Our economy will survive COVID-19; do not despair
By Harold Miller
In the last edition of 55 Plus magazine (April-May), I wrote of the world’s industrial evolution (not revolution) the likes of which has never been experienced before.
Artificial intelligence, super computers, quantum computing, data mining and cloud computing — they all will change the way we live our lives. Silicon Valley is the epicenter and the think-tank for this technology.
Consequently, for the most part, America is the prime benefactor. Since the rising tide lifts all ships, anyone who is willing to learn a skill and work hard shall enjoy the golden years ahead.
And then the roof caved in.
As the story goes, somewhere in the bowels of China an epidemiologist researcher at a laboratory somehow got infected by a bat. The rest is history. COVID-19 has infected the world as well as our economy, which has come to a quarantined halt.
When you emerge from the lockdown, you will enter a new world. We are all in the same storm, but we are not in the same boat. Some will sail through it in their yachts while others will struggle through in a leaky dinghy with a single paddle. It will be much easier if we see ourselves not as separate ships but members of the most dynamic armada in the history of the world. It will just be a long slog to prosper once again.
There has never been anything quite like this. World War II affected the world but there was nobody at home getting killed. There has never been anything that impacted 150 countries at one time.
Our economy will survive this virus. Do not despair. This economic crisis will pass once the clampdowns have lifted; that is if the media will cease peddling fear and uncertainly to sell their goods. Unlike any financial crisis before, our government has invested billions to ensure that our workers will have jobs to go back to.
Once the pandemic passes and we all go back to work, I believe the country will recover quickly and I believe we will reach new levels of prosperity. As this article goes to the printers in mid-May, America is just starting to open.
President Donald Trump says, “We’re going to put the flame out. We can’t keep the country closed.” Many financial experts and economists think April was the bottom and May will begin the recovery. This seems to be the case.
Many journalists, reporters and others talk about how far the stock market is down from the record level it was at the end of February. This is meaningless. The market value of your stocks is what it is today. If you did not sell at the top, you never had it.
Likewise, if you did not sell it at the bottom price, you never lost it. All that matters is how your stocks are valued today. If you own shares in a company that is in trouble, you may want to sell, take your loss now and write it off your taxes. We are in a whole new world now and must adapt. Just remember that our country is still the best in the world and others are suffering more than we are.
My favorite saying that has guided me through many bumps and curves in the process of building my business career is, “Good judgment is the result of experience, which is the result of bad judgment.” The U.S. Treasury is using good judgment and learned from the crash of 2008-2009. It is using billions of dollar allocated to keep small and large businesses afloat.
Government in rally mode
The Federal Reserve is also buying non-investment grade corporate paper now to try to support the capital markets. All this was done very quickly. Indeed, we have done a pretty good job of getting money to flow to individuals and get people back to receiving cash equal to what they were getting when working.
Retail will never be the same. There will be accelerated store closings and the acceleration to online sales will bury many brick-and-mortar chain stores. Amazon and Walmart will swallow most of the retailers.
Many companies are never going back to office space. They have concluded that remote workers can get the job done. Huge malls will be a thing of the past and the real estate market will drastically change, while hotels will take a long time to recover.
Presently, there is no overall recovery in sight. Now it is unclear. There are parts of our economy that are being obliterated and not just damaged: Hotels, restaurants, barber shops, gyms, sports and concert venues, taxis, doctors, dentist, therapists, car dealers, travel agencies and cruise ships. The streets of our cities are empty now and interstate roadways have a dribble of traffic.
As a footnote, the only good thing coming out of this worldwide disaster is the drop in oil prices that will pull the rug from under the war mongering and terrorism that is engulfing the Middle East. Iran, Syria and Saudi Arabia can no longer sustain this calamity and Russia can no longer finance its military to keep the pot stirred.
Oil is the main income that supports their economies. The basic cost is $54 per barrel to meet their budget; the present worldwide cost of oil is $24 dollars per barrel. Russian leader Vladimir Putin can no longer sustain his military and feed his people nor can the bad boys of Iran, Saudi Arabia and Syria.
America is no longer dependent on Middle Eastern oil thanks to our abundant supply of shale oil. The result of all this is that the U.S. can no longer fear being drawn into a war to protect our interests in the Middle East and we can bring our troops home. The money saved can be used to fight our own war against the COVID-19.
One day we will look back on the devastation of COVID-19 and be proud that our country came out of it stronger than before as we have done in every other war that has threatened our freedom and prosperity.