Thanks Tim!

Will be  even more interesting to see how the market reacts.

Hi Tim

I know you and myself are invested in the stk market

Do you think the gov't policy of bail outs to large and small business was a good idea

The alternative was to allow many to  file chapt 11 and then allowing the courts to decide if all creditors can agree to the re-organized business model or if this seems impossible then the next step is a formal BK

If small business and large alike were not bailed out, the share holders would likely take the larger hair cut, some possibly losing everything invested in the Co. if BK occurs. The bond holders would likely have 1st dibs on any asset value The other problem is the courts would be swamped with applications for Chapt 11 and take yrs to work thru re-organization or BK. Small business would likely disappear in large numbers

On the other hand the large and small business are taking on more debt by accepting bail out money. If a business was in trouble, does it make sense to add more debt to that business. There is no way the gov't will forgive all those loans.One the other hand, bailouts have effectively allowed the monetizing of debt att the Fed level, with bail outs, effectively lowering the credit rating of America debt. This bail out allows the Fed to leverage appox 4.5 trillion of new money. This would increase the deficit and Fed balance sheet to levels never seen since after WW 11. But after WW 11 the economy was on a tear, building new houses, converting war plants to making stuff the economy wanted to buy and so forth. 

The deficit was quickly brought back down to something the country could handle. Today we don't have manufacturing, instead we are a service country having shipped most of the manufacturing jobs else where.  So how to service a possible 30 trillion deficit on mostly minimum wage and many not even paying income tax. don't ask me how the Fed balance sheet and the deficit would look like after the 4.5 trillion is distributed because I don't know and if anybody says they know, you know they don't know. Investors might cause a run on USA treasuries causing more monetization as bond holders sell, if a sell off or risk off develops. This would likely cause gold to increase in value as investors seek a safe haven. However, as of today you can not buy physical gold or silver so some other PM would be most likely bought. I doubt many would buy paper gold or silver. We are told the gold is there just out of position and the swiss are not minting any new gold bars due to shut down over virus concerns. It remains to be seen how this plays out. it's possible our fiat could be replaced by gold backed fiat of something new

Or the monetizing of debt could cause inflation which might be worse than the bail outs in the long term Once the money is printed and monetized, it is hard to reduce a deficit, as we have not done a very good job of that so far

I hope this makes some sort of sense as the boys have arrived for noon lunch time and I can't proof read this to see how well I organized my thoughts. Maybe you will get the gist of my thoughts. I know it is too long.

IMO,   a dire scenario has already been priced in.   If the virus numbers stay within projections,   and things start opening up in a week or two,   we'll probably see steady growth in equities,  which I think are dramatically over sold.

Energies can't stay at these levels, even with decreased demand.   Even Saudi can't afford to deliver at 20/bbl. 

If China can come fully back on line...   if if if..  

We're in uncharted territory, so projections are as tenuous as they can be. 

Wayne,   I've never been a fan of bailouts.   As I understand it, the money for larger corporations will be in the form of low interest loans.  In these extraordinary times, I can get my head around that.

Smaller companies  are getting help to continue paying employees.  I guess I can accept that.

I'm a little concerned with the "enhanced" unemployment as I think some (many) will feel it makes a lot more sense to stay home.

I'm hoping this virus impact will be fairly short term, the worst of it over in a month.   But I hear stimulus numbers of up to 6 trillion being thrown about.   Scares me to death.

Coronavirus job losses could total 47 million, unemployment rate may hit 32%, Fed estimates

https://www.cnbc.com/2020/03/30/coronavirus-job-losses-could-total-47-million-unemployment-rate-of-32percent-fed-says.html

• The coronavirus economic freeze could cost 47 million jobs and send the unemployment rate past 32%, according to St. Louis Fed projections.
• There are nearly 67 million Americans working in jobs that are at a high risk of layoffs, according to the analysis.
• St. Louis Fed President James Bullard said last week that the initial estimates are grim but the plunge should be short-lived.

Sorry,  but I have to figure that's a worst worst worst case scenario.  Even if we get close to something like that,  it should be pretty short term and the eco-hit would be softened by the stimulus.