Headlines

Cuomo escalates safety mandates, orders all ‘non-essential’New Yorkers to stay home

Coronavirus live update: Unprecedented stop in economic activity, Americans worry about looming bills

UK SHUT ...

Spring breakers party on beaches, despite social distancing

Indiana becomes seventh state postpone presidential primary

Junk bond default rate to triple within 12 months S&P says

Fed begins pumping municipal bonds ...

‘Stunning’ correlation: Coronavirus not spreading in malaria countries

U.S.-Mexico to partially close border

IRS extends tax filing deadline until July 15th as coronavirs spreads, Mnuchin says

Delta, United sending largest planes to desert for storage ...

Lobby insists abortions must continue during coronavirus crisis

Where To Invest?

Where does someone stash one's investment funds these days? The choices are becoming very meager for the ordinary investor. Consider the following:

Income Stocks: The prospect of increased interest rates being pushed by the Federal Reserve Bank for this Fall has cast a pall over most income stocks ... particularly utilities. However, seeing that interest rate increases are likely to be small and stretched out, this might suggest that the weakness in these income stocks just might be overdone.

Growth Stocks: Growth stocks have been hot of late as money has been leaving income stocks ... that is until the latest slips by Apple and Microsoft. The stratospheric price-earnings ratios of many of these tech and bio-science companies offer considerable risk for the casual investor.

Government Bonds: Theoretically U.S. Government bonds are a safe investment ... however to earn 2.3% per year on you money for ten years is a pretty meager return ... particularly if one may not get a full return of one's capital if one has the sell this investment before its maturity date.

Municipal Bonds: Federal and often state and local tax free, these securities might be interesting under a Democrat presidential win ... since taxes are likely to go up. However, this may be more than offset by the dangers associated with increasing municipal bankruptcies.

Corporate Bonds: High-yield corporate bonds have been suffering the same fate as high-yield equities ... however, the time may be right for certain convertible debt securities ... but do your research!

Fine Art and Antiques: I believe that the only people who make money in these markets are well-connected dealers.

Gold (and Other Commodities): Gold and most other commodities are now at or near their five-year lows. The excuse given is the strength of the dollar. However I believe other forces are also at work ... including possible hedge fund manipulations of these markets ... and, as they say, you can't eat gold.

Developing Nations: A few years ago developing nations' markets were the place to be. Now, Russia and Brazil ... and more recently China have greatly disappointed.

Savings Accounts: Paying usually well less than 1%, savings accounts should only be used for ready liquidity ... certainly not for income.

Real Estate: The median price of homes in the United States just hit an all-time high  ... primarily due to lack of inventory ... and such prices, insiders say, are not sustainable ... particularly if mortgage rates climb back to more normal levels.

Your Mattress: Gets kinda lumpy.

So, in conclusion, there are not a lot of viable choices ... and I am as befuddled as the next investor ...

Mo-or-Less-Town

Mitt Romney's campaign prediction has come true.  Detroit, Michigan has declared bankruptcy ... the largest city to ever do so in the United States (see: Detroit News Story).  What a shame! I've only been to Detroit once or twice ... to visit the General Motors headquarters ... so I have not seen the central-city decay there cause by decades of irresponsible fiscal management. But there might be plenty of pain to go around once the courts have divvied up the few remaining assets.

Yes, pensioners there may suffer but, I suspect that the Obama administration will find a sub rosa way of easing their pain.  (There is something called the Pension Benefit Guarantee Corporation which will probably dump tons of taxpayers money into this financial chasm ... see: Wikipedia Entry.  Yes, this quasi-governmental company is privately-funded now ... but it is running such a huge deficit that we all know that taxpayers will eventually be forced to close this gap.)  The other real sufferers will more likely be all the IRA owners around the country who either are directly or indirectly invested in Detroit municipal bonds.  They, like the previous investors in General Motors debt, will take it in the shorts.

And many other major mismanaged cities around the country are going to find their municipal bond financing costs go up ... possibly dramatically.  So we see that Detroit's pain will likely be shared by all of us ... even though we had no hand in the corruption and fiscal naivete that caused this catastrophe.

I do have a simple suggestion that might allow Detroit to make lemonade out of the bushel of lemons that it now has on hand (a thought I also had for the South Bronx when it was in rampant decay.)  I think that tens if not hundreds of blocks of contiguous abandoned homes and businesses in downtown Detroit should be bulldozed and a gigantic verdant municipal park should be created ... as a centerpiece of an eventually revitalized city.  It might even get Mitt Romney to donate the millions of dollars it will cost ... then name it for his father, George.

Afterward: For another interesting take on Detroit, see: The Diplomad Blog.