WE may be at the beginning of the end. “Singapore could become one of the first countries to stop recording daily Covid case numbers in a bid to get life back to normal by treating the virus “like the flu.” “Boris Johnson says England on track to lift Covid restrictions and rules on mask-wearing.” “Fully vaccinated Canadians returning to the country from abroad no longer have to quarantine for two weeks.” “Taiwan eyes easing restrictions as
Covid-19 cases decrease.”
On the other hand: “Super-viral Lambda variant detected in over 30 countries.” “Indonesia copes with oxygen shortages as Covid cases quadruple.” “Russia reports record 737 Covid-19 deaths.”
All of the above headlines are from the last 72 hours. We may be at the middle of the beginning at least from a health standpoint. However, from a financial standpoint, we have entered Covid Wave Two.
As a planet and as individuals, sometime around March 15, 2020 our lives were thrown into chaos. Businesses closed, jobs ended, and billions of people (think about that number) were forced to struggle to just survive from day to day. And by “struggle” I mean beg, borrow, and steal as necessary.
What we think of as basic human rights disappeared in the ensuing weeks and months. “Freedom of Speech and the Press”? Social media proved to be as fascist as anything out of the 1940s and as “communist” as anything from the depths of Mao’s “Cultural Revolution” except without the estimated 20 million dead at the hands of “peaceful protesters” and the military.
The Press/Media are all in favor of “freedom,” but that is about their own and not yours. Ordinary as well as prominent citizens were censored and then vilified for suggesting that maybe the global fortress of truth and transparency—the People’s Republic of China—was not being completely honest about Covid. Likewise, the World Health Organization, apparently appointed by heaven itself as the protector of global health, was kept off-limits as possible from criticism.
But the Covid Financial Wave Two starts now. “As payback time approaches for more than 75 billion pounds [$104 billion] of emergency state-backed loans, Britain’s banks must tread a delicate path. With the first Covid loan repayments now falling due, Britain’s four biggest banks have hired more than 750 debt collection experts and being trained how to handle customers sensitively.”
British banks must protect their own balance sheets—and the government’s—on these loans. Yet, losses on the most popular bounce back loan scheme that enabled small businesses to borrow up to 50,000 pounds could be up to 60 percent. So far, all is good with a single-digit percentage failure rate. So far because those were loans given at 2.5 percent interest rate. Nearly 17,000 businesses were charged at double-digit interest rates.
In the US, “Millions of Americans are in a ‘race against the clock’ to receive rental assistance before the end of the month, when a federal eviction moratorium designed to help people cope during the coronavirus pandemic expires.” In mid-May, 7.5 million US adults said they were not current on rent or mortgage payments and had “slight or no confidence” they could make next month’s payment, according to the Census Bureau’s Household Pulse Survey.
The eviction moratorium kept many families housed. There were 1.6 million fewer eviction cases last year than would be in a typical year, according to the Eviction Lab. However, after the moratorium ends, they will need access to $47 billion in rental assistance.
How the health aspects of the Covid play out in the next weeks and months is obviously uncertain. But there is no doubt that Wave Two of the financial stress is just beginning.
E-mail me at mangun@gmail.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis provided by AAA Southeast Equities Inc.