BOOM as at 12th April 2020

EPIDEMICS IN ITALY

In Italy, in the 2017-2018 flu season, the estimated incidence of Influenza was more than 8.5 million. This year, the Coronavirus has affected 152,000 and the Deaths per Day numbers which peaked on March 27th are now clearly falling. Those facts beg the question — Is this epidemic worse than the influenza epidemic of 2018?  Or not?

COMPARING DEATH RATES

An excellent way to compare the impact of the Coronavirus on different nations is to compare the Deaths per Million population numbers. The most dangerous place on Earth so far has been the Republic of San Marino in Northern Italy with 1,032 deaths per million, followed by Spain (352), Italy (322), Belgium (289), France (212), Netherlands (154), UK (145), Switzerland (120), Luxembourg (99), Sweden (88), , Ireland (65), USA (62), Iran (52), Denmark (45), Portugal (46), Austria (37), Germany (33), Norway (22). All of those nations have death rates above the world average of 14 Deaths per Million.

Many nations are below that average. Some advanced economy nations have strikingly low numbers, including Australia (2), China (2), Singapore (1), Japan (0.8), Hong Kong (0.5), New Zealand (0.8),  Taiwan (0.3).

The differences between nations are staggering. Some have suggested that  the difference is explained by prevalence of BCG vaccination programs. BCG vaccine is the anti-Tuberculosis vaccine. Others have suggested that different strains are to blame.

Source:  https://www.worldometers.info/coronavirus/%20%20%20%20(Deaths/Million%20Population)

TEN STRAINS OF CORONAVIRUS

There are now ten strains of the novel Coronavirus identified. These are called “Clades”. Here are the ten clades — A1a, A2, A2a, A3, A6, A7, B, B1, B2, B4.

Nextstrain.org displays the up-to-date data about variants of the novel Coronavirus that are occurring in the current 2019/2020 outbreak. Nextstrain has a powerful user interface for viewing the evolutionary tree that it infers from the patterns of variants in gene sequences worldwide. Nextstrain downloads SARS-CoV-2 genomes from GISAID as they are submitted by labs worldwide.

At nextstrain.org you can also look at the genetic progress of other common viruses over time. For example, you can view the evolution of the Mumps and Measles viruses over decades.

Link:  https://nextstrain.org/ncov/global?c=clade_membership

TWO DOCTORS SPEAK OUT
IS THE CURE WORSE?

The famous American Doctor, Michael Burry has spoken out and he is angry —

Very poor testing infrastructure created an information vacuum as cases ramped, ventilator shortages were projected.

Politicians panicked and media filled the space with their own ignorance and greed. It was a toxic mix that led to the shutdown of the U.S., and hence much of the world economy.

The bureaucracy failed in a good number of countries. Turf wars and incompetence has ruled the day. So the political cover for that failure on the part of the technocrats and politicians is a very harsh stay-at-home policy.

 Vaccines are not coming anytime soon, so natural immunity is the only way out for now. Every day, every week in the current situation is ruining innumerable lives in a criminally unjust manner

Japan and the U.S. are putting more than 20% of the GDP into new fiscal stimulus, and easy money will be the rule. Those things will all bring stock and debt markets back.”

Link:  https://business.financialpost.com/investing/michael-burry-of-the-big-short-slams-virus-lockdowns-in-tweetstorm

Another not-so-famous doctor in the UK who is an active clinician GP has also spoken out —

His article was titled — “As a GP, I fear our Covid-19 lockdown will result in significantly more deaths than we are trying to prevent“.

The Covid-19 pandemic has brought a very thorny issue to the forefront. How much money can we, as a society, spend on keeping people healthy or alive? No one has ever fully got to grips with this question, but it has never been more important than now“.

He discusses a concept called QALY – Quality Adjusted Years of Life.

Whichever way you look at QALYs, the fundamental question always comes down to ‘How much can we afford to pay for one QALY?’ In the UK, the current answer is that NICE recommends interventions which cost less than £30,000 ($36,933) per QALY“.

Using these figures, spending £350 billion to reduce the “QALYs lost” figure to zero means that each QALY will have cost £333,000 ($410,000), more than 10 times the NICE level. And, if the death toll does not reach the 500,000 upper estimate, then the cost per QALY will be even higher.”    NICE is the UK’s National Institute for Health and Care Excellence.

Are we paying too much to lock-down Covid? The answer from most people may well be that “I don’t care, we need to spend as much as it takes.” My fear is that, if we are not very careful, the actions we are taking will result in significantly more deaths than we are trying to prevent.

The Australian government has planned expenditure of almost $ 200 Billion so far to fight the economic effects of the virus. To date, Australia has seen 56 deaths so the cost is $ 3.6 Billion per death. That is 100,000 times more than the QALY recommendations made by NICE.

https://www.rt.com/op-ed/485110-covid-19-lockdown-deaths/

BUYBACKS ARE BACK

BOOM closely watches share buybacks by corporations in the United States. And the fact is this — they are back. Company Share Buy Backs have risen by 24 % in the last 2 weeks. This should support share prices significantly and has done already. It is a golden opportunity for companies. They can get rid of those pesky shareholders who are always looking for out-sized returns and replace them with silent debt that costs almost nothing.

This process will continue until it doesn’t.

An example is a well known global consumer goods company.  That company has a balance sheet containing $ 7.7 Billion of debt ($ 7,700 Million) and only $ 194 Million of equity.  The company now has only 341 Million shares on issue.  A 21 % reduction in shares has occurred over 10 short years. In the last 6 years, its balance sheet equity has fallen from $ 5 Billion to just $ 194 Million. That is a decrease of 96 % in US Dollar terms. In the last 10 years, the share price on market has doubled from $ 60 to $ 145 (at its recent peak).  Makes sense.

That company now has $ 442 Million of cash on its balance sheet. Its top 25 shareholders own 44 % of the company.

If less (and less) people own the available shares on issue and a company is still generating the same revenues and pre-tax profits, then the value of the company per share must rise as the shares become scarcer over time. This is especially so if the debt is raised via corporate bond issuance with long maturity dates and ultra low interest rates.

Why use potentially expensive equity finance when you can use ultra-cheap long term debt finance via bond issuance?

This is the ultimate manifestation of capitalism at work. If interest rates continue to be close to zero, a relatively small number of share owning people (or institutions) must eventually own all of the productive assets. The rest are left as slaves.

NON FARM PAYROLLS — DOWN 701,000

The “strength” of the US economy was a mirage. BOOM has often stated this in the past. Donald Trump is learning this the hard way. The Non Farm Payrolls number came out last week at Negative 701,000. That is a horrible manifestation of an economy in critical care and about to be moved into the intensive care ward.

BOOM is a proponent of capitalism — financial risk must be rewarded. However, it is becoming more and more apparent that unbalanced, credit dominant capitalism in its most brutal form has failed most of the people in the United States.

PURE CAPITALISM HAS FAILED

Capitalism based purely on credit money has failed the vast majority of people (everywhere). The new Coronavirus has dramatically exposed that failure.  We need to reduce our reliance on a money supply based purely on credit creation. We need to balance credit money with sovereign money. Cash is sovereign money. But it is bulky and inconvenient. We need to do QB.

Only QB (Quantitative Boosting) as described by BOOM will do that. It will create a form of electronic sovereign cash to balance off against credit money. The asset markets will not be distorted by it (as does QE), it will not cause CPI inflation, currencies will not be threatened and the central bank will be in control of money volume as well as money cost. Banks, central banks and governments will work in tandem. And it will all happen quickly with everyone benefiting.

SAVE THE PLANET    Quantitative Boosting Explained    https://boomfinanceandeconomics.wordpress.com/2019/12/15/boom-as-at-15th-december-2019/

AGENDA 2030 — NO MENTION OF BANKS OR MONEY SUPPLY

If you read Agenda 2030 — the long term vision for the planet issued by the United Nations in 2015, you will see a lot of Utopian goals but no mention whatsoever of the banking system and money system that we all live under. Maybe they just didn’t think of the most important element of our economies? Or did they think our banking and money system is already perfect?

https://sustainabledevelopment.un.org/post2015/transformingourworld

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.


CLICK HERE FOR PODCASTS:
   OUR BRAVE NEW ECONOMIC WORLD

EMAIL: gerry {at} boomfinanceandeconomics.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

=======================================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS

BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.

https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”

The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.
“…… the vast bulk of broad money consists of bank deposits”
“Money can be created …….. when financial intermediaries make loans
“In the first instance, the process of money creation requires a willing borrower.”
“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
======================================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

========================================================================

MOLS Denmark

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s