Coronavirus Infects Stock Market: Part LVI
“Requests for driving directions on Apple Inc.’s Maps app are back around mid January levels, while data from Dutch location technology firm TomTom International BV show traffic congestion gradually climbing in some late U.S. cities, though it is still down substantially from March levels in many,” reports the WSJ. But after this weekend’s riots, who is in a rush to visit a city?
The future of the city is on the rocks. Blue state governors and mayors have gone wild. They’re a fiscal mess. Consider the self-inflicted wreckage of mismanaged pensions—they are beyond the rate of return.
Steve Malanga in the WSJ:
Meanwhile, elected officials and pension administrators have endorsed overly optimistic economic assumptions that made their systems look affordable. In 2007, for instance, most state funds projected an annual return of 8% or more on their investments. Under intense criticism, many have now pared down projected returns to 7.25%, but doing so has added billions of dollars of debt. Here’s a reality check: Over the past decade, state pension systems averaged only 6.8% actual returns, according to Wilshire.
Expect higher taxes, fewer services, and the potential for violence at the drop of a hat. You don’t want to live in a city.
With a future of higher taxes on your lifetime of production, you need to save until it hurts. You need to work for as long as you can, putting off retirement for another day. You need to get out of debt pronto and consider how much worse things can get when supply lines are cut off. This virus is nothing compared to what could happen to your way of life.
For blue states, money grows on trees is their mantra. In Newport, for example, they’re looking to float a $100 million bond to build a new school. The current school building is a wreck. But does it make sense to build a new school when they’re headed into obsolescence like the library? Tell that to the blue state governors who will always spend your money to make them look good. Blue states will not make the tough calls.
Stephen Moore writing about Pelosi’s bill:
Government spending as a share of GDP would be 48%. Under the Pelosi bill it would be 51.5%—more than half. That’s never happened. Even in 1943-45, at the height of World War II, government spending was a bit under 50%. Senate Minority Leader Chuck Schumer said the next relief bill should authorize “Franklin Rooseveltian-type action,” and he wasn’t talking about defense spending. Yet before the U.S. entered World War II, total government spending never exceeded 20% of GDP.
Time to start driving your car to see where you can seek some shelter when things get ugly.
Read my entire series, Coronavirus Infects Stock Market here.
