CNBC featured legendary investor and success story Ray Dalio. His prediction is not rosey. At best he believes a deep recession based on all of his years of research and team discussions is possible if not likely.
The greatest depression lurks. It lurks because America is not Great Again with failed state policies. To blame – you and me. We let the greatest country on earth fall amongst nations. We sit with a dagger in the heart, waiting for some others to pull it out. They will not.
Ray’s dire prediction, “this has never happened before” only becomes a reality when the government fails its people. It only becomes a reality when companies fail their employees and employees fail their customers. Advocates for change, like Robert Reich at Berkley, tirelessly demand fairer wages. Yet his own institution’s tuition is excess for most. Where are the large endowments granted previously at Berkley now being made available to save students from immediately falling behind? Universities can do their part to save Uncle Sam.
In Ray’s new world, broke is the common currency. Not bitcoin. Not gold. Despair is needed for this 50+ year one-time occurrence – a true Talib “Black Swan.” Ray misses a few key points.
Human Nature & Technology:
50+ years ago human nature may have been the same basic instincts. These will surely be heightened. 50+ years ago, the pandemics took longer to solve because of paper and pen. We have Watson – by IBM. We have Gates – previously warned the world. We have collaboration tools with good doctors who still, maybe still, want to first tend to human needs vs self-interest. We have markets.
And here lies the problem. While markets are digital and dispersed, none lack people. Volume yes. People no. Technology is adapting and adaptable. People able of “FAST CHANGE,” morphing into something they never expected in a short period of time may be what saves the markets. And the urgency may be done swiftly because of COVID-19.
How does this quickly take place: social media. Ray does not address technology in our world. He accounts for human nature in macro terms. FB ads allow consumers to choose a dinner delivery app. Trial period “Ad targeting” should be provided by FB. FB can do its part for creating the unhealthy social fabric that has been eroding certain parts of society globally. To its credit, FB is also our glue – Instagram, FB, Whatsup.
Food & Essentials:
The ban on movement, except essential employees, can allow food delivery first. The teams of restaurant employees desiring to be delivery drivers save unemployment burdens. Leases for commercial space will be broken. Landlords will sue. The government will need to intervene. Temporary transition support for the sector applicants would need to exist. Landlords and tenants are preserved and employees make a critical choice: new role or Education Unemployment.
Education Unemployment is career-enhancing. While from home, the employee supports critical services – hospitals and small businesses. The roles are defined by the new reality America finds herself. Marketing and customer service at a liveable wage of $15/hr if that is what the employee and employer agree upon. If the employee negotiates for more on their own and the employer accepts, both do their part for America.
Tourism and Travel:
It is time to clear the deck. The travel industry has many inefficient facets. Some participants can survive simply by their own emergency efforts. Makeshift hospitals if needed are to become former hotels. The funds and management companies of these hotels will receive a future credit from the IRS. In addition, the American taxpayer will receive a travel voucher. This is a government-supported plan. The discount by the hotel operators will restart the industry, whenever that may be.
In the interim, property owners and hotels should find their own lifeline. A property owner should take equity in the hotel. The hotel should receive a pass on its monthly obligations like rent. The hotel industry has a solution. Employees can choose between the Education Unemployment or a career shift into COVID-19 Service. The government funds the temporary employee need but receives a future payment from the future earnings of the hotel operator.
Investors should accept simply because zero return today for worthless paper is less than potential future earnings tomorrow. Additionally, investors and COVID-19 service employees receive the American Pride Citizen Medal to share with their family and future generations. Their commitment to COVID-19 Service is 1 year. A live award ceremony will be broadcast at a future date to enhance the social interest in the programs.
Airlines and Autos:
The industry was already in flux. COVID-19 just makes it happen today. Ford, GM, and others have lagged behind pioneers like Tesla and foreign competition. Boeing, as we know, created a bad product – unsafe actually. These are market problems, not COVID-19.
The Auto industry of the future is here today. Unemployed can choose to build America’s new transportation system. This will start with the ELECTRICAL GRID. California suffered the greatest utility debacle – old equipment stoking fires unlike others in California. Traffic is inefficient and gas-powered vehicles are last century technology – future collector items. New York and approximately 20 eastern US states have a failing electrical grid as evidence by the mid-2000s blackout. With workers of all types now at home, fuel-efficient solar panels for the roof can likely be further developed. Solar City, First Solar, and others are market solutions that can work today. Mnuchin’s treasury can make it happen with a proper tax code entry for homeowners. The incentive speeds up our willingness to be energy independent.
Electric is proven and the American people deserve to free themselves from political battles. Russian and Saudi Arabia knowingly or not set off the greatest financial crisis in the world. They did so because of assumed market pricing. The self-interest of a nation-state leader vs a globally-minded leader allowed global citizens to be subjected to Dalio’s prediction. American’s experienced this in the 1970s. Americans who want to make America great again with quality craftsmanship and the envy of the world should step up. Step up and retool. Step up and transform. Now not later.
The roads required for our national transportation system need reinvestment. America will rebuild with direct investment in the national highway system. Truckers who move up to new model vehicles should receive free toll access. Those who chose otherwise can find higher prices at the pump. As America’s current President stated, “we bought oil cheap from the Saudis.” Even if he lied, the fact remains oil in America has to be repositioned.
Jet Fuel and petroleum-based products require our existing knowledge of extraction. This is a knowledge that should not be lost – but this is a market-driven value. We may not need so many oil companies but we truly need a healthy industry. Industry players in oil can consolidate normally. The attrition of the work can be buffered by joining the COVID-19 Education Unemployment program. The employee who might be downsized has two opportunities – one immediate in government and one immediate in an industry of his or her choice. The prior being guaranteed to start immediately with a 1- year commitment.
Similarly, the Airlines should not be supported further. Technology, Terrorism, and Health have destroyed travel for the masses. Global alliances are frequently jammed with travel delays and burdens, including health concerns. COVID-19 is health terrorism to us all. Political enemies can clearly see this. So too have global citizens. Individualized transportation, first with a fuel-efficient vehicle and ultimately with personalized models is likely. Long-distance air travel is going to be needed always. The current format though is simply not going to work.
United Airlines should fail. No further bailout should be offered to a company that elected to buy back stock vs reward its own employees. The employees have lost their own voice if their own ability to benefit from the share buyback was not possible. This airline specifically has attempted to hold cities and communities hostage based on the Tax incentives offered by local communities. These incentives are ultimately paid by the citizens and not the company. Any bailout of this or other Airlines should now become partially owned by the American people. The marketing should remind both United and the traveling public that this is America’s airline. The investment return for the American taxpayer will be clearly shown on every American tax return. For every year that a loan payment by United is made, Americans will see the payment on their filed return.
Bezos has succeeded. He is wealthy. His ex-wife is wealthy. He is involved in numerous companies personally and as Amazon. He has won – almost.
The complete log-jam in America’s supermarkets because of COVID-19 is a security risk to us all. Dalio’s doom and gloom scenario are evident in the market. The inability of the markets to adjust to unexpected surges in our food logistics system is now known. All food retailers are experiencing what Whole Foods and Amazon.com have learned: logistics is incredibly hard and can only be accommodated with government help. The current 6 feet between citizens, “Social Distance,” maybe the government’s solution unbeknownst to citizens. The distance and the shutdown of restaurants likely allowed the food supply enough time to breathe from this shock.
America’s online delivery system works as-is. The efficient market will now drive the winners and losers in the grocery and restaurant industry. Americans can tolerate a slight medical gap caused by COVID-19. Americans do not have to tolerate high prices for terrible products or perceived shortages. Toilet paper is the COVID-19 flag. It is a black swan for supermarkets. For a specific reason not yet known to the consumer, the abrupt shortage from the mill to market of paper goods is an overall concern. Amazon and the other food retailers only know the underlying answer – if not the highest levels of the US Government.
Amazon, Walmart, and Costco are healthy industry companies. Trader Joe’s, Sprouts and others are competing and should continue as such. Small companies competing with Amazon needs further encouragement. The last mile is what bigger companies do not want to be involved. Amazon should be forced to spin off its trucking and delivery business and have it merge with the remnants of the US Postal System. This will become a third major transit player available in the public equity and bond markets. Investors should be rewarded for the break-up with the opportunity to invest now.
Jeff Bezos should further do his part by forcing the Washington Post to a higher journalism standard. Readership ultimately will determine its continued success.
Delivery by drone is one of the new transportation models now available. Last-mile solutions will require new companies. Unemployed from other COVID-19 impacted industries should consider new opportunities to work in this new delivery category. The commercial and industrial real estate which once housed malls can become last-mile delivery centers. Similarly, small retail locations can have air rights granted to property owners. Drone delivery from rooftop/lots will allow centralized suburban and urban delivery. Obsolete venues like Movie Theaters can now be converted for health and packed delivery use. Once popular luxury malls can renegotiate with their tenants or lose their tenants. Those tenants can shift to independent real estate holdings and management that want their business. By appointment will be the new luxury model and possibly the only store model. Retail properties will have a market reset in price based on tenants and landlord relations.
The last mile is currently occupied. Americans have been asked to stay at home until a solution is found for COVID-19. Freedoms have been gained. Families have become renewed at a time of need. Working from home will require the obvious: shelter.
America’s tax code allows for a home deduction. Americans should now demand a 1-time deduction for home improvement. Purchasing a home in an already tight market place in select parts of the country makes the home employed better off. Each home-owner will gain from their proximity to things that they like. Residential real estate is becoming more efficient with multiple transaction models available. Those in need will take a price discount on their home by selling to an iBuyer agency. Foreclosures will only happen in rental properties, specifically those in the sharing economy. Because of the immediate shift, Americans will not experience the demise that Ray Dalio projects. Americans will stay in their cars. Americans will stay in their homes. Americans will fall back in love. Americans who may perish will be renewed with youth. Families will grow and the country will avoid a deep recession. Of course that requires proper and swift leadership.
The American Election:
The 2020 Campaign has ended. The Joe and Don show are now set. The DNC has failed the American people. The RNC has failed the American people. They have blown up government and killed markets. They have scared parents and played on emotions.
From the comfort of their homes, Americans should find and form a new party. A party of hope. A party of prosperity. A party to make each freely choosing consumer proud of liberty, freedom, health and the pursuit of happiness. That is, of course, the heart of the American Dream.
Click the link below to show your support for the above opportunities. Enjoy the ride.