Cigarbutt

So, apart from the noise, you have to establish scenarios where the intrinsic value or perception of intrinsic value is or will be significantly impaired. When looking back at the New York outage from the summer 2019 (there was a small thread on this) and when comparing to the longer term evolution of Con Edison's share price, it is not at all obvious how one could have benefitted from a short sale then (the same CEO is still there). Investor-owned utility conversion to another model could make sense, under certain circumstances, but this seems unlikely for Eversource. If there was one poor corporate 'citizen' example, it was PG&E (2 threads on this) and it even went through bankruptcy and came out relatively intact. Please show what is different in this case.

No, herd immunity might require that 60%, more or less, be *resistant* to the virus. That can be achieved through antibodies acquired by virtue of having already had the virus, antibodies from a vaccine, or resistance from having already had a different coronavirus. So, from what I can see, there have been ~5m cases of covid that have been officially laboratory diagnosed, and seroprevalence studies have suggested that 10x or 15x the number of official cases generally show the presence of antibodies. So, are we at 50m or 75m in the US with antibodies today? That would be 15% or 20% of the national population that might have antibodies. Strangely, at the national level, the cases appear to be on the down-swing. Anybody got any theories why the cases were 70k+/day a couple of weeks ago and ~50k/day today? That would be what level of R0? Did people suddenly adopt social distancing strategies, or is this peak virus? If it is actually peak virus, there would be a long way to go on the downside of the curve before the virus disappears, but the apocalyptic assertions seem to be on hold. SJ The answer to the above bolded question is i don't know. The answer, though somehow, contains features that 'we' don't control or even understand... Reviewing some aspects around the Spanish Flu episode may be helpful. Coronaviruses typically feature a slow genetic drift and the most likely outcome is that the virus will accommodate selective pressures (behavioral and growing herd immunity) and will slowly become a milder and seasonal form of disease but many alternative outcomes are possible. In other words, the virus intrinsic trajectory itself will be a determining factor behind trends, subsequent waves etc. When comparing the pathogenic potential severity to population outcome ratio of the Spanish Flu to the Coronavirus episode, Covid-19 is, at least so far, much less pathogenic but the population outcome reached, so far, has been uneven and often much less favorable, relative to the pathogenic potential, despite the obvious progress that has been achieved on so many levels since 1918-9. Why? Some references for those interested or having potential to adjust the thesis going forward: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3291398/ https://academic.oup.com/aje/article/187/12/2596/5068408 https://jamanetwork.com/journals/jama/fullarticle/208354 Even in 1918-9 though, it was shown that uneven applications of community mitigating measures resulted in uneven results (mortality) but our world now is more 'connected' and that comes with its own set of advantages and (un)intended consequences. ---o---o--- On the crying wolf for nothing theme which recurrently appears in this thread and which may have relevance to the above section, some threads and posts don't age well but one can learn from them. An example: TL;DR version: Some people that 'believed' that this was only like the flu are likely to (consciously or not) disregard convincing arguments going against their beliefs and the same people may even 'forget' to associate the benefits of actions that they condemned along the way. This coronavirus story has been very humbling along the way from a scientific standpoint but the most surprising 'social' finding has been that a large part of some populations have had difficulty integrating knowledge and have even shown an unusual pride of ignorance. --- Edit: addition on masks It's often mentioned that there are two solitudes in the US. i would submit that some differences are more marginal, like in a compounding interest kind of way.

-On the Texas data The Houston Chronicle reports updated (interactive) data from government sources for mortality presently attributed to CV in the State of Texas. The graph is starting to show leveling off (very recent but as expected from objective assessment of data under the circumstances) but the graph has two areas with different slopes. The first slope ends around the 6th of July (deaths listed at 2683) and the second slope (much more vertical) which starts in early July and ends pretty much now shows (as of yesterday) 8926 deaths. An interesting part (combining various pieces of evidence and analysis such as the link provided below and the recently published piece in the New York Times (dealing with the gap between excess mortality what is reported now versus what is)), is that Texas was exceptional in the delay before widespread testing (the virus spread had built a secure advance) was applied. There is very strong evidence that, early on, Texas was an outlier, compared to the rest of the US, in the gap between excess mortality overall and allocation to CV cases. So, this gap has likely improved over time with more testing and the slow realization of what was coming but it's reasonable to suggest that the official death rate that will eventually be recognized for today (as the gap between CV deaths and excess mortality is closed to fit reality) in Texas will be much higher, perhaps about 100% higher. https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2767980 -On herd immunity The national media in my country has started a section of "fact check" to, in part, counteract the spread of false or misleading information. Good reporting sources such as Reuters have started to do the same. Here's a link that does a good job describing where we're at, in terms of evidence. There is some talk about nonspecific cell-mediated immunity and that obviously plays a role (to be defined) but countries that have, so far, 'decided' to rely on that part have had to report much higher mortality, morbidity and complications. https://www.reuters.com/article/uk-factcheck-herd-immunity-positive-rate/fact-check-rate-of-positive-covid-19-tests-doesnt-show-us-has-reached-herd-immunity-idUSKCN25327U

Bullshit! You pretty much have to wear a mask anywhere you go in Ontario for a long time. @Castanza The issue of masks (or muzzle, depending on perspective) is not as divisive on this side of the border but you seem to know how to stir the pot. If interested, the Globe and Mail recently had a nice summary on the State of the Nation on masks, with international comparisons. The Globe and Mail is subscription-based but free registration will easily take you to this COVID-related article as it seems the paper feels it's in the general public interest. https://www.theglobeandmail.com/canada/article-masks-to-combat-covid-19-which-countries-are-embracing-requiring-or/#comments

Here is an updated list of %s of cash, equivalents and ST bills in Insurance and Other over SE. (from a thread with a different line of thought, November 3rd 2019, pre-virus) From a coherence point of view, it was suggested in early November that Mr. Buffett had lost it because shares were not aggressively bought back when the B shares were at 215-220. Since then, using a long term lens and a sustainability bias, Mr. Buffett has been able, even while opportunistically increasing buybacks, to increase liquidity and financial flexibility. The above numbers have evolved since the 2010-2 period and the World keeps changing and it seems the thinking is anchored on the long term.

@wabuffo i just finished the book. Thanks again. It is a rapid read and helps to connect dots. ----- The idea is to look at specific businesses but isn't reasonable to look at the overall context? Let me contaminate 'your' thread with a 'macro' consideration (no politics, i promise) which resulted from an insight that permeated at the end of the book. The author shows that, for the period from 1965 to 1980, BRK performance (BV, IV, MV) had significant competition from 'gold' although most other participants did get swindled. FWIW, i agree with your conclusion about inflation pressures but it's not clear how we'll get there. Presently, when this question comes up along a target assessment, the most likely scenario chosen implies a J-shaped direction: negative rates as a low-level springboard for (much?) higher rates. Why? The last time an external shock caused such an accentuation in global fiscal deficits was during WW2. Mr. Buffett often quips that he bought his first stock in 1942 and suggests that the environment was favorable, when he says his father told him after that the market went up 2% that specific day. But this was shortly after Pearl Harbor and then stocks had lost about 30 to 40% since the highs reached in 1938. In many ways (historical anyways), stocks then were the cheapest ever. Still, in 1943, the budget deficit was 2.7x the NYSE capitalization. It was also a period when the Fed used asset swap techniques to transform fixed-income securities into the equivalent of cash. Still, this would have been a very poor time to hold gold. ----- Now i need to find time to study the Archives that you submitted recently.

First and foremost: Good luck and i hope that 'energy' is restored rapidly. In my quarters, losing WiFi access for a few seconds has the potential to trigger an uproar and it's easy to think of the real consequences when the outage lasts more than a few hours. This is interesting (utilities as investment targets, utilities risk management strategy for power outages, both as prevention and response and the models behind the thought process; one of my daughter's summer job is to help build a mathematical model that may be sold to the utility monopoly in my jurisdiction and that tries to assess the best strategy to deal with heavy rainfalls in relation to the distribution infrastructure). Just skip below for a poorly substantiated comment about Eversource. --o-- We (developed countries) take low outage rates for granted and the number of outages has been convincingly going up including (and especially?) in your great country. There is no need to believe that weather-related events are on the rise since even keeping that number constant, the growing and densifying distribution network will make sure this 'problem' is not going away. And of course, there's the elephant in the room that the American Society of Civil Engineers keeps on depicting (and quantifying): the ageing patchwork of the distribution infrastructure. The US is a large place and is submitted to an unusual array of severe meteorological phenomena, but evidence is building up that the exceptional energy setup has entered a phase of decrepitude. Also, European countries (and my province) typically have a single regulatory body which is responsible for reliability of the entire nation’s power system which is a nagging feature but seems to be a net positive factor for 'reliability' at large. Anyways, 'public' investments will happen but i bet that private players like BRK will successfully resist the crowding out which may recede if budget constraints become fashionable again. Long term thinking may be required but tomorrow starts today in a way. It's interesting to recall that Eisenhower, during his presidency, was inspired to develop the interstate highway system as a result of an attempt (painful) to cross America by jeep decades before as an army man. --o-- After spending just a few minutes on Eversource (market, network, policies and financials), it's possible that the stock price goes down from a momentum point of view especially if investigations reveal gross mismanagement but these episodes inevitably force politicians to 'strategically' respond in order to temper public outrage and people may realize that it can be hard to put a standard deviation on an Act of God. The fact that a smaller competitor looks good is a compounding factor though. Interestingly, the most effective short term restoration tool for the company may lie in its communications skills, a skill that is hard to assess prospectively. Typically, the long term value of utilities is rarely dented significantly by an isolated and disturbing power outage. Also, i wonder if it's a good idea to short a stock you're mad at..

This reminded me of previous comments about principles guiding goodwill impairment. It involved GenRe and the adjustments that had been made before (adjustments made without a requirement) to more conservative discounting of workers comp reserves. Combining what both said, i guess the goodwill impairment means facing reality with a dose of a margin of safety. The way it's always been. The comment about decreasing transparency with modern (and more detailed) disclosure (1960s vs 2000s) is food for thought.

FWIW, the speed of testing seems to vary a lot from state to state. In MA, my wife went to a testing station and got the results back in less than 24h. There are also CVS rapid test stations around that are even quicker. Yeah, it's a mess because there's no federal leadership and resources to help places that fall behind or get the right incentives and guidelines uniformly. I'm hearing about a lot of places where it takes 10-14 days to get a result. By the time you get a "negative" result, you've had time to get infected, and you think you're negative (oh, I'm feeling bad, but it can't be COVID..) so you're even more dangerous because you may not quarantine even when feeling some symptoms.. Pretty amazing read, to say the least. Everything can be turned into a "problem", if one wants to [in the in casu situation]. *Shaking head* [Are those citizens awaiting their test outcomes not aware about what to do while waiting for test results?] Not only are they seemingly unaware of what to do, the level of government that presumably has the authority to order them to self-isolate apparently has chosen to not impose that measure. So, apparently the state governments have no responsibility in this. Maybe I need to read the US constitution again? SJ Some comments on the 'speed of testing' and The Art of War perspective (protracted and uncoordinated campaigns will tend to drain resources). In a way, too many and not enough tests have been done. How possible? The number of tests done is impressive but, to this point, has lagged the community spread and recently the number of tests has been going down before a significant decrease in test positivity, which is very unusual and very hard to explain from a tactical point of view at the population level. The 'strategy' has been to increase the supply of tests (no focus on the turnaround time, ie time to get the test back for practical efficiency) in a context of excessive demand preceding the rising supply. https://www.cms.gov/newsroom/press-releases/cms-increases-medicare-payment-high-production-coronavirus-lab-tests-0#:~:text=Medicare%20will%20pay%20laboratories%20for,the%20spread%20of%20COVID%2D19. A very inconvenient outcome is that the strain imposed on production (more units produced) has resulted in a poorer delivery of timely results because of the strain on resources (limited supply of chemicals, machine, personnel etc). Normally, in any typical company, this would reach the Board of Directors' level. In a related way, in order to 'solve' the demand-supply mismatch, top people (in the cacophony) have suggested the use of "pooled testing" (FDA recently approved). On paper, this is a great idea. It is a well established practice under some scenarios. Let's say you have 100 samples to test. Instead of testing 100 samples individually, you can pool some samples and if you can achieve a negative result for some pools, you end up doing less tests and obtain the same end result at the individual level. There is some concern about dilution and loss of test sensitivity but this can be worked out. Also, using interesting math, it is even possible to develop an efficient overlapping pools method in order to maximize efficient output productivity. The outcome of this method however (a lot of money is going in this direction now) depends on the pool size (the bigger pool the better) but the pool size, itself, is highly conditional on disease prevalence (level of community spread). For CV, it could be very effective with a 1% positivity rate but the method loses its effectiveness as the % goes up and, around 5 to 10% prevalence, it's possible that doing pooled testing results in about the same number of tests or even more with a significant impact on end consumer productivity (companies don't mind as long as more tests are done and more money per test is allocated). The whole thing is very puzzling.

NJ has 1793 deaths/million NY has 1687 deaths/million Texas has 280 deaths/million Florida has 361 deaths/million Are you saying NY & NJ listened to Trump and Texas & Florida did not listen to Trump? IF you go by deaths per million, the top 10 states are New Jersey, New York, Massachussetts, Connecticut, Rhode Island, Louisiana, District of Columbia, Michigan, Illinois, Missisippi. https://www.worldometers.info/coronavirus/country/us/ Submitted with respect and a firm commitment to USD-invest during the restructuring. This 'episode' (IMHO and depending how you define 'success') required coordination, collaboration and cooperation. Some people question the value of orchestra conductors. After all, it's the free market that produces virtuosos. A center and balanced medium looked at this: https://www.npr.org/sections/deceptivecadence/2012/11/27/165677915/do-orchestras-really-need-conductors Conductors and especially talented maestros can make a difference but of course there's the issue of control.. In related news: https://news.gallup.com/poll/317018/one-three-americans-not-covid-vaccine.aspx?utm_source=alert&utm_medium=email&utm_content=morelink&utm_campaign=syndication A fascinating aspect is that there may a parallel in the partisan divide for the by-mail or in-person voting preference. Today i'm lsitening to If Today Was Your Last Day and it's a great song. https://medium.com/@erikrittenberry/the-american-life-is-killing-you-9e7e68135f4a

This is a very interesting topic. Here are a few suggestions. I have some notes (including mental ones) so don't hesitate if you have specific questions. 1-A Peace to End all Peace, D. Fromkin. If you're into proximate causes, this is a British-focused perspective on the transition from the Ottoman Empire to the "Mandate". 2-A History of the Modern Middle East, W. Cleveland and M. Bunton. This is more "textbook" but my 2009 edition has 641 pages. It's quite balanced despite the explosive nature of the topic and covers the period from the Ottoman transition up to relatively recent events. Inevitably, there is a political component but it's included in a constructive way (IMO). 3-https://www.amazon.com/Prize-Epic-Quest-Money-Power/dp/1439110123/ref=sr_1_1?dchild=1&qid=1596767004&refinements=p_lbr_one_browse-bin%3ADaniel+Yergin&s=books&sr=1-1 This is a book i read recently after a recommendation on this Board. Given the importance of oil in the region, the book sections on the post WW1 and WW2 Middle East situation is a nice complement to general history.

Imagine running a pension fund in this scenario. Liabilities increasing by 15% annually and bonds get zip interest. There is no alternative but to yolo. The pension CIO job these days is quite challenging it seems (if one is into scenarios (alternative) analysis). How to determine the "discount" factor for liabilities will likely be very challenging. Instead of the typical questioning between the market-based approach and the expected return-based approach, some actuaries have started to suggest a probability-of-ruin approach. i think they should change the name because it's an approach that makes a lot of sense conceptually and is not necessarily all doom and gloom. It's simply an approach that tries to integrate how various scenarios could impact the capacity to pay future (and promised) benefits in the reality that the return on various assets is far from promised (especially at this point). Anyways, some pension CIOs have been looking into investment postures that are specific to a low interest/high inflation environment: http://pensionpulse.blogspot.com/2020/06/calpers-80-billion-leverage-plan.html "SWIB {Wisconsion public pension} officials discovered that, like many pension funds, Wisconsin's exposure to equity risk comprised 90% of the fund's volatility. The pioneering change also would position the fund to endure a period of high inflation and low economic growth, a scenario of growing concern for many investors." The Calpers' CIO, for various reasons, recently left and interesting times suggest that Calpers will not do well going forward. At least, in an inflationary environment, the rise in future benefits is usually capped unlike the deflationary scenario where (at least with present rules) CPI-derived calculation cannot give a negative number.

Additional comments: https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm#dashboard There are options for the whole US and for all states. There's even a separate graph for New York city. Some have reported a correlated rise in gun sales during the same period and you can try to find a causation link between the two. Some technical details: -The last reported numbers, if you 'isolate' CV cases are the least reliable because states meticulously examine death certificates reports to help to translate into results closer to reality. So far, these adjustments have resulted in a higher degree of correlation between excess deaths and CV deaths. -Reflecting on the models and methods used and assuming (very reasonable) that many folks who died would have died anyways in the following weeks and months, one would have expected a significant reversal to the mean and more, a phenomenon that hasn't occurred yet at the national level given the protracted evolution of the spread in the US.

I think the parallel for today's market is the late 60s go-go markets (and the rise of the Nifty Fifty vs today's FAANG) which were then crushed in the early 1970s by a dollar crisis (and currency debasement) both in nominal and real terms. i like your it-often-rhymes approach but history rarely repeats. Great people like the Wrays and Roches of this world can explain things directly and what's left for ordinary people like me is to use analogies, often temporal ones. Holding the barbarous relic has paid off lately but most assets have become so much more correlated it's hard to tell the fundamental direction. Compared to the 70s, i wonder to what people will run to? The Fed has already said that they will run through all inflation stop signs because they want higher inflation. You keep harping on the Fed but it's getting confusing as i had understood that it was the Fed-Treasury Industrial Complex. 8)

Follow-up to investor flows to or from public equities with some added perspective from: https://www.morganstanley.com/im/publication/insights/articles/articles_publictoprivateequityintheusalongtermlook_us.pdf?1596549853128 TL:DR version: Investor flows out of equity mutual and ETF funds is for real even if it tends to constitute only a very small amount compared to overall market value changes but it has been more than compensated by funds going to private equity. There are differences with 1999 but there are parallels. If higher valuation ratios, higher leverage ratios, lower interest rates, adjusted EBITDA parameters and institutional drive persist, investors' expected returns (p.53) will be realized.

Your post is interesting and FWIW i agree with the general direction. The degree of confidence reached between data and conclusion is a personal affair but personal mental discomfort was reached above two standard deviations with "The reason why breaking a hip as an elderly person is often fatal is that they don’t have the source of protein for repair because they have lost too much skeletal muscle." Just in case you're not aware, the following is what i consider the best summarizing work (which happens also to be widely recognized and quoted). It is comprehensive, solid, balanced and can contribute to mental gymnastics. https://www.sciencedirect.com/science/article/pii/S1552526015001971

placebos are great if they help you get into a better mindset. works the same as a compliment. i've always had mixed feelings about placebos. A compromise developed implies to explain (gentle explanations work even better) the placebo effect. At least some of the placebo effect is maintained, as well as my own mental integrity. Mind over matter. https://www.health.harvard.edu/mental-health/the-power-of-the-placebo-effect

Most of the homes, especially in the Keys are built to avoid that. For instance where I'm at is roughly 8 ft above see level. And the units are an additional 10-12 ft elevated. Most of the complexes and homes look like the one in this link: https://blog.iese.edu/doing-business/2016/08/22/climate-change-and-the-florida-keys/ End of the day, if you are hugely concerned about global warming and not bullish on dredging/seawall type engineering solutions, its probably not the place to buy property. If you arent, there is hardly anywhere like it IMO, especially of you like fishing, scuba, island life, etc. So, Gregmal how much is the approx. property insurance ( including wind and flood) for your ~ 500k condo? Risk perception is subjective, but insurance rates aren’t, imo. Here, simply an insurance-related addition for the thought process that may go into buying property in the Keys, the value of which is unrelated to the possibility of a hoax or human ingenuity (which can go both ways). Flood and wind insurance are heavily subsidized in Florida (complicated but social net both at the state and national levels) in order to keep rates 'affordable' with the side effect that the subsidies are considered now a permanent fixture and many people with feet on the ground evaluate that these subsidies are actually slowing private investments to deal with expected material increases in true insurance costs going forward. In 2020, the public entities supplying the 'catastrophe' insurance markets are meeting massive rises in private reinsurance rates and are deciding to retain the risk.. Public subsidies to encourage ownership in high(and getting higher)-risk areas means that tomorrow may never come.

^Some very humbling questions have been raised. There are many definitions for herd immunity and one of them is to be able to return to as close as possible to 'normal' life. A functional-type of herd immunity can be attained with much lower levels of pure biologic immunity (social and behavioral substitutes for natural immunity). In the NY area, as an example of an area that was highly 'involved', mobility reports (and other related measures like restaurant reservations etc) still show a marked decrease in activity. It's still unclear if they have reached a level of immunity that would be sufficient to allow a return to normal life. Note: Basic biologic herd immunity is not an either/or phenomenon like pregnancy, it is a state that is gradually achieved. Recently, Ontario (the most populated province in Canada that was also significantly 'involved', including the older population segment), released results from a report (done in a way and 'adjusted' to be representative for the entire population). They reported an overall 1.1% of seroconversion (2.6% age above 80 and 0% age below 9). The % was higher in urban centers but numbers suggest that pure biologic herd immunity has not been achieved in Ontario, even if one allows for the possibility of cell-mediated immunity. Another consideration is the confusion about the definition of a first, second or subsequent waves. An argument can be made that the bimodal distribution actually being defined in the US is, in fact, only one wave, characterized primarily (there may be also seasonal, climate and other factors) by uneven and heterogeneous application and adoption of 'social' measures. Looking back in the history of epidemics (true also about the Spanish flu episode), it is vey humbling to realize that 'we' have not really figured out why subsequent waves occur. It may be a combination of intrinsic factors related to the virus itself and extrinsic factors (how humans react or adapt to it). It is humbling but at least, there are things that 'we' can influence and even, to some degree, control. Also, this virus has been unusual in the sense that, at the individual level, it needs to be fought upon initial contact (immunity) with strong resistance without triggering the excessive and out-of-control immune reaction (mutually assured destruction type) that has killed so many. Evolution has tried to moderate this delicate balance over a very long time and auto-immune disorders seem to be a compromise that is unlikely to be significantly improved overnight.

^The story behind the Florida Keys' main road is interesting. Henry Flagler, one of John Rockefeller's initial oil partner decided to retire from day-to-day oil refinery activity in order to enjoy (and develop) Florida. He built various accommodations and infrastructures, including a railroad (which was eventually extended to the Keys) and the railroad (so the story says) was punctuated by mile markers that served as an inspiration to the mile markers that appeared on the road built thereafter. It's an interesting area but the landscape may change over time, given the relentless sea level rise (9 inches over the last 100 years). It depends on which scenario to believe in, but within the next 10 to 30 years, the intermittent flooding will become a progressively larger nuisance (infrastructure, including roads, land 'disappearance', habitat changes etc).

^It's probably best to go with the flow and to buy businesses that will do at least OK under any circumstances with a margin of safety. A self-imposed curfew on this topic has been set after this post. Larger fiscal deficits will make sure all roads eventually lead to inflation but Japan has shown that an older, less productive and heavily leveraged society can have an impact on velocity as the the nominal growth of the economy is a function of money growth and velocity. https://fred.stlouisfed.org/series/M2V It's funny to think that the great minds of the past thought that money velocity was a constant (it was not if you look carefully at what happened in the 30s and during the low grade inflationary buildup of the post WW2 period) and, of course, nobody could have predicted what has been happening with the recent growing debt overhang. For those interested in Canada (?), the nation escaped QE during the 2007-9 episode but, this time around with the communicable disease issue, the deficit is 6x larger compared to the response to the GFC and recently Canada jumped on the QE bandwagon in order to (to summarize) help prevent a bond supply indigestion. Interesting perspective that discusses some of the issues mentioned in this thread and "what comes next" (hint:potentially a lot more): http://behindthenumbers.ca/2020/04/08/canada-joins-the-qe-club-what-is-quantitative-easing-and-what-comes-next/ Recently the CDN federal government released a 168-page economic snapshot and the institutional Budget Watchdog suggested that there was no reason for drama if 1-what is happening is temporary and V-cyclical (not secular) and if interest rates stay near zero.. So inflation will probably creep up somehow but i bet we will see negative (perhaps deeply negative interest rates) first. The IMF, in 2019, published a nice blueprint "Enabling Deep Negative Rates to Fight Recessions: A Guide" (they also cover the potential implications for bank profitability in a footnote) and i submit that "independent" institutions may eventually rally to consider negative rates as a "GIFT" that will keep on giving.

The Covid impact on (re)insurers is a mixed bag and there are segments that clearly have benefitted. Not a big deal for Fairfax but, with decreased mobility, car insurers don't seem to complain. That aspect, however, may help to explain the otherwise unusual favorable development in some of the segments. It will take time to figure out but Fairfax has, in the latest part of the cycle, showed better than average (relative basis) favorable development but there is no evidence that shows that it will completely diverge compared to industry-wide trends. Another aspect of the Covid issue is duration and development patterns. For workers comp lines (Zenith), the reserve development (from claims not still incurred but that need to be priced beforehand) will be influenced by the presently unknown evolution of the virus problem, the public policy responses to it as well as future legislation for coverage. Event cancellation settlement should be straightforward but, even if the insurers' legal position in general appears strong for the business interruption claims, the extent of those claims remain presently unknown. Typically (one would need to assess specifically for Fairfax; i assume they use the usual policy language), the BI contracts include a specific duration (limit) clause but, if history is any guide, BI claims after previous catastrophes took a while to manifest. There are a lot of businesses looking at their options now. It would be expected that most claims will have clearer visibility when legal actions are taken (or not) somewhere around 2021. It is possible that some of these claims have already been "reported" without a clear quantifiable and specific claim amount. Sometimes, the IBNR account includes the typical not reported claims but may also include a "pipeline" reserve where a claim is considered in process, which results in some 'flexibilty' for reporting purposes. It appears that the unfavorable reserve development recognized by Fairfax for the BI claims should eventually reverse.

^If currency debasement is a concern, there are potential ways to hedge (i also bought gold (bars) during a previous post dot-com reflationary episode) and one may even question how price stability could be achieved or optimized from a top-down approach. FWIW, in the small time spent on macro (the stuff is interesting) in proportion to the rest, i recently looked back at some notes made on margins (The Trouble with Prosperity, James Grant, chapter 1: Heirs to 1958) to help understand a technicality related to the Operation Twist performed in 1961. It is interesting to note that Mr. Grant does an amazing job at analyzing the macro concerns of the day (there's always something to worry about) but a better way to make money perhaps (despite the building inflation currents) was to look for mispriced textile operators on the decline. :) Your bureaucratic inertia argument does not convince me. Circumstances were different to some degree but, in the late 70s and early 80s, Mr. Paul Volcker went against the grain, stepped on some toes, patiently built support for a rational plan, maneuvered various corridors and was eventually able to nudge the Fed money supply/base policy in the right direction. Because of the complexity of the inflation issue, perhaps it was a fluke (similar price path would have occurred) but a strong case could be made that governance made a difference as restrictive policies (and their consequences) can be explained (or at least negotiated behind closed doors). It is difficult for the 2020 Fed to discuss or consider a restrictive phase when they have not been able to extricate themselves from a uni-directional, self-imposed, quasi-permanent and pro-cyclical accommodative stance with progressively deeper easing now flirting with the zero bound (i suspect yield curve control may just be an appetizer). In the last 2 to 3 years, the time spent on macro themes has increased slightly and i'll watch it and it may be an age thing, to compensate for previous recklessness. Time is precious and the key is selection and there's someone who i keep reading when the opportunity arises: Mr. Paul Kasriel. He's an economist who was at Northern Trust and who (if i understand correctly) works for fun during retirement (which should always be the way to work). He does not seem trapped by a specific ideology and recently wrote this (he feels that inflation is coming and wonders how we'll get there): http://www.haver.com/comment/comment.html?c=200526SP2.html Edit: non-material detail added

I saw that at the recommendation of a friend. I thought it had some flashes of a really good movie, some really good scenes and characters, but that overall it didn't quite gel together and wasn't entirely satisfying. I just watched this today and love it. It gels really well for me, the acting, characters, storyline and the soundtrack. I think it’s one of the best movies I watched lately. That's one movie i really liked too. Ordinary people are often extra-ordinary because they are multi-dimensional and justice often follows a tortuous path. It felt authentic and the cast was great overall too.

When "inflation" is the only restraint on government spending, you know that inflation will come, somehow, eventually. Is that desirable? Mr. William M. Martin in 1969 regretted (he said he "failed" which is uncharacteristic in these circles) not to have intervened (restrictive policy) more strongly before it was too late. Though he was aware and vocal about it before. We can go technical (and quantitative) and look at specific transactions at the Fed’s Term Deposit Facility and all and look at the circular transactions (it is a big and complicated circle but it is a circle) but, basically, under the government debt dimension, the Fed acts as a financial intermediate (if you can live with one perspective of the chicken or egg question): The Fed borrows reserves and pays interest on them and, with the proceeds, buys government bonds. So this is considered business as usual now given the tools in the tool box but i would submit that on-balance sheet interest-bearing reserves, massive excess reserves and large-scale quantitative government security acquisitions are a 'new' phenomenon that has has been relentless for more than a decade. When the policy of paying interest on deposited reserves was 'designed', one of the main drivers, apart from 'policy effectiveness maximization', was to provide a an exit strategy (!) tool.. When Montesquieu described the principles behind the separation of the three powers, he had in mind that the three independent entities would cooperate and generally work together but the idea was that the checks and balances inherent to such a system would play out in certain circumstances. The independence of the Fed is a related concept. When i post things here and it's stupid (perhaps most contributions), i expect to be told so by independent contributors (i guess we could call this constructive cooperation). Why has the Fed cooperation with the Treasury resulted in a situation where it has become virtually impossible to raise rates (under the current regime)? Why are we in a situation where inflation (as a lagging indicator) is the only residual constraint on government spending? Negotiations and compromises are fine and even "Accords" like in 1951 can make sense but it feels to me now like a poorly designed echo chamber. Did i succeed in skating on thin political (controversial word used in reply #60) ice here? Under present and unprecedented circumstances, inflation may take a while to take hold and it's interesting to consider what it may take to get there. How will the Fed react (since reaction instead of action seems to be the motto) and adjust interest paid on reserves when (if?) market rates go negative?