In the Market
We have a little investment account, setup with the Schwab Company. It’s been there for years though there’s not a ton of money in it. But it serves as an ultimate backstop if we would need finance. I’ve learned not to dwell on it. The stocks go up, the stocks go down; if you leave it alone in the end they trend to the good.
But with all of the tough economic news in the past few months, I’ve worried about where our investment has gone. Did the COVID crisis economy impact on our little nest egg? But, at least as of today, the answer is no: our shares are valued within a few hundred dollars of what they were in February, before COVID, and the crash.
Personally that’s nice to know, especially for two retired folks who also have pensions vested partly in the market. But it raises a whole different issue: what planet is Wall Street on?
By the Numbers
We are in the midst of a global pandemic. Unemployment shot from three percent to fifteen percent, and now has eased back towards ten percent (BLI). That means that one in ten people who need a job can’t get one. But in mid-July, 51 million Americans were drawing unemployment (Forbes). That’s a confusing number. Last year the Pew Research Institute estimated 157 million Americans were employed, so if fifty-one million are drawing unemployment, that means that now almost a third don’t have jobs.
No matter how you manipulate the numbers, either a whole lot more people are unemployed than the ten percent listed, or there’s a lot of the 51 million drawing unemployment who aren’t counted. (That’s true, by the way, because they aren’t looking for work. And before someone starts the nonsense elitist conspiracy theory about the lazy American worker, remember most of those on unemployment are waiting to get back on with their regular jobs, closed by the pandemic).
51 million is almost a third of the workforce. So keep that in mind. And among industrialized nations, the United States is demonstrably one of the worst in the world in handling the COVID pandemic. We are on a scale with Russia, and Brazil, and maybe India and Bangladesh (Guardian). We, the United States, have screwed this up. Many thousands have died as a result. Even with all of our political blinders on, it’s difficult to argue that.
The Wall Street “Force”
But to paraphrase Star Wars’ Yoda, “…the blinders are strong on Wall Street”! It’s a narrow tunnel of vision that lets them accept one of the highest death rates in the world, in order to keep on making money. But if you can think about it in their way, it makes sense. As long as Americans are working, and much of the workforce either doesn’t get sick or recovers, than the engine of the American economy keeps running. And while the markets for products are subdued from COVID, many are still going strong. It’s mostly the old and those with pre-conditions that are dying, and most of them weren’t in the workforce to start with. If that sounds incredibly cold blooded – it is.
While Mom and Pop running the corner store are losing, Amazon and Apple and Microsoft are cleaning up. Even if you can’t or won’t go to the local store, Amazon is lining up packages at your door. And even if you don’t want to leave your property, there’s even more time to build that fence, or deck, or addition. That’s why there almost no construction lumber left around (check you nearby lumberyard). We’re all digging postholes, pouring Quikrete, and building fences. If only we could find the pickets, we could all finish “good fences” and become “good neighbors”.
Folks aren’t invested in Mom and Pop Incorporated on Wall Street. But they sure are in Amazon, Apple, UPS, and all of the other industries legitimately profiting from the COVID crisis. And that’s not even including investing in companies building ventilators, or developing pharmaceuticals.
Enter the Fed
And to add to all of that, the Federal Reserve is making sure there’s lots of “free money” around for investment. The current Federal Reserve lending rate is ¼ of one percent annually (Bankrates). In non-mathematics, that means it costs 25¢ a year for each $100 you borrow. Essentially then, if you can get the best Federal Reserve rate, they’ll loan you money for virtually nothing. Even more realistically, right now the current thirty-year mortgage rate, something most homeowners understand, is 3% (Bankrate).
So there’s lots of money out there, and folks are using it to buy into the stock market. More buyers mean that the share prices go up, and that keeps Wall Street “looking good”. It also provides political fodder for the Trump 2020 campaign that proclaims the “health” of the economy based on the Dow Jones Industrial Average. It’s now just a little over a thousand points below the record highs of the beginning of the year (Marketwatch).
Strategic Flaws
But there are two “flaws” to worry about if you’re the Trump 2020 campaign. First is all of those 51 million drawing unemployment. Most of them know why they aren’t working, and COVID is the answer. If they draw the straight line from the COVID disaster to Trump, it’ll mean a disaster for Trump at the polls.
And there’s a second, more existential moral question. If the United States economy is rolling by ignoring the human toll of COVID, then what kind of nation are we? I can’t say that Trump or his campaign is concerned about that, but I can hope that there are Trump supporters that are. Certainly if they are mourning the loss of a loved one, those market numbers don’t create much joy.
It’s all in where you are economically. If you are doing well with money in the market, you’re doing even better. If you are unemployed, especially because of the pandemic, things are looking pretty grim. And if you are at risk from the pandemic with little being done to protect you from infection, well, Good Luck. You’re not the priority.
