To Your Health!

Sure, I'll raise a glass to your health. Somebody should be willing to, because you can bet Anthony Fauci and Rochelle Walensky (the new CDC Director, in case you didn't know) aren't going to. Think they're interested in your health? Think again.

See, their covid protocols have nothing to do with health, and they haven't since the 14th day of flattening the curve - if they ever did at all. Want proof? Here you go.

Fauci and Walensky want you to get vaccinated, then still wear a mask (or two), only gather with other people who have been vaccinated, even then only in small numbers and only outdoors. (Why? Are they finally admitting that the virus isn't transmitted outdoors?) They've criticized large gatherings like the Sturgis motorcycle rally, fans at NFL games, the Texas Rangers' home opener at 100% capacity, Spring Break, the resumption of travel - even though none of those things has been tied to a remotely significant outbreak. They warn us of going to restaurants, bars, even church.

"Well gee, it sure sounds like they're concerned with our health," you say. Yeah? Then why are they okay with hundreds of thousands of illegal immigrants crossing our southern border from countries whose case counts are not declining? Packed in caravans, many of them without masks, not only outdoors but crammed into trucks and buses? The vast majority of whom are not being tested at the border? For the small numbers who are, exhibiting infection rates more than seven times those of the U.S.? Then being dispersed into the general population in U.S. communities, and allowed to board public transportation to travel freely throughout the U.S.? Or crammed into detention centers at 700% of capacity, or more?

If Fauci and Walensky cared one whit about public health, they'd be screaming bloody murder about this. But it's not about health. It's about politics. A few days ago, Fauci was asked about the situation at the border, and why he wasn't saying anything about it. His answer? "I have nothing to do with the border." Well, if he cared about Americans' - or these immigrants' - health, he'd have everything to do with the border. (Fitting that he did a bang-up Pontius Pilate impersonation right around Good Friday.)

Still not convinced? Remember all the teachers who are scared to death of the virus, so much so that even though the CDC has said it's safe to go back to in-person learning, they insist on staying home, damaging - perhaps irreparably - the educations of millions of American kids? Well, in San Diego, a number of them are volunteering - that's right, volunteering, to go back into the classroom to teach those same immigrant kids who crossed the border illegally. So they're not afraid of being in the classroom with a bunch of untested kids who traveled and were detained in those kinds of conditions, from countries with high infection rates and poor health care, but they're deathly afraid of being in the classroom with a bunch of American kids who've been stuck at home for a year, whose parents have probably been vaccinated. Why? Because it's not about their health concerns. It's about their politics. Teaching those immigrant kids is woke. Teaching their own students is not.

Finally, there's this: many in the medical profession, and pretty much all in the media, are outright lying to you. This one, I proved myself. A few mornings ago I was listening to a national news anchor interview Dr. Michael Osterholm, an epidemiologist and Director of the Center for Infectious Disease Research and Policy at the University of Minnesota, and - wait for it - a member of Joe Biden's COVID-19 Advisory Board. In other words, a doctor-cum-political hack, just like Fauci.

During the interview, the news anchor pointed out that in another recent interview, Walensky spoke of "the recurring feeling I have of impending doom." So much for "follow the science;" let's just go with our gut feelings, our baseless fears. Osterholm applauded her for her "honesty," and said the U.S. is the only country that's seeing a rise in new cases due to "this new variant" (referring to the B.1.1.7 variant, which has been known in the U.S. since early January, so it's hardly "new").

As is my wont, I decided to look at the data. And what did I find?

Daily new cases in the U.S. have been absolutely flat since the middle of February. Oh, but not only did he lie about the U.S. trend, he lied when he said we're the only country that has seen cases rise recently. I did a quick review of the trend in a few other countries with high case counts. Several are seeing sharp increases, to record levels.

(By the way, the media don't care about public health, either: the news anchor failed to question Osterholm's misrepresentation of the data. He either didn't know, or didn't care, that his interviewee was lying.)

Osterholm has since been making the rounds warning of the "fourth wave" or "surge" or "spike" we're experiencing. Why would he lie? First, because most won't fact-check him, and second, because it will justify not only maintaining restrictions, but spending massive sums of money on things the administration claims are related to covid, but in fact are not.

If it were about health, medical professionals would be telling us the truth, and citing the actual data. (We in Kansas have seen, on numerous occasions, how our own state health director manipulated data to attempt to convince us that masks are effective in reducing transmission.)

If it were about health, teachers would either get their butts back in the classroom, or wouldn't volunteer to teach immigrant kids in person, particularly given the conditions they traveled and were housed in and their relative infection rates. (Note: this is not a condemnation of all teachers. I know many who are back in the classroom, willingly, and many more who long to be.)

And if it were about health, the two people at the head of the spear would be focused on the human health crisis at our southern border, instead of washing their hands of it.

So get together with your friends, take off that mask, and have that drink - to your health!

Free ... to Choose

Today's post will focus on three intertwined concepts: logic, freedom, and choice. But first, let me explain why I'm writing this.

I recently posted an article to a social media group page about the resumption of cruising by Royal Caribbean. The cruise line is bypassing the CDC's restrictions by sailing out of non-U.S. ports in Bermuda and the Bahamas for Caribbean itineraries. However, RCL is requiring that all adult passengers be vaccinated against covid.

Judging from the reactions and comments, the fact that RCL is raising its middle finger at the CDC was well-received by most members of the group, which was formed in opposition to government mandates imposed in response to the pandemic. However, some members took umbrage at RCL's vaccine requirement. (IMHO, all cruise lines will be requiring vaccinations for adult passengers when they resume cruising, because if they don't, there's not a port in the world that will accept their ships. So blame those governments, not the cruise lines, who have to meet government requirements to remain in business.) One commenter, in defense of her ire, made this statement:

"Freedom with conditions isn't freedom."

That statement sounds good and right and noble and patriotic. I support fully the idealism on which it is based. But unfortunately, it falls flat as a logical statement. Which is why I want to begin with a discussion of logic, before we delve into freedom and choice.

I'm not talking about logic in terms of, "Hey, that seems logical." That is most people's understanding of logic. One of my friends - at least, I hope he's still my friend - was upset by my assertion that masks are ineffective in controlling the transmission of the virus. He sent me an angry message in which he said, "It makes sense to me that if I cover two-thirds of the holes in my face, I'm less likely to get it or give it."

He got covid. I haven't.

But that's not the point of the example. The point of the example is that he believed that because his assertion made sense to him, was logical. It is not.

Logic is an academic discipline. Courses in logic are part of the philosophy curriculum. Logic is deeply rooted in math. One of the smartest guys I ever worked with was a logic professor at a major university, and now runs a very successful hedge fund that invests in complex and esoteric mortgage derivatives. To model the performance of those derivatives requires stochastic calculus.

Here's an example of a fairly simple logic puzzle (feel free to try to answer it in the comments when I post this link on Facebook):

You are at an unmarked intersection. In one direction lies the City of Lies, and in the opposite direction, the City of Truth. Citizens of the City of Lies always lie. Citizens of the City of Truth always tell the truth. A citizen of one of those cities - you don't know which - stands at the intersection. What question could you ask him to find your way to the City of Truth?

(Logic puzzles often relate to truth vs. lies, because those are binary opposites, hence the mathematical roots of logic. Also, since we'll be talking about freedom, choice, and government restrictions, lies vs. the truth seems apropos.)

Logic is the most appropriate discipline to apply to arguments like "freedom with conditions isn't freedom." Let's examine a world where we have freedom without conditions.

In that world, I am free to break into your house and steal your possessions. In response, you are free to break into my house and shoot me dead. Freedom of speech without conditions means that you can yell "Fire!" in a crowded theater without repercussions. Freedom of religion without conditions means that, if your chosen religion requires human sacrifice, you may freely practice it using your neighbors to appease your gods. You know the old saying: your right to punch me in the face ends at my nose. At a minimum, all of our rights are constrained by the equally valid rights of others.

It is clear, then, that true freedom without conditions would lead to chaos, lawlessness and anarchy. (We've seen examples of this in Portland, Seattle and Minneapolis.) We are a nation of laws - we have to be, in order to be civilized. But what are laws?

Laws are conditions upon freedom unfettered.

Now, a cruise line requiring proof of vaccination before embarking is not a law. A governor or unelected health official issuing a mask mandate is not a law, in spite of what that governor or health official thinks (whether such mandates are truly enforceable is a matter for the courts). They are, however, conditions upon our freedoms - to take a cruise, to walk into a store or restaurant or other business unmasked, to gather in large groups, etc.

There are countless examples of conditions upon our freedom that go far beyond this pandemic, and were in place well before it, one of which will be explored in examples below.

My response to the group member who made the assertion about freedom was this: "We all choose our freedoms. Don't be blind to that." I'm not convinced that she understood my meaning, and another group member asked me to explain, so I did. Then I decided to explore that statement further by writing this blog post.

Conditions on our freedoms present us with choices. Let's take Bob, a hypothetical person who adamantly opposes wearing a mask, and refuses to do so under any circumstances. Bob feels that going anywhere that requires him to wear one is a condition on his freedom, and that is unacceptable to him. He believes that by refusing to wear a mask, he is exercising full freedom, without conditions.

Is he?

Bob is not free to fly on an airplane, or go on a cruise. Bob is not free to shop in most grocery stores or big box stores, at least in the Kansas City metro where he lives. Bob is not free to enter many restaurants. He is not free to get a massage, or a haircut, or an annual physical, at least in most places. These are all freedoms that Bob has chosen to give up, in order to exercise his freedom to remain maskless. If he wants to travel, he must drive. If he wants to go to a store, or eat at a restaurant, or obtain other services, he has to find establishments that either don't require masks, or won't enforce their requirements. That's all well and good - but Bob may no longer have the freedom to shop, dine, or otherwise patronize the establishments he prefers. He has chosen to compromise on where he can go and what he can do in order to preserve his freedom to not wear a mask. He has accepted those conditions on his freedom, which is a key point.

By contrast, Brian also hates wearing a mask. Like Bob, he believes that masks are ineffective in preventing the spread of viruses. He bases this on credible medical opinion and on statistically valid studies. Brian wears a mask as little as he can get away with, so unlike Bob, he does occasionally wear a mask. Why, if he hates doing so and believes they are ineffective? Because he chooses other freedoms that he will not sacrifice - freedoms that Bob has chosen to sacrifice.

Brian has a client in Jacksonville that he still visits at least once a quarter. It is a full two days' drive from Brian's home to Jacksonville. Besides the fact that Brian hates long drives, that would add four days of unproductive travel time to each trip Brian makes to see that client. His schedule does not allow him to waste a couple of weeks a year driving unnecessarily, so he flies. This requires him to wear a mask on each flight and in the airport. (Only for a minimal amount of time; he does not wear one while the flight attendants are seated during taxi, takeoff, approach and landing, as they cannot see him, nor does he wear one during the flight as he is sipping water and nibbling almonds throughout. In the airport, he sits well away from other people and does not wear a mask. He has never been hassled.) He chooses to wear a mask for very brief periods of time to afford him the freedom to fly.

Brian also enjoys leisure travel. He recently flew to Cabo with his wife, to celebrate their 25th anniversary. They chose to celebrate this once-in-a-lifetime milestone the way they wanted, because they would never get that day back. And in order to have the freedom to do that, they accepted the condition of wearing a mask during travel, again for only minimal amounts of time. During an 11-day trip involving four flights, Brian wore a mask for about four hours total.

He and his wife also have the freedom to shop and dine wherever they choose, and they accept the condition of having to very briefly don a mask in some of those businesses, rather than losing that freedom of choice and being limited in where they can dine and shop, and potentially having to drive well out of their way to do so.

So you see, we choose our freedoms. Bob exercises his freedom to never wear a mask. In doing so, he chooses to give up other freedoms: flying, cruising, patronizing his favorite businesses, even taking care of his health by going to his regular doctor, who requires masks be worn.

Brian, on the other hand, chooses those other freedoms over the freedom to always be maskless. There is no judgment here regarding whether one freedom or set of freedoms is more important than the other. That is a decision that only the individual can make, for his or her own self. It's a matter of which freedoms you're willing to sacrifice, and which ones you're not, and that is different for each person.

But make no mistake, you are going to sacrifice some freedoms. You are going to accept conditions on the freedoms you ultimately choose to retain. You can't have it both ways. Don't kid yourself into believing that you're not choosing to give up one set of freedoms for another. There is no freedom without conditions in this covid world we've been forced to live in.

In fact, the same holds true irrespective of the virus. Brian lives in a nice house, in a nice neighborhood. It is convenient to his family's work, schools, doctors, dentist, vets, and a variety of dining, shopping and other places they frequent. Brian's neighborhood has an HOA. The HOA has restrictive covenants, which are conditions on Brian's freedoms as a homeowner. He cannot paint his house pink with orange polka-dots. He cannot build a massive shed in his back yard. He cannot buy a boat and an RV and park them on the street for the 50 weeks a year he's not using them.

Why would Brian accept those restrictions? Well, he chooses the freedom to live in a nice house, in a nice neighborhood, near all his chosen amenities. One of the benefits is that his property value is always appreciating. Part of the reason for that is that all of his neighbors are subject to the same covenants. So they can't paint their houses pink with orange polka-dots either, or park their RVs and boats on the street all the time (thank God).

Bob, however, will not accept restrictive covenants. As a homeowner, nobody is going to tell him what he can and can't do with his own property (other than restrictions applied by the city and county in which he lives - conditions he has chosen to accept). And that is Bob's right. Unfortunately, it means that he has to sacrifice the freedom to live wherever he chooses. He cannot live in a neighborhood with an HOA. He may have to live in a run-down older neighborhood, where the property values are in decline, and it may not be safe. Or, he may have to buy a rural property, and drive long distances to his chosen amenities.

Look, I am as passionate about freedom as anyone. My Dad was a WWII vet whose unit liberated Dachau and ended the war by winning the Battle of Munich. I'm descended from the same Scottish clan that produced William Wallace of Braveheart fame, for crying out loud. But I also understand freedom in the context of logic, and I recognize that I must inevitably make choices regarding what freedoms I choose, and which ones I'll sacrifice in return.

Friends, we all make choices when it comes to our freedoms, because freedom without conditions is but a noble myth. And there should be no judgment in that, no right or wrong. What's the most important freedom or set of freedoms to you may not be the most important to me, and that's okay. We make our own choices - but there is no mistaking the undisputable truth that we do choose our freedoms. And thus our most important freedom may be the freedom to make those choices as we prefer.

Get Lost!

 Don't be offended. I'm not telling you to go away, vamos, scram, or any such thing. With all the talk over the past year about "following the science," I am warning you: attempt to follow the science, and you will only get lost. Because the "science" leads nowhere.

Witness the CDC's recent proclamation that grade school students can now safely sit only three feet apart, instead of the earlier six-foot distancing requirement. (Which has always been in conflict with the WHO's one-meter requirement. One meter is a little over three feet. Apparently the science differs depending on whether you're under the jurisdiction of the WHO or the CDC. Or maybe covid can jump six feet in the U.S., but only one meter in the rest of the world.)

Except now, it can only jump three feet in a grade school. But wait - that's just in the classroom. In common areas, the distancing requirement is still six feet. Apparently the virus can jump farther in a lunch room or a library than it can in a classroom.

Also, grade schools no longer have to have any kind of barrier between desks. Covid's ability to clear a Plexiglas shield has apparently been disproven. Fine - can banks and grocery stores remove their Plexiglas barriers now?

Of course, we've known all along, through the various closure requirements, that the "science" is more flexible than a carnival contortionist. Covid does not spread in large, crowded big box retail stores, although it does spread in other crowded places, like concerts. It does, however, spread in small mom-and-pop retailers. It doesn't spread in doctors' offices. But it does spread in hair and nail salons. It doesn't spread on naval vessels, but it does on cruise ships. It doesn't spread in government buildings, but it does in churches. It spreads like wildfire in bars and restaurants, even though there are no reported significant outbreaks stemming from one. And it especially spreads in bars after midnight, like the viral equivalent of the Mogwai from The Goonies. I guess you shouldn't get the virus wet, either.

Anyone who believes this new edict has anything remotely to do with science is probably still reaching under his or her pillow every morning, hoping against hope that finally, the Tooth Fairy remembered to show up, and is not only making good on all those lost teeth from childhood, but is paying interest to boot.

No, this has to do with available space. After much pushback from schools nationwide that they just can't reopen with six feet of separation due to space restrictions, and with the shiny new (but even more vapid) CDC Director wanting desperately to make her new boss look good and get schools open more than one day a week, the agency has changed the science. Poof. Just like that. The CDC didn't even try to justify the shift. No worries; the masses will believe it, because hey, it's the CDC. The CDC wouldn't lie to us. They're here to protect us.

Want more evidence that it's about space? Consider the maintenance of the six-foot requirement in common areas. Common areas are larger than classrooms. And in most schools, all kids aren't in the library or the lunch room or the gym at the same time. So space is less of a consideration.

If we know anything about this viru$, it's that there is no *&%$#@! science. Science is settled. But nothing about this thing is settled. Never has been. All we have are a bunch of theories. There's a theory that masks are effective as a mitigant. There's a theory that two masks are better than one. That the only path to herd immunity is mass vaccination. That new variants are far deadlier than the original strain. (Even the fatally flawed IHME model, which I debunked thoroughly and repeatedly last year, blows that one out of the water.)

So if you want to follow the science, be my guest. Don't blame me when you get so dizzy you fall on your arse.

Stimulus for Thought

 Let's take a look at the recent $1.9 trillion "stimulus" bill that was passed on a straight party-line vote (so much for "unity"). Let's ignore the fact that less than 10% of that staggering amount had anything to do with covid relief. Or that taxpayers in states that are fiscally responsible just paid off the accumulated budget deficits over the past two years of San Francisco and New York, without imposing any budgetary discipline on those two profligate cities. Heck, let's even overlook just the staggering size of that number to begin with: 1.9 trillion seconds is more than 60,000 years. And 60,000 years ago, the first pre-Neanderthals were just beginning to drag their knuckles across what is now the Australian outback. (They're now dragging their knuckles through the halls of Congress.)

No, let's talk about the necessity of further stimulus as relates to covid; the effectiveness of this particular package; and what would really be effective.

Let's first remember that covid did not cause a recession. Covid evoked a government response - for now let's say right or wrong - and the government response caused a recession. Some jurisdictions' totalitarian, unchecked executive mandates were more draconian than others, but nearly every state forced schools and businesses to close and put millions out of work. Even after they re-opened, they imposed restrictions on capacity and hours, and some very large jurisdictions had second shut-downs.

The initial actions took place in March 2020. In April, the U.S. unemployment rate shot up to 14.8%, by far the highest since the Great Depression (although unlike that period, last year's joblessness was concentrated in just a few sectors at the lower end of the income scale). Several states saw unemployment rates above 20%. More than 17 million people were put out of work. Initial jobless claims spiked to nearly seven million the first week of the shut-downs, and continued claims peaked at nearly 25 million in May, both far and away record numbers. U.S. GDP dropped by more than 30% in the second quarter, again the most on record.

In response, the government immediately passed the CARES Act, a $2.2 trillion relief package. The bill included $877 billion in aid for affected businesses, small and large; $340 billion for state and local governments, whose tax revenues would be decimated, but by their own actions; $154 billion for public health; and $560 billion for individuals. That latter amount included $260 billion in additional unemployment benefits, and $300 billion in direct payments to individuals earning less than a given threshold (I'll explain why the word "earning" is italicized later).

Late last year, after months of partisan stalling due to the looming election, Congress passed another round of direct payments to those same earners, totaling $920 billion (that amount also included funding for additional small business loans, vaccines, and unemployment benefits).

And now we have the $1.9 trillion package. There were other stimulus bills last year that did not include direct payments to individuals, totaling $716 billion. All tolled, the government has spent four trillion dollars of your money on covid relief. That's more than total U.S. public debt less than 30 years ago - so if you're 30 or older, it's more than the total public indebtedness was in your lifetime. And to put it further in perspective, 4 trillion seconds is more than 120,000 years ago, when the only living organism was primordial ooze (and there's still an abundance of that in Washington, too).

In all, prior to the latest bill, individuals earning up to the specified threshold (which has been the same for all three rounds of direct payments) received $1,800 each. Married couples received twice that. So our first question is this: is further stimulus really necessary?

Well, the U.S. unemployment rate is already back down to 6.2%. That's just above the post-WWII average, and roughly equal to the average from 2009 to early 2020, when the economy was expanding. Initial jobless claims are down by 90% from their peak, and continued claims are down by more than 80% (more on why ongoing claims aren't lower later). Most of the improvement in those numbers took place by the August - October timeframe, well before even the second round of direct stimulus payments. And GDP grew by a record 33% in the third quarter, more than offsetting the second quarter's decline, and ending the recession after just two quarters. That tied for the shortest recession in history.

Because of record low interest rates, auto sales and home sales are booming. Lenders are having record years, when they thought they'd be charging off massive amounts of loans. Home values are surging on the demand, leaving those who sell with more equity to spend.

Between Feb. 19 and Mar. 23, 2020, the S&P 500 plunged by 34%. It reached a new record high in August. Most recently, it is up 16% from the pre-shutdown high, and has recovered 76% from the Mar. 2020 low. The NASDAQ had more than doubled from last year's low, prior to its recent pull-back. Note that stock prices are a leading indicator of economic activity.

In conclusion, that "Super-V" recovery we were promised, materialized. Due to the unique, bottom-up nature of last year's recession, demand remained extant, so as things opened up, people resumed spending. In some cases, the pent-up demand resulted in an acceleration effect. Anecdotally, several local restaurants are seeing record sales due to dining rooms being open at 50% capacity, and take-out more than making up for the tables that are blocked. (Think about it: you can serve one table in about an hour or so, but you can pump out take-out orders as fast as you can prepare and package them.) More new restaurants have opened now than were closed. (I realize that has not been the experience in states with more draconian lockdowns.)

The recovery is in full swing. GDP growth for 2021 was forecast to be more than 5%, which is very strong, even before this last round of payments. Thus, we can conclude that further stimulus was unnecessary.

So why do it?

First, politicians love to spend money, because it isn't theirs, and they believe it makes them look magnanimous, like they actually care about any of us. And second, they're buying votes. But with the voters' money. So think of it as a forced campaign contribution, to candidates you'd never contribute to.

On to our second question, then: how effective will this "stimulus" be?

Herein lies the reason that I italicized the word "earning" above: if you were "earning" the same amount you were earning before the government shut everything down, you didn't need a stimulus payment. Of the first round of payments last March, a third was saved, a third was spent, and a third was used to pay down debt. If you saved your payment or used it to reduce debt, you didn't need it in the first place. You had enough to live on. And if you spent it on a new big-screen TV, or some other discretionary item, you didn't need it. Only if you spent it on necessities, because you'd lost your job or suffered a reduction in earnings, did you need your stimulus check as a direct result of the government response to covid.

So in other words, more than two-thirds of that first stimulus payment was squandered. Oh, you could argue that the one-third that was spent stimulated the economy, and you'd be right, up to a point. But you can't stimulate the sales of a business you've forced to close, no matter how much money you give its patrons.

As for the boost in unemployment benefits, that was indeed helpful. However, the Curmudgeon's First Rule of Perverse Incentives is that any incentive offered, unless very carefully structured, will create unintended consequences that will lead to bad behaviors that may offset the very benefits created by the incentive. We've seen this with executive bonuses many times, in many industries.

With unemployment benefits, the incentive may be not to go back to work. When things did open back up, many Americans were making more on unemployment than they would be working, so why work, and take a pay cut? This isn't laziness, it's sound economic decision-making. So the unemployment piece should never have been structured to provide extra income over and above that which was lost. It should be income replacement insurance, just like short-term disability insurance coverage. And that's why continued claims have not fallen as much as initial claims, in part.

As further evidence that the stimulus was misdirected, we can look at the Personal Saving Rate. It was 7.6% in Jan. 2020. It soared to a record 33.7% in April. (And by record, I mean about twice the previous record.) It declined to 13.4% by year-end. And it jumped back up to 20.5% in January, on the second round of stimulus (which was smaller than the first, so it makes sense that the spike would be lower).

So what can we expect from this third round? Well, the individual payments are larger than either of the first two rounds. However, they will go to fewer people, as the income cap phase-out was tightened considerably. So the total will be about 75% of the total for round one. Also, it's expected that, with higher gas prices, more than a third of this round will be spent. And, with higher interest rates, more than a third will be used to reduce debt, as credit card interest rates are increasing. But, with the saving rate already north of 20%, we'll likely see a spike to 30% or more again.

That is not in and of itself a bad thing. My own research on long-term cycles in the stock market indicates that long-term bull cycles (stock prices generally rising) begin when the saving rate is historically higher than average. Capital drives growth.

However, it is a clear indication that most of the stimulus was misdirected in terms of actually compensating Americans for what their federal, state and local governments have done to them in response to the pandemic.

So what would be more effective? When I was a CEO, I always told my employees that bringing problems to my attention had no value, because I could see the problems for myself. However, bringing me solutions was of high value. So herewith, I offer my solution:

OPEN THE HELL UP.

Open every restaurant, every movie theater, every bar. Don't limit capacity, and don't limit hours. Open churches for in-person worship. Allow as many fans to attend concerts and sporting events as want to buy tickets. Open cruises and other travel. Yes, people will still get sick. But people have always gotten sick. And people got covid even when things were shut down, even when they wore masks, even when they stayed home.

Many more people ate out, traveled, didn't wear masks, and never got sick. Remember, 30 million Americans have gotten covid. But 300 million Americans haven't. Life happens, and illness is part of life. Besides, between natural infection and vaccination, we're rapidly approaching herd immunity, if we're not already there. So don't condition it on vaccines or test results. Open. Up.

What created the perceived need for stimulus? Closing businesses down and placing restrictions on businesses and people. So what's the most stimulative thing that can be done? To re-open those businesses, and remove the restrictions. Anything else is a band-aid on a tumor.

A Tale of Two Vacations

This post reflects on two trips my wife and I took, one in 2020 and one in 2021. Both departed and returned home on nearly the exact same dates. Both were to very nice beach destinations. Both trips were wonderful. But the similarity ends there, in terms of the world we returned home to, and the world in which we were traveling. I thought readers might enjoy reflecting on the contrast, and thinking about how their own worlds are different now vs. a year ago.

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Early 2020 involved a lot of travel for my wife and me. First, we flew to Tampa and spent the night in late January. It was during the annual Gasparilla Festival, which attracts a few hundred thousand drunken pirate wannabes to the city for a weekend of carousing, a boat parade, and other activities. It's Tampa's Mardi Gras.

We stayed in the middle of it. Our hotel was crowded with people attending the festival. The lobby was packed. The elevators were full. Nobody was probably going out of their way to wash their hands more thoroughly, not touch their faces, or avoid other people. The only masks were pirate masks.

Then, we embarked on a cruise. We touched the usual surfaces, got food at the buffet, etc. (We've always been diligent about washing our hands. And I will not miss the demise of the cruise buffet. I've seen far too many people grab a food item with their grubby hands, look at it, and put it back.)

When we got home from the cruise, I was sick (that's never happened to me in the 20+ cruises I've taken - so much for the "floating petri dish" myth). I went to the doctor, and tested positive for ... influenza A. In spite of getting a flu shot the previous October. I do recognize that flu vaccines are based on the strain of flu that is expected, and sometimes the flu throws a curve ball, as it did last year. My case was very mild, probably due in part to the vaccine.

I then had several business trips in February: San Francisco, Tampa, Jacksonville and Austin. I followed my normal routine, even though there was some buzz about this coronavirus thing that originated in China. (Okay, I didn't make my usual sojourn into Chinatown when I was in San Francisco, but that's it.) I didn't worry about what I touched in the hotel or on the plane, but again, I washed my hands regularly, as always. And I had no qualms about dining out, no matter how crowded the restaurant. (I still don't.)

Then, my wife and I went to Hawaii in late February and early March. Same story there. We spent the night on the way out in Oakland, and on the way back in San Jose. In the Oakland airport, we did see some people - mostly Asian - wearing masks, but that's common there during any flu season. The flights were fairly full. Nothing was different in Hawaii (the state that would later have the most draconian lockdown and quarantine measures in the nation, in spite of the lowest case numbers in the nation). Restaurants were crowded, the hotels were at capacity.

We didn't really notice that anything was different until we flew back to San Jose. We were the only people on the shuttle bus to our hotel. The driver said the restaurant was closed, and they'd laid off all but the most tenured staff, because the usually brisk convention business in Silicon Valley had dried up. The hotel was indeed like a ghost town.

On March 10, we returned home to Kansas City. The next day, I made a Target run. I was literally laughing out loud as I pushed the cart through the stores, incredulous at the behavior of the panic-driven hoarders. No soup. No beans. No canned tuna. Of course, no toilet paper, no facial tissues, no paper towels, no hand sanitizer, no wipes. I'm still trying to figure out how a respiratory virus can cause one to have to increase one's arse-wiping exponentially. I figured it would be short-lived.

I was wrong.

A few days later, I awoke at oh-dark-thirty, thinking only about what would happen if we ran out of toilet paper. I lay awake thinking of schemes - mostly illegal - to obtain some, should the stores remain out of stock. I decided to be at Wal-Mart when it opened, and try to find some. If they didn't have it - or even if they did - I'd run across the street to Target. Then hit the grocery store on the way home. But I had a back-up plan.

I have Diamond status with Hilton, as I stay at their properties when I travel for business (which I used to do a lot). They offer a digital key that lets you use your phone to open your room door, so you can bypass the front desk. I was going to take an empty suitcase to the nearby Hampton Inn (a Hilton property), walk past the front desk as though I had a room, walk to the elevator, go up a couple of floors, find a maid's cart, and fill the suitcase with TP while the maid wasn't looking. Hey, I said some of the schemes were illegal. I didn't tell my wife what I was contemplating - plausible deniability.

So I set out on my pre-dawn raid, hell-bent on coming home with toilet paper. Fortunately, Wal-Mart had some. They also had wipes, so I scored some canisters of those.

My grocery shopping routine was altered for months. It often took me three stops at different stores to find everything on my list. However, I view grocery shopping the way military leaders view missions. If it's on the list, I am by-God not coming home without it. Besides TP, flour and cream of mushroom soup turned out to be the greatest challenges. (Flour, because of all those first-time sourdough bread makers. What's up with that? Do you really need sourdough bread to survive?)

Every trip I made, I bought toilet paper, which by now was limited to one package per customer. But if I stopped at three stores and they all had it, I scored three packages. I'm no hoarder, but I do worry about the behavior of others. If they're inclined to try and buy up all of an item out of panic, I'm going to make sure that I'm well-stocked in that item. So I continued that buying behavior for a number of items that had been in short supply. Suffice it to say that I'm well-prepared for the next round of irrationality.

Over several months, shopping largely returned to normal, and shortages were once again virtually non-existent. But those few months felt like living in a third-world country - or one governed in a manner that none of us should hope for.

We continued to travel. Only my Jacksonville client had me keep making my regular quarterly visits, so I went there in May, August, November, and February 2021. I also went there for a board retreat in June, and my wife accompanied me, and we stayed a few extra days at a beach resort. She accompanied me again in November. And we took a couple of driving trips with our dogs. One of the advantages of the remote work model is that you can do it from anywhere, so we plan to make additional trips with the dogs without having to take time off work.

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March 1, 2021, was our 25th wedding anniversary. Our original plan was to make our first visit to Italy in late May and early June to commemorate the occasion. We booked three amazing properties for three days each: an apartment on Lake Como, a villa in Tuscany, and a home perched above the Amalfi Coast. We booked them after the pandemic began, thinking that by our travel dates, things would be back to normal.

As 2020 progressed into the fall, we concluded that travel to Europe for our dates was highly unlikely without a draconian quarantine requirement. We didn't want to wait until the last minute and cancel, running the risk that the property owners wouldn't be able to re-book our dates. So we canceled our plans. Instead, we decided to go to Los Cabos, Mexico. We had been twice before, and had stayed in the Hilton located between Cabo San Lucas (CSL) and San Jose del Cabo (SJD), using points to pay for the room. Mexico was open for business, and there were no restrictions on going there.

Rather than stay at the Hilton again - even though we were sitting on about a million Hilton points - we decided to try to find someplace special for this milestone celebration. And we did: a three-bedroom, three and a half bath villa with a pool and hot tub perched above the ocean, with expansive views. The villa is in a gated, off-the-grid solar community about 15 minutes east of SJD - well away from the night life and hustle of CSL, which is not our scene. It was perfect.

A few weeks before our trip, the CDC announced that anyone flying into the U.S. from abroad - including U.S. citizens - must show negative results of a covid test taken within three days of the return flight. We considered canceling. But we decided that we weren't going to let the CDC imprison us in our home over a covid test. We found that they did accept the less invasive and inexpensive rapid antigen test. So we began to try to figure out how we'd go about getting tested in Mexico.

Within two days of the CDC announcement, Mexico had mobilized resources to respond. The Los Cabos tourism website had a page with information on testing. Every hotel and timeshare resort had tests (free for guests), medical personnel to administer them, and the forms required by the CDC. The website also listed all hospitals and clinics that offered the tests, which tests they offered, the turnaround time for results, and contact information. U.S. states should be so organized, and they've had months to get there. Private enterprise will always get better results than government.

Traveling was different this time. Yes, masks are required at the airport, and onboard flights. But no one says anything if you're seated in the airport without one, especially if you're eating and/or drinking. The same is true on the planes, and the flight attendants are seated during taxi and takeoff, so they can't see who's wearing a mask and who isn't. So one could basically lower or remove one's mask as soon as the flight attendants sit down before takeoff, then pull out food and drink when they get up, sip and nibble until they sit down again, and then don the mask when the plane stops at the gate.

The flights were, for the most part, pretty full, and there were lots of people out and about in Cabo. The airports were busy. Travel is clearly coming back - especially in places like Mexico that are welcoming visitors.

Arrival in Mexico was the same as always, with an added form to fill out saying we didn't have symptoms, hadn't been in contact with a positive case - the usual.

The situation in Cabo was pretty similar to home. Masks are required until you're seated at restaurants. Some of them ask you to use hand sanitizer, and take your temperature. Masks are also required at the grocery store, but not in most shops. We took a sunset cruise, and had to wear them to board the boat and in the harbor, because hey, we all know that the 'rona spreads in harbors, but not on the open sea, nor on the dock.

Testing was a breeze. Without an appointment, we went to a local hospital where everyone we encountered spoke English. We were in and out in ten minutes, had our test results by email in less than two hours, and picked up the paper forms the next day. The whole thing cost less than $60.

We had to fill out an attestation that we'd been tested on the Southwest Airlines website, which was automatically entered into their system, so all we had to do at check-in was show the negative test result.

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Our Cabo trip was amazing, and it made us glad that Italy fell through. It was the best vacation of our lives, and we've had some incredible travels. The villa we rented was amazing. We'd wake up in the morning and step out on the terrace by the pool, and watch the whales play in the ocean. We ate at awesome restaurants, visited beautiful beaches, and saw indescribable sunrises and sunsets. I would not have traded this experience for anything. We will only have one 25th anniversary, and ours is a marriage worth celebrating.

Sure, we could have stayed home because we refused to wear masks for the little time we had to, or to get a test to be able to return to our own country. However, that would not have made us "free" - quite the opposite. We wouldn't have missed this trip for the world, and we weren't about to allow the CDC to imprison us at home with a two-inch by four-inch strip of cloth and a nasal swab.

Oh, and when we got back, I again went to the grocery store. This time, there was plenty of toilet paper, soup, tuna ... you name it. (But the basement's still stocked, just in case.)

DO NOT COMPLY!

This is a message I've heard from a good number of my like-minded friends, including a social media group to which I belong that is oriented toward preserving - or should I say re-gaining? - our freedoms.

Do not comply!

They're referring in general to the myriad restrictions that have been forced on us all, by unelected health officials and executive-branch leaders at the local, state and national levels, without legislative due process. But they seem to be specifically addressing the wearing of masks.

Don't get me wrong: I'm with them. I do not believe masks are effective in mitigating the spread of viruses. I find them uncomfortable, inconvenient, unsafe in terms of restricting peripheral vision, de-personalizing, and, well, silly-looking. I believe that there are adverse health effects that would be associated with wearing a mask for long periods at a time, especially over a long period of time. And I recognize that there are people with legitimate medical or psychological afflictions that make wearing a mask at all more than just a nuisance.

However, I've been thinking about what it means to comply, or not comply. What is the CDC's end game when it comes to masks? What are they really trying to accomplish: supposedly mitigate the spread of this virus by getting everyone to wear a mask when shopping, dining out, going to movies or other entertainment, and traveling? Or, knowing that nobody really wants to wear one, discourage people from shopping, dining out, going to movies or traveling?

I have my own opinion, but I wanted to see what other like-minded folks think. So I posted the following survey to the social media group page mentioned above:

"Is the CDC's real purpose in requiring mask-wearing:

A. To allow people to live their lives as normally as possible, but to try to prevent the spread of the virus (right or wrong) by requiring that they wear masks while doing so? Or -

B. To use masks as an inconvenience/symbol of authority/discomfort/etc. to try to discourage people from living their lives as normally as possible?

In other words, is the end game to let you do pretty much everything you'd normally do, but with a mask on; or is it to use the mask to try to get you to change/refrain from doing what you'd normally do? (e.g., dining out, shopping, air travel, etc.)"

The group overwhelmingly responded "B," 67-2, so more than 97% of the respondents selected "B."

That served to validate my own view: the CDC and government officials want to restrict our activity by making it inconvenient to engage in the things we want to do, hoping that we'll resist the inconvenience as if that were the real act of non-compliance. But in so doing, we're accepting the restricted activity, which is what they really want. We're complying with their desire to change our lives, our activities.

In this sense, the mask is but a subterfuge, and the idea is to get us so focused on the mask that we don't do the things we'd normally do, because we'd have to don a mask in order to do them, and by God, we're just not going to wear one of those things.

What got me thinking about this in the first place was an upcoming trip to Los Cabos, Mexico, to celebrate my wife's and my 25th anniversary. We had the trip booked, and were getting excited to go. Then, in mid-January, I got an email from our carrier, Southwest Airlines, notifying us of a new CDC requirement that we get tested in Mexico before we could board our return flight. Both my wife and I immediately resisted, and said we weren't going. She was especially concerned that we would be subjected to the PCR test, which she calls "the brain-scraper." Turns out the CDC will accept the less invasive (and expensive) antigen test. My primary objection was simply that I wasn't going to let the CDC force me to get tested.

In other words, I would not comply.

However, that's a hard stop. Refuse to get tested, and you can't fly home. (It's not the airlines' fault; the CDC has authority over them in matters of what it deems "health emergencies.") And if you can't fly home - well, as tempting as an expat move to Cabo is, you're probably just staying home.

Then I began thinking about what the CDC was really after in implementing this new requirement. I looked at the history of their travel warnings, specifically related to Mexico. They've been urging people to not fly throughout the pandemic. However, the CDC has no authority to prevent an individual from flying (unless that individual has an active case of a communicable disease). They could ground the airlines, as they have cruise ships, but that would be impractical, as some air travel is necessary.

Most countries (and some states) have imposed their own inconveniences that resulted in people not flying. Primary among these is the 14-day mandatory quarantine. If I have family in, say, Italy, that requirement might not dissuade me from an extended visit. However, if I want to take a two-week vacation in Italy, having to take a month off to meet the quarantine requirement there, then spend my two weeks enjoying the country, is probably a non-starter.

Not so with Mexico, however. Los Cabos has been open to tourists since July 10. And U.S. tourists have been going to Cabo. Over 80% of Cabo's economy is driven by tourism, and 90% of its visitors are Americans, with 70% of visitors being repeat guests.

Now - do you think the CDC likes this? Apparently, they do not: with the December holiday season approaching, and many Americans pining for warmer climes, the CDC decided to try and nip travel to Mexico in the bud. It raised its designation for travel to Mexico to 4, or "very high," and said that all travel to the country should be avoided. It based this, supposedly, on "the numbers." The head of the WHO, in lockstep with the CDC, said, "Mexico is in bad shape."

This piqued my curiosity, given our travel plans, so I looked into "the numbers." The US ranks 7th among all countries in cases/1M population with over 83,000; Mexico ranks 93rd, with less than 15,000. The US ranks 9th in deaths/1M population with 1,430; Mexico ranks 18th, with a little under 1,300.

So the CDC really doesn't want people traveling to Mexico, supposedly based on "the numbers," in spite of the fact that Mexico's numbers - especially in the winter tourist zones like Los Cabos and Cancun - are much better than those in the US. They can't force Mexico to restrict travel or require a self-quarantine period. But they can make it a nuisance for Americans to return to the US if they do go, in hopes of dissuading them from travel.

This is consistent with the conclusion of the informal mask poll that I posted: it's not that the CDC really wants more people to get tested; if they did, they could easily mandate testing in the US. No, they want to suppress behavior. They're hoping you won't get tested in Mexico, because the prospect of having to arrange for a test, the potential discomfort, the cost, leads you to change your travel plans. That's the real endgame, not testing.

And that changed my thinking. By canceling our trip, I'd actually be playing into the CDC's hands. Refusing to comply in this instance didn't mean giving up our trip because we refuse to get tested, it would mean taking the trip anyway, in spite of the CDC's wishes. Besides, the cancellation deadline for the villa we'd rented had passed, and Mexico is well-prepared to administer the tests - better prepared than the US, in fact. Every hotel and timeshare in Los Cabos has tests, medical personnel, and the necessary forms to present to the airlines. The airport will have last-minute antigen testing, with results available within an hour or less. Kiosks are being set up in the tourist areas for testing. The Los Cabos tourism website lists hospitals and clinics that offer testing, which types of tests are offered, the turnaround time for results, and the facility's contact information.

Besides, we're only going to have one 25th anniversary. And the place we're renting is well worth the trip, even if defying the CDC's wishes weren't:

So take that, CDC. I'll send you a postcard.

Back to masks. I see a corollary relationship with mask requirements. See, the CDC/governments can't make me wear a mask. But they can fine or shut down a restaurant or store that doesn't either require me to wear one, or refuse me service.

Some of my friends address that by seeking out establishments that don't require patrons to wear masks. All well and good. My wife and I enjoy Mexican food, so I googled "Mexican restaurant that doesn't require masks near me." I found one place in the Kansas City metro. I could go there, and not wear a mask, and be happy that I'm refusing to comply with the county mask mandate.

Or could I? What am I really complying with? The county's desire to change the way I live my life, by keeping me from going to whatever Mexican (or other) restaurant I want to patronize. I applaud what this place is doing. But it's not among my KC Mexican faves. It's 22 minutes from my house. That's not an insurmountable obstacle. However, there are five Mexican restaurants that we love, all within 10 minutes. They're places we've frequented for more than 20 years, and places that we tried to help survive through the shutdown, by frequently ordering takeout food from them. We continue to support them by dining in. They're not to blame for the requirements; they're forced into it by the city, county or state. Blame government.

The place that doesn't require masks also doesn't get very good reviews (admittedly, some of the recent bad reviews are from Karen-ish mask nazis who walk out appalled that they're not requiring masks), and it's counter-serve, vs. a true sit-down restaurant.

See, I don't want to be forced to change my favorite restaurants, stores, or other businesses. I'm not going to change doctors. And I'm sure as hell not giving up travel. Air travel is necessary for my job, and travel is too big a part of our lives to give it up. I traveled on business four times last year after March, and my wife accompanied me on two of those trips, to Florida's Atlantic coast. We also went to Taos on a driving trip (in spite of a 14-day quarantine requirement in New Mexico, which we somehow forgot to comply with), and to northwest Arkansas on another road trip. Every one of those trips was memorable, and I wouldn't have given them up - especially last year - for anything.

I have other friends who address these requirements by simply defying them. They'll go shopping, or walk to their table in a restaurant, without a mask. And that's perfectly fine. If they are approached by someone who tells them they should wear a mask, I'm assuming they'll have an appropriate response at the ready.

What's more likely to happen, however, is that some passive-aggressive mask nazi will become upset, and not confront them, but turn in the store or the restaurant. (Most jurisdictions and states have complaint hotlines established so that citizens can turn in their fellow citizens and local businesses to the authorities, just like in Stalinist Russia.) Then, the business may get fined or even shut down.

As noted earlier, I like my favorite stores and restaurants. I want them to stay in business, to stay open. I wouldn't want them to have to pay a fine, or close, because of me.

So I will occasionally don a mask, for the minimum amount of time I can get away with, in order to continue to live my life as freely as possible. I know, it sounds oxymoronic. (It certainly is moronic.) But in the grand scheme of things I'm willing to give up, I am absolutely not willing to give up flying, eating in the restaurants I want to eat in, or shopping at the stores where I want to shop. To preserve those rights, I am willing to give up being bare-faced for very short periods of time.

How short? Only once have I had to wear a mask for more than 30 minutes, and usually much less than that. (The lone exception was the visitation for my brother-in-law, who lost his battle with depression last year. I was there for two hours. And I wasn't about to dishonor my sister and her kids by refusing to be there, for any reason.) Here's my routine. You probably do the same things, but if you don't, maybe this will help.

I frequently shop at Target, because I can get groceries, alcohol (in Missouri, where the liquor laws are sane), and household goods in one trip. The mask doesn't go on until I'm in the vestibule between the inner and outer doors. Like most men, I organize my shopping trips with the precision of a military operation. Rather than just wander the aisles, my list is prepared in aisle order. It's on my iPhone, which has Face ID. So when it goes into sleep mode, the mask comes down to wake it up and get the list back, rather than messing with a passcode. I'm in and out of the store in less than 20 minutes, every time. And as soon as I hit the exit vestibule, off comes the mask.

Restaurants, of course, are easy. The mask goes on just inside the front door, and comes off when I reach the table, before I sit down. Sometimes I put it back on after I get up to leave, and then take it off just outside the door. But sometimes, depending on the place, I just carry it out. I figure if anyone squawks, the restaurant can just say they kicked me out.

When I fly, I have a system (pre-pandemic, I traveled over 110 days a year on business, so I'm pretty travel-savvy). The mask stays off until I'm in the security line. Immediately after clearing security (I have TSA pre-check, so that always goes fast), I either buy a bottle of water or fill one that I brought. I also always have a bag of almonds with me. I sit down, well away from anyone else, and the mask comes off to eat and drink.

Except I don't really eat and drink. I do some, but I also frequently just raise the bottle to my lips and pretend to drink, or pretend to grab an almond from the bag, and chew on ... nothing. The mask is required for boarding, so when I get up to board, on it goes. Boarding generally takes about 20 minutes, and it might take another ten to get up to about 10,000 feet. Then the tray table comes down, the mask comes off, and the eating and drinking (or pretend eating and drinking) resume. I usually put the tray table back up at around 10,000 feet, and don the mask again until I leave the jetway. Then the water bottle comes back out. Depending on my proximity to other passengers and what they're doing, I may start and finish the eating and drinking charade before and after 10,000 feet. I've never been hassled by flight attendants or passengers, on either airline that I fly.

Hotels are easy. I nearly always stay at Hilton properties, and I get the digital key, which lets me use my phone to enter the room. I select a room on the app in advance. So when I arrive, I bypass the front desk, so they have no opportunity to ask me to wear a mask. Once I've checked in, I figure they're not going to kick me out (they desperately need to fill rooms), so I just enter and leave without a mask. Same on the elevators (I usually wait for an empty one), and in the hallways. I see most other guests doing the same thing.

Look, I want it both ways. I want to have my cake and eat it, too. But it's impossible (without a bona fide medical condition) to fly without a mask. Not wearing one in stores or restaurants in jurisdictions where they're required puts the business at risk, which I won't do, because I selfishly want them to stay open so I can continue to patronize the businesses I choose to patronize, rather than have to change my favorites. (The owner of the Mexican restaurant that doesn't require them said he'd gladly pay a fine, and that's perfectly okay. It's the place that doesn't want to - or maybe can't, because of being shut down for months and then having to operate at limited capacity - that I'm concerned about.)

I'm a firm believer in free choice. You do you, and I'll do me. So I have no issue with someone who wants to change their preferences to only shop in stores that don't require masks. Nor with people who go to their favorite stores and restaurants without wearing one. Nor with people who refuse to fly due to the requirement. And I certainly have no issue with anyone who legitimately can't wear a mask due to a medical disorder.

I'll probably get lit up in the comments, so let me reiterate: I believe that masks are ineffective. I disagree with the jurisdictional requirements to wear them, and with the health "experts'" opinions. I believe there are ulterior motives underlying the mandates. Masks are uncomfortable. They're hot. They're hard to breathe through. They fog my glasses.

However, this isn't a both/and situation. It is binary. You're not refusing to comply when refusing to wear a mask. You are choosing what to comply with, and complying with one thing while refusing to do another. Maybe that means not flying. Maybe it means not eating out, or doing curbside grocery pickup or grocery delivery (we've had mixed results with other people picking out our groceries, especially meat and veggies). Or maybe it means not eating at your favorite restaurants, instead choosing one that is willing to defy jurisdictional requirements. And that's fine. You do you.

My own preference is to determine what the CDC, et al are really trying to force me to do, or not do, or change ... and then refusing to comply with that. I just happen to believe that they're really after making me change my life, not making me wear a mask or get a test. I'm going to keep living my life to the full.

And if the CDC thinks they can use a two-inch by four-inch strip of cloth to imprison me in my own home, they need to think again.

The Big Short Squeeze

Several people have asked me on Facebook to explain the whole dust-up with GameStop, Robinhood, Reddit, and the effect on the market overall. Herewith is that undertaking. I thought it would be useful to lay it out in a Q&A format, somewhat along the lines of the questions I'd expect people to ask me about it.

But first, some introductions are in order. As a friend of mine always said, "You can't tell the players without a program," so here you go.

The Players

GameStop. GameStop is a seller of video games and related merchandise, through more than 5,500 retail outlets across the U.S. and in several other countries. As video games were increasingly downloaded and played online, the brick-and-mortar business model began to falter. In addition, management made some questionable moves to try to counter the decline, including a failed venture into selling mobile phones.

GameStop's stock traded between about $4 and $58 a share from the company's initial public offering in 2002, to its zenith in late 2007. The stock then fell victim to the broader '08-09 market crash and recession, falling below $18 a share. It finally began climbing out of that range in 2012, peaking above $55 a share in 2013 and trading in the $30s and $40s until late 2015, when the fundamental factors and bad business decisions noted above began to drag it down. It declined steadily from 2016 to early 2020, even as the rest of the market soared, and traded as low as $3.32 a share in 2019. GameStop is essentially the Blockbuster Video of the gaming world.

This stock is a dog, and for easily understandable reasons. As a primarily brick-and-mortar retailer, its woes were exacerbated by the pandemic shutdown and supply chain disruptions. It has recently re-structured its board, suspended its dividend, and its earnings per share are $(4.18) - in other words, it was trading around $4 a share, and at the same time it was losing about $4 a share.

Robinhood. Robinhood is a commission-free stock trading app. It was founded in 2013 by two finance entrepreneurs who previously built trading platforms for (drum roll, please) hedge funds. It competes with the big boys, like Schwab, TD Ameritrade (which is being acquired by Schwab), and E*Trade, which all stopped charging commissions in 2019. Robinhood's assets under management (AUM) total about $20 billion, vs. more than $3 trillion for Schwab, more than $1 trillion for TD Ameritrade, about a half-trillion for E*Trade. All that means is that Robinhood has fewer users with smaller balances. And any of its users could open an account with any of the big boys just as easily as with Robinhood.

However, Robinhood differentiates itself by claiming to be the platform for the "little guy." Its interface is designed to appeal to millennials and investment rookies. Its stated mission is to "democratize finance for all." Its founders abandoned hedge funds, which pay next to nothing to trade stocks (more on that to come), believing they could bring that same low- or no-cost trading ability to small investors. Its website throws out tidbits like, "we believe the financial system should be built to work for everyone," and "a more human way to learn ... education resources that are built for today." And its educational materials are, indeed, targeted toward the newbie, with topics like, "What is an investment?" and "What is a stock?" By contrast, TD Ameritrade's education offerings focus on trading strategies, including options trading. (Full disclosure: TD Ameritrade is the platform I use.)

But other than those differences, there is nothing revolutionary about Robinhood at all. It's just another trading platform, and in terms of the way trades are entered and executed, market prices, settlement, etc., it is no different than any other online broker. It is also a FINRA-registered broker/dealer, is registered with the SEC, and is a member of the Securities Investor Protection Corporation, just like any other broker (including the one that I led as CEO).

Reddit. Reddit is described by Wikipedia as "a social news aggregation, web content rating, and discussion website." Reddit is described by Reddit as "the front page of the internet." Feel free to read the full Wikipedia entry. Reddit was acquired by Conde Nast, the magazine publisher, in 2006, and it was subsequently acquired by Conde Nast's parent firm. Other investors include the rapper Snoop Dogg and the Chinese holding conglomerate Tencent (let that sink in).

Reddit holds quirky events for its users. Its user groups, called communities, regularly engage in pranks such as skewing polls on various websites; the pranks are often encouraged by Reddit. Reddit has been marked with numerous controversies, many involving censorship similar to what we've recently seen from Twitter and Facebook. It appears to be the social media platform for people with too much time on their hands.

Some of my own google searches seeking information about various topics have landed me on Reddit pages, and I have generally found the posts there to be less than informative. Their posters seem to me to be uninformed, and mostly juvenile delinquents. Your mileage may vary, however.

The GameStop stock trading action that is the subject of this post was organized on a Reddit topic forum, which are known as subreddits, called r/wallstreetbets. (That's right - bets.) This subreddit is known for aggressive and highly speculative (read: risky) trading strategies. Its members are generally amateur investors who are basically gambling in the markets, rather than investing for some goal, such as retirement, and they ignore (or don't understand) investment fundamentals. As such, they are a perfect subset of the Robinhood target market: generally young investors that don't have a lot of capital, that don't really know what they're doing. Wikipedia says, "The subreddit is also known for its profane and juvenile nature ..." Hardly serious investors looking to improve their lot in life.

Keith Gill. Gill is a member of the r/wallstreetbets subreddit. He is 34 years old and works as an investment rep, at least for now. He is registered as a broker and investment advisor, as well as a Registered Principal (manager). He also holds the Chartered Financial Analyst (CFA) designation, which I also hold, and can personally attest is very difficult to attain. He has a sum total of five years' experience in the industry, with three different firms, over a span of nine years. In other words, there is some question as to whether he can hold a job in the business. I would not have hired a rep with such gaps on his resume, and such short tenure with any one firm.

The normally clean-cut Gill spends his spare time creating youtube videos under a profane username, in which he pushes certain investment trades while wearing a long wig, a wide headband, and sunglasses. One trade he pushed on youtube - and on Reddit - was buying GameStop shares. He claimed that GameStop was worth $50 a share when it was trading at $5 and had negative earnings. He held a significant long position in GameStop, meaning that he stood to profit handsomely if enough of the Reddit crowd - again, inexperienced and unknowledgeable investors - bought the stock and drove its price up.

If Gill were just another Redditer (my own term), this might not be a problem. However, as a FINRA registered rep, he is likely to lose his job, his licenses and his CFA charter, as well as having to disgorge his profits. He may wind up in jail. I certainly hope so, at least. And shame on his employer, Mass Mutual, for not better monitoring his youtube antics. They're probably in for some hefty fines as well.

Hedge funds. Hedge funds are not evil, nor are their managers, generally. (Bernie Madoff was a bad guy, but he was running a Ponzi scheme and calling it a hedge fund.) Hedge funds are generally structured as limited partnerships, and are only open to very high net worth investors. This is because of the risk involved in what they do, which usually involves using leverage (borrowing money) to increase returns for their investors. Unlike the Redditers, who also assume a large amount of risk, hedge fund managers know what they're doing, and so do their investors. Hedge fund investors are often themselves institutions that manage other people's money.

Yes, hedge fund managers make a lot of money. If you handed a million dollars over to someone and they turned it into $1.5 million in one year, wouldn't you be willing to pay them 2% of that $1.5 million, or $30,000? You're still up $470,000. Multiply that by more than 2,000 to reflect a fund whose AUM is over $3 billion, and the hedge fund manager can make $40 million a year, after paying other employees. Too much? Considering the manager added a billion dollars worth of value to his clients' investments, it's not.

In fact, this is the story of a guy I used to work with, who went on to start a hedge fund focused on the mortgage derivatives market, which was the focus of our former employer. (At least two of my former colleagues went on to manage hedge funds. Where did I go wrong?) This guy was a logic professor at KU before joining our firm, and was one of the smartest - and funniest - people I ever knew. (He also went to high school with Paul Simon and Art Garfunkel.) In 2010, his fund returned 50% to its investors, and he was named Hedge Fund Manager of the Year for funds managing $1 billion or more.

Hedge funds often bet against the market, hence the name. Hedging is using one investment with a low correlation to your other investments to protect your profits when those other investments fall in value. It's used to limit your losses. It's basically how I started my career in the capital markets, 33 years ago: trading futures contracts to hedge the value of mortgage derivatives. Remember the example above, in which my former colleague's hedge fund returned 50% in 2010? Remember what was going on with the rest of the market - especially mortgage securities - in 2010? By being uncorrelated with the market, his fund made a lot of money while most investors were losing money.

Oh, and why do hedge funds pay next to nothing to trade stocks? Buying power. They - and other institutional investors - are trading billions of dollars at a time in some cases, and they're using multiple brokers. Every broker is competing for a piece of that billion-dollar trade, no matter how small in percentage terms. Because even a fraction of a percent of a billion dollars is a lot of money.

Now, on to the questions.

What went down with this whole thing?

Gill was pushing his fellow Redditers to buy GameStop. But the motivation wasn't just to drive GameStop to $50 a share. The Redditers wanted to hurt the hedge funds by driving the stock price higher. You see, hedge fund managers, recognizing that GameStop was a dog, were short-selling the stock en masse. More than 100% of the company's stock is held by institutional investors. The short interest in the stock, meaning the number of shares sold short as a percent of the total number of shares outstanding, is over 120%. I'll continue answering this question momentarily, but first - .

How is that possible? And what is short-selling?

The answer to those questions is pretty much one and the same. Selling a stock short is a bet that its value will fall, as opposed to a long position, which is a bet that the value will rise. (That's what most of us do - we buy stocks that we think will increase in value.)

So a short sale involves selling a stock you don't own. To effect that trade, you borrow the shares from your broker and sell them. When the price falls, you buy them back for less than you sold them for, and the difference in price is your profit. Of course, if the price goes up, you have to buy the shares for more than you sold them for, and you lose money. Buying the shares back and delivering them to the broker is known as covering the short position.

When a short seller's position suddenly rises in value significantly, it's known as a short squeeze, hence the title of this post, which combines that term with the excellent film, "The Big Short," which was about the '08-09 crash.

Why would a broker let you borrow those shares, and what if you're unable to pay for the shares you have to buy to cover the short position?

Great question. First, the broker requires you to put up cash, known as margin, to cover potential losses. Generally, the margin requirement for a short sale is 150%. So if you short 100 shares of GameStop when it's trading at $5, you have to put $250 cash in your margin account in addition to the shares you borrowed, which are worth $500 initially. (100 shares at $5 per share equals $500 worth of stock, and the additional 50% cash margin requirement is $250.)

If the stock price goes up, the broker can access the margin account to cover the short position. It can also issue you a margin call, which is a requirement that you put up more margin if you want to maintain the position.

The other reason a broker will do this is that it gets paid to do it. It charges you interest on the borrowed shares, and it earns interest on your cash margin. It also charges you a commission when you short the stock, and another when you cover.

Back to what went down?

Since hedge funds bet against other investments, they make extensive use of short-selling. And since they're using leverage and borrowing stocks, they can drive the short interest in a particularly doggy stock above 100%. Also, since they are institutional investors - not individuals - they can drive the percent held by institutions above 100%, also through leverage. (By contrast, less than 70% of Home Depot stock is held by institutions; I am one of the individual investors that owns Home Depot directly. And the short interest in Home Depot is less than 1%, meaning the vast majority of investors expect the stock to increase in value. At over 120% short interest in GameStop, virtually everybody expected its stock price to fall.)

But the Redditers didn't, right?

Wrong - probably. Some of them may have thought GameStop was legitimately worth more than $5 a share, maybe even the $50 that Gill claimed. If they did, they don't understand the fundamentals of investing. Nobody in their right mind would have thought it was worth the $469 a share it traded at briefly on Jan. 28, nor the $325 a share it closed at on Friday, Jan. 29. Imagine: a stock with negative earnings and no dividends going from less than $20 a share to nearly $500 in a matter of days. (The Redditers were actually already bidding up the stock's value gradually as far back as September, but the huge surge in buying came in recent days.) If a pharmaceutical company announced a definitive and immediate cure for the virus with 100% efficacy, its stock price wouldn't increase that much.

The Redditers are gamblers. So what they did was akin to mortgaging their houses, buying roulette chips, and putting them all on one number. Except the stock market doesn't work that way. A massive number of buyers, in a concerted effort, can actually cause a stock's price to go up, in this case by a large amount by using leverage and stock options. You can't cause the roulette wheel to stop on your number - legally, at least.

They also wanted to hurt the hedge funds, which they saw as the evil Goliaths, and they saw themselves as David. But what goes up must come down, and the fundamental value of GameStop is far nearer $5 a share than it is $325. Most of the Redditers will wind up living under overpasses when GameStop normalizes, if they don't wind up in jail.

What happened to the hedge funds?

When GameStop shot up on January 27, the hedge funds had to cover their shorts at big losses. One false report circulating was that one fund lost over $13 billion and declared bankruptcy. The actual losses sustained by all hedge funds that were short GameStop were about $5 billion, at least for now.

What did Robinhood do that upset everyone from the Redditers to Tucker Carlson?

To cover their losses, hedge funds had to sell large amounts of their long positions, which resulted in the Dow Jones Industrial Average (DJIA) falling by more than 600 points under heavy selling pressure on Jan. 27, even as GameStop rose by 136%. The next day, Robinhood suspended trading in GameStop, meaning the Redditers couldn't keep trying to manipulate the share price.

The Redditers, of course, were furious. They accused Robinhood of acting to protect the hedge funds and limiting the small investor's access to the markets. Carlson and other media pundits - none of whom have the first clue as to what went down, how the markets work, why Robinhood did what it did, or what a hedge fund is - sided with the Redditers and went after Robinhood.

Why did Robinhood suspend trading?

A 150% margin requirement will only protect a broker up to that extent, and in the face of a 135% one-day gain in a heavily-shorted stock, the broker is going to begin to suffer losses. Fortunately, the hedge funds were able to access capital to cover their shorts. But some small speculators who were short GameStop weren't able to, and in some cases Robinhood had to eat their losses. (Brokerage firms take risks, too.)

As a registered entity, Robinhood has to meet a minimum capital requirement, and they have to meet it every day. If a bank's capital falls below its minimum regulatory requirement, it has to file a capital restoration plan with its regulator. If a brokerage firm falls below its requirement, for even one day, FINRA will close its doors.

So Robinhood was protecting itself, but also protecting its investors - including the Redditers - by ensuring that it remained in business. It also has an obligation to attempt to maintain orderly markets. And it's not the only platform that instituted restrictions on trading in GameStop. Schwab, TD Ameritrade, E*Trade, and all the other brokers did, too.

Robinhood did nothing wrong, and everything right. Only people who don't understand the markets would be upset with them.

But hedge funds are just for the rich, right? Didn't Robinhood effectively favor them over the "little guys?"

Remember when I said that hedge fund investors were largely other institutional investors? These are professional money managers who, again, are investing in hedge funds to hedge, or protect the value of, their primary investments. As noted earlier, the hedge funds' investments are largely uncorrelated with those investors' primary investments.

And who do those professional money managers manage money for? Pension funds for companies, government agencies, and labor unions. Sovereign funds for foreign countries. Insurance companies.

So if you're a teacher, or a nurse, or a government employee, or an autoworker, or have a life insurance policy, you can be sure that your pension fund manager is prudently using hedge funds to protect your retirement savings and the insurance benefits for your family against market downturns. In other words: you own hedge funds.

But isn't that incredibly risky?

No. First, those pros know what they're doing. Second, the hedge fund investment is a relatively small percentage of their total holdings. Third, by investing in uncorrelated assets, they're actually reducing their overall risk through diversification. And finally, the hedge funds require them to leave the money in the fund for three months to three years. That adds stability by avoiding the kind of volatility that can result from large amounts of money jumping into and out of an asset in a short amount of time - like what the Redditers did with GameStop.

Weren't there some other stocks involved?

Yes, there were a number of other heavily-shorted stocks, including AMC Entertainment, the Kansas City-based theatre chain. AMC's stock shot up from about $5 a share to over $20 at the opening bell on Jan. 27, and it closed the week above $13. The brokerage firms restricted trading in AMC and a number of other stocks that the Redditers were trying to manipulate.

AMC is another dog of a stock. (As a dog-lover, I should really stop insulting dogs.) When the pandemic shutdown hammered stocks in the entertainment, leisure and travel industries back in March, I calmly looked at a number of affected stocks, and began buying them. I bought airlines, cruise lines, restaurants, and hotels. I sold many of those positions later in the year at more than 100% gains. And I looked closely at AMC, which was trading at about $3. I thought this might be another opportunity to double my money in a stock. However, the company was already heavily in debt, and thanks to competition from streaming, its stock price had already been falling since late 2018. So I passed, and I'm glad I did: by the end of last year, the price had actually fallen further, despite theatres re-opening, to less than $2 a share. So no way should AMC be trading at $13, if not for market manipulation by the Redditers.

What happened with the overall market last week? If this was just related to a handful of stocks, why did the market move so much, and over several days?

As noted above, the hedge funds had to sell long positions in other stocks to cover their shorts in GameStop and other stocks they'd shorted, which drove the Dow down by 600 points on Jan. 27. When the brokerage firms suspended trading in those names the following day, the Dow rebounded, and was up nearly 600 points by mid-day Jan. 28, having almost fully recovered the previous day's loss. After all, the stocks the hedge funds had to sell to cover still had their fundamental value. Effectively, they were just "on sale" after the previous day's decline. So a lot of investors bought back in.

Then, the media and the politicians got involved. There was talk of action against Robinhood. Elizabeth Warren wanted tighter regulations on the stock market overall, which spooked all investors. The media started spreading false rumors about a stock market bubble. By the closing bell on Jan. 28, the Dow had fallen 300 points from its mid-day peak, and the net gain on the day was less than 300 points, roughly half the previous day's drop.

Those concerns fueled by politicians and the media resulted in a nearly 200-point drop in the Dow at the opening bell on Friday, Jan. 29. The selling continued throughout the day, in part as a result of Robinhood and other brokers resuming simple trading in the shorted stocks, including GameStop. They still prohibited some of the riskier options strategies that led to the extreme volatility two days earlier, but the Redditers resumed buying them, and more short positions were closed. The Dow closed out the week below 30,000 for the first time since December, losing another 600 points on the day.

Is there a bubble in stocks?

No. The stocks of airlines, cruise lines, hotels, restaurants, and entertainment venues are still closer to their 52-week lows than their 52-week highs - meaning a large segment of the market is more oversold than overbought. And those stocks still have room to run, as travel continues to pick up, states and countries increasingly re-open, and life after the pandemic emerges. There's probably another round of fiscal stimulus coming, too, which will result in more spending. Mortgage rates remain low and homebuying is still brisk, so housing stocks will continue to show strength. Supply chain disruptions will ease, so manufacturers will be able to satisfy pent-up demand, improving their stocks' performance.

So the Redditers are the bad guys here?

Yes. They're the stock market equivalent of the Capitol rioters or Antifa. They were trying to disrupt legitimate businesses from going about their business in an orderly way. They put a lot of truly small investors - pensioners and retirees - at risk.

Do you think there will be a movie about this?

I have no doubt about that. I only hope that it's a fair and accurate presentation, like The Big Short or Too Big to Fail, and not the usual slanted Hollywood treatment that blames the wrong party, and glorifies the guilty.

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So there you have it. If you're still with me, thank you for reading all of this. I hope it's been informative. If you have additional questions, feel free to message me.

Also, for those of you who initially asked the questions that sparked this post, thank you as well. I had a good general understanding of what went down, but I learned even more through the additional research that went into this post.

**Disclaimer: none of what is written above should be construed as advice to purchase any stock, engage in any trading strategy, invest in any sector, or use any specific trading platform.