Pondering

Devastation from government ordered shutdown of the economy – 3 of 3

What the California economy might look like by the time it is allowed to reopen. Photo of abandoned farm in North Dakota by James Ulvog.

This is the third in a series of posts describing the damage caused by shutting down the economy. First post discussed recent news on economic damage. Second post described ongoing health damage.

Some things are *not* going wrong

Just under half a million people attended the motorcycle rally in Sturgis, South Dakota from August 7 through 16.

9/1/20 – PJ Media – OH THE HORROR! Sturgis Motorcycle Rally COVID-19 Numbers Are in and They Are Shocking

Half a million. Official tally is 462,000.

In one small town.

Check out any of the pictures from the rally and you will notice a distinct lack of masks and social distancing.

Expectations in most media sources were for this event to produce massive amounts of infection.

Half a million people. In one town.

The tracking results are in from the massive numbers of people who were infected and the resulting fatalities from this massive event.

It is shocking. Amazing. Head-shaking. Astounding.

Best info available is that:

  • 196 people tested positive for COVID with results linked to attending Sturgis.
  • 4 people died.

To put that in context, 5 people died of motorcycle accidents in Sturgis during the rally.

Growing awareness something is wrong with lockdowns

8/24/20 – Wall Street Journal – New Thinking on COVID Lockdowns: They are Overly Blunt and Costly – Article has a massive amount of information on the course of the pandemic, wide range of strategies by national and state governments, and large volume of statistics. The story is told basically scrambled egg style with no pattern or trends or storylines that I can easily summarize.

Devastation from government ordered shutdown of the economy – 2 of 3

What the California economy might look like by the time it is allowed to reopen. Photo of abandoned farm in North Dakota by James Ulvog.

This is the second in a series of posts describing the damage caused by shutting down the economy. See previous post for economic damage.

Damage to health across a society

8/18/20 – British Office for National Statistics – Coronavirus and depression in adults, Great Britain: June 2020

Study by the British organization compared data from July 2019 to June 2020.

They found 19.2% of adults were experiencing depression in June 2020 compared to 9.7% in July 2019. That is a doubling as a result of the pandemic.

Severity of the rise can be seen by 6.2% of the population that had ongoing depression, 12.9% developed moderate to severe depression during the pandemic, and 3.5% some improvement during that time.

Is there any doubt that the overwhelming portion of that increase is due to the isolation and economic damage caused by the government ordered shutdowns?

An interesting exercise is to put that data into table as follows:

Devastation from government ordered shutdown of the economy – 1 of 3

What the California economy might look like by the time it is allowed to reopen. Photo of abandoned farm in North Dakota by James Ulvog.

Over the last several weeks I have accumulated a number of articles describing the economic and health damage caused by the government ordered shutdown of the economy.

I’ve been wanting to post these for a while. In light of the California government imposing more severe constraints on when the economy will be allowed to start functioning again, it is now time to publish.

Economic damage

7/30/20 – Wall Street Journal – US Economy Contracted at Record Rate last Quarter; Jobless Claims Rise to 1.43 million – The preliminary estimate of the collapse in the US economy for the second quarter came in at an annualized 32.9% drop. Again, that is annualized. In addition, it will be revised in each of the next two months as additional data is gathered by the feds.

That follows an annualized drop of 5% in the first quarter.

8/25/20 – CNBC – American Airlines to cut 19,000 jobs when federal aid expires in October – …

California’s suppression of religious freedom, retaliation update – #3 in a series

Image courtesy of Adobe Stock.

I was going to extend this two-part series to three, adding on an upbeat explanation that when counties go after the Church the government is destined to fail. Reference to Church with an upper case C refers to the worldwide church, the universal, invisible body of Christ instead of meaning one particular local congregation.

Planned for the next post to give a small illustration expanding out to wider examples in history and then going back to New Testament illustrations.

Then a news report yesterday about petty retaliation from Los Angeles County interrupted, showing I need a different post as the next discussion.

 

So, for your daily dose of shake-my-head amazement, consider…

8/31/20 – Disrn – LA County evicts John MacArthur’s Grace Church from parking lot lease held since 1975 – By now a few other news sources are covering the story, but as of this morning I did not find any major news organization that considered it important enough to have an article.

First, some background.

California’s suppression of religious freedom getting more serious – 2 of 2. Oops – 2 of 3.

Image courtesy of Adobe Stock.

Update: Decided to make this a 3 part series. Next post – the effort to suppress religious freedom will not succeed.

Efforts to restrict the first amendment right of free expression of religion are growing in strength here in California. At least three counties are participating in the effort.

Pastor John MacArthur and Grace Community Church are standing in the gap, but other churches are also receiving pressure including planted spies, as discussed below. This is second article in this specific series.

Previous post gave recap of enforcement efforts against Grace Community Church. At end of this post there is a great comment from the GCC elders why the state dictacts are a direct restriction of religious expression

8/24/20 – PJ Media – California’s All-Out War on Church Worship Intensifies With Bans, Fines, and Sending In Spies – Three churches in California standing up to the oppressive restrictions on religious activities are receiving increased pressure from the state and county.

Some background:

  • Worship in a sanctuary is banned.
  • Singing or chanting of any sort is prohibited in worship, even when the worship is conducted in a private home.

Ventura County

California’s suppression of religious freedom getting more serious – 1 of 2

Image courtesy of Adobe Stock.

The efforts by the state of California and at least three counties in the state to restrict the first amendment right of free expression of religion are growing in strength.

Pastor John MacArthur and Grace Community Church are standing in the gap, but other churches are also receiving pressure, including planted spies. This is first article in this specific series.

Next post will give a concise explanation why prohibiting indoor worship, limiting worship size, and banning singing are direct restrictions on religious freedom.

In my humble opinion, the county does not yet know that in picking on GCC, they have targeted a church that will not back down when they have made up their mind. I predict there is a small but measurable chance this case could wind up in the U.S. Supreme Court.

8/20/20 – The Roys Reports – Julie Roys – Judge Rejects Request o Hold John MacArthur & Grace Community Church in Contempt – In the LA County Superior Court (that would be the initial trial court for proceedings) a judge refused to issue a contempt order for Pr. MacArthur and GCC. Also refused to impose $20,000 of fines.

Article gives recap of the legal efforts targeting GCC:

Settled matters outlined in the Declaration of Independence.

John Trumbull: The Declaration of Independence painted by John Trumbull. Photograph by Thomas Cizauskas is in the public domain (Public Domain Mark 1.0)

 

Several statements in the opening of the Declaration of Independence are settled matters. The issues are resolved. They are final.

If those key issues are not final but are instead malleable or alterable or subject to revocation the consequences will be horrible.

A speech by Pres. Calvin Coolidge explained this idea back in the 1920s. Let’s expand the concept of those ideas being resolved issues.

Please consider President Calvin Coolidge’s Speech on the 150th Anniversary of the Declaration of Independence on July 5, 1926.

He lists the three resolved issues:

“Three very definite propositions were set out in its (the Declaration of Independence) preamble regarding the nature of mankind and therefore of government. These were the doctrine that

all men are created equal,

that they are endowed with certain inalienable rights, and that

 therefore the source of the just powers of government must be derived from the consent of the governed.” (emphasis added)

He explained these issues are settled, resolved, final.

We can expand on those ideas. We need to bring them into further fruition. We can dive deeper into their meaning.

Setting them aside or replacing them means we go backwards. Declaring they are no longer true is regression to the ancient past.

More eloquently than I could ever describe, the president said:

“About the Declaration there is a finality that is exceedingly restful. It is often asserted that the world has made a great deal of progress since 1776, that we have had new thoughts and new experiences which have given us a great advance over the people of that day, and that we may therefore very well discard their conclusions for something more modern. But that reasoning can not be applied to this great charter. If all men are created equal, that is final. If they are endowed with inalienable rights, that is final. If governments derive their just powers from the consent of the governed, that is final. No advance, no progress can be made beyond these propositions. If anyone wishes to deny their truth or their soundness, the only direction in which he can proceed historically is not forward, but backward toward the time when there was no equality, no rights of the individual, no rule of the people. Those who wish to proceed in that direction can not lay claim to progress. They are reactionary. Their ideas are not more modern, but more ancient, than those of the Revolutionary fathers.”

Expanding those foundational concepts

It is even more important this year to remember that we are the land of the free because of the brave.

Image courtesy of Adobe Stock.

With our freedom under assault by many state and local politicians across the United States, it is more important than ever before that on this Memorial Day we remember those who shed all their blood so that we may be free.

A ‘thank you’ from me is so trivial.  I will demonstrate my appreciation for freedom purchased by others by exercising my freedom of speech today. Yesterday I exercised my freedom of religion. Today and tomorrow I will exercise my economic freedom, also called pursuit of happiness, by running my business the way I choose to do.

Following post was first published on May 29, 2017. It reprints an earlier post of May 30, 2011. I will update the discussion slightly. Deletions are struck through, new comments are in italics. This feeble tribute to those who have gone before will be posted across several of my blogs.

 

Image courtesy of Adobe Stock.

From May 29, 2017:

Those of us living in the United States are blessed with religious freedom, political freedom, and economic freedom because those who went before us fought for freedom.

Many of those fighting offered up their life for freedom and the offer was accepted.

I am humbled and grateful to God that some of my ancestors are included in the long list of those who fought. I am especially humbled that a great, great grand-uncle is in the list of those who died in the defense of freedom and the effort to crush slavery.

Because of their sacrifice, I get to enjoy this kind of freedom:

Economic destruction from lockdown continues to expand.

There is severe danger that a growing number of businesses are going to look like this over the next few months. Abandoned Safeway store [01] by Ben Schumin is licensed under CC BY-SA 2.0

Going concern thoughts for accountants:  I have stopped cross posting all my comments on the pandemic to this blog. The focus here is accounting and attestation issues.

The following conversation is worth listing here, so you can bring into consideration what is going on in the broader economy as you ponder your client’s going concern assessments. The economic damage from the shutdown is an issue for audits, reviews, and comps.

You might pay particular attention to comments by  the Atlanta Fed on near-term GDP forecasts.

 

The damage from the lockdown is spreading. More news is emerging about the devastation that took place in just the first full month of the closure.

The damage will continue to grow the longer the shutdown continues. At some point it will start compounding, growing at a faster rate out of proportion to the time that is passing. Keeping the economy closed now is unnecessarily so the compounding damage is a choice.

Merely a few of the articles in recent days:

  • Guess on GDP shrinkage in next quarter
  • Disproportionate number of poorer households hit by job losses
  • Collapse of tax revenue in New York state
  • Collapse of home sales in Southern California
  • Another retail chain announce store closures and another announces liquidation

It is imperative to reopen the economy in full, not just for ‘curb-side delivery.’ If we don’t open soon, I fear the following articles will be mild in comparison to what we will see in the future.

This discussion will be posted on several of my blogs.

5/16/20 – Fox Business – US GDP could sink over 40%: Atlanta Fed – Federal Reserve Bank of Atlanta is forecasting a 42.8% drop in GDP for the second quarter of  2020.

California starts first few steps to start opening up the stalled economy.

Economic doors will start to open on Friday – Opening or closing? by Paolo Gamba is licensed under CC BY 2.0

Friday of this week, 5/8, California will take the first baby steps to revive the state’s economy. Some retail stores will be able to provide curb-side delivery of products.

I don’t quite know how many people will order clothes online in order to pick them up at a store’s curb, but that is a first step.

At least half the value of a bookstore is browsing the shelves to see what book you really have to read right but that you previously didn’t even know existed.

Well, it’s a baby step.

Several articles describe the beginning here in the state. First article describes that government officials better start opening up quick or they will find the everyone already has done so.

5/1/20 – Forbes – Apple Data Shows Shelter-In-Place Is Ending, Whether Governments Want It To Or Not – Apple and Foursquare are tracking data that show people are getting out more.

The shutdown will be relaxed, one way or another.

Time to use the other side of those signs. Image courtesy of Adobe Stock.

If the politicians don’t start relaxing the lockdown and letting people pay their rapidly accumulating bills, bunches of people are going to take the initiative and do so on their own.

I sense there is a limited time for those in power to start loosening the extreme restrictions or people are going to start ignoring parts of the rules.

At a deeper level, the concern I have is what’s referred to as the “social contract.” Government gets its authority from consent of the governed.

If a large number of people get to the point of concluding the rules in places like California and Virginia are unnecessarily severe and are causing more health, mental, social, and economic damage than they prevent, people will conclude our leaders have broken the contract.

If we get to that point, respect for law and respect for public officials will decline. That is not a good place to go.

 

Next two articles point out a small number of people who have already reached that conclusion:

4/20/20 – Daily Wire – “Social Shredding”: Defiant Residents Grab Shovels, Dirt Bikes After Cali Authorities Dump Tons of Sand In Skateparks For ‘Social Distancing’ – Officials in San Clemente California noticed teenagers were committing the grave sin of skating in the city’s skate park. Well, that is patently unacceptable, so the city dumped 37 tons of sand into the skate park in an effort to shut down the skating. Since the park is at the beach, sand was readily available.

Well, the city officials did not take into consideration the incredible level of creativity present in humans, especially Americans.

Good news in some states for people who like to pay their rent and put food on the table. Bad news for California and Virginia.

A deep freezer, used for keeping large volumes of meat and vegetables frozen. That’s where the economies of California and Virginia are going to be stored for a long time. Image (but not commentary) courtesy of Adobe Stock

Many states are starting to open up their economy.

Virginia may be closed down tight for up to 24 more months.

California may not open up until August.

August.

There will be incalculable medical, emotional, and financial damage in California and Virginia from the lockdown. More on that momentarily.

This discussion will be posted on several of my blogs.

Good news

On the bright side, getting most attention for opening are:

  • Texas
  • Georgia

Other states are thawing because they also don’t want to bankrupt everyone, destroy all the hospitals, further tear down overall health levels, and permanently cripple their economy. List includes:

  • Alaska
  • Colorado
  • Minnesota
  • Montana
  • Mississippi
  • Ohio
  • Oklahoma
  • Pennsylvania
  • South Carolina
  • Tennessee

And then there is Virginia and California.

Other damage from pandemic

Tornado damage. Image courtesy of
Adobe Stock.

Warnings are surfacing about the damage from the stay-at-home orders.  There are mental health repercussions from isolation.  There are also negative health implications from rapidly dropping income and disappearing wealth, such as missed medical screening and delayed or skipped treatment.

4/9/20 – Wall Street Journal – Coronavirus Pandemic Takes Toll On Mental Health – Article describes how the forced isolation and disruptions are starting to cause distress in terms of mental health. There will be a severe Ripple effect from the stay-at-home orders and shutting down the economy.

Economic damage from pandemic is severe and will continue to be severe.

Image courtesy of Adobe Stock.

We are starting to see some guesses about the economic damage from the shutdowns driven by the pandemic.

When you read about the 10 million people who have filed for unemployment in the last two weeks and consider there will be millions more and the unemployment will continue for another month or two, ponder the ripple effects.

That shock of unemployment translates into cars not purchased, summer & Christmas vacations not taken, conferences not attended, college enrollment delayed a year, fancy wedding receptions never planned, and house renovations postponed by a decade.

4/5/20 – Wall Street Journal – State Shutdowns Have Taken at Least a Quarter of U.S. Economy Offline – Study by Moody’s Analytics estimates that 29% of the U.S. economy has shut down. That is the estimated drop in output we have already seen.

Some of the staggeringly dangerous hits to U.S. output and wealth:

When will this mess from the pandemic be over? Focus on the idea that it will end, not what that date will be.

We will prevail. Image courtesy of Adobe Stock.

When will we be done with this stay-at-home restriction?

When will the economy recover?

When will we be back to “normal?”

 

I don’t know the dates for any of those transitions.

I have a suggestion for you.

 

Don’t set a specific date in your mind. Instead firmly set in your mind that this mess will end, we will get through it, we will survive, and we will thrive at the end.

What is the danger of setting a date in your mind and having faith it will be over on that date?

Let me introduce you to the Stockdale paradox.

Admiral James Stockdale was an American pilot shot down during the Vietnam war. He was a prisoner in North Vietnam for 7 1/2 years, routinely subject to brutal torture, legs broken twice during interrogation, and held in solitary confinement during four of those years with his legs locked in a metal stock each night. He was awarded the Congressional Medal of Honor a few years after his release.

I think we should listen to him. His physical courage and moral courage are a role model for all of us.

For one explanation of the phenomenon he described check out article titled The Stockdale Paradox.

 

Who did not come home from captivity?