- Jun 6, 2007
- 852
- 483
- 910
Yesterday was the fiftieth anniversary of the launch of the Apollo 13 Space Rocket and that ordeal really captures the key challenge for the American people today. For those that don't know the Apollo 13 Mission story this is a thumbnail. Back in the 1960s and 1970s America's Space program was a really big deal back then the United States and the Soviet Union were continually in this intense struggle and NASA had beaten the Soviet Union Space program to the Moon and so NASA was a big source of national pride. Well on the third trip to the moon, the Apollo 13 mission, the Apollo spacecraft on the way to the moon experienced an explosion which destroyed two and a half of their three oxygen tanks oxygen was needed to burn the fuel in their rocket engines so they were left with a very limited time period for use of these engines. What NASA did was they used the gravity of the moon to take advantage of the rate the spacecraft was traveling toward the moon and whip the spacecraft around and send it back shooting toward earth. The apex of the human challenge on this accident experienced mission was that after the spacecraft was shooting toward earth the astronaut team realized their trajectory was coming in to high if left unchanged they would bounce off the earth atmosphere and fly into oblivion. Their specific challenge was they would only get one chance to fix their trajectory because of their shortage of oxygen and that they needed a certain amount of that oxygen to run the engines to turn the spacecraft 180 degrees just before they entered the earth atmosphere so the the space capsule's heat shield would be at the front of the spacecraft so the space capsule would not burn up during reentry with the increased temperature brought about during re-entry; the problem was further magnified by the fact that the astronaut crew could not use the spacecrafts computer system to run the engines to correct the trajectory because the computer was powered down to conserve battery power to operate the computer system immediately before and during the reentry period which would be a necessity. How did the three astronauts handle this apex challenge where they would only get one shot to fix this life or death problem? With the whole world rivetingly looking on and hoping and praying for their success, even the Pope took time to offer public prayers, they cooperated with one another one astronaut ran one set of engines one astronaut ran the other set and another astronaut handled the time consideration turning the engine on and off at the correct time and the crew corrected the spacecraft's trajectory and subsequently successfully returned to earth in the space capsule!
This past Friday the economist, Mohamed El Erian, gave an interview on the Fox Business channel about the economic challenge from the Corona-virus; for people that don't know Mohamed what a great auto mechanic is to a car Mohamed is to the economy - the man knows what he is talking about on economic matters! The end of his interview was really the most important for the American people to keep in mind because it pertained to when American should reopen the economy. Reading between the lines what Mohamed was saying was America is only going to get one shot at this, one chance to get this right if America reopens early and ends up back in the state we were in at mid-March of this year the economic consequences will be dire for America. What Mohamed specifically said was that the corona-virus crisis brought about two major risks or dangers for the American economy. First the danger of liquidity meaning businesses not being able to borrow, holders of debt (bonds) not being able to sell the debt, etc.; the Federal Reserve Bank has responded greatly to this risk largely by taking that worry off the table by opening up all these credit supporting programs thanks again to the Fed. Chairmen of 2009 Ben Bernanke the Albert Einstein of Central Bank operation who invented most of these programs. The second risk is what everyone should really really be worried about Mohamed called it the "borrower default/bankruptcy" risk; specifically if America sees these areas of the economy sky rocket it will crash the financial markets and send the country into a Depression. Mohammad describes the controlling factor on this risk how authorities in American handle the health safety aspect of this corona-virus problem; if they let this disease continually weigh down the American economy for a long period of time America will see these second risks materialize. If authorities reopen the economy too early and America sees the infected numbers of people rise to numbers like were seeing now where America's ICU capacity and ventilator capacity is at its limit and people are afraid to interact with other people because of worry about catching covid 19 the corona-virus will be weighing down the economy to a dangerous degree where this worrisome risk is a real possibility!
In this interview Mohamed referenced an aspect of our economy which everyone really needs to keep in mind in their call to re-open the economy. Mohamed spotlighted that America's industries are not at strong as they were back in 2007-2009 during the Great Recession and so the danger to our economy is much worse than that period and that period was bad; what is Mohamed talking about here? Well one could mention the Retail Industry where the American people's change in shopping behavior, that is buying more merchandise on-line, has brought many brick and mortar retail giants to their knees, large scale bankruptcies is a real possibility there if this covid 19 drag on the economy is long-term. The energy industry is a much weaker industry today because energy prices have been unstable for years resulting in low prices which offer no or littl profit causing many oil companies to be in a state where there head is just above water; if the Covid 19 disease drags on the economy long-term it will cut demand and thus energy prices long-term driving many energy companies to declare bankruptcy. Then America has weakened industries from hedge funds and private equity funds abuse. These shark investors often drive conglomerate companies to split apart because the companies are worth more separate than together but the downside is that these individual companies are not as strong to weather economic downturns individually as they were as a conglomerate because in conglomerates the strong companies can carry the weaker ones. Then you have private equity companies that have been buying companies on borrowed money and not only that they get themselves paid big fat annual fees which leave these companies with low cash levels and big debt making them more vulnerable to bankruptcy during economic downturns. What America also has is America's executives in many industries not increasing dividends and doing stock buybacks out of their profits but doing these activities with borrowed money leaving these businesses heavily in debt. I'll tell you what I hope most Americans view this corona-virus crisis as being which is Mother Nature's way of shaking the American people by the chest and loudly calling to them to stop the corruption in your Federal Government by changing the U.S. Constitution to have term limits, twelve years for Senators and House Members - don't try to stop the abuses with the present cast of characters or ones just like it because they will screw up the reform half these people wouldn't be able to pass good reforms if God himself appeared to them and told them what was good - good requires balancing interests these people are too selfish to handle the tasks! What America has today in a general sense is a big cauldron of her businesses heavily in debt and many small business not having or being able to get the cash to make it through a long corona virus ordeal!
This past Friday the economist, Mohamed El Erian, gave an interview on the Fox Business channel about the economic challenge from the Corona-virus; for people that don't know Mohamed what a great auto mechanic is to a car Mohamed is to the economy - the man knows what he is talking about on economic matters! The end of his interview was really the most important for the American people to keep in mind because it pertained to when American should reopen the economy. Reading between the lines what Mohamed was saying was America is only going to get one shot at this, one chance to get this right if America reopens early and ends up back in the state we were in at mid-March of this year the economic consequences will be dire for America. What Mohamed specifically said was that the corona-virus crisis brought about two major risks or dangers for the American economy. First the danger of liquidity meaning businesses not being able to borrow, holders of debt (bonds) not being able to sell the debt, etc.; the Federal Reserve Bank has responded greatly to this risk largely by taking that worry off the table by opening up all these credit supporting programs thanks again to the Fed. Chairmen of 2009 Ben Bernanke the Albert Einstein of Central Bank operation who invented most of these programs. The second risk is what everyone should really really be worried about Mohamed called it the "borrower default/bankruptcy" risk; specifically if America sees these areas of the economy sky rocket it will crash the financial markets and send the country into a Depression. Mohammad describes the controlling factor on this risk how authorities in American handle the health safety aspect of this corona-virus problem; if they let this disease continually weigh down the American economy for a long period of time America will see these second risks materialize. If authorities reopen the economy too early and America sees the infected numbers of people rise to numbers like were seeing now where America's ICU capacity and ventilator capacity is at its limit and people are afraid to interact with other people because of worry about catching covid 19 the corona-virus will be weighing down the economy to a dangerous degree where this worrisome risk is a real possibility!
In this interview Mohamed referenced an aspect of our economy which everyone really needs to keep in mind in their call to re-open the economy. Mohamed spotlighted that America's industries are not at strong as they were back in 2007-2009 during the Great Recession and so the danger to our economy is much worse than that period and that period was bad; what is Mohamed talking about here? Well one could mention the Retail Industry where the American people's change in shopping behavior, that is buying more merchandise on-line, has brought many brick and mortar retail giants to their knees, large scale bankruptcies is a real possibility there if this covid 19 drag on the economy is long-term. The energy industry is a much weaker industry today because energy prices have been unstable for years resulting in low prices which offer no or littl profit causing many oil companies to be in a state where there head is just above water; if the Covid 19 disease drags on the economy long-term it will cut demand and thus energy prices long-term driving many energy companies to declare bankruptcy. Then America has weakened industries from hedge funds and private equity funds abuse. These shark investors often drive conglomerate companies to split apart because the companies are worth more separate than together but the downside is that these individual companies are not as strong to weather economic downturns individually as they were as a conglomerate because in conglomerates the strong companies can carry the weaker ones. Then you have private equity companies that have been buying companies on borrowed money and not only that they get themselves paid big fat annual fees which leave these companies with low cash levels and big debt making them more vulnerable to bankruptcy during economic downturns. What America also has is America's executives in many industries not increasing dividends and doing stock buybacks out of their profits but doing these activities with borrowed money leaving these businesses heavily in debt. I'll tell you what I hope most Americans view this corona-virus crisis as being which is Mother Nature's way of shaking the American people by the chest and loudly calling to them to stop the corruption in your Federal Government by changing the U.S. Constitution to have term limits, twelve years for Senators and House Members - don't try to stop the abuses with the present cast of characters or ones just like it because they will screw up the reform half these people wouldn't be able to pass good reforms if God himself appeared to them and told them what was good - good requires balancing interests these people are too selfish to handle the tasks! What America has today in a general sense is a big cauldron of her businesses heavily in debt and many small business not having or being able to get the cash to make it through a long corona virus ordeal!
