BALTIMORE, MARYLAND – We’re following a couple of different stories this morning. We tried to find a common storyline… but gave up. So we’ll report them separately.
First, yesterday, we were reminded that there is no such thing as “Evergrande.” There is sometimes grande… occasionally not bad… and once-in-a-while fat and sassy.
But Evergrande, it ain’t.
At one point yesterday afternoon, the Dow was down about 950 points. The Wall Street Journal somehow managed to channel the anxiety of traders with this intriguing headline:
Stock Market Falls on Chinese Property Fears
How sweet. U.S. investors are so sympathetic! They ended the day down 614 points (1.8%) – out of sympathy for the poor Chinese.
Of course, the problem the Chinese have is the same problem Americans have – too much debt. And the federales (at least in the U.S.; as for China, we don’t know) have only one remedy: more debt.
A Debt End Run
The gist of the Evergrande story is that property development has been one of the places the Chinese have “invested” a lot of money over the last two decades. They built entire “ghost cities” in China – with thousands of apartments ready for renters who never came.
The biggest single owner/investor was a company called Evergrande, which now carries $300 billion in debt.
Trouble is, it’s hard for a landlord to pay down debt when his units don’t sell or rent. And now, word on the street is that Evergrande is broke.
Naturally, investors are nervous. Sometimes, all it takes is one high-profile collapse to undermine the whole “Evergrande” fantasy.
You Get What You Pay For
Our second item is a reprise of yesterday’s Diary theme.
As we reported, 1 out of every 500 Americans has supposedly succumbed to COVID-19.
We say “supposedly” because there are no “facts” in the COVID story. There are only guesses and arguments – even about the cause of death.
Here’s one “fact”: It is more profitable for a hospital to serve a COVID-19 patient than a pneumonia patient. The Kaiser Family Foundation studied hospital admissions and reported:
…the “average Medicare payment for respiratory infections and inflammations with major comorbidities or complications in 2017 … was $13,297. For more severe hospitalizations, we use the average Medicare payment for a respiratory system diagnosis with ventilator support for greater than 96 hours, which was $40,218.”
We assume that in 2020 and 2021, “severe hospitalizations” – and dollars to the medical industry – increased.
“You get what you pay for,” are the immortal words of economist Milton Friedman. And since March 2020, the feds have been paying for COVID-19 by reimbursing hospitals for treating uninsured patients… and paying a 20% topper for COVID-19 patients.
Glock 19 vs. COVID-19
But even if the death count really were 1 in 500, is that a big deal?
Our guess is that the disease is a big deal to the one guy who dies from it (and his family). As to the others, not so much.
Everybody’s got to die of something; why not COVID-19?
Here in Baltimore, a young, Black man might have more to fear from the Glock 19 than from COVID-19. The COVID germ may be dangerous, but it lacks the penetration power of 9 mm ammunition.
In 2019, it was reported that Baltimore suffered 58 homicides per 100,000 population. But the Glock 19 is even more “racist” than COVID-19. Most of its victims are young, Black males.
For them, COVID-19 poses almost no risk. On the other hand, the odds of getting gunned down are probably a lot higher than 1 in 500.
Why no bullet-proof vest mandate?
One Plan
What we see in this COVID-19 story is a dangerous shortage of hands. All of the known information tells us there are many different ways to look at it.
On the one hand… and on the other hand…
But for the problem of too much COVID, as for the problem of too much debt, the federales seem to have only one message… one thought… and one plan, which they are determined to force onto everyone, whether they need it or not.
More tomorrow… on what’s ahead for the U.S. economy…
Inflation… deflation… or bust!
Regards,
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Bill
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