandemic response unit that had been set up by the previous administration because of ALL the lethal viral outbreaks going on worldwide over the last 20 years. SARS, MERS, Ebola, H1N1 bird flu, geez, surprise, another virus that finally hits us! Were there not enough warnings? The reason S Korea did so well is because they had totally prepared for a pandemic, having been hit hard by both SARS and MERS

          4. The Fed, well what to say that hasn’t already been said a gazillion times already here?

          There is and MUST BE BLAME AND ACCOUNTABILITY, based on facts, just like an airline crash investigation, to make the future better and safer for America.

          This is how we got Glass Steagall and Paul Volcker in previous generations

    • economicminor says:

      Good luck with waking anyone up. I was talking to my sister yesterday and she commented that I have been trying to do that for years now. The system broke a long time ago and most people are either Marie Antoinettes OR belong to one of two clans, either the 3 Monkeys Clan or the Ostrich Clan. They really don’t care about foreseeing or being responsible. All they want is someone ELSE to blame.

    • wkevinw says:

      Danno- thanks for the post. Americans have it great.

  29. Unamused says:

    Finally if the laws of finance are not changed immediately…aka risky derivative bets that are too big too fail and continue to be bailed out to the tune of TRILLIONS at our expense all this is for naught.

    Those trillions at your expense are all for naught, at least for the general population.

    The Fed can’t compensate for $20 trillion in lost economic production, can’t cure cov-19, can’t make test kits or hospital supplies, in fact, can’t do a long list of things, hardly anything, in fact. But they can make sure the banksters have it over on you, permanently, so they’ll do that.

    The Black Death caused such a severe labour shortage in England that the surviving peasants revolted and ended serfdom. The Financial Industrial Complex now has the opportunity to reverse that.

    • Jonas Grimm says:

      …so you’re saying we should grab the torches and pitchforks NOW, yes?

      • Unamused says:

        If you want to storm the Bastille you’re going to need permits to have one built first. Maybe you should just stick to social distancing for the time being.

      • Danno says:

        Yes…I know you are being funny.

        I meant, speaking up and actually doing something once this is behind us like confronting politicians and those in power who can do something….

      • Danno says:

        Don’t laugh Jonas….it just may come to that if people are that desperate.

        Remember Putin said “Never trap a rat?” and what do people have to lose if they have nothing left to lose?

        Good Luck . You may need it.

    • Danno says:

      Let’s hope SOMEONE has the morals and forward thinking to reverse this “charade” of the past 40 odd years since we went off the gold standard.

      I nominate WOLF! :)

      Thanks for the forum Wolf..always appreciated.

  30. Cas127 says:


    (Have not been able to read all comments yet, so forgive if I duplicate…)

    “Over the past 22 trading days, it has plunged 31.9%:”

    Okay, but with a SP 500 PE of 25 (non ZIRP distorted long term average = 15 or thereabouts), the mkt has long been (going on 5 yrs, gradually getting worse) overvalued by 40%.

    So, the mkt has not even corrected the asinine ZIRP induced distortions.

    Let alone the enormous hit to the denominator earnings as a result of the C19 shutdown.

    • Gandalf says:

      I predict the Shiller PE to drop below 15 (the bottom of the GFC), and at or slightly above 5 (the historic Before Greenspan Era lows of the stock market)

  31. Gian says:

    Silly stock buyers, stocks are for the insiders like Feinstein. At least it’s good to know your money did not vanish, it went into the pockets of crooked politicians and their friends. It’s called transfer of wealth, yours to theirs and some people never learn. Leonard Cohen, “the rich get rich, the poor stay poor”!

  32. c1ue says:

    Just out of curiosity – I looked at the Bureau of Labor Statistics’ household spending profile to get an idea of how bad the lockdown could impact the economy.
    Average household spending is: $53,708
    Other transportation: $712
    Eating out: $3365
    Alcohol: $558
    Entertainment: $3203
    Other: $2214
    While some of this spend will transfer over – it is likely a small fraction. A takeout meal or delivery meal vs. a restaurant or bar visit – the takeout is going to be a lot less.
    The above categories, excluding Other:, constitute 14.6% of average household spending. If overall spend in these categories drops 2/3rds, that’s 10% spending reduction. This discounts the 100% likelihood that fear and uncertainty will reduce other spend.
    To put in perspective: 30% GDP fall between 1929 and 1933 (height of Great Depression).
    The problem is that the US GDP is 70% consumer spending. China’s, in comparison, is 38.7%.
    10% reduction in household spending = at least 7% GDP reduction. I say at least 7% because GDP is every dollar doing anything – and entire value chains are being disrupted.

    For example: one conference is cancelled due to nCOV. airlines cancel flights so pilots, stewardesses, mechanics, fuel suppliers, food suppliers, baggage handlers etc all lose income. Hotels, Airbnb, restaurants and bars around the convention center lose bookings. Convention staff itself, event staff at exhibitor companies, suppliers of giveaways, convention center owner/operator also lose business. Uber/Lyft/taxi lose passengers. The customers of these 1st order businesses affected jobs in turn lose business, which in turn affects their suppliers – rippling all the way down.

    One of the reasons why 1st world economy GDPs are so much larger is precisely this interwoven net of value chains; in contrast a really poor, subsistence farming country has really flat and short value chains.

    What’s the impact of falling GDP? well, Russia’s GDP fell in half from 1989 to 1998 – a bit under 5% a year. Russia’s life expectancy dropped from 69.2 to 66.9.
    To put this in perspective: 70K additional deaths per year due to opiates dropped US life expectancy by 0.3 from 2014 to 2017.
    Russia has a smaller population, but it would take around 700K extra deaths in Russia to account for their past life expectancy fall, with about 1 million deaths for the round trip from 69.2 down to 66.9 and back again.
    So 5% GDP annual losses = 0.05% deaths in population.
    Just contrasting the nCOV mortality rates vs. deaths due to economic despair/poverty – lockdowns so seem to be a net win regardless.

  33. Shawn says:

    Reading this article and the one before it, I have learned so much as to what is actually happening in the world financial markets and how it is happening. Info and analysis I can not find anywhere else. Could we have a piece on stock buybacks by the FANGMANs and whether or not those will diminish or come to a standstill given that these companies, like Boeing and the Airlines sector need to support daily operations?

    • Wolf Richter says:


      The 5 biggies of the Fangman (FB, Amazon, Google, Microsoft, and Apple) are very profitable and all except Amazon have stellar balance sheets. So if they want to waste some cash to buy back their shares (I still think it should be illegal), I don’t have a huge problem with it in terms of bailouts because they won’t need a bailout. They might benefit anyway from any bailouts, but their existence is not threatened by this crisis.

      The bigger problem with them is the so-called “death zone” around them, where they buy potential competitors and then integrate part of it and shut down the rest, or shut down all of it, to snuff out competition. Antitrust investigators should be (and now finally are) crawling all over them.

  34. Nate says:

    Am kind of amazed that an offhand prediction I made near the the first time I commented here was that simple charting showed a value on the SP500 at about 2100 in 2 years or so. I think it’s happened even faster than that d/t the virus. Just goes to show what narrative can do when people freak out.

    • Wolf Richter says:


      People probably told you at the time that you were nuts :-]

      • Nate says:

        :D I make no claim for genius. Market got a lot more inflated than I expected it to before the fall too. I take all the analysis with a grain of salt, except when they start saying it’s different this time! Probly will be some day, but not today…

  35. Zantetsu says:

    Lame reply gorbachev. Super lame.

  36. DeanSeavers says:

    Let’s say we get a 50% crash from these levels and the fed is allowed to buy stocks. Is that a good time for us little peons to buy, or will it not work like Japan? Is there something about the US that will allow them to buy stocks and have the market rise?

  37. Max says:

    What a fantastic ‘site’ Wolf-you attract wonderful commentary too-well done and long may you contribute.

  38. Charlie says:

    Welcome to what we deal with in the agricultural world all the time. Wheat hit a high of over $13/bushel in 2008 and today is under $5/bushel, over a 60% loss and has been in this low range for going on 4 years. Corn hit a high of over $8/bushel in 2013 and currently around 3.60/bu. “Solution” is just to get a bigger truck as farms continue to consolidate, pushing smaller farms over the edge. Not much sympathy for those “stock buyback companies” from this side of the fence.

  39. Rcohn says:

    Anyone ever heard of Northeast , Eastern ,PanAm or Transworld airlines. ?All part of history.
    Anyone ever paid nothing for a checked bag.?All part of history.
    Anyone ever sat in a seat where you did NOT feel that you were crunched up for the entire flight?
    Airlines have cone and gone and will do so in the future . Maybe in the future the “new” airlines will not treat their customers like crap and won’t try to financially rip them off for even minor items

    • VintageVNvet says:

      You leave out the very best of the old ones, PSA:
      Time and time again, I would walk up to the gate on Friday, Saturday, or Sunday evening/night, hand over $10 cash, and walk onto the plane that would take off from LAX or SFO as soon as the plane was fullish,,, and land at the other end about 50 minutes or so later ,,, and keep on doing it until there was nobody waiting to board, (or something like that at the end of each night, maybe midnight?)
      Family and friends flew back and forth almost every weekend, and all the non pilot staff were friendly, frequently as much into the fun as the rest of the party, everybody ”sharing”, etc.
      Those were the good old days,,, far shore,,, right arm,,, farmed out, etc

      • California Bob says:

        I flew PSA a couple times. I’ll never forget one of the stews–they were still ‘stewardesses’ back then–giving the safety advisory:

        “… and, in the event of a water landing, pull your bottom seat cushion out and kiss your ass goodbye.”

        The cabin broke out in laughter (flying was definitely more fun back then).

    • Zantetsu says:

      People get what they pay for. Flights have been getting cheaper and cheaper relative to inflation for years now. If you want better services, you pay more. Plain and simple.

      In the future the “new” airlines will be more expensive than what we pay now if they provide more services. I am actually OK with this, long distance travel should be more of a luxury than it is currently, at least until we can figure out how to do it without burning so much oil.

  40. Rcohn says:

    From all of the proposals that Congress seems to be considering, it looks like Bernie has already won the Presidency

    • Zantetsu says:

      Not even close. Congress is going to bail out the large corporations and the banksters. Immediately nationalizing healthcare would be more Bernie’s style and it’s too bad it won’t happen.

      Also, congress makes the laws. The president just provides influence.

  41. MCH says:


    What happens if someone is in an ETF when it implodes?

    Is it the same thing as when a stock goes to zero, and you get nothing? I recall hearing a couple of oil funds or ETFs shuttering lately. Was curious what happened to them.


    • Wolf Richter says:

      An ETF is less likely to implode than an open-end mutual fund, especially a bond or loan fund with illiquid assets. Those have a history of imploding.

      When a sponsor shuts down an ETF or ETN, it’s usually because there is not enough interest in it. ETFs are priced by the minute in the market, so the “collapse” would come from a drop in price because when investors want to get out of the ETF, they just sell the shares in the market, and they get their money from other investors (the buyers), and prices drop.

      You can’t do that with a mutual fund; as investor, if you want to sell your units, you have to sell them back to the fund, and the FUND has to have the cash to pay you — and when it doesn’t, it implodes.

      However, there could also be structural problems with an ETF that could cause it to malfunction in some way. I’m not sure we’d seen this in a big way yet.

      • Gandalf says:

        Er, Wolf, my understanding of ETFs is that they ADD an extra layer of market uncertainty and potential illiquidity to the underlying bonds, securities, etc in the fund.
        When you buy or sell an ETF, you are buying or selling one share of that publicly traded ETF stock, not the underlying assets reflected by that stock. The assets get sorted out by the fund managers later
        So if the underlying assets crash or become illiquid, and everybody is trying to sell the ETF and nobody wants to buy it, the ETF could plunge in value BELOW whatever the market value of the assets are. The ETF could lock up
        The same could happen to a mutual fund, but if you execute a sell order and the assets are close to zero value, that’s what you’ll get redeemed back, close to zero

        • Wolf Richter says:

          Yes, but the liquidity when you sell a share of an ETF is provided by another investor, and it automatically adjusts to market price, and a plunge in price is part of it. When there is a run on the fund, the ETF doesn’t collapse itself structurally. But the price plunges.

          This is different with a bond mutual fund. When you want to get out of it, the liquidity for your exit comes from the fund itself.

          When there is a run on a bond mutual fund, the fund cannot fulfill its obligation for redemptions. It has to sell assets at fire-sale prices to some hedge funds, but won’t be able to sell enough fast enough. And then the fund shuts down. Investor money is trapped. It may take a year to sort out, and investors left in the fund get cents on the dollar.

          This has played out many times during the financial crisis with conservative-sounding bond mutual funds and has led to numerous class action lawsuits and individual lawsuits. This included some very large bond mutual funds, such as the Schwab YieldPlus Select (SWYSX) and Schwab Yield Plus (SWYPX) which collapsed and generated horrible losses for investors who weren’t able to get out:

      • MCH says:

        interesting to know. thanks Wolf.

        Could ETF become divorced from the stuff sitting in it if there is suddenly a lot of selling on the ETF itself? Does that in turn affect the stocks that is partly held in the ETF?

        Not sure if I’m making sense here, but am very curious about the interrelationship between some of the ETFs and their holdings, and how one affects the other.

        Could for example VOO or VTI or SPY tank a smaller tech stock, or are they such a close track of the S&P weighted or otherwise that this is not possible.

  42. Kasadour says:

    Personally, I find the use of the word “heck” in this context, refreshing. There’s no need for profanity at such critical times as these. But, I’d still like to know where we, as humans, are heading from here? And why are we in this hand-basket?

    • Wolf Richter says:


      I can see many opportunities for us to come out of this and end up in a better place. This is shaking us up, and we’re rethinking things we’ve taken for granted. Big and small things. I think there is real opportunity to change for the better — as a society, as people, as an economy — but we could also totally screw up that opportunity and end in a worse place than before. And given what I’ve seen in the past, I’m not going to discount that last part ;-]

      • Max says:


      • Kasadour says:

        I agree with you, sir. I’m glad you’re here doing what you do, holding up a good example, and keeping yourself and us encouraged and informed. Thank you,

      • Gandalf says:

        I want Glass Steagall and Paul Volcker back

      • Phil says:

        After we come through this, most of the rich will remain rich and most of the poor will be poorer. Even in the middle of this disaster we’re watching sick people being forced to come to their lousy warehouse shipping jobs just to stay afloat, while the big owning company’s stock soars on the good news of huge demand. I wish I could agree with the positive spin on things.

        • Hebron's Gate says:

          phil there will be no revolution; stop instigating before i see something, say something, you commie

  43. Saylor says:

    So it just occurred to me ‘what about the Christmas consumption rush’? If there is any money left to be spent then, will there be much of anything to buy? And will the fear of social contact be the ‘final nail’ in the brick and mortar (or what is left of them)?
    Don’t retailers and distributors start ordering in August? I’ve seen all sorts of statements of the percentage of money spent just for that holiday and I’m not educated enough to know how to make my own statement. But…, yikes.

    • Mr Wake Up says:


      Brick and Mortar that has an eCommerce presence will use this moment to hammer the final nail into the physical presence coffin. They sent employees home with two weeks pay and look like good guys for now until they put out an announcement in two weeks the stores will not reopen.

      The mom and pop strip malls that were barley holding on to their “pun indented” finger tips – with nail salons, hair salons and happy ending salons will all go bust without any personal reserves. Washing out the tides of excess retail and the abundance of restaurants in our major cities as one reader pointed out. That’s if people don’t get infected from ordering out and solely depending on take out for their every meal.

      In terms of excess cash and credit required if majority of Americans have any left before the shopping season they might have to gift the left over toilet paper from the coronacrash!

    • Hebron's Gate says:

      @saylor as one testosterone pit reader said about what Max Keiser said:

      Syphilis for Christmas!

      for jaime dimon (I’ll take the aorta splicy thing that killed john ritter as aonther wolfpitstreet reader said)

      (make it so #1)

  44. Ed says:

    Isnt it just more a reset of the market. Getting a grip on reality. Lots of stocks are still over valuated like Tesla.

  45. Mr. Wake up says:

    What about Cruise lines like NCL & Royal whom source their credit cards via BOA.

    Do they receive full payments upon issuance of credit cards activated to pay for these trips through Bank of America or do they wait until the working people that can’t meet these debt obligations to the anchored ships that are sitting idle with no cash flow and lets double down on financial chaos – credit payments that will never surface because the cruise itineraries have been cancelled?

    These working people who are about to go from worker bees to unemployed bees are going think twice of making that payment – people are not going to just hoard supplies they will hoard the cash in their accounts and stop making critical payments to the cruise lines that 3D printed new luxury ships in Europe sitting on stock piles of debt or will Berkshire bail them and the airlines out for pennies on the dollar allowing him to go out with one last big bang!

    Oh and BTW don’t forget BOA inherited secretary Mnuchin’s country wide bank and its basket of defaulted loans during the 2008 crisis but that was one year after he sold the bank for $150,000,000!

  46. Jeff Relf says:

    Environmentalists won this round;
    next round, they won’t be so lucky.

  47. Cruiser says:

    Note to backwardsevolution – Your comment, “The Fed is never mystified; they know exactly what they’re doing.”

    Really? By way of illustration remember this:

    There are many such examples on the part of members of the Federal Reserve and academic economists in general. One of the most important lessons I learned as an econ grad student is just how out of touch with reality cloistered academic economists can be; they demonstrate as much continually. Micro theory offers many robust economic insights but macro theory is little more than confounding nonsense.

  48. Unamused says:

    The United States Department of Labor is asking states not to disclose any more unemployment data – claiming the information is an important economic indicator that could potentially impact the financial markets. The DOL plans to release the unemployment figures late next week.

    ABC News, yesterday.

    Notice their concern about the financial markets. They’re probably right about that.

    I’m expecting current claims to be around four to five million, but spread out over future reporting periods to make them politically palatable. The Fed’s target rate is 6.7 million, so they’ll probably meet their target, and maybe even exceed it.

    That’s the bad news.

    The worse news is that the US only has a supply of test kits amounting to a few percent of what’s needed, at best, so the information needed to control cov-19 isn’t there, and therefore the outbreak cannot be managed.

    The even worse news is that many of the more dedicated conservatives in the US are heeding calls to ignore any containment restrictions, ensuring a greater crisis.

    I think hopes that this crisis may motivate changes for a brighter future for all are overly optimistic. For one, the privileged classes are going to be resistant to losing any quantity or quality of their privileges, despite the greatly reduced capacity to feed them.

    “Do you believe,” said Candide, “that men have always massacred each other as they do to-day, that they have always been liars, cheats, traitors, ingrates, brigands, idiots, thieves, scoundrels, gluttons, drunkards, misers, envious, ambitious, bloody-minded, calumniators, debauchees, fanatics, hypocrites, and fools?”

    “Do you believe,” said Martin, “that hawks have always eaten pigeons when they have found them?”

    “Yes, without doubt,” said Candide.

    “Well, then,” said Martin, “if hawks have always had the same character why should you imagine that men may have changed theirs?”

    I think it would help if people in the US would stop electing pandemic profiteers to high office who are more than willing to throw their own constituents under the bus for a buck. But that’s just me.

    • Hebron's Gate says:

      hope haaaahahahaha haaaaa…..i stopped that silly stuff ….i dont dress up for holloween & valentine’s day anymore!!… !

    • Jonas Grimm says:

      I wish more people would read Candide. Perhaps then they’d be more introspective…

  49. Raging Ranter says:

    I think it’s time for a second beer mug, to be sold in a pair with the first:

    Nothing goes to heck in a straight line.

    Unless everything goes to shit at once.

    Maybe you can use Powell’s likeness on the second mug.

    • Hebron's Gate says:

      complex dynamic strange attractors – suddenly everything goes to shit, but honestly, even chaos happens within certain bounds(it is still deterministic), you cant say you couldnt see it coming; it’s not pure random; there IS information there.

      • Hebron's Gate says:

        really there is no such thing in reality (in theory sure) as pure randomness.

        reality happens in the gap between potential entropy and actual entropy, and while it is chaotic, it is bounded, meaning it has a causal origin, and it isnt purely random (no such thing) or unpredictable or without cause and therefore unpredictable.

        pure randomness would have to have no cause or effect; therefore not real.

        my point is they cant say “we didnt see it coming”

        anything political or social cannot be random;

        it can be chaotic/stochastic/ergodic

        but it cannot be without cause or “random”.

    • noname says:

      For those of us who might need to start drinking (wine) again after all of this, I suggested Sec Treas’ “Now is not the time to worry about it [the deficit]”. No photo desired, though.

    • Wolf Richter says:


      Going with “heck,” I’d have to rephrase it into “Unless everything goes to crap at once.”

      • Raging Ranter says:

        Actually, I thought the contrast was what kind of made it work. Like, you started out avoiding profanity, then got forced into it by circumstances.

  50. OutWest says:

    Pro business? This Administration claims to be but wait.

    Who in their right mind will go back to work (or allow their children to return to school) until their coworkers or fellow students can be tested and cleared of the virus perhaps on a daily basis?

    Will you hang out with people who have not been tested?

    By blocking the distribution of test kits, these bozos are ensuring that everyone will stay home and avoid spending. Perhaps one of his handlers should mention that fact to him. Soon.

    • Ensign_Nemo says:

      It is exceedingly unlikely that we could DNA test 325 million Americans on a daily basis for coronavirus. That would be 365 * 325 million = 118,625 million or 118.6 billion DNA tests per year. Even testing just 1% of the population per day – i.e., each person would be tested every 100 days – would require about 1.2 billion tests a year.

      Right now, the lowest cost quoted for a test is $35.92, so it would cost $4.261 trillion a year for daily tests, or $42.61 billion to test 1% per day.

      Unless we can invent a much cheaper personal DNA sequencer app for smartphones, it ain’t gonna happen.

      So yes, we will all hang out with people who have not been tested for coronavirus every day, because it’s well nigh impossible to do so with our current level of technology, and most of us have a job (or schooling) that requires us to interact with other humans every day.

  51. Hebron's Gate says:

    dividends are not going away lol…you got neg rates and shitty eps for foreseeable future….what is US Mrs Watanabe from oklahoma gonna do?

    warren buffet (ffs as an atheist i can only pray to dog) is gonna die very soon.. he is in my dead-pool,…he’s been there for a long time i keep eatin it on his old ass year after year..

  52. TownNorth says:

    This will be an economic reset.

    Record low interest rates encouraged record borrowing. Now Covid has interrupted the cash flow that would have gone toward servicing that debt. There will be asset values that existed before Covid and asset values that came after, and those will have to be discounted with new financial risk parameters.

    Here in LA, the shops on Rodeo Drive (Hermes, Gucci, Prada, LV, Harry Winston, etc.) have cleared the stores entirely of all merchandise. As a preventative measure.

  53. kitten lopez says:


    regarding your earlier comment where you wrote–

    “You could get together with a number of like-minded people, pool your personally-productive resources, and form a private corporation where you and your friends control your own means of production and isolate yourselves from the usual follies. Make ‘social distancing’ work in your favor. That’s pretty marxist, though, and most people are going to be disinclined to do that because they’ve long been conditioned by their masters to actively distrust each other. These days people are dependent on faceless corporations that aren’t at all marxist, which has made it too easy for them to snub thy neighbors, rather than cooperate with them.

    “So these are the best of times, such as they are, and the worst of times are still ahead of you. So you might as well enjoy them while you can, if you can, and not worry too much about the future. There is no time but the present.”

    and then regarding your comment directly above this:

    “I think it would help if people in the US would stop electing pandemic profiteers to high office who are more than willing to throw their own constituents under the bus for a buck. But that’s just me.”

    THAT’s where you need to go next. you’re an “ahead” guy. now that we’re here, it’s ALREADY time to jump ahead now; start thinking of creative ways of suggesting we work with the reality of things like rigged/corrupt irrelevant “two” party systems.

    that’s what i BEG from you as your eager reader. no lie.

    a lot of us who’ve been waiting for the real world to finally reflect common sense horrors we felt INSIDE, we’re just as gobsmacked as everyone else.

    i wanna know: WHAT NEXT???

    it’s a rhetorical question at this point because i’m talking: “how do you pole vault past this to prepare for what is inevitably coming NEXT?”

    i want to learn about this Gandhi “owning means of production” thing you mentioned. that’s what made me write you this. (i read your “own the means of production” post earlier and it so electrified me as a beautiful …what’s the word: not an edict but a directive a brilliant IDEA. i revisited it 3 or 4 times to reread that.)

    so while you’ll dabble in the end of the world now with the most up to date information, i beg and plead with you to go to WHAT’s next more often. i need more than crumbs.

    i need your histories and stories you know about. the secret ones they never want us to know about because it’ll give us funny “ideas.”

    that’s what i want from you. yeah, yeah, yeah… it’s all tits up. we all expected it. the reason i fell in love with this site is because some of the most brilliant creative and humane MINDS are on this site.

    i stopped hanging around because i realized people were just using Wolf to make a financial killing and it made me blue.

    i worry Alex from Digital Detroit offed himself because it’s hell knowing too much and trying to navigate and survive in a careless harsh world.

    but i’m finding out i wasn’t wrong about how important i thought this site was after all. it IS a trusted place among rampant habitual b.s. / thus i CHALLENGE not only the cloaked and mysterious Unamused to find smart ways around and under the system, or some good way of fighting back. they have all the tanks and guns.

    i got twitchy and scared watching the local news yesterday because they STARTED out saying, “the police will just educate. we’re not out to arrest anyone. if we did, it’d be a misdemeanor.”

    but yesterday, a week into this lockdown, the San Jose police guy gets on the news and says now it’s different and they’ll clamp down on anyone in violation of this lockdown.

    ah… THERE IT IS. that’s what i was waiting for…

    anyhow, so it’s rigged.

    apparently black folks actually donated more money to sanders’ campaign than anyone else …and somehow “they all” suddenly switched en masse to biden???

    i’m not buying ANY of this.

    so Unamused and ALL of you brilliant magicians and businessmen and entrepreneurs… we are screwed. WE ARE ON OUR OWN…

    what do you REALLY suggest next?

    all that we’ve been waiting for is HERE. now it’s too “common” to discuss where we ARE NOW… how do we get out of this together?

    i was inspired by Wolf’s comeback to someone who only saw doom.

    nah… crappy hell nets the best stuff all the time. i think a lot of things will change and we won’t have to depend on “one person” to save us this time.

    this is an elastic time. they can use it to teach us to be better sheep and cattle for slaughter… or we can use it ourselves to jump, pole vault to what’s next.

    like the businesses here who’re saying “screw it” and shutting down because they know there’s no point to paying loans when you can never regain all that lost biz and few will have any money in the first place.

    UNAMUSED… i want your history and all you know and feel and care about to help craft and envision ENVISION what is next. envision. THAT is the word.

    and you entrepreneurs and bad asses here…

    after your initial shock wears off in the weeks to come… please do share ways of us coming together in this new urban/suburban…. “situation.”

    and i LOVED reading the guys talking about ways of getting around broken fuel guages. YES!!!! THAT’S IT! my toes curls because i miss that kinda talk.

    Basul said some guy’s new car wasn’t working and they opened the hood and it was a big plastic thing and Basul was horrified and said, “they’ve made it so men have nothing left to DO anymore.”

    i love this place.


    • Unamused says:

      For some problems, there are no solutions. For others, there are only partial solutions. Problems have a way of not staying solved, and leading to more problems. You cannot solve them all, but maybe you can solve enough of them.

      Life is a problem for everybody. Perhaps it would be better to just try to be happy.

      Tiger got to hunt.
      Bird got to fly.
      Man got to sit and wonder “Why why why?”

      Tiger got to sleep.
      Bird got to land.
      Man got to tell himself he understand.

      • kitten lopez says:

        no way… that’s all you’ve got, Unamused???

        ah… i am also unamused but more like… profoundly disappointed….

        this is all a game for you. this is what i meant about you playing with art poetry words.

        to me they are mad real. they are the new STORY.

        ah, my Dear One, you’ve lost me. the magic went poof and i am sad about this.


        • VintageVNvet says:

          Una playing with your head Kitten; give him or her some time to reflect, synthesize, and then verbalize,,, not the other way round as we are seeing from the crown
          don’t know a ting bout d boy or girl, but seen the way its thoughts will sometimes curl to the point of light we all seek
          and sometime find in nothing other than another’s cheek
          be kind first, think fast, don’t be one of those who do not last
          said Ode to a Sunday evening, expecting ALL heck set to loose and lose in the dew of the morning

    • RD Blakeslee says:

      Here’s one you might like:

      Wolf reminds me of a highly principled old-time schoolmaster. Awake all night preparing a sound lesson, spends all day keeping his pupils in line.

    • Mittenwald says:

      Kitten I completely agree. I constantly come back to this site to check in every week and read through all the comments. I can’t think of any other site where people are more respectful and add so much intelligent insight and discourse. Being a newer student of economics and investing, this site has been so incredibly valuable for me to learn how it all works.

      Unamused- I always appreciate your observations.

      Wolf, you do a stellar job here. We all appreciate what you do.

  54. California Bob says:

    For better or worse, airline travel won’t return to ‘normal’ for a long time, if ever:

  55. JM says:

    I live in South East Asia and here the infrared thermometer is used a lot to check the population at the entrances of the supermarkets, hospitals and all the gathering places, so the limited number of cases of coronavirus is reduced to a minimum where even Japan with the area territorial overpopulation also presents a limited number of infections there, the thing that amazes me that in Italy where I have friends they tell me that they are only used in airports and at the borders, now the disaster in Italy seems to come in my opinion from the non-use of these infrared thermometers, the question is why is it not used in Europe?
    In the US are they used throughout the country?
    Japan so far seems destined to keep its economy intact as partially many Southeast Asian states and many wonder what happens in Europe

  56. George W says:

    Disgusted by the whole affair…

    As store shelves empty, all that enters my mind is who pays these people( consumers ) and why? A couple of sniffles and we are down for the count?

    I just don’t get it!
    Real pandemic’s of the past had real consequences.

    Cholera could result in the loss of vital bodily fluids.
    Coronavirus might lead to the shortage of what? tissue paper?

    Stupid. I am often wrong and almost never right. Flawed as I am, I still say the coronavirus is stupid!

  57. Juanfo says:

    Can’t just drop money out of a helicopter they have to throw it.

  58. Michael Engel says:

    Wolf, somebody got it and the response was quick, within few hours !!

  59. RD Blakeslee says:

    “@ Unamused and ALL of you brilliant magicians and businessmen and entrepreneurs… we are screwed. WE ARE ON OUR OWN…

    what do you REALLY suggest next? ”

    Well. kitten, I’m not unamused as Unamused, maybe, but I’ll have a go at your question.

    For this old man, it’s a question I asked myself a long time ago.

    Worked out the answer as I went along: “Be as self self reliant as possible” Almost paradoxically, that led to less acquisition of money, the pursuit of which can be enslaving.

    Started by building my own house.

    Twenty-something and can’t do that? Oh, yes, you can! Teach yourself how and dedicate yourself to it, ’til you “git ‘er dun”. It’s back to the future, upside down. In the 19th century, all the sodbusters did it and, from my own experience I can tell you your house will be much more palatial than theirs were.

    My experience can be found, published elsewhere.

    • kitten lopez says:

      Thanks, RD. /

      it’s back to the future and upside down, indeed.

      and pray tell: where can your experience be found, published WHERE? at that link attached to your name?

      thanks for daring to care. to give a damn. to always write me back when i need it most. / you’ve got a lot of heart, Daddy.

      damn you made my eyes cry from the BEAUTY… this is what i need. thank you.


  60. kitten lopez says:

    this is an amazing place of thought ideas audacity and wisdom. those of you who’ve stumbled here to understand how and why we got here, i don’t want you to assume there are “no solutions.”

    i don’t believe such a thing.

    as a colored girl who’s played at both staying in my lane and knowing my “place,” or i’ve rebelled and assumed i was entitled to ANYTHING, i know that there are OTHER WAYS of undermining or rebelling that range from passive resistance to outright resistance.

    i leave behind a wish here, a prayer that some of you newer thinkers and doers will find the diamonds and gold ideas here among the moneymakers. i hope that you find a way to either passively resist or outright resist.

    i fear the alternatives are only more despair and needless suffering and death.

    this is not a game for me. this is not academic. i am pushing forward the changes i’d like to seee. i’m pushing to care too much, be embarrassed, wrong, not know anything.

    beware of the cynics out there. they are actually dangerous for you, for us.


    glib cynicism is irresponsible and like handing a dying person a vat of acid to drink.

    so tread here with care and ignore the old stories and hang onto the wise kind ones as we get from The Elders here. like RD and Vietnam Vet Guy. Petunia doesn’t feel like an “Elder” with her bad girl attitude and rhinestone flip flops, but Elders can be kids with old souls.

    i am for the kids now. everything is different.

    there is ALWAYS a way of undermining the status quo… always…

    it’s time for a new story. this is what we artists are up at bat for now.

    don’t leave the future to the casual cynics for whom this is all a game a past time. entertainment.

    shame on you, Unamused. i expected so much more of you and all you know.

    i don’t give up on you, though. i expect you to confront your own Existential Scream soon and you’ll let go of the veneer that you “know anything” at all. we’re all dumbfounded. even you. i want the poetry to mean something real to you. blood sweat tears eviscera…

    anything else is … prattle twaddle…etcetera.

    dare to be vulnerable and scared. no one is above this. no one.




    • RD Blakeslee says:

      kitten, I’ve replied to your earlier post, but it’s on hold for “moderation”. Hope Wolf can release it to you even if he declines to publish it on Wolf Street.

  61. CreditGB says:

    Gee how are the social and news media company revenues doing? Clicks, views, and subscriptions declining just like air travel and gasoline?
    just asking.

  62. raoul says:

    excellent work as usual, Mr. Richter.

    Are you going to change the message on the mug?

    • Wolf Richter says:

      Some people here have suggested a companion mug with a different message, something like: ““Unless everything goes to shit at once.”

      • Mittenwald says:

        I would definitely buy that one, well, I would definitely buy the set :)

      • VintageVNvet says:

        Wolf, in spite of my not wanting the mug you offer, and just chose to send you some very well earned and deserved cash, I would in fact, like to see a set of some kind, perhaps the design ”crowd sourced” if that is the right modern term, by folks who really appreciate you work to give us real information and then keep the discourse civil, etc.
        So, to get the ball rolling, I am thinking a set to include: shooters, high ball, low ball, red and white wine, and, perhaps a couple or three or more beer mugs, including choices of your SO good original, some a bit more scatological both up and down, etc.
        (As an aside, my only screw up so far in this event, so far, was that when I ordered my ”wine futures” a few weeks ago when I saw the virus coming into Europe, I did not order enough,,, LOL)
        Thanks again,

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