Archive for March, 2020

As I write this post, I am watching President Trump give an update on March 29, 2020 at 5:30 p.m. Trump’s just announced the extension of the quasi-lock down we are in until April 30th and that has me thinking what if?

What if it’s August and the virus is still out of control?

What if it’s August and no one has gone back to work?

What if the meat packers that process our meats can’t/won’t show up to work?

What if the migrant workers that pick up the crops on farms all over the U.S. don’t show up to work the fields anymore?

What if the drivers that drive the food from the slaughterhouse to the supermarket can’t drive because they are sick?

What if the food arrives at the the grocery store but no one is there to unload the truck and stock the shelves?

What if the shelves are stocked but cashiers are sick?

What if it’s August and you don’t get any more money from the government to help you get by?

What if you decide it’s time to get money out of your bank branch but it’s closed or inaccessible? Ditto for your safety deposit box?

What if desperation sets in for the multitudes that don’t have enough to eat?

Unfortunately, I don’t have any answers for you and most of the answers I can think of aren’t very pleasant. In the worst case scenario, getting meat and fresh fruit and veggies may become very difficult to come by unless you are growing your own.

I’ve gone out and stocked up on canned goods, beans, and rice. It’s not ideal eating but I have enough food now to last me a few months. I have also prepared in other ways that I won’t get into here but if you think through the questions, you should be able to come to the same conclusions.

I wrote the following comment over 10 years ago and I never thought I would need to resurrect it but here we are again.

When people realize that the money they thought they had in the stock market is gone, when they realize that their credit lines have been cut and when they have no cash on hand left to pay for fuel, groceries or medicine there will be a stampede at your local bank.   The first ones to get there and pull out some or all of their cash will get their money; the lazy, the ignorant, the socialized, the optimists, and the clueless will be left cashless.

Be prudent, Be safe, Be Solvent.

Well just a few days ago I wrote how FDIC should have raised their insurance coverage limit from $250,000 to $350,000 to adjust for inflation since the last time it was adjusted was in 2008 with the last financial crash. Here we go again.

I hope they raise the limit because I’ve already pulled cash out of the bank for that very reason. Now that I see this video has been posted on the internet, I can only surmise that there is a slow bank “crawl” rather than a bank run but who knows.

In any event, here is the video.

I tried searching for reports on reserves for some of the big health insurance companies and I had trouble finding them. If I understand how most insurance companies operate, they take in premiums, invest those premiums in bonds and equities to generate returns and use those funds to pay claims that are filed by their customers.

With the stock market crashing and the bond market in turmoil and the potential for insurance claims to soar as people get sick, is this the perfect trifecta to crash the health insurance market?

According to this news report, a woman who got coronavirus and was treated, ended up with a $35,000 bill. The report doesn’t offer too many details but if that is the average bill and health insurance companies end up getting inundated with 100,000 claims then that’s a staggering $3.5 billion per 100k claims. If we end up with 1 million sick that’s $35 billion and 10 million sick, it’s a whopping $350 billion.

So are health insurance companies even solvent at this point? I don’t know the answer to that question but it is frightening to think that the health coverage I think I have may not even be there if I need it.

Plan accordingly. Stay home and stay healthy.

Well here we are again 11 years after the last financial crash and there is talk of bailouts for airlines, cruise lines, banks, hotels, restaurants and on and on and I have yet to hear a single person demand FDIC insurance be funded to prevent insolvency,

I wish that were the only problem but the second one is that FDIC coverage hasn’t increased from $250,000 since 2008. It seems I am one of the few people that can do a net present value calculation so let me give you the numbers. The $250,000 amount from 2008, adjusted for inflation at 3% interest for 10 years should be around $335,000 but let’s just round it up to $350,000 or better yet $400,000. See you in 2030.

If congress fails to act, I’m gonna pull all my money out and then the banking system will really be hurting.