Things to Come

The title of this article is not unique; I’ve stolen a portion of it from one of the most exotic writers of all time: Englishman Herbert George Wells (1866-1946) – perhaps better known as H. G. Wells. Though prolific in many genres, he’s best remembered, along with Jules Verne and publisher Hugo Gernsback, for his science fiction works. Nominated four times for the Nobel Prize in Literature, he could certainly be regarded as the father of science fiction.

His novel, The Shape of Things to Come, published in 1933, speculates on future events up to the year 2106. A devastating war following a long economic slump leaves Europe devastated, ruled by petty dictators and threatened by plague. Wells describes how enlightened world-citizens depose the tyrants and establish a habitable world order devoted to peaceful pursuits and utopian ideals.

With this as our introduction, let me welcome you to the year 2020, in which following a profound economic slump, America appears to be ruled by petty dictators and immersed in a continuing plague. Whether or not enlightened citizens will dispose of the tyrants and establish a more habitable order remains to be seen. Unfortunately, Mr. Wells is no longer around to write the ending; sadly, we’re on our own.

Although the devastation currently being foisted upon us is nationwide in scope, my view of it is local. For this reason, I’ll mostly confine my comments to what I’m personally viewing. If conditions elsewhere are more or less favorable, my knowledge of them will, by necessity, be based upon articles and statistical reports I encounter.

At this moment we’re suffering from a variety of ailments, where unemployment seems to be the most devastating. During the past eight months millions of Americans lost their jobs … though perhaps this is more accurately described a little differently, in that in the past eight months millions of jobs ceased to exist.

Quite recently an Associated Press article stated the coronavirus caused “depression level unemployment.” Sorry, but I disagree. In reality, the depression-level unemployment is the result, not of the virus, but of state and local governments’ pointless reaction to it. Those equally innocuous viruses which previously appeared year after year were mostly ignored.

The second-most unconscionable result of the COVID pandemic is the dictatorial control seized by governmental entities at every level, whereby citizens are coerced into performing every conceivable type of compliance under threat of fine or other punitive action.

Massive lock downs, amounting to penal incarceration devoid of any criminal charges or conviction, may be ordered on nothing more than a governor’s whim. Furthermore, forced shutdowns of every sort of business or social activity, for reasons defying rationality, are commonplace.

Perhaps most onerous of all, governmental announcements and proclamations, as well as the utilization of a compliant media, are employed to intimidate anyone who might be persuaded by the claims being circulated. It’s fair to say millions of Americans are currently deathly afraid of a virus which valid studies by both Stanford University and the University of California verified as having a mortality rate no greater than one in 10,000.

If a single word can be used to most accurately describe the effect of the virus on the vast majority of those persons who happen to contract it, the word is asymptomatic – meaning no symptoms whatever.

The question which now deserves to be asked – and answered – is vitally important: How has our nation’s encounter with the coronavirus during these past nine months affected us? From a medical standpoint, as I’ve just indicated, most recipients of the virus are unaware of it. Those who actually note some effect normally recover within a week or two.

The sorts of symptoms experienced may include shortness of breath, cough, chest pain and a loss of smell or taste. In general, if a person is fundamentally healthy, there’s rarely a serious problem. However, there can be profound consequences for those persons suffering from potentially fatal ailments such as pneumonia, influenza, acute asthma or severe immune deficiency. In these cases, the COVID-19 virus can act as the kiss or death … or if you prefer, the proverbial straw that broke the camel’s back.

But despite the reputed medical consequences, the true hazard to most citizens is economic. Prior to the pandemic, the U.S. economy performed well. With unemployment at a 50-year low and inflation below the Fed’s target of 2.0%, many Americans found their prospects to be as favorable as at any time in their lives. This ended, of course, when a lock down of the nation became a reality. Almost instantaneously real GDP growth began to fall, such that it deteriorated by an astounding 31.4% during the second quarter of 2020. This is the sort of decline not seen since the Great Depression of the 1930s.

Bond yields are an excellent indicator of economic expectations. When an economy is staggering, Treasury yields normally fall. On 2/19/20 – when the COVID-19 policies commenced – the yield on the 10-year Treasury was 1.50%. Within three weeks, the yield plunged to 0.56%, a then-all-time low. It takes no imagination to visualize the goings-on in the heads of investors.

The National Bureau of Economic Research, a private nonprofit organization founded in 1920, committed to disseminating economic research among public policy makers, reported that February 2020 marked the end of the longest recorded U.S. expansion in history. It added that second quarter GDP decreased by 9.1%. To put this into historical context, quarterly GDP never before experienced a drop exceeding 3% since recording keeping began in 1947.

With the year 2020 drawing to a close, and a new federal administration about to take charge, we’re entitled to contemplate an answer to the implied question this article’s title suggests: What may we expect of Things to Come?

It’s my guess if you ask this question of a dozen persons chosen at random, you’ll end up with a dozen different answers. However, as I contemplate the possibilities, I see three plausible scenarios.

Possibility 1: America will return to normal. Think back, if you will, to several of our past pandemics – the Asian flu of 1957, the Hong Kong flu of 1968-71, the swine flu of 2009 and others. They each resulted in millions of worldwide deaths, but are now just ancient history. With luck we may expect our coronavirus to be forgotten by 2023.

Possibility 2: COVID-19 will be with us into perpetuity. Just as Italian Prime Minister Benito Mussolini, in 1923, discovered the joy of ruling by decree, our current political leaders find it equally enticing. Accordingly, they’ll drag this virus on for as many years as they can, while continuing – God forbid – to frighten us into abject submission.

Possibility 3: We’ll neither immortalize this pandemic into a revered experience nor drive it from our memories like a forfeited sporting event. Instead, we’ll modify some personal habits to improve our hygiene, spend a little more time selecting healthful foods and pay less attention to medical specialists who simply seem to make up remedies as they go along.

We’ll also give less credence to our elected officials and the rules they enact, forcing us to live our lives in ways never intended by our creator.

A final thought: As a society we’ll recover from the coronavirus as we recovered from all prior infestations. We’ll also overrule those self-anointed authorities who profess to act as our divine protectors. And lastly, we’ll silence those critics who seek to categorize us as a third rate species incapable of acting effectively in our own behalf.

Al Jacobs, a professional investor for nearly a half-century, issues weekly financial articles in which he shares his financial knowledge and experience. Al may be contacted at al@abjacobs.com