Long Philosophical Post

This is not my normal type of post.  I try to avoid social or political commentary, but I think unusual times deserve unusual responses.  As I write this post, we are at the beginning of a global pandemic that's keeping most of the world under a no-travel advisory, or "lock-down".

Below:  Playing chess with Death during the Black Plague - a scene from "The Seventh Seal"



I've been thinking a lot about how we got where we are. 

Where we are is not a good place.  We are at the beginning of what is shaping up to be a long-lasting global health crisis that will lead to a greater depression.  I'll explain why I think that shortly.

I'm segregating this post into a few modules, to help keep my thoughts in some sort of order.  

Prepping vs. Being Prepared:

I don't consider myself to be a prepper.  If I were to guess what the difference between a prepper and being prepared is, the word I'd use is "paranoia".  The prepper is quite certain that something awful is just around the corner, and prepares for it in accordance with some sort of dire scenario in his or her head.  On the other hand, "being prepared" is the understanding that life throws curve-balls at you from time to time.  As a functional and competent human being, you should make arrangements for those events ahead of time.  The Boy Scouts of America are not preppers, but their motto is to "Always be prepared".  Why live in a way that a problem becomes a catastrophic event?  Choose to be resilient.

Part of being prepared is staying aware of the situation you are in.  For that reason, I'm an avid reader of current events.  As a result, I picked up on both the serious nature of the pandemic and its implications much earlier than most people did.  I became really alarmed by the Diamond Princess outbreak, in mid-late January, followed by small outbreaks in several cities on different continents.  It was clear to me that we were at the start of a pandemic, although the World Health Organization kept denying the obvious.

I noticed that most people finally became concerned when the NBA announced they were ending the basketball season on March 11, and when Tom Hanks announced he was infected on March 12.  It's a little amusing that it took sports and celebrity figures becoming ill for people to take this virus seriously.

I completed what I considered to be rational planning for a shit-show in late February.  I also overlooked a couple of things - who would have guessed that crazy people would buy all the toilet paper.  WTF is that all about?  I was also a bit late getting cash - they were already restricting withdrawals by the time I thought about that.

Until very recently, the nearest grocery store was 15 miles from our house.  The nearest Wal-Mart and Costco are 20 miles away.  As a result of the trip involved, we stock up when we travel to town.  We also buy large quantities of stuff when it goes on sale, because that's more frugal than buying things at full price.  We keep bulk toiletries and food on hand because it's a huge pain in the ass to drive all the way to town and back whenever you run out of something minor.

My "prep" for Covid-19 was buying a couple more gas cans, a couple of 25 lb sacks of beans, and a couple of gallons of bleach.  That's it.  I was a little bit surprised how little I needed to purchase - but this was mainly because (as I said above) we stock up when things go on sale, and because we live so far from town.

Enough about being prepared.  Everyone should be somewhat prepared for events outside the normal - that's why cars come with spare tires and jacks.  Let's attempt to *realistically* assess the situation.

The economy

A large number of people are currently stuck in their homes for the near future.  This is causing the economy to go - not into a recession - but a depression.  The job losses have been staggering, shockingly bad.   I've lived through plenty of previous recessions, and they all sucked.  This event brings the suck to a whole new level though.  This will get worse.

I'm not an economist, but I understand economics enough to know that this event is nothing less than a gut-shot.  The International Monetary Fund agrees with me.

The chart below is not good.

Below is an animation of the same data, with an additional week of data.  This is bad.

EDIT:  4-16-2020, new unemployment data shows 22 million new claims, so these graphs have gotten much worse.

In light of this jobless data, I'm not at all surprised that the stock market has collapsed like a house of cards.  That's pretty much all it is.  How else can you explain years of gains erased in 3 weeks, if they weren't phony gains to begin with?

This house-of-cards stock market has been propped up by historically low interest rates and share buybacks, not by a healthy economy.  The buyback binge is over.  That buyback scam was a 4-5 trillion dollar heroin-high of money injection that won't be happening going forward.  That's because none of those companies will have the cash flow to pull that trick off.  The "value" that the stock market index was supposed to represent did not exist, any more than it did during the dotcom bubble or the housing bubble, or the stock bubble of 1929.  It's smoke and mirrors.

Also, mom and pop won't be putting money in their 401(k), because many of them are no longer employed.  The rest are holding their breath and maybe keeping their paychecks close at hand, rather than handing them over to Wall Street.  Even with the huge drop in the stock indexes, the market is still historically overpriced.  I have no doubt that it will fall further.  In fact, it would not surprise me to see the Dow drop below 10,000.  That's about where it would be correctly pricing all the bad stuff that's baked into the situation right now.  The massive earnings losses have not yet been priced in.

Financial advisors recommend that families have 6 months of living expenses on hand in case you have a layoff/downsizing and it takes a while to get another job.  I do that, because I've never been under the illusion that anyone gives a fuck about me or my family.  So I plan accordingly, like a Boy Scout would.

Oddly enough though, many CEOs of various companies don't feel that way about their companies.  CEOs use company profits to purchase company stock (and enrich themselves with stock options).  This leaves the company vulnerable, because not having any spare cash makes a company very fragile.

This aspect of the pandemic has been a real eye-opener:  A whole lot of high-profile important companies live paycheck to paycheck, just like poor people do.  Look at how quickly these companies needed a bailout the moment their business began drying up.  Airlines, for instance.  I wonder if the absolutely non-essential entertainment industry has gone to the federal feed bag. 

Now these companies need/want the Federal Government to bail them out - with my tax money.  I disapprove.  This is similar behavior to a guy who buys a truck, then spends every spare dime on a lift kit, stereo, exhaust system, and bling rims, and then loses his job.  I don't want to bail either of them out, because neither of them have behaved prudently.  Why should the ant bail out the grasshopper?

On another gloomy note, our corporations have been so clever pinching pennies that they've gone to the four corners of the globe to locate the cheapest labor and the slackest environmental protections.  They relocated a huge amount of manufacturing overseas, and now since all "our" manufacturing is in other sovereign nations, we have no control over whether that product actually gets shipped here.

Very clever, yes?  Especially pharmaceuticals.  Big Pharma has very recently been lobbying against bringing that back home too.  I'm sure congress will bend a sympathetic ear to the swamp creatures, even though the manufacturing country is threatening to cut off our supply of life-saving drugs.  Artificial fragility, brought to you by financial bean counters.

The elites who relocated all of this manufacturing overseas will probably not have any problem getting the medications that *they* need, so they are effectively isolated from the consequences of their poor/greedy decisions (pick one). There's probably a historical rhyme of Marie Antionette in there somewhere.

Another clever thing that elites have been patting themselves on the back about recently is "just-in-time" delivery.  These days, nobody keeps products in warehouses.  That's partly because the tax code makes inventory taxable every year.  It's also about saving money by minimizing storage expenses.  As a result, we have no stockpiles of goods that can be put to use while production ramps up.  This is another example of fragility that has been championed by financial bean counters.

These are the same people that co-locate a computer server right next to the stock exchange so that when you buy 10 shares of Microsoft, they can buy it a few milliseconds earlier, and sell it to you at a slightly higher price, profiting off the difference.  You do that a few million times a day, and we are talking real money, while adding no value to the economy.  These folks know the price of everything, and the value of nothing.  We can only hope that they are ruined, exposed or swallowed up in this pandemic.

We are entering a greater depression and a global pandemic from a self-inflicted position of weakness and fragility.  I blame greed and globalism (which are probably just different aspects of the same awful people who set this fragile system up).  There is a lot of unnecessary human suffering right now, and more in our near future.  It's depressing, because it didn't have to be like this, and I don't have much hope that things will get better, unless things get really really ugly.  I'd prefer that it didn't come to that.  For the record, I try not to blame any individual for something that is clearly a systemic failure, a global health crisis, and an economic crisis.  That framing is not helpful.  We are all victims.

There is a distinct possibility that we will go into a deflationary spiral.  If you aren't familiar with that, consider this scenario:  The guys to either side of you on the factory floor have both been laid off, because business has slowed down.  You think to yourself (correctly), "I might be next!".

As a result of this justified fear, you stop spending your excess cash.  You do this out of knowledge that your job will soon be gone.  On a large enough scale, this behavior causes other businesses to lay off employees and reduce prices to entice you to buy product.  But you don't buy, because everyone around you is losing their job, and you might be next.  It's a vicious circle of fear, unemployment, hoarding behavior and collapsing prices - and it's very difficult to break the psychology of this.  Many people who lived through the Great Depression era were incredible hoarders.

With the massive job loss we are experiencing, I expect vehicle and house prices to collapse.  People will not be able to keep up their payments.  A lot of inventory of vehicles and houses will go up for sale, and compete with each other in price to get sold.  Deeply discounted houses and cars will have to compete with brand new houses and cars - and not enough people will have the desire or money to buy them.  New house and vehicle construction (and jobs) will plummet in response to lower demand.  Times are going to get difficult.  And scary.

I want to show one last chart.  The performance of the S&P 500 stock index (mid-caps) during three different economic shocks:  The 1929 crash, the housing bubble bursting, and the Covid-19 outbreak.  The market has crashed faster this month than at any other time.  Also note how long it took for the other collapses to reach their final low.  310 days and 355 days.  I expect a similar time frame for this event to play out.  A favorite financial blogger of mine always says "The path to hell is never a straight line."

The human toll

The charts above really don't matter, other than indicate the level of economic harm.  They don't show the real cost:  Disease, death, despair and hunger - the human misery.  Something that economists aren't interested in graphing.  Graph this:

I feel deep sadness for people who were barely on their feet financially before this pandemic hit.  Maybe they were working a couple of jobs to make ends meet, and those are now gone.  Their rent, utility, and car payments haven't gone away though.  I'm sorry to break this news to you, but a $1200 check isn't going to help these people hang on long enough to ride this pandemic out.  Our track record of helping the weakest in society does not bode well.

Then there is the tremendous unnecessary loss of life.  The economic suffering is bad, but thousands of people drowning in beds surrounded by beeping machines and strangers in masks is what I'd imagine hell itself is like.

The virus itself

I've come to the conclusion that this virus escaped from a lab in Wuhan.  Infectious diseases have escaped from labs before, and will in the future.  Nothing is certain in human affairs except human error.  This lab has previously published results of their studies of the bat virus - the letter below is dated March of 2018.  The research paper describes researchers at the Wuhan lab infecting monkeys with SARS-COV virus derived from bats - what a fascinating coincidence!  This is perhaps the easiest case of "connect the dots" ever - something we idiot citizens must do on our own, with China refusing to allow scientists from other countries to investigate.

I'm speculating about the source of the virus of course, because transparency is nowhere on the horizon.  Nobody in their right mind would be willing to admit to infecting the entire world with a plague, and I'm not certain that the scientific community won't find ways to deflect or deny blame.  

That said, the lab *was* conducting research on a bat SARS coronavirus, and a SARS coronavirus outbreak just happens to have started in the city where the lab is located.  I'm *NOT* making the claim that they were doing bio-weapons research - although that is always a possibility.  It's just as likely they were conducting pure research or looking into vaccines like the above research paper suggests.  Whatever the source of the virus, it's gotten into a lot of people's lungs, and it is killing a lot of people.

Human behavior in a time of stress

As a realist, it's been incredibly frustrating discussing this pandemic with all of my colleagues and much of my family.  I have finally come to realize that they were going through something that (being a devout realist) I had completely skipped over: The Kubler-Ross cycle of grief.

https://commons.wikimedia.org/w/index.php?curid=81674970

Many of my colleagues have gone down the rabbit hole of conspiracy theories, while others are in the "let's get it over with, so what if old people die" frame of mind.  Meanwhile, most of them try to keep an optimistic outlook, and hope this will all be over with in a month or so.  Recently, I've come to realize that they are just trying to come to terms with a world-altering and life-altering event.


People (myself included) are subject to cognitive bias.  Everyone's perception of reality is warped in major or minor ways by their own personal experiences.  I've seen several bizarre opinions about our situation recently - and trust me, this is easier to spot in others than in yourself. 

Wishful thinking is one thing I've noticed - as in "the virus has already run through here, so we can return to normal now".  I'm pretty sure we would have noticed that.  I've also seen a lot of groupthink.  For example, it's not a good idea to suggest anything other than super-rosy outcomes from this pandemic.  On the TV, we see the cognitive bias called the illusion of control - in reality, nobody is in control of this virus, or the situation.  Mostly I see a lot of Normalcy Bias.  This is the tendency of people to believe that the future will continue to be the same as the past.  There is an excellent article on normalcy bias here.  This helps to explain how people are reacting to this.

My brutal assessment is that most people's lives are going to permanently change in some major ways.  No longer will you be willing to crowd into a stadium and sit near strangers to watch an NFL game, eat dinner in a crowded restaurant, watch a movie, or go to the county fair.  The cruise ship industry is already a zombie business, and will likely be completely dead soon.  I expect that crowded public transportation will be dead, except for the poorest people who can afford nothing else.  Few people will be flying for a long time, unless someone can guarantee their health at the other end of the trip.

I'd suggest that people get themselves past the Kubler-Ross stages of grief as quickly as possible, and accept the fact that the world has changed in major and unfathomable ways.  Accept and move on.  Emotional bullshit keeps you from behaving quickly and effectively.  I recommend reading some of the writings of Marcus Aurelius on Stoicism.

A couple of other things to consider from a personal psychological health perspective:  Understanding the circles of concern, influence and control.  Take a moment to surf to this web page.  It's a quick read.  Understanding that you cannot control or influence those things that concern you removes stress. Soon enough, you will stop worrying so much about things outside your reach.

The other thing from a psychological health perspective to keep in mind in these uncertain times is that we are *autonomous*.  We have the ability to *choose* how to respond emotionally to this:  We can approach it from a position of fear, curiosity, anger, apathy, determination, or any range of human emotions.  I've embraced stoicism for a long time, so that's what I'm going with. 

It's heartening that the death toll isn't higher, and that we might now be turning the corner on the spread of the virus.  That small victory has required extraordinary measures of quarantine to accomplish, and the measures may not be sustainable.  I don't know where the world goes from here, any more than the next guy.  Wherever it goes, we should be prepared to face that reality head-on, and accept what we are dealing with, and behave accordingly, with a clear mind.

There is a follow-up to this post here.