Our news media today must sell advertisements. They make more money by having more
viewers. Anytime there is a crisis, the
news media wins. The longer a crisis
goes on and the more fear the public has; the higher their ratings become.
If you are in your forty’s you can remember a time when your
parents would watch the nightly news on one of the main cable stations. You would see local stories, national events,
sports and then the weather. The
reporters would share what was going on without really expressing their
opinion. Some families had access to
CNN. When America liberated Kuwait from
Iraq, many people would tune into watching the war take place and listen to
Wolf Blitzer and others share the events of the day. By the time President Bill Clinton was being
impeached, Fox News found that 50% of Americans wanted to hear a more
conservative viewpoint and the news station competed with viewers who used to
only have one other choice with CNN.
Along came other stations and view points over the years. Instead of reporting the news; we receive an
agenda. MSNBC is notorious for stating
it is the news media’s job to tell the public what they should think.
In our past blogs, trying to help businesses overcome the
obstacles of working within the new government regulations that continue to
take away our freedoms, we have pointed out the discrepancies in so-called
facts of the Coronavirus. Yes it is a
very contagious virus. Yes, it has the
ability to bring a high mortality rate to the elderly and those with underlying
health conditions. However, the
government regulations of shutting down some businesses and not others is
foolish when they are saying how bad the virus is. Our leaders are human. They want to be elected and don’t have the
backbone to do what is right rather they let public opinion sway their
voice. As long as the public does not do
their research on their own, the loudest voices will win. (This should be a wake-up call to any
business who is not utilizing social media, content management and online
reputation to share their message.)
Recently, even though the actual numbers do not warrant these
actions, government officials are calling for many great businesses to keep
their doors shut through the first week of May.
One would think we are dealing with the Bubonic Plague which struck
Europe and Asia in the 1300’s. In five
years, that plague would kill almost one-third of the continent’s population. When in fact we are dealing with a virus that
has had Medical Examiners taking the liberty of classifying deaths of suicide,
heart disease and other mortality contributors to the Coronavirus. Neil Ferguson, the most famous Epidemiologist
that our leaders at every level cited using his graphs projected 2.2 million
dead in the United States if no action were taken to slow the virus and blunt
its curve. That would be 6,027 deaths a
day! Now he has revised his claims revealing
that far more people likely have the virus than his team originally figured. A higher rate of transmission than expected
means that more people have the virus than previously expected; when the number
of those with coronavirus is divided by the number of deaths, therefore, the
mortality rate for the disease drops.
Therefore, now the epidemiologist predicts hospitals will be just fine
taking on COVID-19 patients and estimates far fewer people will die from the
virus itself or from its agitation of other ailments. In short, this virus is not as deadly as what
the news media would have you believe.
There will be deaths, and a lot of them. I’m hopeful that my elderly parents or
in-laws do not get sick and die. It
would be a tragedy for anyone I am close to or even know, contracts the virus
and dies because of the illness. I would
have the same sadness if these people were to lose their life to an automobile
accident, other health issues, murder, suicide or anything else that can take
one’s life. However, the approach that
the government is taking and the complacency people are allowing these
restrictions to happen will have far more devastating effects on our society.
If we continue the shutdown we will skip over a Great
Recession and experience The 2nd Great Depression! What does that means to us?
To fully understand the
gravity of what a true Depression will look like we must take a look at
history. The Great Depression that we
learned about in the history books (Do you remember the days when kids carried
books to school and didn’t do their assignments on a phone?) started in August
of 1929 and we didn’t start coming out of it until March of 1933. The Depression didn’t just hurt one
country. It was a severe worldwide
economic depression with peak global unemployment at 24.9%. Using the same numbers that would be the equivalent
of 64 million of working adults in the United States would be out of a job
today.
The Great Depression’s most famous day was October 29, 1929
or better known as Black Tuesday.
Billions of dollars were lost, wiping out thousands of investors. In the aftermath of Black Tuesday, America
and the rest of the industrialized world spiraled downward into the Great
Depression which would become the deepest and longest-lasting economic downturn
in the history of the Western industrialized world up to that time. Some causes for the crash were a rapid
expansion of the stock market after a period of wild speculation during the
roaring twenties. Production had already
declined and unemployment had risen, leaving stocks in great excess of their
real value. Other causes of the market’s
crash were low wages, proliferation of debt, a struggling agricultural sector
and excess of large bank loans that could not be liquidated.
Less than 2 months ago, on February 20, 2020 there was
another global stock market crash. This
was 8 days after the Dow, NASDAQ and S&P 500 all finished at record highs
with the NASDAQ and S&P 500 reached subsequent record highs the day before
the crash. From February 24 to February
28th, stock markets worldwide reported their largest one-week declines
since the 2008 financial crisis, thus entering a correction. Global markets into early March became
extremely volatile, with large swings occurring in global markets. On 9 March, most global markets reported
severe contractions. The major reason
was the overreaction to the Coronavirus Scare by our media and lack of
leadership from our politicians at the National, State and Local levels in
addition to an oil price war between Russia and the OPEC countries led by Saudi
Arabia.
Three days after Black Monday I there was another drop,
Black Thursday, where stocks across Europe and North America fell more than 9%.
Wall Street experienced its largest single-day percentage drop since Black
Monday in 1987, and the FTSE MIB of the Borsa Italiana fell nearly 17%,
becoming the worst-hit market during Black Thursday. Despite a temporary rally on the 13th
of March all three Wall Street indexes fell more than 12% when markets
re-opened on March 16th. At
least one benchmark stock market index in all G7 countries and 14 of the G20
countries have been declared to be in bear markets.
As of March 2020, global stocks have seen a downturn of at
least 25% during the crash, and 30% in most G20 nations. Goldman Sachs has
warned that the US GDP will shrink 29% by the end of the 2nd quarter of 2020,
and that unemployment may skyrocket to at least 9%. Even the Australian Prime Minister Scott
Morrison has called the looming economic crisis 'akin to the Great Depression'.
A record 3.3 million people filed claims for unemployment in
the US last week as the Covid-19 pandemic shut down large parts of America’s
economy and the full scale of the impact of the crisis began to emerge. The figure is the highest ever reported,
beating the previous record of 695,000 claims filed the week ending 2 October
1982.
According to St. Louis Fed projections, the coronavirus
economic freeze better could cost 47 million jobs and send the unemployment
rate past 32%. That would mean there are
over 67 million Americans working in jobs that are at a high risk of layoffs,
according to the analysis. Millions of
Americans already have lost their jobs due to the coronavirus crisis and
Government Lockdown on Businesses and the worst of the damage is yet to come,
according to a Federal Reserve estimate.
Jobs such as sales, production, food preparation, high
contact-intensive jobs like barbers, hair stylist, airline attendants and food
and beverage services are on the chopping block. This dramatic spike in jobless claims is an
American peculiarity. In almost no other country are jobs being destroyed so
fast.
Now add in the stimulus package which was 2.2 trillion
dollars. Both the Democrats and
Republicans added as much pork as they could possibly get away with helping out
their special interest groups. These
were things like:
- ·
$150
Million for Federal Grants to State and Local Arts and Humanities Programs
- ·
$75 Million for Corporation for Public
Broadcasting
- ·
$25 Million for Washington, D.C., Kennedy Center
for the Performing Arts
- ·
$75 Million for the National Endowment for the
Arts
- ·
$93 Million to Congress
- ·
$25 Million for the House for teleworking and
“other cost”
- ·
$10 Million for Senate for teleworking and
“other cost”
- ·
$25 Million for cleaning the Capitol and
congressional office buildings
- ·
$14 Billion for Universities and Colleges
- ·
$25 Billion for Public Transit Systems
- ·
$10 Billion for Publicly owned Commercial
Airports
- ·
$1 Billion for Amtrak
- ·
$300 Million for Fishing Industry
- ·
$400 Million to help states prepare for 2020
elections with steps to include expanded vote by mail and additional polling
locations
- ·
$2 Billion for health care, equipment schools
and other needs for Native American Communities
- ·
$258 Million for international disaster
assistance
Nine hundred ninety nine billion, nine hundred ninety nine
million, nine hundred ninety nine thousand, nine hundred ninety nine dollars
and ninety nine cents is one penny short of a Trillion Dollars! Now double that number and add another $200
Billion Dollars to it. That is the
package our Congress has passed. Divide
that number out by the current population of the United States and that comes
out to $6,100 per man, woman, child that will have to pay it back in their
lifetime. That means for a family of 4;
they would have to pay back $24,400 and only receive $3,400 ($1200 for two
adults and $500 apiece for two children in a family of 4). Does that sound like a good deal to you?
Baby Boomers have absorbed the country’s wealth. In fact, as
they age, their percentage of total US wealth has increased from 20% to nearly
60%. By comparison, Generation X holds 16% of national wealth while the
Millennials account for holding 3%. More problematically, 81% of Millennial’s
households (ages 18 to 34) carry a collective debt of $2 trillion. This is before the Coronavirus scare.
So as history have shown us, if public opinion is that the
Coronavirus can destroy us all, our politicians will continue to keep many
Americans under house arrest. There is
now talk of easing some of the restrictions that the Dodd-Frank financial
regulations placed on the Federal Reserve use of this emergency authority. A lack of oversite will mean more corruption
in the name of supposedly countering the economic shock caused by the global
coronavirus pandemic. Currently, the Fed
is looking at the use of contractionary monetary policy in order to protect the
value of the dollar. This process can
increase deflation; however, the Consumer Price Index will drastically decline. Thus, housing prices will begin to fall as
well as our GDP. Falling prices will
send many firms into bankruptcy. When
you add the massive amount of government spending; the debt-to-GDP ratio will
rise to record highs. Recessions hit
every decade, and the government tries to give the economy a shot in the
arm. However, the effects from a
complete shutdown due to a virus that has a very low mortality rate will not
allow families to recover.
For example, a person age 45 becomes expectantly
unemployed. They have equity in their
house and have saved money by investing in stocks. Their spouse also experiences the same
thing. There expenditures include two
car payments, a mortgage and financial support for two children. Their parents are retired living off of
social security and savings that are mixed between stocks and bonds. Immediately, the spouses try to look for
work, but because there is a shutdown they cannot find employment. They rely on their investments in the stock
market to cover their expenses. However,
with the downturn in the market; they will lose their retirement. They look at
selling their home to downsize in order to readjust to the loss of income, but
their home price has also dropped losing all equity that had been acquired for
the last 10 years. If they sell their
home, they cannot qualify for another home because of the lack of income and
previous saved assets. The next choice
is to move in with one of the spouses’ parents if they are still living and the
home is large enough to hold 4 adults and 2 children. The spouses’ parents have a reduction in
revenue due to the loss in the stock market; however, they are able to keep
paying their bills because they have investments in bonds.
Unfortunately, it gets worse because those
investments are not enough to cover the cost of the car payments or other
expenditures of a two income family and credit worthiness decreases while debt
increases. Thus relying on the
government is the only option. With a
lower tax base, the government which is already bloated will be unable to
continue to support social security benefits or child advocacy
supplements. Now the United States has
to turn to foreign government for help.
In this scenario, others are negatively affected as well. The person who landscaped the couple’s house
is out of a job as are the car mechanics, hair stylist and house cleaner. Not to mention, with no discretionary
spending, the economy cannot truly be stimulated. Next on the list of economic casualties will
be the credit institutions that cannot recover losses from the debt that had
been incurred. It continues to become a
downward cycle.
The regression of unemployment on violent crime rates
generates a positive coefficient of 31.87251, and is statistically significant
at the 10% level. A one percent increase in the unemployment rate will increase
the violent crime rate by 31.87251 per 100,000 inhabitants. These facts don’t even compute minor theft,
non-violent assaults or forgery and fraud which have a much higher increase
during times of higher unemployment according to the Journal of Law &
Economics.
A 2016 study by Harvard researchers found that men who
aren't able to be the main breadwinners in their families are more likely to
get divorced than those who are able to earn more than their wives. And a 2011
Ohio State University study found that unemployed men were more likely to get
divorced than employed men. "Work
equals earnings, and earnings equals helping to support and sustain a
family," Steinberg said. "One partner's lack of ability to contribute
financially in a meaningful way can cause the other partner to have to scramble
to work extra-long hours, which can cause resentment, or to not have emotional
security if his or her own job is shaky or not the type from which she or he
can even earn extra income to compensate for the partner's lack of
contribution." For family with
children, this can create a major disadvantage to their future.
Lancet Psychiatry researched and found that there had been an
increase in the relative risk of suicide associated with unemployment across
all regions in the country of 20% to 30%. There are an estimated 233,000
suicides a year, of which around 45,000 could be attributed to unemployment. In addition, there is strong evidence of an
association between unemployment and poorer health outcomes. Unemployment is almost universally a negative
experience and thus linked to poor outcomes, especially poor mental health
outcomes. Unemployment not only
increases the likelihood of disease, but it can greatly affect one's mental
health, leading to depression and decreased self-esteem. In addition, one can
alienate family and friends or feel alienated themselves which can result in
lack of support in one's life. Smoking
and alcohol consumption are often increased after the onset of unemployment. Families are put at greater risk of physical
illness, psychological stress and family breakdown.
Although we have reacted to save as many as 2.2 million
people (if you believed in the Centers of Disease and Control or the World
Health Organization) in the United States which is a great thing, we are now
putting many more millions of Men, Women and Children at risk due to the
misguided rulings by our officials which is exactly what we were trying to
avoid with all of the regulations in the first place.
The United States will recover because that is what we have
always done in the past. (Of course
there are other nations like China, Russia and Saudi Arabia that may have a say
in our recovery.) Revolutionary
movements have emerged in the past, so the combination of disease and economic
contraction will provoke a new era and a new global order. Indeed, even as we
confront the prospect of economic collapse, we will also witness the
application of policies that move our society beyond a dying fossil fuel era and
into an era of cheap renewables. Beyond the age of combustion and the wanton
destruction of the Earth, we are on the cusp of a Digital Renaissance.
To recover, businesses must embrace a technological
transformation in automation as well as trying to provide their message to the
masses gaining a reach to solicit, sell and service their products. In today’s world, businesses now more than
ever must have a digital strategy. Today
it is the Coronavirus, tomorrow it will be something else. Our customers are spending more hours of the
day online shopping, researching or mindless browsing. Now more than ever, all eyes are on social
media. As a matter of fact, 66% of
social media users believe their social media usage habit will increase in the
event they are confined to their home due to the Coronavirus. Over 60% of both YouTube and Facebook users
expect an increase while only 2% expect a decrease.
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