Warren Buffett says when the tide goes out, you see who is swimming naked. With the tide going out hard this past month we are seeing an entirely naked system.
It looks like many businesses were running on razor thin margins. Many of those that were generating profits were then buying their own stock to juice the returns even more. Was this healthy for their business? Or did this weaken their overall business? Can they sell that stock now to raise the needed capital to operate?
Have we all been working too much and neglecting our own personal health in the pursuit of higher GDP?
Looks like individuals were spending every penny that came into their bank accounts. Numerous articles have recently been written that very few people have 3 months of emergency savings and this is across almost all age brackets.
When things do open up after the corona virus subsides it will probably make us more conservative with the funds that we receive. New restaurateurs will probably not be willing to take risks with thin margins as before.
Seems like the trickle down effect in every industry could be huge.
Will the Federal Reserve begin to buy stocks to keep everything afloat? Will the Federal Reserve buy all the issued debt to make lenders whole? Will this help individuals?
Our oil independence has been amazing, but is too much of a good thing bad? Too much growth perhaps? We all like cheap gas but could it kill our domestic industry altogether? But hasn’t the oil industry always been boom or bust?
Our hospitals and healthcare system seems like it was caught off guard. Key ingredients for medicines dependent upon China as well as PPE and ventilators?
Supply chain fragility and global dependence will probably be inspected and changed so that we are less likely to be impacted so drastically in the future. This will all take time.
This fragility across the system will probably make for a stronger system in the long run, but may create pain in the near term. The spotlight will shine on the weaknesses and we will adjust.