When intervention does not work.

[786Trader]

Coordinated action from the world's central banks have failed to calm market sentiment. Why? Because it is not the cure for Corvid 19, because the money being poured into equity and debt is partly going to the wrong place. Because the markets are still open. The only survivors will be the cash rich. Normal people however face mounting financial meltdown.  Watching one's 401k evaporate in a matter of weeks is not good for ones constitution. More so, those who shifted their pensions to market trackers, which everyone would have agreed was the most sensible thing to do say, six weeks ago. Right now, traders everywhere are realising to stop this virus the world trade has to almost stop for 51++ days.  Never before imagined. But here we are. World trade will effectively shut down by up 70+% for 2 months. Maybe more. Hopefully less. This is hurting everyone, but those normal folks who are on zero hours contracts, have anything to do with tourism, flights, sports, airports, transport,restaurants, oil and related services, banks, or  have tight profit margins are going to experience real pain. Or go bust. Insurers are in a bit of a sweat too.  Sure Netflix, Amazon and online food retailers are in for a boon. But the positives are outweighed by the negatives.

I went to my big supermarket this morning (Tesco), had to see for myself what is actually happening. It is carnage, palpable panic. It was full and partly empty at the same time. There was no toilet paper (of course), eggs, tinned food, pasta, dog food, beer, anti-bacterial wipes, beef and pork, whole milk and potatoes. Impressive. Naturally I saw opportunity. Couldn't help it. I was also the only one wearing a mask (very busy crowd) and gloves. The penny hasn't dropped yet for most people and they are wondering what the fuss is about. My son tells me lots of kids are coughing at his school. I am seriously thinking of taking him out of school. Point being people are still in shock and clueless. Like the markets.Here in UK our Corvid 19 numbers are inaccurate as they only test in hospital and those infected are being encouraged NOT to go hospital, making accurate assessments of the true numbers involved impossible.

Back to the point about intervention and why it's not working for very long.  Interest rates are an irrelevance in this situation. Direct investment in people will help, certainly it will help the majority of normal people and small business owners.  Providing unlimited credit to banks and trading houses will keep the banks afloat but not airlines or tour operators.  Statutory sick pay of £92 pw covers few of life's expenses. Constantly funneling resources where it is not needed instead of where it is will only exacerbate the problems.   My boss, by the way is not a happy bunny (his pensions are heading west faster than his hairline).

[dmedin]

21 minutes ago, 786Trader said:

Coordinated action from the world's central banks have failed to calm market sentiment. Why? Because it is not the cure for Corvid 19, because the money being poured into equity and debt is partly going to the wrong place. Because the markets are still open. The only survivors will be the cash rich. Normal people however face mounting financial meltdown.  Watching one's 401k evaporate in a matter of weeks is not good for ones constitution. More so, those who shifted their pensions to market trackers, which everyone would have agreed was the most sensible thing to do say, six weeks ago. Right now, traders everywhere are realising to stop this virus the world trade has to almost stop for 51++ days.  Never before imagined. But here we are. World trade will effectively shut down by up 70+% for 2 months. Maybe more. Hopefully less. This is hurting everyone, but those normal folks who are on zero hours contracts, have anything to do with tourism, flights, sports, airports, transport,restaurants, oil and related services, banks, or  have tight profit margins are going to experience real pain. Or go bust. Insurers are in a bit of a sweat too.  Sure Netflix, Amazon and online food retailers are in for a boon. But the positives are outweighed by the negatives.

I went to my big supermarket this morning (Tesco), had to see for myself what is actually happening. It is carnage, palpable panic. It was full and partly empty at the same time. There was no toilet paper (of course), eggs, tinned food, pasta, dog food, beer, anti-bacterial wipes, beef and pork, whole milk and potatoes. Impressive. Naturally I saw opportunity. Couldn't help it. I was also the only one wearing a mask (very busy crowd) and gloves. The penny hasn't dropped yet for most people and they are wondering what the fuss is about. My son tells me lots of kids are coughing at his school. I am seriously thinking of taking him out of school. Point being people are still in shock and clueless. Like the markets.Here in UK our Corvid 19 numbers are inaccurate as they only test in hospital and those infected are being encouraged NOT to go hospital, making accurate assessments of the true numbers involved impossible.

Back to the point about intervention and why it's not working for very long.  Interest rates are an irrelevance in this situation. Direct investment in people will help, certainly it will help the majority of normal people and small business owners.  Providing unlimited credit to banks and trading houses will keep the banks afloat but not airlines or tour operators.  Statutory sick pay of £92 pw covers few of life's expenses. Constantly funneling resources where it is not needed instead of where it is will only exacerbate the problems.   My boss, by the way is not a happy bunny (his pensions are heading west faster than his hairline).

 

 

Isn't all the mass buying an example of stupid behaviour?  Seems like a command-and-control system would actually be more rational under the circumstances.

[dmedin]

"Health officials have said 35 people have died from coronavirus in Britain"

 

There have probably been more people killed in drunk driving accidents this month.

[Guest Penguin1]

16 hours ago, dmedin said:

"Health officials have said 35 people have died from coronavirus in Britain"

 

There have probably been more people killed in drunk driving accidents this month.

Historians will look back and wonder why with a world population approaching 7 billion, the deaths of some tens of thousands caused so much alarm and panic. During wars, famines and plagues people died in the hundreds of thousands to millions with a much smaller world population.  How many die every day from gun related incidents, road traffic accidents, starvation or malaria?

[dmedin]

49 minutes ago, Guest Penguin1 said:

Historians will look back and wonder why with a world population approaching 7 billion, the deaths of some tens of thousands caused so much alarm and panic. During wars, famines and plagues people died in the hundreds of thousands to millions with a much smaller world population.  How many die every day from gun related incidents, road traffic accidents, starvation or malaria?

 

Meanwhile, the guys who instigated the war in Iraq (which resulted in up to 500,000 deaths and cost trillions of dollars) live in luxury to this day.

Edited March 17, 2020 by dmedin

[dmedin]

17 hours ago, dmedin said:

 

 

Isn't all the mass buying an example of stupid behaviour?  Seems like a command-and-control system would actually be more rational under the circumstances.

Apropos of which, I have certainly been a contrarian and not followed the crowd.

I may end up having to use my curtains lol