A Slippery Slope

Today, we're going to talk about slopes, as in the slope of a curve. Why? Because the media, in their never-ending quest to scare you and shut down the economy again so that we're in a deep recession come November (because the party they control can't field a candidate who can defeat Pres. Trump on the merits), is once again using language that distorts the truth. (Note: this may look like a long post, but it's mostly graphs.)

To wit: the uber-liberal outlet The Hill (whose motto is "Changing America. Shared Destiny. Shared Responsibility.", which is pretty ominous, when one considers their agenda) published an article on June 22 with the headline, "12 states show record spikes in coronavirus cases."

The text of the article includes this statement: "Twelve states recorded data suggesting a record number of new cases." First and foremost, this does not suggest a "spike." Today's record number could be two cases more than yesterday's, and yesterday's number could be in the ballpark of daily new cases for the past couple of months.

So to put the lie to their false headline (to merely call it misleading would be too generous, and the media do not deserve my generosity), I'm going to list those twelve states. Then I'm going to post graphs for each of those states that show data for all dates going back to mid-March. I'll post two graphs for each state: one showing daily new cases, the other showing daily new deaths. (I'll explain the importance of that distinction following the graphs.)

I'm going to use a logarithmic scale, for several reasons: first, that's what the "experts" (i.e., Drs. Fauci and Birx) use. Second, it responds to skewness toward large values. And third, it best illustrates "exponential growth." I'll leave it for you to plot your own imaginary trend line over the peaks of the new cases and new deaths, and to decide whether that trend line represents a "spike" or a gradual rise.

My source is infection2020.com, which uses data from the CDC, WHO, New York Times, Johns Hopkins University, Corona Data Scraper, and official state and county health agencies. In other words, it is skewed, as all of those sources overstate deaths directly attributable to COVID (the CDC admits this in explaining its methodology, and Colorado had to adjust its reported deaths downward due to non-COVID deaths reported as COVID deaths). All of these sources grossly understate total cases due to the fact that many of those infected have very mild or no symptoms, and have never been tested for either presence of the virus, or antibodies from having had it and recovered. So we don't know who has been infected. This understatement is in part offset by the fact that a great many people were diagnosed based on symptoms and without a test, and may actually have had the flu or some other ailment.

The states cited in the article are: Florida, Texas, Arizona, Utah, South Carolina, Nevada, Georgia, Missouri, Montana, California, Tennessee, and Oklahoma. Here we go.

What do you see when you look at these graphs? See any "spikes" in cases, other than maybe from a day when very few new cases are reported to a day when the number of new cases is about in line with the trend?

Look, I don't want to lead the witness, but I'm a data guy. I look at data trends for a living. So I'll tell you what I see.

In most of those states, I see a gradually increasing trend level of new daily cases. I don't see a single spike. I do see some new records in daily cases, but in several states, the recent levels, albeit elevated from a few days or weeks earlier, are not new records - in at least in one case, not nearly so. In other words, The Hill is outright lying. And if The Hill will lie, so will CNN, MSNBC, the New York Times, the Washington Post, ABC, et al. (Even Fox News is using the "spikes" falsehood in its reporting, and it's not in the "Bad Orange Man Bad" camp.)

And in all of those states, I see flat to declining new daily deaths. In some of those states, sharply declining. (To include Montana on the list is laughable: that state's total cases and deaths are less than many counties in the U.S., and it hasn't reported more than one new daily death since April - and its daily peak was three deaths.)

Why include data on deaths? Here's why. First, an increase in cases may be a function of opening states back up. But it's also definitely a function of increased testing. You know how the media is now reporting along the lines of, "OMG positive cases are increasing among YOUNG PEOPLE!!!"? Well, early on, the scant available tests were reserved for the at-risk population. As tests have become increasingly available, we're testing more young people, and so we're seeing more positive cases among those age cohorts. This tells us that young people have been getting infected all along, but their symptoms were either non-existent or so mild they didn't think it could be COVID. Now, with increased testing of young people, we're finding out that, yes, many of them do get infected.

Second, increased cases without an increase in hospitalizations so severe that it threatens to overwhelm the health care system, or an increase in tragic deaths, is a good thing. Not only does it lead to increased herd immunity (which is the ultimate weapon in the entirely plausible event that an effective vaccine is never developed), it also helps us understand that the mortality rate (deaths/cases) is lower than originally thought. Get it? Declining deaths divided by increasing cases equals lower mortality. The more cases we identify, the more we learn about this virus, and what we're increasingly learning is far different that the fear-mongers - and the experts - would have had us believe in March.

And while hospitalizations are increasing in some locations, they're nowhere near the level that would tax the healthcare system. In fact, only the New York City metro was ever at risk of that. And the rapid deployment of field hospitals, as well as the Navy hospital ship that was never used for COVID cases, mitigated that risk entirely. So if there were a "spike" in hospitalizations in a poorly-run hot spot like NYC, we could spin up mitigating responses much more rapidly than before, and contain it.

So, the media is in some cases outright lying (surprise!), and in all cases, distorting the truth by selectively using misleading language (bigger surprise!), all in an effort to send the stock market tumbling on fears of reverting to shut-downs (which is highly unlikely, even in liberal states), and to scare people into thinking that they're either going to lose their jobs again, or that they're going to get sick and die. To say "shame on the media" is a gross understatement. The media have no shame.

Now, maybe you're not a data person. Maybe you don't pore over these graphs like I do. So let me present you with a few graphs that do represent spikes, so you'll have a frame of reference.

Before I do - for those liberal readers who will accuse me of caring more about the economy than about human lives, know this: yes, every COVID death was a human being, somebody's mother, grandfather, uncle, sister, spouse, sibling, child. Just as every lost job is a human being providing for themselves or their family. Every business that fails was essential to its owners and employees. Every bankruptcy filing damages the credit of the filer for years to come.

The efforts to control this virus were never about ensuring there are no new cases. Even Drs. Fauci and Birx have said that. It was about spreading out the new infections so they didn't come all at once, and thus overwhelm the healthcare system. Mission accomplished. Remember those "flatten the curve" graphics? They didn't show no new cases. They showed new cases over a longer period of time, which is precisely what we're seeing now. It's hard to say new cases are good. We all wish this virus never existed. But, given that it now does, herd immunity is going to be necessary at some point, and we don't get there with no new cases. The only way to eliminate the virus is to virtually eliminate life as we know it - and then what have we gained? 

This virus can be deadly - we all get that. So can economic ruin. Do you get that? Over 120,000 Americans have lost their lives to COVID. Many of them wouldn't have seen 2021 in any event. Over 20 million Americans have lost their jobs due to the government response thereto. Virtually none of them would have lost their jobs in any event. You tell me where the balance of equities lies, but remember this: as I've said all along, sanctimoniousness is a luxury good that those Americans whose livelihoods have been affected can no longer afford.

V is for Victory

Okay, I was wrong.

As the economy began to tumble under the weight of a government-mandated shutdown that crushed the service, leisure and manufacturing industries, I began attempting to educate. My intent was to counter the misreporting of employment data by the "news" media, whether due to their reporters' ignorance of economics, or an intentional effort to frame a narrative. And as part of that education effort, I made a few forecasts.

And I'm happy to report that I blew it (the forecasts; hopefully not the education effort).

I began by explaining what initial jobless claims are, and that you can't aggregate them over several weeks to come up with total unemployed. This is because some people file an initial claim this week, then find work again within one or more weeks.

Case in point: after the June 4 release of initial claims for the week ended May 30 showed that less than 1.9 million Americans had filed initial claims that week, most in the media were saying that the total number of unemployed was over 42 million, which was the cumulative number of first-time filings since the week ended March 21. (The media conveniently ignored the fact that initial filings peaked at the end of March, have been declining sharply ever since, and that the 1.9 million number was the lowest since the shutdown began.)

Before we unveil the actual number of unemployed, let's continue re-tracing our educational path. I next differentiated between initial claims and continued claims. The latter is the total number of people collecting unemployment insurance. It includes both first-time and ongoing filers. Both initial and continued claims have peaked, which I predicted would happen fairly quickly. We also discussed numbers like the civilian labor force, the unemployment rate, and non-farm payroll growth. I predicted that the unemployment rate would peak in May at around 24-25% before beginning to decline. And while I didn't state it, I expected non-farm payroll growth to resume in June, after a few months of shedding jobs due to the shutdown.

This morning (June 5), the employment report for May was released by the Bureau of Labor Statistics (BLS). This bellwether report includes the unemployment rate, non-farm payroll growth, average hourly earnings, and other key employment metrics.

The May report proved me wrong. Even I was surprised by the velocity of improvement in the labor market. To be sure, these numbers still aren't good. But they're considerably better than they were, and have reversed course faster than any economist expected (and certainly faster than the media wanted you to believe). Let's examine them.

Non-farm payrolls grew by 2.5 million jobs. The forecast was a decline of 8.5 million. That 2.5 million was a record - like more than two times the previous record.

The unemployment rate in April was 14.7%, and all forecasts pointed to the May number topping 20% - mine included. The actual number was 13.3%, meaning fewer Americans were unemployed in May than in April. That's a good thing, and it was unexpected.

Average hourly earnings ticked down, from $30.04/hour to $29.75/hour. This is actually a good thing. Why, you ask? Well, earnings jumped by the largest amount ever from March to April, rising from $28.69/hour to $30.04. That was because the government shutdown eliminated huge numbers of low-paying jobs (you may recall that I also wrote about this being a bottom-up vs. a top-down recession, and how that boded well for recovery). In other words, the bottom end of the distribution of wages in the economy was decimated, so that the entire distribution shifted higher, and took the average up with it. So as those jobs are returning, the lower end of the distribution will be re-filled, if you will, and the entire distribution will normalize.

Finally, the total number of unemployed was about 20.9 million, down from 23 million in April. Had the forecast for the unemployment rate borne out, that number would have been well north of 30 million.

So I was wrong. Even I didn't expect the numbers to improve that much, that soon. But hey, I'm in good company: the media were wrong, too, in stating that total unemployment was more than 42 million. I was a lot closer than they were, but then, I wasn't trying to mislead anyone, and unlike the media, I was looking at the numbers based on what they really mean.

Some Sobering Math

I've had a number of people - including clients - argue that, if the government had not shut down the economy, resulting in what will probably be peak unemployment of around 25% for May, there would be no economy, because huge numbers of people would be dead, and thus couldn't work or consume.

Clients in particular have made that argument when I explain that they should not include the impact of credit losses, reduced earnings on loans and investments due to lower rates, reduced loan demand, reduced credit and debit card interchange income, etc., when considering pandemic risk. The reason is twofold.

The first reason is that I already have my clients assessing those risks, and we don't want to double-count the residual risk (risk after mitigation). The pandemic risk should be assessed in terms of business continuity: what would the impact have been had we not spun up all the responses to the pandemic and the resulting jurisdictional guidance as quickly and effectively as we did? And how well did those responses mitigate that impact?

The second reason - and forgive this economic purist for making such distinctions - is that the pandemic did not cause the recession. The pandemic evoked a government response, and the government response caused the recession.

Now, I'm politically agnostic about that when it comes to my clients. I'm not going to share my thoughts with them on whether that response was appropriate. There will be plenty of time for recriminations and Monday-morning quarterbacking when we actually know something about this virus: how easily it spreads, the number of actual cases, the number of actual deaths based on COVID as the direct and primary cause of death, etc. Some of that we'll never know. So I don't offer clients an opinion regarding whether the government response was right, wrong or indifferent.

I won't do it here, either. My purpose is solely to apply real math to the most severe worst-case projection, and demonstrate what, even in that worst-case scenario, the economic impact might have been had the government not responded as it did.

Also, let me say that, if the death toll were as high as the numbers I use below, it would have been a heartbreaking human tragedy. And when I say later in this post that the number of deaths among those under the age of 16 is insignificant as a data point, I'm not saying that any of those deaths were insignificant to the parents, grandparents and siblings of the succumbed. I'm only talking economic impact, because that's the argument I'm countering. Let someone else decide whether the human loss outweighs the economic impact. (But hint: let them consider suicides, reduction in life expectancy, alcoholism and drug addiction, and other human costs related to an economic collapse, especially among the most vulnerable participants in the labor force, in balancing that scale.)

Okay, let's start by looking at data regarding COVID deaths by age cohort. My source is worldometers.info, which uses data from the CDC, WHO, Johns Hopkins, and other sources. According to their data, about 72% of COVID deaths are in the age 65 and older cohort, with 28% among ages younger than 65.

Now, let's look at the U.S. civilian labor force by age cohort. Only 10% of the labor force is comprised of individuals aged 65 and older. My source here is the Bureau of Labor Statistics (BLS), and I'm using pre-pandemic data.

So, let's combine the data, by multiplying the deaths by age to workers by age. That means that 72% of the 10% of U.S. workers over the age of 65 have died, or about 7% of the total labor force. And, if we assume that all of those under 65 who died were employed (an important assumption - I'll explain momentarily), we can count the whole 28%. That gives us a total of 7% of the labor force, plus 28%, for a total of 35%.

However - and pay close attention here - we can't assume that 35% of the labor force would have been wiped out. Why?

Because the 35% is based on the total number of deaths, not people. It's not a per capita number. So it can't be applied to the entire labor force, any more than it can be applied to the entire population. If it could be, then we would indeed have 35% of the labor force, or about 55 million, deaths in the U.S. And if it were applied to the entire U.S. population, we'd have about 114 million deaths. Not even the most dire models projected numbers anywhere close to that, and the actual data is running about 0.1% - 0.2% of those numbers.

Further, while I'm going to assume, as a worst case, that all individuals under the age of 65 who died were employed, that's not the case. Some people are fortunate enough to retire before that age. Some were among the 3.2% unemployed before the government shutdown ensued. Also, some COVID deaths occurred among individuals under the age of 16, which is the low-range cutoff for BLS data on the labor force. However, those numbers are insignificant as data points. Just know that the 35% is skewed to the high side for those reasons. (It's skewed even further by the cause of death methodology employed by the CDC, but that's another discussion for another day.)

Okay, still with me? The Imperial College of London put out the first COVID model, and it has been thoroughly debunked as hot garbage. A dumpster fire. Worse than the fatally flawed IHME model, which I have debunked just as thoroughly in this blog. Suffice it to say that the Imperial College's model creator has resigned his position as a government advisor.

So why use data from the Imperial College model? First, it was the model used by the British and U.S. governments to initiate the lockdowns that have so severely affected those two countries' economies, at least the service and factory sectors thereof. And second, it projected the most dire scenario regarding total deaths if we did nothing, so it provides the ultimate worst-case data, ridiculously extreme as that data is.

The Imperial College model projected 2.2 million deaths in the U.S., a number that you've heard bandied about quite a bit, assuming you've been awake the past three months. So let's apply our combined deaths-and-employment percentage to that.

Had 2.2 million Americans died of COVID, the math indicates that 35% of them (on the high side) were participants in the civilian labor force. And 35% of 2.2 million is 770,000. Divide that by the total civilian labor force pre-pandemic of about 157 million, and you get about 0.49%.

In other words, had the government done nothing in terms of shutting down the nation's economy, had the model been accurate (and it wasn't), and assuming that all COVID deaths under the age of 65 were labor force participants (they weren't), and assuming that all reported COVID deaths actually resulted from COVID as primary cause of death (and, according to the CDC's own website, they didn't) -

The unemployment rate would have increased by 0.49%. So today, it would be about 3.7%.

Let that sink in.

Insider Information

Throughout the COVID shutdown, a lot of people - friends, family, clients - have been asking me for my views related to the prospects for the U.S. economy going forward. Some are concerned that this is worse than 2008-09. Some are concerned that it's worse than the Great Depression. Some are fearful that the economy will never recover.

I have tried to put those fears to rest through a combination of data analysis, macro trends, and anecdotal evidence. I've noted that when initial jobless claims peak (which they appear to have done seven weeks ago), we're near the point where the worst is over. And that when the unemployment rate peaks (which I suspect it might with the May data, which will be released June 5 and should come in around 22%), the worst is behind us.

I have explained the significant macro difference between those past severe downturns - both top-down events that eventually took out the rest of the economy - and this downturn, resulting from a bottom-up event, with the top of the economy still primarily intact in terms of employment and incomes. Which augurs well for demand.

And there is anecdotal evidence that demand remains extant. My lovely wife and I will celebrate our 25th year of her putting up with me in 2021. We enjoy cruising, having done so more than 20 times, and one of our more memorable trips was a cruise from Vancouver to Hawaii four years ago. Yesterday, I was researching cruises coming from Hawaii to the mainland. There are two such sailings next May on our preferred cruise line. The suites are sold out, nearly 12 months in advance. True, many of the bookings are being made using credits from cruises booked for this year that had to be canceled. But that doesn't disprove the demand argument - why book with cash when you have a credit for 125% of what you paid for this year's cruise, which many lines are offering?

I have a flight to visit a client next week. While the airlines have cut routes and are capping capacity to distance passengers on the planes, my return flight is sold out.

Since my home county re-opened last week, we have dined out twice. Both times, the restaurants were busy. At one of them, our waitress said that nearly all of the staff had been brought back. At both of them, our servers said they needed to hire more workers soon, because the same crews were prepping and serving both dine-in and still-brisk curbside/delivery customers, resulting in delays. (So if you dine out during this time, please show a little more forbearance than usual regarding wait times.) And a burger joint I drove by today had a sign out front saying that they're hiring.

There is other anecdotal evidence. But in this post, I want to share some "insider information" that points to this downturn being less severe than 2008-09.

I currently work as a risk management consultant for credit unions, which are like banks, but are owned by their depositors under a cooperative structure. I've worked with credit unions since 1992, and in this capacity since 2013. I've had clients in most U.S. states, and since this pandemic hit, I've been in contact with ongoing and former clients in 15 states. All of those states have different shutdown rules, and all have different re-opening plans and timeframes.

Regarding the various jurisdictional shutdown orders, the analogy I've been using with clients is this: we had to build the plane while we were flying it, and we had to get it up to altitude very quickly - with little, and often conflicting, guidance from air traffic control. Storms popped up everywhere, so we had to change course and altitude frequently. Now we have to plan for the descent, approach, and landing, again with little and often conflicting guidance. We have to figure out what parts we can remove, and when, and how. At the same time, we have to determine what parts may need to be put back on, and how and when and under what circumstances, as well as how we may need to change our flight plan, should the landing be aborted.

I've been impressed with how agile credit unions have been in doing all of this. Some have deployed nearly all of their work force remotely, including call centers, in a matter of days. Some have instead closed branches and deployed other personnel to that space to implement distancing across all facilities, and have deployed branch personnel to assist with the overwhelming volume seen by call centers and collections departments. Cash limits in ATMs have been increased to meet greater demand from that non-in-person channel. Plexiglas shields and floor markings have been put in place in branches. Millions of dollars of PPP loans have been extended to small businesses. Skip-payments and loan modifications have been proactively offered to keep borrowers from defaulting. HR departments have scrambled to deal with remote workforce deployment issues, CARES Act changes, and leave issues related to the pandemic.

But I'm not writing this just to congratulate the industry I serve. I'm writing it to report on what those institutions are projecting in terms of credit losses and other impacts to income, and the anecdotal evidence I hear from them. Let's tackle the anecdotal piece first.

Besides the mortgage refi business - which will help keep people whose incomes have been affected remain in their homes, and will put discretionary funds in the pockets of those who haven't been affected, so they can spend them - other business is picking up too. One client I spoke with very recently is in a state that has begun to re-open. That client, like most credit unions, is active in indirect auto lending. Under those arrangements, the credit union works with a network of dealers, and the dealers offer the credit union's auto financing at the dealership. The credit union provides the pricing (loan rate) and underwriting criteria. It's like having an outsourced auto lending business. Some credit unions do considerable volume in indirect lending, as much as 70% of total loan production.

This particular client reported that, during the shutdown, they were doing about three indirect loans a day, which is abysmal. Now that things have re-opened - just partially, mind you - their end-of-day queue - the loans they couldn't get approved that day just due to sheer volume - is 60 to 70 loans. (And they have a sizable indirect lending department.) Their dealers are reporting that May will be a record month for them in terms of sales. This makes sense: new light vehicle sales had been trending around 17 million units, annualized, as of February. In March, they fell to just over 11 million, the lowest since 2010. In April, sales fell to about 8.5 million units - the lowest ever.  That's a lot of pent-up demand to pick up, and to be financed at record-low rates. And the dealerships are implementing innovations like contactless sales and delivery to make it easier to buy for those still leery about kicking tires and slamming doors at the dealership.

My primary contact at this client also told me that she and her husband had been furniture shopping recently, and the store told them that it too was looking at an all-time record sales month in May. This illustrates that demand for big-ticket items is still there. And folks - this credit union is located in America's factory belt, where unemployment rates already were systemically above the national rate by about a percentage point.

On to the data. A key measure of financial institutions' profitability is return on assets (ROA), defined as net income divided by average annual assets. Another definition we need in hand for this discussion is "basis points." One basis point is equal to 1/100th of a percent; 100 basis points (bp) equals one percent.

All of the credit unions I've spoken with are projecting about a 40-45bp hit to ROA this year. To put that in perspective, that would knock out about half a year's earnings for the average credit union with assets of $500 million or more (my clients range in asset size from about $200 million to nearly $10 billion, with the average north of a billion). In other words, industry average ROA would be about 45bp.

In 2009, the industry average ROA was 29bp. In other words, earnings were about 36% lower than what's projected this year. Many credit unions, especially those in the "sand states" where home price declines were more severe, had negative earnings in 2009.

Our firm works with over 100 credit unions, and we have validated the estimated 45bp hit to ROA through analysis of our clients' aggregate risk assessment data. The losses will come in part from charge-offs of loans that default. However, they'll also come from reduced investment income because interest rates have plummeted (credit unions can only invest in bonds, which pay interest). And from reduced loan income as auto loan demand disappeared for the two months that dealerships were shut down across most of the nation (but that demand is coming back as dealerships open, especially with loan rates this low). And from reduced interchange income (the income earned on credit and debit card swipes) during the two months that people weren't shopping, dining out and traveling (most of that demand will come back also; we'll see how contactless payment affects it). And from reduced income from wealth management services as those clients have stopped investing. And from increased expenses from the technology costs of deploying workers remotely, installing Plexiglas shields, buying hand sanitizer, and other responses to the pandemic.

So it's not just credit losses, and that suggests that credit losses won't be that widespread. Again, clients are reporting that they're proactively offering loan modifications and rate reductions to keep borrowers in their loans. As hiring in the service sectors picks up, those loans will remain current. They're also modifying business loans to keep those borrowers from failing and defaulting, as well as extending the PPP loans to keep them afloat.

And mortgage refinancings are exploding at today's record-low rates, so they're booking a lot more of those loans. True, the loans are at low rates, but most institutions are selling those loans into the secondary market (where they're packaged and sold to investors), earning fees for originating and selling the loans, as well as for servicing the loan payments. So that is helping to offset lost income. Only one of my clients is not seeing record mortgage refi volume, and they're located in a COVID hotspot.

In terms of the anticipated loan losses alone, the hit to ROA is projected to be about 20bp - roughly half the total hit, and on the order of a fairly mild recession. This has also been validated by looking at aggregate data across all of our clients.

If credit unions thought that demand wasn't coming back, and that most businesses would fail, and unemployment would continue to go up for months, they'd be reserving more for loan losses. They tend to be very conservative in establishing their loan loss reserves. And their regulator hits them hard if they don't, so the regulator isn't anticipating widespread business failures and continuously increasing unemployment, either. Reports from the banking industry tell a similar story.

So don't just take my word for it. America's financial institutions - who lend to the businesses and individuals who are affected by the shutdown, as well as those who aren't - are telling a story of a short recession overall, and a return to more normal times in 2021. The anecdotal evidence corroborates that, as do the projections by the majority of credible economists, including our current Fed Chairman.

Whose Side? Supply Side!

In the last post, I touched on supply-side, or "trickle-down" economics. I noted that the fact that both the Great Depression of the 1930s, and the Great Recession of 2008-09 were caused by asset bubbles that imploded the "top" of the economy - the higher-paying jobs in the financial and other sectors. That resulted in a "trickle-down" (or, more accurately in the case of those downturns, a cascade down) effect that took out the "bottom" of the economy - the relatively lower-paying jobs in the service sector. Those jobs depend on spending by those higher up on the economic ladder to sustain those service businesses. In turn, the employment provided in the service sector creates the ability for all participants in the economy to have funds available for discretionary spending (depending on how well they manage their finances, at all levels regardless of income).

This illustrates that supply-side, or "trickle-down" economics does indeed work as stated. However, there are many detractors who claim it's a farce, a hoax, a myth, that it doesn't work. Unfortunately, the vast majority of those folks don't really understand economics, and the detractors who do are big-government politicians and policy wonks trying to gin up the folks who don't understand it, so they'll be opposed to any politician who supports it. Those politicians and the folks who, unfortunately, believe them, would rather deploy big-government social programming.

The fundamental premise of supply-side economics is that if you apply stimulus to the supply side of the economy - the side where jobs are created and goods are produced - that will eventually "trickle down" to the lower end of the economy. A simple example is a cut in the corporate tax rate that allows companies to price more competitively. That stimulates demand, and those companies then have to hire more workers to keep up with the demand, which creates jobs, which provide income, which stimulates further demand, etc.

The detractors make the usual tired claim that if you cut the corporate tax rate, the tax expense savings just wind up in the executives' pockets. This is a liberal myth, though there may be some indirect truth. Those executives have no incentive to just pocket the savings and do nothing to grow the companies' revenue. However, they probably have stock options that result in increased personal income if they do things to drive the stock price higher, and then exercise those options at a gain. And to drive the stock price higher, they generally have to increase net income, which means working harder and smarter to expand market share, increase revenue, etc. So to the extent they use the tax savings to grow revenue, market share, etc., they may indeed be compensated for that, on a performance basis.

President Reagan was a strong proponent of supply-side economics, as was Dr. Art Laffer, one of Reagan's top economic advisers and one of the great economic minds of our time. At some point, some bright aide probably got the idea that voters couldn't grasp what "supply-side" economics meant, and coined the term "trickle-down" economics to make it more understandable to the public at large.

That actually had the opposite effect. People thought they understood what it meant, but they didn't. They expected it to do something it was never intended to do, and when it didn't do that, they grumbled that it was a myth. Also, opposing politicians had a field day with the "trickle-down" term, and used it to derisively oppose supply-side economics in favor of policies that would stimulate the demand side (such as the recent government handout of $1,200 per person, whether the recipient's income had been affected by the COVID-19 shutdown or not).

So what, you ask, do these detractors expect "trickle-down" economics to do? They expect it to eradicate income inequality. And because income inequality still exists - and by some measures is increasing - they blindly assume cause and effect, and assert that as proof that "trickle-down" economics doesn't work. They're wrong.

I'm not going to go into a treatise of the various causes of income inequality, other than to make a couple of points. First - I'll pick on Apple CEO Tim Cook here - if Apple's board believes that Tim Cook brings at least $3 million in value to Apple's shareholders, then he's "worth it." (His salary last year was $3 million, and he earned another $7.6 million in incentive-based pay - meaning he either met and exceeded bonus targets, or he drove the stock price higher and profited from exercising options, or both.)

Apple's stock price doubled in 2019. Based on the number of shares outstanding, that means the value of its shareholders' aggregate investment increased by more than $650 billion. It employs nearly 140,000 people. It created 7,000 jobs in 2019, a 5% increase in its workforce. Its total payroll expense is in the billions of dollars. It provides many more thousands of jobs for its suppliers and manufacturers of accessories. So a lot of workers benefited from Apple's growth.

If I represented Apple's shareholders, and Tim Cook came to me and said, "I can increase your aggregate wealth by $650 billion, but it'll cost you a cool $3 million just to take a chance on me - and if I hit that target, I'll want another $7.6 million" - I'd make that trade every day. Especially if his strategy and execution also created thousands of jobs and spawned additional business formation that also created jobs - all of which trickles down as those new employees spend money in the service sector, pay taxes, etc.

The detractors, of course, will deride the "fat-cat" shareholders. Guess what? If you have an IRA or a 401(k), there's a very good chance you own Apple stock, through mutual funds or exchange-traded funds (ETFs) in your account. Apple's largest shareholder isn't some evil rich guy, it's The Vanguard Group, which is the market leader in passive index ETFs. Those funds buy the stocks that are components of underlying indices like the Dow Jones Industrial Average or the S&P 500, and are used by vast numbers of investors to passively invest in the broader markets without making bets on individual stocks.

In fact, 9 of Apple's 10 largest shareholders are mutual fund companies (the 10th is Warren Buffett's Berkshire Hathaway holding company, which is arguably a mutual fund itself). Vanguard manages 5 of the 10 largest mutual fund holders of Apple stock; its aggregate share of the Apple pie (pun intended) is about 7.4%. That's more than $80 billion of Apple stock - directly owned by Vanguard, but indirectly by you, me and a lot of other retirement savers. We doubled our money on Apple in one year. That doesn't happen often.

The most profoundly immutable law of economics is the law of supply and demand. And given the results Tim Cook has delivered at Apple, if its board suddenly went woke and told Cook he's only worth $500,000 (still too much for some of the income equality crowd), Samsung or another competitor would snatch him up in a Silicon Valley minute. The market price of anything is whatever the next person is willing to pay for it - supply and demand. That and that alone determines private-sector compensation, as the laws of supply and demand apply equally to talent.

Here's an example. Early in my career, I worked for a large savings and loan association that had an incredibly complex investment portfolio. We employed a number of Ivy League MBAs and engineering PhDs to help manage and analyze the portfolio. (I hold an MBA degree, but from a small Midwestern state university - far from Ivy League. That job provided my real education in the investment world.) We had developed a fairly extensive library of research materials - this was before the internet really took off - and our Vice Chairman, himself a Wall Street alumnus and U. of Chicago Finance PhD holder - wanted to hire a librarian to manage it.

I was on a committee that graded jobs for purposes of pay ranges. We used a vendor-supplied system to do that. As we were grading out the Research Librarian job, which required a Masters' degree in Library Science, someone on the committee asked whether that degree was to be valued the same as an MBA. The head of HR said yes. The Chief Marketing Officer and I nearly fell out of our chairs.

As we explained to the committee, based on the laws of supply and demand, there just aren't as many jobs that require an MLS degree as an MBA. MBAs, being higher in demand, command greater compensation. And if the two degrees held equal value, there would be a mass exodus out of relatively more difficult MBA programs, and into MLS programs, which, in the days before the internet, big data and data mining, were a whole lot easier to complete.

(No disrespect to librarians intended; these are just the facts. If you're looking at grad school and are undecided between an MLS and an MBA, and it's money you're after, pick the MBA. But if your passion is to be a librarian, choose the MLS degree - your earnings will be lower than, say, a portfolio manager's, but the most important thing is to love what you do.)

Look, the reality is that there are a lot fewer people who can successfully run a company like Apple than there are people who are qualified to flip burgers. So supply and demand, as well as performance and results, are going to dictate that Apple's CEO will make more than a burger-flipper at McDonald's. Yes, the economy needs both. No, they shouldn't receive the same pay, unless McDonald's believes a lone burger-flipper can add $650 billion to the firm's market capitalization.

Income equality was never promised as part of the American Dream. Opportunity equality was. What each individual does with that opportunity is what determines their income potential, by and large. Not everybody has the ability to be a Tim Cook. But an awful lot of people do, if they put in the work to get where he's gotten. The business world abounds with rags-to-riches stories like that of Sam Walton, who built the Wal-Mart empire. There are also a lot of near-rags-to-success stories, like my own. To be sure, there are some who do not have equal opportunity, and I'm all for addressing that. Opportunity is the most valuable commodity a society can offer. But that isn't related to supply-side economics, nor does it (nor should it, nor can it) bring the promise of income equality. The system isn't perfect in terms of opportunity equality, but it's pretty darn good.

Those who argue for income equality can never achieve what they really want. What they want is for the Tim Cooks of the world to have their pay capped at a level low enough that their own compensation can be raised to match his. Their premise is that everybody would be equally compensated, and at a pretty high level.

Not only would the math not work, but it wouldn't work economically, either. The Tim Cooks would find some country that didn't enforce such policies and run a business there - or move Apple's headquarters offshore. The U.S. economy would be decimated from companies leaving our borders. Corporate tax rates would shoot up for small businesses in an effort to make up the lost tax revenue from larger corporations, and unemployment would go through the roof. And the supply of available burger-flippers would suddenly skyrocket.

The only true path to income equality is through a totalitarian regime, either Socialist or Communist. That's happened before. However, instead of providing equal prosperity, those regimes have produced equal poverty, as the powers that be at the top of the regime enrich themselves far beyond anything Tim Cook could imagine and leave the crumbs for their subjects. In fact, those regimes tend to have much higher income inequality than free-market democratic republics.

They also carry carry nasty side benefits like pogroms and ethnic cleansing and imprisonment (or worse) for exercising rights we all take for granted, like free speech, freedom of religion, liberty, and the pursuit of happiness. Be careful what you wish for.

Bottom-Up vs. Top-Down

No, I'm not talking about drinking vs. driving a convertible. (Please don't do both at the same time.) I'm talking economics.

I've seen a lot of comparisons of the economic fallout from the government's response to the COVID-19 pandemic to the Great Depression of the 1930s and the Great Recession of 2008-09. However, this downturn is quite different from those infamous economic declines - 180 degrees different, in fact.

Before I get into the meat of this post, let me explain what I mean by the "top" and "bottom" of the economy. I'm generally referring to relative compensation in the banking and finance sectors, tech, pharma, some of health care, etc. - the top of the compensation curve, at least for private employers - vs. those at the bottom of that curve - service sector workers like restaurant staff, hotel clerks and maids and bell desk workers, most cruise line employees, hair stylists, dog groomers, etc. This is not meant to be demeaning to any group, nor am I making any points regarding the relative value of one worker vs. another, which is determined by supply and demand.

On to the bottom-up vs. top-down discussion. Both the Great Depression and the Great Recession resulted from asset price bubbles - stocks in the late 1920s, housing in the early 2000s - that were inflated by too-accommodative monetary policy. (In the 1920s that policy was effected by dramatically increasing the supply of money circulating in the economy; in the 2000s it was through interest rates held at then-historically low levels for too long after the dot-com recession of 2000.)

I won't go into great detail about the Depression, in large part because I wasn't around to witness it.

Honest.

But it was precipitated by the stock market bubble, which had been inflated by the aforementioned increase in the money supply, bursting in 1929. The Dow Jones Industrial Average lost half its value in just two months. After a couple of brief partial rebounds, by 1932 the Dow had lost about 90% of its value. Stocks weren't as widely held as they are now; there were no 401(k)s or IRAs, hardly any mutual funds, no online brokerage accounts. So this primarily affected those at the top of the economy - banks, investment firms, wealthy industrialists.

As those institutions failed and those people lost their jobs and investments and stopped consuming, people lower on the economic spectrum got scared, and everyone stopped consuming. Manufacturing all but shut down, which caused the economy to shed lower-level jobs. President Hoover tried to intervene to prop up the economy, but his efforts only caused it to weaken further.

(This is in stark contrast to the false narrative that Sen. Chuck Schumer is pitching in comparing President Trump to Hoover, saying both did nothing. Hoover tried to prop up the economy, and so has the Trump administration, to the tune of $2.4 trillion and counting. Too soon to tell whether that's a good thing; I'm just noting that Schumer is lying again, which should have been evident from the movement of his lips.)

President Roosevelt doubled down on Hoover's stimulus, which weakened the economy even further and prolonged the Depression. (And Schumer is calling for "Rooseveltian" action. Heaven help us.) Only the massive spending on WWII, and subsequent economic growth as soldiers went back to work rebuilding the manufacturing sector for private vs. military needs, saved the economy. The lesson is that economic activity is more stimulative to a struggling economy than government intervention.

So in short, the economy imploded at the top, and that took down the rest of the economy.

In the 2007-09 downturn, the economy again imploded from the top down. That downturn was precipitated in large part by new wrinkles in the mortgage market. I won't get technical, but these loans allowed people to leverage themselves into more house than they could afford, with initial payments that were much lower than what it would ultimately take to pay off the loan in 30 years. They featured triggers that would result in increased payments so that the loan would pay off fully in 30 years.

The housing boom was so massive that lenders couldn't keep all the loans they made on their books without running out of liquid funds, or liquidity, to make more loans. So they were packaged and sold to investment and commercial banks, pension funds, even Fannie Mae and Freddie Mac, the government's housing finance agencies.

Once the triggers in these loans kicked in, many borrowers couldn't afford the increased payments, and they walked away from their homes. That left the banks and investors holding the bag. Some insurance companies had created credit insurance instruments to make the pools of loans more attractive to investors, and they got hit with huge claims under those instruments.

At the same time, the teachers, factory workers, hotel and airline and restaurant and casino employees, hair and nail salon workers, and others who had taken out those loans still had their jobs. They just no longer had the house they had financed with those loans (plus they had destroyed their creditworthiness, sadly). They rented apartments or homes, or lived with relatives, or even lived in their cars. But they still had jobs. This is a critical point.

As was the case with the Great Depression, the financial sector - banks, investment firms and insurance companies - failed first. The stock market was down only 10% from October '07 to March '08, as home values began to decline. Then Bear Stearns, which was at the forefront of mortgage finance, failed. In April, unemployment was at 5%, vs. 4.4% at the low in May 2007. (Note that I'm lagging the unemployment rate by a month after the event, in this case the failure of Bear Stearns.)

In September 2008, Lehman Brothers failed, and many other banks, investment banks and large insurers like AIG were at the brink of running out of cash, all on the same day. I'll never forget that day. I was in Flagstaff to deliver an economic outlook to a bunch of credit unions, and I was in the bar and watched it unfold - and the market tank - on the news. The next day I told the attendees to disregard my slides, which they'd received in advance, because everything had just changed overnight. In October (lagging a month again), unemployment hit 6.5%. I remember seeing images of investment bankers walking out of buildings on Wall Street in droves, carrying boxes of their belongings. So now we'd seen unemployment go from 4.4% to 6.5% in 16 months - bad, but not terrible; you see, the financial sector only makes up about 5.5% of the nation's labor force.

It took another year for unemployment to peak at 10%. That's because the top of the economy (higher-paid people) failed first. They stopped eating out, going to movies, taking vacations. They couldn't find other jobs, because that sector was toast. A guy from Bear Stearns who used to sell investments to the brokerage firm I ran at the time is now teaching middle school in Virginia. Financial institutions slashed their travel budgets - my clients no longer came to our investment schools and other conferences. So hotels were affected. Banks stopped holding conventions in Vegas due to the optics as well as the expense, so casinos got crushed (and the former high rollers didn't have money to gamble anyway).

Hotel, airline, restaurant, bar, casino, theater workers lost jobs. The implosion at the top of the economy took down the bottom, and all sectors collapsed. However - another critical point - not all workers in those industries lost their jobs, because their employers remained open for business, unlike today. There was just less demand, so a hotel might only need half its staff, for example.

Again, the economy imploded at the top, and that took down the rest of the economy.

This time, the bottom was pulled out from under the economy when the government forced businesses to shut down, primarily in the leisure and hospitality, retail and service sectors - restaurants, theaters, hotels, airlines, cruise lines, hair and nail and massage salons, and many retail stores. It wasn't a function of demand; the demand was evident in the fact that cruises, flights and hotel rooms had already been booked and had to be canceled. Prior to the shutdowns, restaurants had long wait times on the weekends, retail stores were busy, and people were doing discretionary things like getting their nails done or having a massage.

Restaurants got hit first, especially the mom and pops (which is the majority of the industry). Lower-level hotel workers got hit hard. The managers have to be retained to stay open and to re-open, but you don't need many maids at less than 10% occupancy. Same with the airlines - you need a lot less of the lower-end employees, but you've got to have management, logisticians (especially now that routes have been slashed), and pilots. The cruise lines have largely retained crew, but land-side personnel have been laid off.

The retail, leisure and hospitality, and other services sectors employ about 25% of U.S. workers - five times the financial sector. That's why this time, unemployment shot up from 3.5% to 14.7% in two months, vs. what we saw in those two earlier downturns. The vast majority of these jobs are at the lower end of the compensation scale.

However - the top of the economy is almost entirely intact. The banking sector is largely unaffected in terms of what we saw in '08-09, though there will be layoffs of some lower end employees (especially as the banks try to navigate whether they still need branches to the extent they did before, since branch traffic is way down but customers are still accessing their accounts via digital channels). But most long-term employees will just be re-deployed to other areas because of their institutional knowledge.

Wall Street is largely unscathed. They make money buying and selling investments. The supply chain is roaring - the stocks of Amazon, WalMart, Target are all up, and those firms are hiring, though many of those jobs aren't at the top of the economy. Most of tech is doing well. Some of pharma is doing quite well. The relative health of the top of the economy is one reason why the Dow has already recovered about half of the 35% or so that it lost from late February to late March. At this writing, it's down 17%, which doesn't even meet the definition of a bear market.

I've previously written about the evidence of demand for leisure and business travel, cruises, dining out, entertainment and sporting events, etc. So unless we reverse course on re-opening, the recovery from a failure at the bottom of the economy is going to look much better than a top-down failure, because there's still demand for all of those things on the part of people that have to date been unaffected, who have the means to spend money on them. That will bring back jobs at the lower end of the economy, and those Americans will be able to resume discretionary spending as well.

One final note: for those who believe that supply-side or "trickle-down" economics is a myth, these examples prove you wrong. A failure at the top of the economy will trickle down and crush the bottom. A failure at the bottom won't necessarily take down the top. And in the next several months, the spending by those at the top that I describe above will indeed trickle down to salvage the bottom of the economy. This lesson is free of charge.

Accen-tuate the Negative, Eli-minate the Positive

If you get that reference, you're old. Welcome to the club.

It's a play on an old song written by Johnny Mercer in 1944. It has been covered by numerous artists over the years: the Lennon Sisters, Bing Crosby, Ella Fitzgerald, Sam Cooke, even Paul McCartney, as recently as 2012, for you young whipper-snappers.

The song actually goes, "Accentuate the positive, eliminate the negative." And it cites doing so as the key to happiness. So why are we all so unhappy right now, besides some of us being scared out of their wits that if they go outside, they may become gravely ill, or worse; and some of us tired of what they perceive as their rights being trampled on, and ready to just go back to work and get back to life?

The media.

The media - I can't even use the word "news" anymore, it doesn't exist - has been trying to scare people into the first camp all along, and incite others into the second camp, through an intentional campaign of misinformation. On either side of the health vs. economic impact argument, they consistently highlight, exaggerate and mis-state the negative, and bury the positive.

My alter ego posted a picture on Facebook of a TV set with CNN's Wolf Blitzer on the screen. Next to his head was the ubiquitous case and death count in the U.S. from COVID-19, that by now have probably been burned-in to all our screens. It showed nearly 3 million cases in the U.S. And the banner at the bottom of the screen screamed, "U.S. DEATH COUNT APPROACHES 3 MILLION."

Incompetent? Perhaps. The media talking heads are all, by and large, under-educated buffoons. But more likely it was intentional. Get one person, one math-challenged person (and they're everywhere, folks) to believe the banner, and they'll tell their friends, who'll tell their friends, who'll post it on Facebook and Instagram and even Nextdoor, for crying out loud. And then you get them all coming back for more, huddled in front of the TV in abject terror or uncontrolled rage, riveted to the screen, waiting for more doom and gloom.

What's even more interesting about the picture I posted?

Facebook took it down.

Social media is complicit in fomenting panic. They don't want people to see the hypocrisy, incompetence and/or intentional misinformation displayed by the media.

They want it shared.

The other night, I was watching one of the major cable networks. The anchor first interviewed Gov. Burgum of North Dakota. She said, "You're re-opening your state, but the number of cases is increasing. Why are you re-opening?" Would you have needed to wait for the governor to respond? I sure didn't. Reported cases are increasing everywhere, because of MORE TESTING. North Dakota ranks 47th among U.S. states in population. Care to venture a guess as to its rank based on testing per capita?

Fourth. FOURTH. Behind Rhode Island, New York and Massachusetts. (My home state of Kansas is dead-last, in spite of ranking 35th in population, which is proof that for some governors, it's easier to shut down a state than it is to run it.)

So of course more cases are being reported if there's more testing. That has happened, and is happening, everywhere.

Gov. Burgum responded by saying, "We're doing more testing." Duh. "North Dakota ranks fourth among all states in testing per capita," he went on to boast. Which anyone can find out with a simple web search. The anchor went on to say, a few sentences later, "Of course cases are increasing because of testing, that's obvious."

So why ask the stupid question in the first place? It could be that she was saving face for not knowing the reason, not getting the obvious correlation, not having done her homework, like competent journalists used to do before the breed went extinct. More likely she knew all along that testing was the reason for the increase, but was hoping some uninformed viewer would hear her question, freak out, go get some Ho-Hos to fear-binge on, and miss the rest of the interview.

But wait, there's more. Her next guest was Ohio Gov. DeWine. She kicked off her interview by citing the hopelessly flawed IHME model, which I have debunked numerous times. She noted that the model showed that it had been six days since cases in Ohio peaked, and the model indicated that it wouldn't be safe to re-open the state until May 14, yet Ohio was opening some businesses as early as April 29. "Aren't you jumping the gate?" she asked.

Anybody with even a minimal amount of intelligence is looking at the data, not the model - from Drs. Birx and Fauci, to the governors who have done a good job throughout this mess. And the "gate," referring to the gating criteria for re-opening, is based on data, not on the model. So what does the data say?

Well, the data shows that new deaths in Ohio peaked on April 22, three days after the date the model shows they peaked.So one might surmise that the model is pretty close.

Except the model was last revised on April 22, three days after its forecast peak. So at that point it reported the peak had already been reached, even though deaths continued to climb for a few days. The previous revision, made April 17, "forecast" the peak would be reached on April 16. Oops. The April 10 revision said April 10. Oops again. The initial public release said April 21, which was actually more accurate than any of the subsequent revisions.

Does that mean the initial release of the model was "right?" No, it proves the old adage that even a blind squirrel finds a nut once in a while.

This anchor's next guest was the creator of the IHME model himself. She asked him why the model's numbers were still going up. (Let's conveniently ignore the fact that the actual numbers of new daily cases and deaths are going down. That would be way too positive. The media's job is to crush hope, not inspire it, and foment panic, not reason.)

The modeler cited several factors, including more presumptive cases (in other words, not tested and proven, but hey, even though they might just have the flu, we'll say they have COVID); protracted flat peaks in some states (he specifically cited New York, but neither the actual data nor the man's own model show a protracted flat peak in that state - look it up); and -

The model uses actual cases as a leading indicator! And we already established that actual cases are going up, right? And we already established that the reason is more testing, correct? So the more we test, the more the model is going to predict will die. That's probably true, but the actual data will continue to show the mortality rate falling significantly as testing is increased, while the model will continue to assume the same inflated mortality rate that has rendered it useless all along.

Did the anchor draw any conclusions on behalf of viewers, such as pointing out that since testing results in increased reported cases, and the model uses cases as a leading indicator, it's always going to show increasing numbers? Did she question the model's veracity?

She did not. She left viewers with the impression that the model is accurate. But she had no problem challenging the governors who were re-opening their states, even though they're doing that based on data, which is what the gating requirements dictate. The media are well aware that viewers are unlikely to actually look at the model or the data to determine whether New York's peak is actually flat and protracted. Nor are they likely to understand the model's flaws, or review the actual data. They're banking on being people's only source of (mis)information, so they can create either fear of the virus, or anger over the response. Or both - often within the same anchor's time slot.

(A quick note about the model's projected "safe" re-opening dates: that's a new wrinkle the modelers added after the re-opening guidelines were released. I've looked at it state-by-state, and it has no basis in the actual data. It should be based on that data and tied to the gating requirements, but it is not. It's not even looking at testing numbers. It also still shows many states exhausting health care resources like ICU beds and facing shortages, when in fact no state has. I'm not sure why they bother keeping the model running, other than to get on TV every other day.)

The local outlets are equally complicit, for the most part. On April 29, Kansas City, Missouri Mayor Quinton Lucas announced the most onerous re-opening requirements of any jurisdiction I've seen to date. Businesses can only re-open after May 15, and then at only 10% capacity - not the 25-50% or more established by most jurisdictions. When the announcement was made, I questioned why a restaurant would bother if it's already doing decent carry-out business.

After the press conference, a local TV station posted on Facebook that it had talked to business owners in attendance, and all of them supported the requirements. The post quoted two business owners. I was skeptical; what are the chances that 100% of business owners in attendance support such draconian restrictions? And can we extrapolate that sample to all Kansas City businesses?

Sure enough, in a radio interview the following morning, a prominent local chef and restaurateur stated that he was very much opposed to the plan, and was very upset about it. He said that it wasn't worth it to re-open at 10%, as I expected. He had tried to reach out to the Mayor's office, which was not responsive.

(The Mayor complained that other contiguous jurisdictions' health officials would not return his health commissioner's calls, yet he himself won't return his constituents' communications?)

Another local radio host said that he had heard from hundreds of local businesses, and not one of them was happy with the plan.

And yet the TV station, with a much larger audience, reports that no business owners are against it. Based on a sample size of two. Did they follow up with a larger sample? Talk to any other business owners? No - because that's not the narrative they're trying to shape in unsuspecting viewers' minds.

Besides local and national TV and print media, social media is out of control as well. I was watching the Kansas governor's press conference a couple of days ago. I was at my desk, so I was watching on Facebook, and could see the comments scrolling by. One commenter said that he had just learned that the state was going to extend the lockdown through October, and that they were deploying the National Guard the next day to enforce a mandatory 24-hour a day curfew. (The Kansas order expires May 3; the KC metro counties on the Kansas side are extending that by one week.)

People actually believed this person. They were terrified. This was the equivalent of me and my high school friends calling stores and asking if they had Prince Albert in a can (do a web search on the question if you're too young to get it), only far more cruel.

So you see? Individuals are preying on people's fear - and yes, gullibility - on social media, for sport. The TV media are doing the same, for ratings. Facebook is helping them all along - leaving the false comments like the one I noted above, but removing anything that exposes the panic-mongering.

All of which leads us to a simple rule: turn the TV off. Don't pay attention. Tune in to something else. Unfollow the fear-mongers and conspiracy theorists on your Facebook friends list. And, as always, go to the source.

I mentioned reason earlier. When it comes to the media, I'm led to paraphrase a very misogynistic statement made by Jack Nicholson's character in the film, "As Good as it Gets." In it, he plays a novelist who writes romance fiction. The character is bigoted, obnoxious and rude. When asked how he can write female characters so well, he replies, "It's easy. I start with a man, and I take away reason and accountability."

And that's the media - devoid of both traits, whether male or female.

I'll close with some good advice from the lyrics of another song, this one by John Prine, titled "Spanish Pipedream:"

"Blow up your TV, throw away your paper,
Go to the country, build you a home
Plant a little garden, eat a lot of peaches,
Try and find Jesus on your own."

Excuse me, while I go have a peach.