Quote for Today – 09.19.20

Higher education committed suicide with its dual racketeering model. First was the college loan racket, in which schools colluded with the federal government to jam too many “customers” through the pipeline who didn’t belong there, and who buried themselves under a lifetime debt obligation they could never escape. The second was the intellectual racket of creating sham fields of study that contaminated all the other “humanities” with poisonous bullshit theory, and eventually even invaded the STEM disciplines. Covid-19 screwed the pooch on all that, scotching the four-year party-hearty in-residence part of the deal. For now, who needs an online class in Contemporary Sexual Transgression ($2000-a-credit) when you can just click on Porn-hub for free? Hundreds of colleges and universities will be going out of business in the years ahead.

James Howard Kunstler — https://kunstler.com/clusterfuck-nation/things-going-by/#more-‘

Quote for Today – 09.16.20

We do not, as these numbers show, live in one economy. We are a tale of too many economies. There are no one-size fits all solutions, though several trillion dollars more of spending surely will benefit everyone. No part of the country is unaffected by the past months, but some parts are devastated and others merely dented. A sense that we are actually all in this together would dictate that we only thrive when most of us thrive, but that sense was not prevalent enough before this crisis for it to be demonstrable during. Instead, our many economies are making collective stories impossible and added to the sense of fracture that the presidential election and pandemic are magnifying.

America is a Tale of Fractured Economic Realities and That’s Stopping Us From Fixing this Crisis — By Zachary Karabell September 15, 2020 1:30 PM EDT — https://time.com/5888267/america-fractured-economic-realities/

29 Million Americans Don’t Have Enough to Eat

According to a new report commissioned by the Food Research and Action Center (FRAC), as of July, the number of people who said they sometimes or often did not have enough to eat has skyrocketed to 29 million, or 11 percent of adults in the United States. (By comparison, 8 million adults, or around 4 percent, did not have enough to eat in 2018.) In 38 states and Washington, D.C., more than one in ten adults with children had inadequate amounts of food, with the highest rates of hunger in Mississippi, Louisiana, and Texas…

Now, new data from the Census Bureau, referenced in the report, shows that even America’s middle class is now reckoning with hunger. Two years ago, only 3 percent of adults earning between $50,000 and $75,000 a year said they did not have enough to eat; during the pandemic, that rose to 8 percent. Similarly, 5 percent of adults earning between $35,000 and $50,000 reported that hunger in 2018; now, it is 12 percent. 

https://thecounter.org/covid-19-hunger-food-insecurity-crisis-america/

Spain – a Squatter’s Paradise

For many people, squatting is a desperate last resort, while for some it is a lifestyle choice or a political statement. Barcelona, which is ground zero of Spain’s squatting phenomenon, attracts squatters from all over Europe. In recent years, more and more young locals — including many with jobs — who have been priced out of the rental market or who simply don’t want to pay the inflated rents have also turned to squatting.

https://wolfstreet.com/2020/09/12/how-spain-became-a-squatters-paradise/

If you live in a part of the world that is blessed with a year round moderate climate this phenomenon is coming to your town.

Meanwhile in Argentina…

In Argentina, they have gone beyond just squatting. Lands with no buildings on them are being occupied, houses build on them and people moves there, sometimes in just a few weeks. Once the illegal houses are occupied getting the people out and the houses destroyed is not easy. That already was a problem before quarantine but during quarantine? It has got a lot worse. And of course there is squatting too.

Reader comment on the arttcle

The Implosion of Freelance Work

I live in LA, and the article is really about people who work in entertainment/media — every tv show, commercial, music video and movie is the result of anywhere from a few dozen to hundreds of people who work for the run of the project, then move on to another project. It’s everything from the building trades – carpentry, electrical, rigging/framing – to business services — legal, accounting, HR – to tech heavy work – video/sound editing — and finally, a lot of musicians — people who write and play the music you hear. All of these people are employees of the production, not AB5 type gig workers.

It’s a lifestyle/career choice and not for everyone. People hustle, build relationships and are always on the lookout for the next gig. But the work has been steady for decades, and then very suddenly the whole sector shut down hard.

Los Angeles Hit Hard by Implosion of Freelance Work

 

The pandemic has only exacerbated tenuous financial conditions for many in the flexible workforce.  According to a survey of more than 1,100 U.S.-based respondents interested in flexible work, more than half (53%) of people are currently earning half or less of their pre-pandemic income. Approximately one-third (31%) of respondents have lost their entire income since the pandemic started. This survey was conducted by FlexJobs, fielded in partnership with Prudential (1), in late June 2020.

Demographic breakdown of the 1,100 U.S.-based respondents interested in flexible work. Gender: female (81%), Male (17%) Prefer not to identify (2%) Ages: 20-39 (29%), 40-59 (53%), 60+ (18%); Education: high school degree or equivalent (4%), some college but no degree (15%), associate or bachelor’s degree (48%), graduate degree (33%); Career level: entry-level (11%), experienced (56%), manager (21%), senior level or higher (12%). Household income: Less than less than $50,000 (35%), $50,000 to less than $75,000 (18%); $75,000 to less than $100,000 (17%), $100,000 to less than $150,000 (17%), $150,000+ (13%). 34% of respondents were unemployed and looking for work.

Survey Finds 53% Earning Half Or Less Of Their Pre-COVID-19 Income

As a former freelancer my heart goes out to all of the gig workers whose lives have been upended by the pandemic.  I transitioned back to the world of W-2 work quite some time ago and haven’t regretted the move.

Meanwhile in Georgia…

“I think quite honestly this week went real well other than a couple of virtual photos,” Gov. Brian Kemp said at a news conference with the U.S. surgeon general.

Georgia governor: School openings going well except photos of crowded hallways

3rd Cherokee County school closes due to new COVID-19 cases

EfVgeCPXYAAU2GP

 

 

What Happens If Most Businesses & Consumers Tighten Their Belts at the Same Time?

In April and May 2020, the Bank of Italy conducted a special survey of Italian households to collect data on the financial situation and expectations of households during the crisis linked to the COVID-19 pandemic. More than half of those surveyed said their household income had shrunk as a result of the measures adopted to contain the epidemic. The impact has been particularly severe on the self-employed. Over a third said they did not have enough liquid resources to cover essential household expenses for a period of three months. Households’ expectations regarding spending have also been affected by the economic situation: more than half of those interviewed believe that even when the epidemic is over, they will spend less on travel, holidays, restaurants, cinema and theatres than they did before the crisis.

The Bank of Italy

What Happens If Most Businesses & Consumers Tighten Their Belts at the Same Time?

Answer:

Not good.

 

Comparing Drivers of Pandemic Economic Decline 2020 – NBER

The collapse of economic activity in 2020 from COVID-19 has been immense. An important question is how much of that resulted from government restrictions on activity versus people voluntarily choosing to stay home to avoid infection. This paper examines the drivers of the collapse using cellular phone records data on customer visits to more than 2.25 million individual businesses across 110 different industries. Comparing consumer behavior within the same commuting zones but across boundaries with different policy regimes suggests that legal shutdown orders account for only a modest share of the decline of economic activity (and that having county-level policy data is significantly more accurate than state-level data). While overall consumer traffic fell by 60 percentage points, legal restrictions explain only 7 of that. Individual choices were far more important and seem tied to fears of infection. Traffic started dropping before the legal orders were in place; was highly tied to the number of COVID deaths in the county; and showed a clear shift by consumers away from larger/busier stores toward smaller/less busy ones in the same industry. States repealing their shutdown orders saw identically modest recoveries–symmetric going down and coming back. The shutdown orders did, however, have significantly reallocate consumer activity away from “nonessential” to “essential” businesses and from restaurants and bars toward groceries and other food sellers.

Fear, Lockdown, and Diversion: Comparing Drivers of Pandemic Economic Decline 2020

I admit to having a short attention span.  My mind tends to wander a bit, sometimes a lot.  The reason for my cognitive wandering is usually a question which sends me down yet another path of discovery.  So here’s another post in my intermittent series on Post Pandemic Changes in Consumer Behavior

My July 4th weekend will be a quiet weekend.  I’ve downloaded the pdf of this working paper to read.  I’m hoping for some insights that I might have missed.

Scary Charts 05.06.20 — Auto Loans

Subprime Auto Loans Blow Up, Get Very Messy

US-auto-loan-deliquencies-dollars-2020-q1

Delinquencies of auto loans to borrowers with prime credit ratings were near historic lows (0.27% in March), according to Fitch data. In the pre-Virus Good Times, it was the subprime loans – with credit scores below 620 – that were blowing up…

In mid-March, the world changed for subprime lenders. Delinquencies were already exploding in the Good Times, and now they’re in utter turmoil.

In addition, it is likely that prime loans are becoming delinquent as well, as many of these people too have lost their jobs – this includes dentists and other professionals with high incomes and big debts and lots of expenses and no savings, who’d suddenly had to close their operations, and their cash flow disappeared. If they fall behind on their debts, they’ll be subprime in a hurry.

 

Significant financial stress is associated with a 13-fold higher odds of having a heart attack

Both work stress and financial stress were associated with a higher risk of acute myocardial infarction. The odds of myocardial infarction was 5.6 times higher in patients with moderate or severe work stress compared to those with minimal or no stress. Patients with significant financial stress had a 13-fold higher odds of having a myocardial infarction.

Small study with interesting findings.