Things That Make You Go Hmmm-March 22, 2023 Edition

Climate Change

Greta Thunberg is famous for making bold predictions about the demise of the planet due to climate change.

Time actually named her its Person of the Year in 2019.

Credit: https://www.nbcnews.com/news/us-news/greta-thunberg-time-s-2019-person-year-n1099396

This is what she tweeted out in 2018.

It seems that she just deleted that tweet for some reason.

Source: https://nypost.com/2023/03/15/greta-thunberg-reportedly-deletes-grim-2018-tweet-about-climate-change/?utm_campaign=SocialFlow&utm_medium=SocialFlow&utm_source=NYPTwitter

Does anyone remember this headline from 10 years ago?

Source: https://www.dailymail.co.uk/news/article-2425775/Climate-scientists-told-cover-fact-Earths-temperature-risen-15-years.html

For context, here is a graph showing the % of days that US Historical Climatological Weather Stations had temperatures above 90 degrees for the last 100 years.

Credit: https://twitter.com/TonyClimate/status/1636138937575149568

How come it was much warmer in the 1930's and 1940's than today when there were much fewer fossil fuels used at that time?

Global fossil fuel consumption has increased 8-fold since 1950 and doubled since 1980.

It doesn't look like the trend has ceased over the last five years either.

Hmmmmm.

Interest Rates

We are hearing increasing rumors that the federal government is considering having the FDIC guarantee all bank deposits 

Source: https://www.zerohedge.com/markets/us-studies-how-guarantee-all-18-trillion-us-bank-deposits

The FDIC currently only guarantees the first $250,000 that any depositor has in an FDIC insured bank.

It has already guaranteed all deposits in Silicon Valley Bank even though 97% of the deposits were over the FDIC limit.

How much did the FDIC have in assets to cover the guarantee BEFORE Silicon Valley Bank and Signature Bank were taken over?

$125 billion.

The last I checked $125 billion is a tad below $18 trillion.

Do you see a problem?

In the meantime, the current yield on a 6 month Treasury bill is almost 5% even after the drop in interest rates since SVB went under.

Source: https://www.cnbc.com/quotes/US6M

How much is Chase bank paying its depositors?

Has it increased what they pay in interest to try to keep deposits in the bank?

If you qualify for its "relationship rates" you can get .02% this week on your savings account. Otherwise you get .01% on most accounts.

Source: https://www.zerohedge.com/markets/us-studies-how-guarantee-all-18-trillion-us-bank-deposits

In the meantime, Chase can pay its depositors .02%, take that money and buy a 6-month treasury bill for 5% or park it at the Federal Reserve for an even shorter term and earn 4.65% at current rates.

That is a pretty sweet deal for Chase.

The problem for the banks is that more and more depositors are figuring out the game that is being played as interest rates have risen.

Does anyone believe this will end well when those are the underlying economics in all of this?

Hmmmmm.

Excess Deaths in Germany

Credit: https://twitter.com/goddeketal/status/1636121394009309186

Draw your own conclusions on this data.

However, has there ever been a pandemic in human history where deaths went up a year into the pandemic after the introduction of new treatments and vaccines targeted at the disease? Then overall deaths went up more in the second year?

Hmmmm.

Electric Vehicles in Quebec

The province of Quebec in Canada passed legislation in 2018 that phases out the sale of all new fossil fuel vehicles there by 2030.

Volkswagen was looking for a site in Canada to manufacture electric car batteries.

It recently rejected Quebec as a possible location for the plant due to concerns by VW about the province's  about tp provide a consistent supply of electricity to power the new plant.

If you don't have enough electricity to power an electric battery plant how are you going to have enough electricity to power all of those electric cars?

No worries.

Those progressive liberals have seven years to figure out how this is going to work.

Hmmmm.

Bachelorette Parties

This article made me go Hmmmm twice.

Source: https://www.thebach.com/blog/bach-app-special-report

Nashville and Scottsdale are both more popular venues than Las Vegas for bachelorette parties?

In fact, there are twice as many bachelorette parties in Nashville as Las Vegas.

The average cost of a bachelorette party is $10,800.

$1,200 per person spent on airfare, lodging, entertainment and food times an average of 9 girls attending.

We have come a long ways from my experience where the bridal party split up after the rehearsal party at separate bars and had a few drinks with the future bride and groom.

Bear in mind these are many of the same people today who claim they cannot afford to pay their student loan debt.

Triple Hmmmm!

Credit: https://www.thebach.com/blog/bach-app-special-report

Seeds of Destruction?

If you want to see where the seeds of inflation were planted, as well as the conditions that set the stage for the bank troubles we are seeing today, look at this graph of deposits at U.S. commercial banks.

These seeds were planted by the Covid relief payments by the U.S. government and Biden's $1.9 trillion stimulus package in early 2021, which were made possible by the Federal Reserve's monetary policy, that accommodated the spending.

Banks were flooded with cash as government Covid payments were made to businesses and individuals in 2020 and 2021.

Between the beginning of 2020 and the end of 2021, bank deposits increased from $13.3 trillion to $18 trillion---$4.7 trillion in additional cash deposits.

How much were the Covid relief and stimulus payments approved by Congress and signed into law in that time?

$4.5 trillion.

Funny how that works.

Of course, that much additional money in the system meant there was a lot of money chasing after stocks, real estate and general goods and services.

Inflation was the result. Too much money chasing too few assets, goods and services.

Most of the deposits in the banks were earning little interest for the depositors.

As inflation because entrenched, the Federal Reserve began increasing interest rates to try to slow the economy.

As treasury rates started to increase in the second half of 2022, more and more depositors started withdrawing their bank deposits to invest in treasury securities that were earning higher yields.

When is the last time we have seen net bank deposit outflows before?  1948.

As bank depositors withdraw cash from the bank it is necessary to have the liquidity to satisfy the demands.

However, in a fractional banking system ready cash is in short supply as most bank assets are invested in loans, mortgages or investment securities that are not liquid.

It also doesn't take much for a trickle to turn into a flood when the confidence of depositors in a bank's safety is shaken.

That is what happened at Silicon Valley Bank.

That concern has spread to other banks.

Banks often use the Federal Reserve's Discount Window to address temporary funding shortfalls. It allows banks to access funds quickly, often the same day.

Borrowing from the window is usually considered a last resort. It can signal that a bank is having financial difficulties.

You can see what has transpired recently at the Discount Window.

Source: https://twitter.com/Malone_Wealth/status/1636736907605336066

Compare what was happening to the stock market at the same time that banks were hitting the discount window in the past.

Late 2008-Early 2009 S&P 500 performance.

Spring 2020 S&P 500 Performance

Will history repeat itself?

I guess we will find out.

In the meantime, perhaps we should all take comfort by what our current Treasury Secretary Janet Yellen said in 2017 when she was the Federal Reserve Chairman.

Or perhaps not.

You may also recall that Yellen was one of the so-called experts who told us that Biden's stimulus bill would not cause inflation, and even if it did, it was going to be transitory.

Credit: https://twitter.com/charliebilello/status/1446858352638763019?lang=en

This is the brain atop the brain trust overseeing our financial and economic policy?

The lesson here is that seeds grow.

They also often grown in unpredictable and unexpected ways.

Let's just hope that these are not seeds of our own destruction when all is said and done.

What Were You Doing Three Years Ago?

Do you remember what you were doing three years ago today?

I do.

I was writing the blog post below.

The underlying question I asked in that post was whether our policy experts were making decisions really knowing what they were doing?

We were living in a surreal world where the entire economy was effectively shutdown.

Was the cure worse than the disease?

Did we really have the data to know that we were making the right decisions?

Ron DeSantis, in his new book "The Courage To Be Free", said he asked Dr. Deborah Birx during the lockdowns to cite the data and historical record to support why they were recommending the lockdowns.

She told him it was "kind of our own science experiment."

Source: https://dailycaller.com/2023/03/14/desantis-deborah-birx-covid-19-lockdowns-science-experiment/

 

“I said, ‘Deborah, just tell me. When in American history has this been done and what were the results because I kind of feel like we’re flying blind here and we may be doing things that are gonna be damaging.’ And she said, ‘You know, it’s kind of our own science experiment that we’re doing in real time.’ That didn’t sit well with me, you’re a citizen of a republic, not a guinea pig.”

Lean back and take yourself back three years in time.

Was BeeLine asking the right questions?

Why were so few others doing the same?

You might also ask why we got to the point that anyone who asked questions about what we were doing over the next three was deemed a purveyor of misinformation?

How would things be different if we could turn the clock back three years?

Surreal Is Our New Reality (originally published March 19, 2020)

I could call it surreal.

However, it is our new reality.

It is stunning the extent that which our lives have been transformed in the last 10 days.

Surreal is our new reality. All sporting events cancelled. Schools closed. Cruise lines shut down. Air travel at a near standstill. Restaurants and bars shut down. Shopping malls closed. Millions trying to work from home. Millions of others suddenly out of work.

I wrote this on January 31 when we were barely a week past the first coronavirus case being reported in the United States.

We often don't realize the precarious perch that our lives are built on. A lot of that is based on the confidence that underlies our economic system. It doesn't take much to disrupt that equilibrium and the confidence that goes with it. When people don't have the confidence to do business, shop, travel and interact, the economy quickly tanks.

People are now realizing what I was talking about. I wish it were not true.

I have to believe that we will soon experience unemployment rates that will exceed anything that most of us have seen in our lifetimes.

If the current surreal reality continues for several months we may challenge some of the numbers seen in the Great Depression.

Jobless claims soared to 281,000 last week and that was before most of the restaurant, bar, store and theater closings that went into effect this week. We will soon these numbers in the millions.

Of course, I don't need to say anything about the stock market.

Over $12 trillion of value has been wiped out in less than a month in the United States alone. Global values have taken somewhere near a $25 trillion hit.

That value evaporated faster than in any stock market sell-off in history.

Washington is talking about a $1 trillion economic aid package. That seems like a lot until you put it into a broader perspective.

I have not heard many talk about it but we are surely blessed in all of this that we are taking this economic hit at a time when we were at an economic high. Stocks were at all-time highs. Unemployment was the lowest in almost half a century. It would be far, far worse having to deal with a poor economy and struggling stock market before we were hit with this pandemic.

For some context, here is the Dow over the last five years. Yes, it is bad, but imagine having to confront this in 2016. Or 2009?

There is a reason that pilots attempt to climb if they run into a problem in the air. It always helps to have as much altitude as you can when you are flying an airplane. The more altitude you have, the greater margin you have to overcome any issue, and the better chance you will have to land the aircraft safely. The strong economy over the last three years is a significant advantage for us compared to where we could be.

It is hard not to ask the question whether all of this surreal reality is worth it?

We will likely never know. Once a course is taken it is often impossible to consider the alternative. Whatever decision is made is quickly affected by other choices and actions that compound and don't permit one to easily determine if the "road not taken" might have actually been a better path. Mind you, I did not say easier. There are no easy roads whichever way we go right now.

I have no doubt that the public health professionals are making the best recommendations and decisions they can based on what data they have. However, the problem is that we are dealing with so many unknowns with this virus.

John P.A. Ioannidis is professor of medicine, of epidemiology and population health, of biomedical data science, and of statistics at Stanford University and co-director of Stanford’s Meta-Research Innovation Center. In other words, he is someone that knows a whole lot more about this than I do.

In a recent opinion column Dr. Ioannidis questions whether we are dealing with a once-in-a century pandemic or a once-in-a century evidence fiasco due to the fact that big decisions are being made without reliable data.

At a time when everyone needs better information, from disease modelers and governments to people quarantined or just social distancing, we lack reliable evidence on how many people have been infected with SARS-CoV-2 or who continue to become infected. Better information is needed to guide decisions and actions of monumental significance and to monitor their impact.

Draconian countermeasures have been adopted in many countries. If the pandemic dissipates — either on its own or because of these measures — short-term extreme social distancing and lockdowns may be bearable. How long, though, should measures like these be continued if the pandemic churns across the globe unabated? How can policymakers tell if they are doing more good than harm?

I am persuaded that the current path we are on for this two week period makes the most sense right now since it is better to err on the side of caution.

However, how long can this be sustained and at what cost?

Even more than new therapeutics and vaccines, what we need most right now is better data to assess the threat and danger to society of the virus together with the ultimate economic cost that we may have to pay to combat it. Rationale minds need to then balance those two important factors as it relates to our society.

At one point is the cure worse than the disease?

How bad is Covid-19? We just don't know right now. It is still playing out.

However, the Visual Capitalist put together this excellent graphic to show the history of the world's greatest pandemics.

There truly is nothing new under the sun. Mankind has been challenged before and come out better on the other side. We will once again.

However, the human costs of most of these pandemics have been extraordinarily high in lives lost.

May we get the best data available as soon as possible to make sure that we are making the best decisions to limit the human costs, first and foremost. That is not necessarily easy as Dr, Ioannidis points out.

One of the bottom lines is that we don’t know how long social distancing measures and lockdowns can be maintained without major consequences to the economy, society, and mental health. Unpredictable evolutions may ensue, including financial crisis, unrest, civil strife, war, and a meltdown of the social fabric. At a minimum, we need unbiased prevalence and incidence data for the evolving infectious load to guide decision-making.

Surreal only works for so long. Every click of the clock the human cost will compound one direction or the other as relentlessly as the virus spreads in communities in the United States and the world.

We need better data if we are going to make better decisions.

The sooner the better. That is the real reality.

Focusing On The Wrong Pandemic?

There is no more concerning trend in the United States than the increasing rate of depression, anxiety and mental illness in young people.

This received a lot of attention during the Covid lockdowns but this trend had been underway for most of the decade before we ever confronted the pandemic.

To provide some perspective on the dimensions of the problem, consider the death rates for those age 15-24 from Covid-19, drug overdoses and suicides for the year ending March 31, 2022.

Almost 16 times the number of young people died of suicides and drug overdoses in that one year period as died from Covid!

The Covid lockdowns did nothing to help the mental health situation of young people. It exacerbated the trend that was already in place.

For example, this is a graph that shows depression scores for 12th graders from 2005 to 2018.

Levels of depression for 12th graders began to increase rather dramatically in the early 2010's.

This applied to both males and females and those with both liberals and conservative political outlooks.

However, as has been seen in most studies, there is a higher level of depression/mental health issues with women than men and with liberals compared to conservatives.

Source: https://www.sciencedirect.com/science/article/pii/S2666560321000438

You can see the same trend in 12th graders in their  "self-derogation" scores. This is when someone answers "they don't have much to be proud of" or believe "they can't do anything right".

Again, this trend began in 2010-2011.

Credit: https://twitter.com/monitoringbias/status/1634218771643506688

You can see the male/female and liberal/ conservative differences in mental health in the broader data set for the population at large below.

The data is rather striking.

The more liberal you are the greater chance there is a mental health issue. The more conservative you are, the less likely that is the case.

Credit: https://twitter.com/monitoringbias/status/1630954493759090691

What is going on here?

Why the rise in mental health issues in the young?

A number of observers believe the increased use of social media and the rollout of the iPhone is responsible in some way. It is even argued that children with liberal parents were more likely to be early adopters and provided iPhones to their teenagers earlier than conservative parents. This would explain why the increasing effects of depression began earlier with liberal teens.

It is an interesting theory. We do know that being isolated and feeling disconnected from others leads to depression. A life centered around a phone, apps and texts and devoid of human interactions is not the best prescription for sound mental health.

The chart below is also very interesting.

Pew Research asked the question whether a doctor or healthcare had EVER told you that you had a mental health condition.

You would think, just based on age alone, it would be much more likely that older people would answer this in the affirmative than young people. After all, they have been around much longer and faced many more challenges and problems in their lives.

However, the exact opposite was true.

The younger you were the more likely you were to have a mental health condition at some point in your life.

This was true of men, women, liberals and conservatives.

Credit: https://twitter.com/monitoringbias/status/1634194897875116032

However, we again see the divide on the issue between men and women and liberals and conservatives, particularly in the 18-29 age cohort.

It is almost behind comprehension that over 50% of young, liberal women say they have been told they have a mental health condition.

This is the group we are relying on to birth and nurture the future generations of Americans?

This is also a large demographic that is voting overwhelmingly for liberal Democrats. 

God help us! 

I wish I had a good answer for why there seems to be more mental health issues with those who identify as liberals than there are with conservatives.

Is it simply because liberals are more honest and transparent? Possibly.

Could it be due to a victimization mindset that has become even more amplified in the social media age we live in today?

Jill Filopovic wrote this in a recent Substack that might provide some perspective on this point.

Just about everything researchers understand about resilience and mental well-being suggests that people who feel like they are the chief architects of their own life — to mix metaphors, that they captain their own ship, not that they are simply being tossed around by an uncontrollable ocean — are vastly better off than people whose default position is victimization, hurt, and a sense that life simply happens to them and they have no control over their response. 

Depression, anxiety and many others mental health conditions result when one feels overwhelmed and becomes unduly pessimistic about the possibility of anything changing in their life.

At the core, they do not believe change is possible or within their control.

Instead of being the architect of their own life and changing the things they can change individually, they focus and dwell on victimhood or any number of external issues.

The problem today is that there are plenty of things social media and the mainstream media do to fuel these thoughts.

"The world is going to end in 10 years due to climate change."

"White privilege".

"Male privilege".

"Systemic racism".

The list could go on and on.

Another fact in all of this is that white liberals are much more likely to live in an echo chamber than white conservatives despite the popular narrative being the opposite.

Credit: https://twitter.com/monitoringbias/status/1631042799788335110

When all you hear is one point of view and it is a pessimistic one at that, you are probably not going to be in the best mental state.

The default answer for many liberals is to rely on government to fix their problem.

However, as we know, it is not really in the interests of the politicians they vote for to fix the problem, even if it is possible.

A big factor in positive mental health is having a strong self-identity, Understanding who you are and being proud of what you are and what you can be.

Another interesting data point on this is that White Liberals are the only group to think more highly of other racial groups than their own.

They may think this is virtuous but you have to wonder whether this is a sign of a healthy mental state?

Finally, we have the interesting change we have seen in recent years in the percentage of those who identify as LBGT.

How do we explain this?

1.7% of those born before 1946 identify as LBGT and 2.7% of Baby Boomers but 20% of Gen Z so identify?

Has something been introduced into the environment?

Did the hard wiring of our genetics change in the span of a decade or two?

Is it something else?

Why is this important in evaluating these mental health issues?

Source: https://adaa.org/find-help/by-demographics/lgbtq

If you consider that 20% of Gen Z identifies as LBGT, and that group alone is six times more likely to experience depression, this issue by itself goes a long way to explaining the overall trend changes we are seeing in the mental health status of young people.

Do we have a big problem with mental health in the United States?

How much was spent on preventing Covid in this age group?

How much focus is going to prevent the root causes of this mental health pandemic?

It appears that our priorities might be misplaced. 

What Happened To Silicon Valley Bank?

I would wager that very few Americans had heard of Silicon Valley Bank before last week.

That changed as the 16th largest bank in the United States was declared insolvent and taken over by the FDIC on Friday.

It became the second largest bank to ever fail in the United States (after Washington Mutual in 2008).

What happened?

The same thing that happens to all banks who fail in a fractional banking system.

What happened to SVB was no different than what happened to the Bailey Building and Loan in the movie "It's a Wonderful Life".

George Bailey (Jimmy Stewart) tries to calm anxious and angry depositors 
"It's A Wonderful Life" (1946)

Bank depositors lose confidence in the safety of their deposits in the bank and seek withdrawals. The bank only has a fraction of the deposits available in current liquidity to meet the withdrawal requests.

George Bailey was able to halt the run on his bank because he and his new bride Mary used their  honeymoon money to meet some of the demands and convince the remaining depositors to keep their deposits with the bank.

Mary Bailey (Donna Reed) offers the Bailey Honeymoon funds to stop the bank run
"It's A Wonderful Life" (1946)

Silicon Valley Bank attempted to raise additional equity to boost its balance sheet and depositor confidence but it failed.

The bank's failure was clearly a surprise to Forbes.

It had recently named Silicon Valley Bank one of America's Best Banks.

Here is SVB promoting that recognition in a tweet four days before it went under.

Banks have historically failed because they made too many bad loans. 

However, banks also put money into investment securities. The 2008 banking crisis was precipitated not only by bad mortgage loans but investments in mortgage backed securities that went bad.

A popular alternative is for banks to invest in treasury securities. It is supposedly a safe investment in which it can earn a spread between what the treasury bill or note yields and the interest the bank has to pay  its depositors.

That strategy works well when the yield on the treasury security is stable or falling while the bank is paying almost no interest to its depositors. It does not work well when treasury rates begin to rise.

As interest rates rise, the value of the underlying treasury security falls. It is like having a bad loan.

In addition, as treasury yields rise there is more and more incentive for a depositor to withdraw their funds from the bank (if it does not increase bank deposit rates) and put their money into treasuries.

Two years ago the yield on a 2-year Treasury was 0.14%. It was 5.05% right before SVB failed.

The yield almost immediately dropped to 4.60% on Friday as demand surged in a flight to safety as depositors in other banks undoubtedly moved money to Treasuries.

Simply stated, SVB failed because of the rapid increase in interest rates on treasury securities.

The higher yields created losses in its investment portfolio reducing its equity base.

The higher yields created an incentive for depositors to withdraw money to benefit from the higher rates as SVB did not adjust depositor rates accordingly.

SVB lost on both dimensions. It was caught in a squeeze.

Of course, SVB got into this position by having a disproportionate amount of its assets in investments rather than in loans.

57% of SVB's assets were investments. Only 35% were in loans. By comparison, San Francisco-based First Republic Bank, which is comparable in size to SVB, has 78% of its assets in loans and only 15% in investments. 

SVB also apparently did a poor job of anticipating these rate hikes and hedging that exposure.

The big question now is what will the fallout be from this?

The shareholders of SVB will most likely lose everything.

This is a stock that carried a market cap value of about $9 billion a month ago.

The depositors will most likely get access to all of their money depending on how the FDIC puts together a salvation plan for the bank. That goes without saying for deposits with less than $250,000 in bank deposits. 

However, 97% of SVB's deposits are above the FDIC's $250,000 insurance limit.

There are a lot of Silicon Valley tech names who use SVB as their primary bank.

Crypto company Circle has $3.3 billion on deposit with SVB.

Roku has almost $500 million.

Unless there is a quick resolution how do these companies meet payroll, pay vendors and continue as going concerns themselves?

There are a lot of concerning after-effects to any bank failure.

That is why it is easy to criticize actions by the FDIC, the Treasury Department or the Federal Reserve to bail out these banks. However, the reality is that it is the little guy that quickly gets hurt in the after-effects of these failures.

In this situation you also have to realize that it is tech companies in California that have the most to lose in the SVB failure. 

Is there a more influential group for the Democrats in power in Washington?

There is a lot of money and votes provided to Democrats from tech companies in California.

It is hard to see where they are not going to protect them in the end.

(Update-After I finished writing this blog post, as I predicted, the FDIC, Treasury Department and Federal Reserve, announced that it was going to insure that all depositors, both insured and uninsured, would be paid in full currently. It also extended the same protections to depositors of Signature Bank in New York which was taken over by state regulators over the weekend. 

Banks in California and New York are bailed out that cater to tech and crypto companies. However, if the same thing happened to a bank in Wyoming that had mostly farmers as depositors, would they receive the same treatment?

The question that also hangs over the market and the economy is whether other banks have the same type of exposure?

There is no question that there are a lot of banks that have the same problem.

For example, this graph shows the unrealized gains (losses) of banks holding investment securities at the end fo 2022.

As has often been said, "what goes up eventually comes down".

This is a graphic representation of that principle.

Credit: https://twitter.com/balajis/status/1634543503958212610

However, SVB seemed to have much more exposure in its investment portfolio than other banks.

For example, Bank of America has less than half of the exposure that SVB had to unrealized investment losses as a percent of equity.

SVB's losses were equal to its entire equity.

Credit: https://twitter.com/Mayhem4Markets/status/1634347023003529216

One thing is clear.

Banks in general are going to have to raise the interest rate on their deposits to compete with treasury rates or we will see more bank outflows. Money will always go where it is treated best.

Of course, this will reduce banks margins which is something the bankers do not want to do. That is especially true when they are looking at losses on their investment portfolio. However, they really don't have a choice.

Finally, what does all this mean for the Federal Reserve?

Do they continue raising interest rates now that something has broken due to its policy decisions?

The market is already betting that the Fed is going to back off.

Last week market futures were forecasting there was an 80% chance the Fed would raise rates another .50% at its March meeting. Those odds have now dropped to 40%.

You should now have a better idea of what happened to Silicon Valley Bank.

The big question now is what happens next?

We could be in for a very interesting week in the financial markets.

Fasten your seat belts if the contagion spreads.

What is most troubling is the same people who got us into this problem (ultra low interest rates, money printing and excess government spending which led to inflation which the same people said was transitory) are now telling us they have the solutions.

Fasten your seatbelts, indeed!

This and That---March 6, 2023 Edition

A few random observations, charts and factoids to provide some context on what is going on in the world.

Mortgage Rates

30-year mortgage rates are now about 7%

Two years ago, when Joe Biden took office, they were below 3%.

It has been over 20 years since we last saw a 7% mortgage rate.

In fact, 99% of all borrowers have mortgage rates below current market rates.

Over 70% have mortgage rates below 4%.

The reality is that very few current homeowners are going to want to abandon a 3%-4%mortgage by selling their home to buy another at a 7% rate.

My concern is that the real estate market may lock up.

Those wanting to buy a new home are also priced out of the market with the higher rates.

Those thinking about moving up to another home will stay put.

How many are willing to take this on?

Real estate looks like it is headed for a rough stretch.

As long as employment levels hold up it will be manageable. Low inventory levels will allow housing values to not fall dramatically.

However, if people start losing the ability to pay their mortgages, it will be a different story

Covid-19 Hospitalizations

It still continues to amaze me that hospital admissions with Covid-19 among the age 70+ age group (the most vulnerable and the most vaccinated age group--93%+ fully vaccinated, 67%+ boosted) are higher today (9.2/100,000)  than they were at the same time last year. (8.7/100,000).

Of course, this is something that you never hear on the news.

This is the case despite the fact that hospitals are less likely to report admissions with Covid in 2023 (an incidental Covid positive test when admitted for something else) than they were in 2022.

The fact that other age groups are down slightly may be evidence of that.

Covid admissions in 2023 are much more likely to be for Covid.

How Strong is the Economy for Workers?

Joe Biden has been complaining for the last several several months that the economy is growing and employment is strong but he is not getting credit for it.

Source: https://thehill.com/business/3845925-biden-wants-credit-for-a-strong-economy-americans-arent-buying-it/

Perhaps the reason that Biden is not getting any credit is that since he has been in office any wage growth has been obliterated by inflation.

This graphic shows how bad it has been for private sector workers.

Credit: https://twitter.com/LHSummers/status/1630619332999888897

Tooth Fairy

If the cost squeeze is not bad enough on American workers, consider the payout that the Tooth Fairy is making these days.

$6.23 per tooth!

I was thinking that $2 would be a lot.

Boy, am I out of touch. 

Credit: https://twitter.com/HoneyBeeGeek/status/1631461211551469569

Different Views on Threats to Public Health

How can political attitudes cause such differing views when the data is the data?

For example, there were 107,477 drug overdose deaths in the 12 months ending August, 2022 in the United States.

Over the same period, there were 44,000 Americans killed by guns but more than half of that total were suicides.

280,000 deaths are attributed to obesity each year.

There are over 500,000 cancer deaths each year.

Democrats believe that guns are a much greater threat to public health than opioids, obesity or cancer when deaths and hospitalizations are a mere fraction of the other risks?

Credit: https://twitter.com/SouthernKeeks/status/1628780046243569664

Better To Be A Rioter Than A Business Owner

Speaking of public health, Black Lives Matter rioters in New York City in 2020 are going to get a payment of up to $6 million because some NYC police officers did not wear face masks as they attempted to stop the looting, vandalization and destruction of property that accompanied the protests that summer.

Each of the "protestors" is eligible for a $21,500 payment.

Source: https://www.frontpagemag.com/blm-rioters-get-6m-because-cops-didnt-wear-face-masks/

Of course, the owners of the small businesses that were looted and ransacked in the riots were only provided with a maximum payment from the city of $10,000.

Credit: https://www.wsj.com/articles/hundreds-of-new-york-city-businesses-were-damaged-looted-in-recent-unrest-11591993138

Is there a better example that we have lost all common sense?