Aesop has an excellent article at his blog considering the wider ramifications of the current pandemic for our economy and our society. Here's an excerpt.
The Oil Industry
People ignore the fact that Russia and OPEC were getting into a throat-slitting contest before the pandemic became news outside China, but that shindig, coupled with .Gov ringing the alarm over Kung Flu, gave Wall Street the go-ahead to take the most massive fiscal **** on itself in recorded history.
Last week, the price of oil was down to "If you'll take this crap off my hands, I'll pay YOU $19/bbl to unload it for me." Imagine Macy's giving $50 bills away for taking suits and dresses - marked down to "FREE" - off their store racks, and you've got the idea.
Fracking? Drilling? Fuggedabowdit.
Short-term, OPEC countries are going to starve, first for cash, and then quite possibly for real. This is when "Arab Spring" from a couple of years ago turns into a Long, Hot Summer Of Discontent.
American drilling platforms, oil fields, and general operations? Probably taking a months-to-years long **** on themselves too. We may never see things like they were last December again, for years, to decades, to ever.
. . .
The Auto Industry
We were already sitting on a months-long glut of cars, because the "booming" economy wasn't trickling down from banks and board rooms to where people buy new cars. With unemployment where it is now, defaults on auto loans to come, and metric ****tons of repo cars, demand for new cars will probably hit 1930 levels. I.e. nada. If Detroit announced there would be no 2021 models or model year, it wouldn't surprise me at this point. So auto workers, and ancillary parts makers, dealerships, auto finance, banking, etc.
. . .
Entertainment
Disney Inc. probably won't re-open any parks in 2020, by all accounts. They're posting 90% Q2 losses (on top of the epic flop that was their craptastic StarBores additions, which lost them billion$ already), and it isn't getting better, as they look to do without any summer park revenue either. Add Six Flags, and every other theme and amusement park to that list, as what gets re-opened, and the whims of both the government and the public change like the wind daily.
The movie business is about to get the worst summer in history, in all likelihood. Pisser not just for Tom Cruise and Top Gun 2, but for the entire multi-billion $$ industry, from fat-cat producers and overpaid actors, all the way down to the folks who wash the cars, take the tickets, sell the popcorn, and those who provide everything from midnight meals for production crews, to props, wardrobe, equipment, and a gajillion rentals of everything known to man.
Concerts? Who's likely going to attend COVIDfest 2020? Is it even going to be an option in most places? I'm thinking it's unlikely at best, for some time.
. . .
The engine of the economy just had a huge bubble of water pumped into the fuel line, and one of the pistons just sheared off. What happens after that?
You ain't seen nothin' yet.
And this is just the everyday stuff, inside the country.
Wait until this rumbles through 150 other countries' economies.
There's more at the link. Recommended reading.
I can't disagree with anything Aesop says; in fact, I've said many similar things myself over the past few months. There's a chance - a small one - that the American economy will kick-start itself, and things will return to normal faster than anticipated: but I doubt it. Over thirty million people (let's look at that in figures: 30,000,000 people) have lost their jobs, or been furloughed, during the past two months or so. How many of them will find that their employers have closed their doors? How many will find that their hours have been cut when their employer re-opens, because the customers just aren't there in the same numbers as before, or spending as freely as before? I think at least half of those thirty million people are going to be on the breadline for a long time to come.
The question then becomes: what to do if you're among them? I think this is a time to pull in your horns, financially speaking, and do everything possible to position yourself to survive.
- Cut back on every single expenditure you can. Budget carefully, and stick to it no matter what. No impulse purchases, no extravagances, no "my spouse will never know about that!" moments. Every penny counts.
- Reduce costs wherever possible. Refinance your mortgage if necessary, to get a lower monthly payment even at the expense of a longer payment period. Get rid of whatever you can't afford, even if you take a loss on it (for example, a car that's costing you several hundred dollars a month that you no longer have).
- Sell assets that can bring in cash to reduce debt elsewhere. I got a head start on that after my heart attack last November. I knew my writing income would suffer badly over the recovery period, so I began to sell firearms from my collection, and ammunition from my stash, to cover expenses. It's kept me afloat so far. Sadly, thanks to COVID-19's effect on the economy, I may have to do a lot more of that, for a lot longer than I'd anticipated. Watch this blog for more sales soon! Take a long, hard look at your own hobbies, assets and valuables, and consider doing likewise.
- Consider what you can earn on the "black economy", doing odd jobs for cash or swapping your goods and services for those of others. ("I'll help fix your plumbing if you'll help me service my car," and that sort of thing.) This can save a lot of money, and generate a little income on the side.
- Be prepared to walk away from debts that become intolerable. It's lousy to be homeless . . . but if keeping your home is crippling you financially, why are you still there? Begin planning right now what you'll do if you're forced into such an extremity. Do you have family or friends with whom you can stay? For how long? What about the stress to which that'll subject your relationship with them? Can you arrange to stay at one place for a week or two, then move to another, and so on, to create less stress for your hosts? Plan ahead.
Finally, if you don't already have one, I urge you as strongly as possible to find a network of like-minded people, relatives and/or friends you trust to help you and your family through hard times. None of us know what those hard times may include, but I think we can all see them coming. A small network of people providing mutual support is much more likely to survive them than a "lone wolf". Miss D. and I are blessed to have a local group of friends like that, and a wider one online. I hope you're as fortunate.
In one sense, the readership of this blog, and of Aesop's, and those that have come together around other blogs and bloggers, already form such networks. Let's share ideas and support each other, even if at present it's only moral support. Who knows what dividends that may pay in future?
Peter
