Press "Enter" to skip to content

Month: March 2020

Season 2, Episode 9, Transcribed: The Medical View of Coronavirus

Moderator 0:02
Welcome to the Contrarian Investor Podcast. We give voice to those who challenge the prevailing sentiment in global financial markets. This podcast is for informational purposes only. Nothing on this podcast should be taken as investment advice. Guests were not compensated for the appearance, nor do they supply payment in order to appear. Individuals on this podcast may hold positions in the securities that are discussed. Listeners are urged to educate themselves and make their own decisions. Now, here’s your host, Mr. Nathaniel a baker.

Nathaniel E. Baker 0:36
Okay. Dr. Robert Bednarz, thank you so much for joining us here. It’s my pleasure to have an actual bona fide doctor on the show. I’ve been trying to get somebody who can actually professionally legitimately speak to this coronavirus Covid-19, also known as the Chinese virus if you’re going to quote a certain president, but let’s not go there. What investors want to know, and what you may or may not be able to answer are a couple things: First of all, just how serious of a health crisis is this? And more importantly, how long will this persist? And interesting maybe could also start us with the interesting little detail that you are right now as we speak in self quarantine. Right?

Dr. Robert Bednarz 1:29
Right. Yes. So I can start with all that I can first start with the self quarantine thing, which is why I have time to do all these interviews and podcasts. So last week, as you can hear, I have a cough as well, too. But last week, I had a week off from work where I spent my time in Poland visiting my family and then on returning to Scotland I was ready to go back to work but I started developing this new continuous cough and a runny nose which aren’t the runny nose isn’t as simple Have a Corona virus but the cost is so instead of just testing me the guidelines at the time which have changed now is for just to stay home for seven days. So they told me to stay home for seven days and now I’m home and I there’s no obviously there’s no cop or somebody or some government official outside my door I can I can leave by wanting to but just for my own causes and not put anyone else at risk just in case I do have coronavirus. I am now stuck at home for the week, day and night. This is this is day six. So I’m really excited to finally go out and do some grocery shopping tomorrow. Whatever is left out there.

Nathaniel E. Baker 2:38
Yeah, and we certainly hope you get well soon and don’t develop any any serious symptoms. Okay, so then to the matter at hand here. Well, let’s have your assessment of this this whole situation

Dr. Robert Bednarz 2:49
So the answer your first question as to how serious this could be in a health crisis. As you can see in Italy, we’re taking that as an example. And it has been a really The devastating experience of what’s going on over there. And that can easily happen anywhere else. Because Italy isn’t a third world country. It’s a fairly developed country, and you know, Western Europe. And you see that now currently today being the 20th of March, because every single day, it’s changing completely. But today in the 20th of March, Italy has surpassed the amount of deaths that China has. And just today, they recorded over 600 deaths. And this this is just becoming a real big problem, because just last week, just last week, on the 14th of March, worldwide, there was only 404 deaths. And today, right now were the death polls that were at 1235 deaths from yesterday. So that’s three times the amount and these are the amount of deaths is going up at an exponential rate. And that’s what we’re really afraid of, because we’re not going to be able to cope just like Italy was with the amount of patients that are coming in We don’t have excuse, we don’t have that many respirators, which are like the mid fives, or what we use FFP threes. We don’t have enough ventilators for everybody because we’re not just only taking care of the patients who have Corona virus, but we also have regular sick people that come to the hospital with other diseases as well. So once that when the number with the amount of Corona virus patients surpasses the amount of patients we have in the hospital, it just becomes a huge problem. And just the limited resources and then the risk of the doctors getting sick as well too, and they have to go home and they have to take a week or two weeks off, and it’s just it just becomes a huge problem.

Nathaniel E. Baker 4:40
Okay, where are we now in this cycle? Based on what you’ve seen so far? And maybe you can speak to Scotland because that’s, that’s where your base but I guess the UK and the US are kind of on the same as far as the timing of it.

Dr. Robert Bednarz 4:56
More or less yes and no, just say Today, just about an hour ago, Boris just announced to close down all bars, clubs, restaurants, everything just basically just to close it down Finally, which for us, we’ve been waiting for this moment because that’s what’s been the highest risk here is all these people going out to clubs, restaurants and infecting others. And we finally needed this statement for people to finally stay at home to realize how serious this can be. In terms of the States and the UK, that’s the one main difference. Trump, about a week ago announced to close the borders, no flights going in or out. Unless you’re an American citizen, you can come in and then immediately quarantined. It’s a little bit slower in the UK than it is in the States. But it is rising fast just for Scotland. I could speak especially the death toll went from three to six yesterday. So we’re still at a low amount, but that’s it’s you know, it’s 100 percent more from yesterday to today already. And the cases are just going up and up and the hospital that I’m stationed at even though it’s University Hospital, it’s not so big to be able to isolate every single person and that’s that we know we don’t we usually have Bay’s of open areas for people to for patients to stay in. But we can’t let infected patients go into those open bays, they need to be in the private isolated rooms, and we don’t have that many. So now we’re trying, we’re moving. we’re shifting the whole organization of the hospital where now we’re trying to make one wing of the hospital considered infected and the other wing clean, just to be able to separate the patients and keep them as safe as possible so that other patients who aren’t infected they don’t get infected by the patients coming in. It’s it’s been it’s been a real struggle, but we’re so far from what I’ve seen, they’re doing a really great job trying to get this under control.

Nathaniel E. Baker 6:55
That’s good to hear. What kind of numbers are you looking at? What kind of numbers are you preparing? In terms of the population that you’re expecting to see infected, and the percentage of fatalities?

Dr. Robert Bednarz 7:06
just just looking at the numbers in my area alone, that’s what I’ve been mostly focused on. So I’m based in Tayside area. And just about four days ago, we had seven and then when I say infected in my area, these are the ones in hospital because we were only testing the ones who are unwell if somebody called in and said, Hey, I think I have some symptoms of the corona virus, what should I do we just tell them to stay home and so nicely, 14 days, there’s no reason for them to risk everyone else to come to the hospital get tested. And we don’t have these drive through testing like some places in the states do yet. So now from four days ago, is 17 in the area to 20, to 23 to now 31 in the area. So the numbers are just rising and I can’t professionally tell you how many were expecting so far yet, because now Since Boris made the statement of everything is closed, and people should be staying indoors, we’re really our hope is on the community. And it’s basically their, it’s their role, they play a huge role right now into helping us into just staying home. That that is the, that’s the biggest thing that we’re asking them is please practice social distancing. If you go out to stay, you know, stay far away from people try to keep your hands clean, whatever you touch, make sure you wash your hands afterwards to keep them clean, and just stay at home, especially if you have symptoms. Since symptoms don’t show there’s an incubation period of two weeks. So sometimes people are infected and they don’t have symptoms, and then they’re going out and they’re getting other people infected. And the again, I stress this so much that the biggest role is the community. It’s just asking them to please be alert, stay at home if you can, and just you know, wash your hands and all that.

Nathaniel E. Baker 8:53
How long do you think that needs to be in effect for?

Dr. Robert Bednarz 8:56
Oh, that’s a good question. So it It’s hard to say because of how a virus can mutate because just looking back at all other pandemics that’s happened in the world even like even from the 2000s you have the SARS pandemic, these swine flu pandemic, even MERS pandemic which is based in the Middle East. And the way that they stopped with that either people were able to self core self quarantine estate home, but the virus would mutate itself to a less dangerous version. And that just happened sporadically. We don’t know when that will happen, when that will start changing and everything or even the Spanish Flu that was another one where it killed about 3% of the population or so. And it’s just had another mutation to a less deadly version of it and that’s what we’re waiting for. And as long as the virus doesn’t have a host to stick on, then you’re you know, it’s there’s no way for it to spread anymore. So the most important thing is for people to stay home and That’s why when the virus if the person who’s infected stays home, the virus will die and not be able to find a new host. So it’s all dependent on the people. That’s that’s what it is. It doesn’t depend on, we can make up all these treatments, all that we want, you know, or even a vaccine, the vaccine might not matter because maybe the virus will mutate into something deadlier at that point, or it doesn’t. We don’t know. That’s how variable medicine can be. And this, this is why can be so dangerous. And then healthcare aspect. This is besides the whole global infrastructure of economics. I see what’s going on there. And that’s insane. But I’m not

Nathaniel E. Baker 10:36
Yeah. Yeah, no, and we have people who have talked about that. But what how realistic is it? Do you think that we could see a mutation here that that could intensify this?

Dr. Robert Bednarz 10:47
I don’t, I don’t think there’ll be a mutation though. intensify anymore. So in China, there were these two strains. I think I mentioned there was an S strain and an L strain and the L strain was the one that was a little bit more severe. But in severe in those terms, it was just basically it was able to attach the receptors in your lungs, it had a bigger affinity to the receptor. That’s the best way I could say it. But they were able to contain the L strain in China, which is really good. So now it’s just the strain, which is still bad. It has this affinity to the lungs. But the thing is, is the biggest fear is that we don’t know what could happen. So but I really, I believe that there won’t be a deadly or strain, if anything, it’s going to now mutate to a, you know, more, less aggressive strain for it for people to be able to handle it and continue on. Yeah.

Nathaniel E. Baker 11:41
What about say, come next fall? Are there concerns already, I mean, we’re gonna obviously want to deal with one crisis at a time here. But is there any type of realistic concern that this becomes a regular thing each winter, that we get something like this or another version of it?

Dr. Robert Bednarz 12:00
So based n the past pandemics we’ve had, these are all really great questions, by the way, Mr. Baker.

Nathaniel E. Baker 12:07
Oh, thanks.

Dr. Robert Bednarz 12:08
But based on the past pandemics we’ve had so SARS and MERS, those are the closest one we can compare it to because SARS and MERS are Corona viruses as well. I see. Whereas swine flu and the bird, the Spanish Flu that we’ve had or h1 and one that’s the swine flu as well, that’s the influenza virus, two completely separate viruses. And that’s what we’ve had pandemics of plus the Ebola.

Nathaniel E. Baker 12:32
So you’re telling me this is literally not the flu?

Dr. Robert Bednarz 12:35
Correct. It is literally it is not the flu is completely different virus. It’s tiny, tiny differences, the structure of the virus, the type of RNA it is inside tiny, tiny differences, but they are completely different families of viruses. So again, like the last pandemic of SARS that we had was back in 2002. And MERS was in 2012. So this can come back I would say maybe in a few years, I’m not expecting this to come back. Within a year or so however, we could experience something like what happened in the Spanish flu, for example, where since once the months get warmer, this tends to die down, and it will cool down a bit within the population. But there is a possibility that if somebody still has it in their system, and it’s just kind of just isolating itself inside the host, that once the cooler months come into effect, like in the fall, that it’ll start becoming a pandemic again. Again, it’s hard to say yes, it’s, it’s really, really hard to say,

Nathaniel E. Baker 13:39
yeah, you touched on something, which is the warmer weather here in the Northern Hemisphere. Obviously, we are now officially in spring as of yesterday, I believe, March 20. Or maybe that’s today can’t get the dates completely right. But what is the what is the chances that as the weather does get warmer here in the Northern Hemisphere that it kind of helps out and puts an end to this this thing.

Dr. Robert Bednarz 14:03
It’s definitely going to be a big help. The weather does play a role as we see in the what’s funny about the corona virus. I’m going to tell you one thing that my friends mentioned back to me while we were chatting when this was getting big in China. The whole the ohana crisis back in the who Bay province. And the they messaged me and they were like, Hey, did you hear about this, this new Corona virus and I tell them that Corona virus is a new Corona virus causes the common cold. Back in med school with Corona virus and Rhino virus. Those are viruses that just causes the common cold and you would get some sniffles and a cough and that’s it and it passes by. But because this is a mutated strain, it’s it’s completely different. But still coronavirus. And back to your question. Where does the warmer months it’s just how many people do you see getting the common cold in the warmer months or getting the flu in the warmer months? It doesn’t happen. I can’t tell you exactly. Actually why that happens. It just tends that the temperature it doesn’t, it’s not able to survive in the warmer months. An easier way to put it doesn’t survive in the warmer months. And so it’ll go away. But if there is a person who has it still as a host, for some reason, and it’s still mutating for whatever reason, and it does have a possibility of coming back. Again, extremely hard to say though.

Nathaniel E. Baker 15:24
Hmm, okay, so definitely rooting for warmer weather here. Okay, going back here. So, as far as the what’s what’s your worst case scenario that you’re looking at in terms of how long? I guess the the economy needs to be shut down? And what do you think, what do you think of that?

Dr. Robert Bednarz 15:45
Oh, well, the economy is the least thing on my mind. Unfortunately. Yeah. Fair enough. Fair enough. It’s the what I’m worried about is exactly what’s going on in Italy and looking at that. That’s what’s scaring healthcare. Healthcare officials around the world that that similar situation can happen to them, whether it be in the UK in the USA, or wherever, where they’ve gotten to a point where they have to literally pick and choose who is going to live and who’s going to die with this coronavirus. Because they just don’t have enough resources. They don’t have enough ventilators. They don’t have enough doctors. And I think they just announced I don’t know how true this is because misinformation is very easy to come by nowadays to where they’re now saying that people over 80 they’re not going to treat because they just can’t. It’s a scary thing to think about where you have so many sick people, you just don’t have enough resources to help every single person because you’re literally just running out of air. You’re becoming hypoxic, you’re suffocating. Because all of the cells in your lungs are being destroyed by this virus. Again, it’s all of this is unfortunately so difficult to say and I hate it when I see people on the news, giving you exactly figures like this is going to end at this stage. This ended in 18 months and 12 months, there’s no possible way to know this, especially seeing how this exponential growth of deaths happening. Even though these types of these pandemics have happened in the past, you would think we would learn from history to be more prepared for the next one, but we just we simply, are we so many people didn’t expect for something like this to happen because they have other things to worry about, like war, or anything else that’s happening in the economic standpoint of view.

Nathaniel E. Baker 17:32
Actually, it’s interesting, interesting way that the world of finance investing in medicine actually do overlap as people don’t learn from history and each from the sound of it but so on.

Dr. Robert Bednarz 17:41
So that’s, that’s basically my point where it’s, it’s really hard to tell. And again, just all these people who give these are, for example, a vaccine that comes out, right, this this vaccine, if whoever creates a vaccine that’s going to become public, which whoever says that it’s going to come out next month. It’s not going to happen. It takes even at an expedited rate, it’ll maybe in 12 months, yeah, at least from the start to the end. And even if they do have a vaccine, it’s not good. It’s just like the flu vaccine. I don’t know how much you know of how the flu vaccine works, but the flu vaccine is a very educated guess what on what this version of the flu will be this year and they basically just take statistics of the previous ones and be like, Okay, looks like this might be the strain this year. And, and the DFT efficiency rate goes from anywhere from 20% to 85 90%. So it’s literally just a really good guess. And with this coronavirus, don’t sure they’ll make a vaccine for this one that’s happening now but in the case of mutates for whatever reason, it’s not. People are not going to have the immunity to that new one again, and that’s that’s another reason why again, a lot of people healthcare officials are so afraid because when it comes to the flu, we know the flu. We have treatment for the flu. We have antivirals we have vaccines. We’ve seen the flu over and over again. We know exactly what what to be what’s expected, whereas the corona but this coronavirus is something completely new novel. You know, that’s what not everyone thinks novel coronavirus, just a new Corona virus, it’s this new strain. We don’t have a vaccine. We don’t know the long term effects of what can happen yet because it’s so new. That’s what’s so frightening. That’s why we just want to tell people to stay at home and and be able to take care of this within the community.

Nathaniel E. Baker 19:29
Got it? You mentioned the vaccine. And we know that’s, that’s at least a year away. What about other treatments? First of all, in terms of Yeah, ways of treating and have you seen anything there? And maybe it might also be interesting for you to say, how would you treat it? What types of medicines are you using to treat it?

Dr. Robert Bednarz 19:48
Right? So another good question. So there are they’re using a whole bunch of different types of antivirals. So for example, rendez severe which is a which they use for The a bola outbreak they use that and there’s there’s there’s experts saying that this will work for this coronavirus. And they have some studies some preliminary results that it works. We also have a combination of HIV drugs. It’s good now it’s called collateral where if you give this for people who have Corona virus it works. And there was just a study that came out on the 18th of March saying it has some improvement for severe cases of this Corona virus because it’s an anti viral, and then also they’re saying how chloroquine or chloroquine however you want to call it, which is an anti malarial drug. Also using a lot of different antivirals as well, which can help as well. We’re taking information as it goes. So just like just like the, just like the public, we’re not hiding anything. I don’t want people to think we have some idea and we’re hiding it from we’re literally telling you how many deaths are are what new information we have. And if you were to go to any art like the Lancet or New England Journal of Medicine, anything about the corona is free. You can download it, read it and it’s there for everyone to use. So science communications Great right now and and in terms and now they just released how French officials the set how non steroidal anti inflammatory drugs are to not be used or not not be used but this is only for people who take it every now and then if they get like if they get a fever and they take an ibuprofen instead of an A paracetamol, for example, tried to switch to a paracetamol but for people who have rheumatoid arthritis where they take the proxxon every single day I that’s some that’s something you need to call your doctor and ask to pay for me to switch and stop or is they need in the box in to take care of their own toy, right is it’s it’s all very it depends.

Nathaniel E. Baker 21:44
What about the testing? How do you have enough testing? I guess facilities there in the UK? And what kind of technologies are you making use of player

Dr. Robert Bednarz 21:55
so in terms of testing, it’s just a swab the throat So okay, something called Art PCR it’s a it’s just a special machine that takes it takes about 48 hours to get results to let you know if you’re positive or negative. The amount of testing. I don’t know, since I’m just a junior doctor, I don’t know the specifics of it. But the I know that it’s becoming an issue because they’re not testing stuff here, as of now, and if they’re not testing stuff that that kind of makes me concerned of how many tests we do have to test the public as well.

Nathaniel E. Baker 22:28
Why is there a limit on this? If it’s just a machine and you just have running out of cotton swabs or what’s, what’s the holdup?

Dr. Robert Bednarz 22:35
I honestly, I wish I could tell you I’m not entirely sure why there’s a limit to these things. Were people saying we’re running out I don’t know if it’s a cost thing. I as you know, in the UK and most other countries in in Europe, that healthcare is free, right. It’s paid by the person taxes and that could be a whole budget thing thing. Maybe it’s a political standpoint. I’m not entirely sure.

Nathaniel E. Baker 22:57
Okay, interesting. Um, the other thing thing I want. The other thing I wanted to ask you is about as far as these it’s interesting. The some of the cultural stuff I was living in Hong Kong for a couple years and and in Asia, these surgical masks are ubiquitous, not even when there’s an outbreak just in general. And here in New York, I’ve seen very few of them, even now, how useful are those?

Dr. Robert Bednarz 23:23
another great question. masks. People shouldn’t panic by and go out and buy all the masks that there are there out there. So in the US, they have been called N-95s. So that’s the most common mass to prevent nanoparticles going into into the person’s mouth. Whereas here in Europe, we call them FFP threes, or FFP twos, the number depends on how efficient it is protecting yourself from that particles. And then you have your surgical masks, surgical masks, it’s more for the doctor. It’s protecting the patients so that for example during a during a procedure, we don’t accidentally spit into whatever procedure that we’re doing. It’s not the other way around. If people are trying to protect themselves from others who are infected, those surgical masks are not. They’re not really working. Right. It is good. If you think you’re sick, and for some reason you can’t self quarantine, you have to go out for some reason, then that’s better than not right.

Nathaniel E. Baker 24:20
Right. Right. Right. Okay. But that’s good.

Dr. Robert Bednarz 24:21
And then in terms of these N-95s I just wanted to point out I see I’ve seen there’s a lot of misinformation going out and I’m not want to comment on like things that I see online to to argue for the sake of arguing, but when it comes to a person’s health, it does bother me so much. And there’s some people I saw selling surgical masks. Yeah, but but naming them as a N-95s. Which is totally wrong. It’s not the surgical mask, they’re just you know, they don’t they don’t have a seal around your face. They don’t work. You don’t work the same as 95. Just be careful with the misinformation that’s out there. But for a healthy person, I don’t know. expecting to get any kind of masks is being alert, just being careful being hygienic. And that that’s more than enough.

Nathaniel E. Baker 25:08
Cool. Dr. Bednarz, thank you so much for joining us in closing, maybe, how might might people find out more about you if they wanted to get in touch possibly, or read up on your stuff to the extent that you have any?

Dr. Robert Bednarz 25:21
Yeah, absolutely. So if anybody wants to ask me a question about this whole cobit thing, or if they want to ask just simple questions of health wise, how does it affect somebody and stuff like that? I’m more than happy to try and answer them for you. For them, they can email me at the patient we’ll see you or they can find me on Twitter at at Robert underscore Bednarz and they can message me on there as well.

Nathaniel E. Baker 25:45
Right so Robert, our ob RT obviously underscore and then Bednarz is spelled p, d, n, a, our z, or Zed as you say, and you’re a part of the world or the part of the world you currently find yourself in. Okay, honest. Great. Well, that was wonderful. Thank you so much for joining us. And yeah, we look forward to speaking to you all again next time.

Dr. Robert Bednarz 26:07
Perfect. Thank you so much for having me.

Nathaniel E. Baker 26:08
All right. Thanks, Rob.

Moderator 26:11
Thank you for listening to the Contrarian Investor Podcast. We hope you enjoy this episode. To subscribe to this podcast. Simply open your favorite podcast software and search for contrarian investor. Follow us on social media by searching for contrarian investor on Twitter and Instagram. Send us your thoughts on feedback at controlling pod com. We look forward to speaking to you again next time.

Transcribed by

Leave a Comment

Season 2, Episode 8, Transcribed: Assessing Economic Damage From Coronavirus With Political Economist Marc Chandler

Moderator 0:02
Welcome to the Contrarian Investor Podcast. We give voice to those who challenge a prevailing sentiment in global financial markets. This podcast is for informational purposes only. Nothing on this podcast should be taken as investment advice. Guests were not compensated for their appearance, nor do they supply payment in order to appear. Individuals on this podcast may hold positions in the securities that are discussed. Listeners are urged to educate themselves and make their own decisions. Now, here’s your host, Mr. Nathaniel E Baker,

Nathaniel E. Baker 0:35
Marc Chandler, you are an economist, and you have a website, mark with a “c.” And I want to talk about your background later. But the first the thing that is kind of vexing everybody, obviously, these days is this Corona virus. And of course we hope everybody stays healthy. But beyond that, what people are trying to figure out now is the economic and earnings impact that is coronavirus is going to have in the US and across and across the globe. And so I’m very pleased to have you on the podcast to hopefully put into context a little bit, what types of things we’re seeing economically. how bad the damage you expect to be, how quickly we should rebound or could rebound. And yeah, just your general take on things from an economic perspective.

Marc Chandler 1:33
Sure, thanks. Yeah, what a shocker. Hmm, you know, all the things that we thought about, like what could hurt us. Many people, I mean, pandemics, Sandys, viruses. Of course, this is like, they make great Netflix series. But at the end of the day, I think that I’m hesitant to call it a black swan event. Because it’s like the third or fourth kind of virus we’ve gotten in recent years, I think about SARS. I think about MERS, even, you know, so. So on one hand, I think we’re ill prepared for this kind of shock. And ill prepared socially, institutionally and psychologically, I think that this is this is the real thing. I mean, if we’ve been saving money for a rainy day, this is a rainy day. This is the emergency that we’ve that we probably haven’t seen so much in our lifetimes. I know people talk about some man, some very clearly man made and specifically man made disasters like World War One, World War Two. in our lifetimes, you think about these other big events, maybe 9/11 here in the US, but this and maybe even some of us still have a scar tissue from the global from the great financial crisis. Well, we don’t know nine, but this is bigger and bigger than bigger than these bigger than these kind of events that we’re familiar with. I think the closest thing can be the Spanish flu, early part of the century. So so the First thing I’d make is that a lot of people I think are confused, because we kind of talk ourselves into this into these like myths. And one of these myths is that the Fed kills economic recoveries. And that that’s the cause of the last few sessions we’ve had. And I look at those other recessions, great financial crisis, the tech bubble, and it seems that loan crisis earlier in my career, these are financial crises that lead over to an economic crisis and have a business cycle. But this what we’re dealing with now, this is an economic crisis, it’s going to spill over and hitting the financial sector. So what we’ve seen around the world but also in the US, central bank’s ease monetary policy, so they cut interest rates, buying assets, like the QE versions that we saw before, but other countries are doing their own versions of it. And we’ve got the federal the federal government, slowly responding. I think at first the US was very far behind the curve still in denial. I think we were in denial up to about two days ago. So until like March 13 or so. And I think that I think that sort of now I think we’re getting more serious. And, you know, a couple weeks ago when Congress was proposing about an $8 billion spending package, it was criticized for having a lot of ideological goodies in it. And now, as of this morning, the White House to Treasury Secretary Mnuchin is talking about an 850 billion dollar package. So this is like we’re going on to war footing.

Nathaniel E. Baker 4:35
Okay. Do you think there’s It sounds like you think this response is appropriate by policymakers and by central banks? Is that a fair assessment?

Marc Chandler 4:43
Yeah, I really think that they’re very slow. What they’re doing is they’re going to things like for example, the Federal Reserve increasing its repo operations. They’ve gone from like very small to 500 billion offering at a time and it turns out the market Doesn’t need that much it doesn’t want that much. And so there is an attempt to shock at all, and maybe not get the money directly to people themselves. And there’s some talk now of like a universal basic income like a one off, check, cut to all all adults $1,000, you get money into people’s hands directly. And it’s the same problem with some of these other operations, that that the banks still intermediate. So the Federal Reserve, or government might give large institutions access to capital, but then people have to borrow it from these institutions. And these institutions might have other other thoughts to do with their money.

Nathaniel E. Baker 5:36
Yeah, not to mention the fact that people can’t really go out and spend money even if they want it to seeing how all restaurants bars and retail outlets are effectively closed. I suppose they could order things on online. But one would think that the the outcome would maybe not be quite what was desired, especially when you look at small and local businesses, right. A lot of these individually owned businesses, these mom and pop little places that you walk into off the street, in towns and cities across the country across the world, not to mention the gig economy and the workers in that sector. But all that aside. So as far as an economic shock to the system, you mentioned historic parallels. And I’m, I’m apt to agree that this is a little bit different than the other cycles that we’ve seen in our lifetime. At least, this is something that was caused by an exogenous shock. Prior to this, the economy, at least in the US, if you believe the economists and if you go beyond and you look at all the data was seemingly healthy, you know, you had unemployment at very low levels. You had manufacturing was was doing okay. consumption was was fine housing, you know, pretty good. And this after 10 years of expansion, so, what do you make of the argument that this was an exogenous shock the underlying economy is still in good shape. And that once this thing is clear and everybody goes back to work, we’ll have a nice one of these V shaped recoveries, right? Where things just kind of like, bounce right away. What do you make of that argument?

Marc Chandler 7:15
Yeah, no, I’m, you know, grew up in Chicago. I’m a Cubs fan and

Nathaniel E. Baker 7:20
Okay, well say no more. Yeah. Hey, you guys won the World Series too finally so

Marc Chandler 7:24
Once, yeah. But I think there’s like a sense of optimism, you know. I think I mean, I think there’s some good reason to be optimistic. And here’s how I sort of look at it. You know, I have I did some work a master’s degree in American history. And I know in the beginning of the Civil War, the North was very slow to get going to get onto war footing. But when it got on war footing, it really you know, the wheels turn quite, quite strongly. Same thing about World War Two, us a bit slow. We got the we got the industry in the war effort, and there was no turning back. Same thing with the space race. The Soviet Union is actually ahead of the US for a while. And I think that, so for me, that’s the important thing that’s going to happen is that finally, and I think belatedly the wheels, which by I mean, the US machinery, industry, government, the central bank, everybody is going to be reeling together. And when those wheels begin turning, I think we’ve got to see all kinds of things like today, for example, the first vaccination for humans is being tested in Seattle. And so of course, we got it, we got to get our own way in the regulations and everything that prevent this from coming to the market very quickly. But I just think about the the the virtue of the United States decentralization, which means that every state has a State University, and almost every State University has a hospital, and these hospitals have researchers, decentralized. You got a lot of brainpower behind this. And so I know this might sound to some of you international viewers as like this is a typical American like technical logical optimism, and there is an element there. But you know, when it comes to selling books online, maybe is it first mover advantage, but when it comes to fighting this Kovac 19, maybe the sooner the last one as an advantage. And by that, I don’t mean of course, we haven’t seen the whole world get it yet Africa is only beginning. But it looks like the US is behind Asia by maybe more than a month behind Europe by a couple of weeks. And so maybe this is going to give us slow to start. We have our own challenges here. Number of hospital beds per hundred thousand people and doctors and all those kind of things. But I do think that the wheels are getting turning is slow to come out of the block, but they are moving. And so I think that could be I think there’s good reason to be optimistic. They’re just like the markets overshot on the upside. And I’m kind of one of those people that thought that almost any measure of valuation that I’m familiar with, showed the market was like just outrageously expensive. And now maybe the markets got outrageously cheap. And maybe things get cheaper first before I mean, I know some people are looking at to say, I think we dip below that 19,000, the Dow today, you know, the kind of downturn we’re expecting is really going to be a couple things. One is going to be compressing earnings. And so we investors have to make that adjustment. But sometimes the markets get it wrong. And I think that the markets are huge aggregator of information. And right now the information needs to aggregate. It’s, it’s not quite there. Some of the things we need is when will When will this peak is that? does one become immune to it after one gets it? What happens when China now is going to Chinese economy is going back? People are going back to work. You can see that traffic’s going up. Pollution is going up again, what happened if there’s another outbreak of the virus. And so and same thing like with the Spanish flu, they pushed it back this spring, summer months, we saw less, less transmission of it, and then it comes roaring back that next winter. And so I think there’s my sense would be that in rates are going to have to stay low for the rest of this year, we if we do get a V shaped recovery in the economy, is it just a one quarter and a pent up demand to go out to drinking or buying some goods? Like you say this has been a historically long expansion, a lot of pent up demand was already was sort of already been spent. So I think that maybe get this one quarter big bounce back. But what is the growth potential in the US economy? And so growth potential, we think of it as like, how many working age people you have, are employed, and what’s the productivity? And so I think that that’s really like the speed limit of the economy. You know, you look at the speed limit, then you can of course, put some high octane fluid called fiscal stimulus or other measures. But what is the speed limit of the economy, it really has a lot to do with the population growth and workforce growth because productivity tends to be at like, it doesn’t change all that much from quarter to quarter, though can change over a period of time. So bottom line, here is Get population growth of about 1%. of productivity about 1%. I think the speed limit that is around 2%.

Nathaniel E. Baker 12:07
So what camp Would you say that you’re in from an economic perspective? Are you in the in the in the camp of the V shape? Or do you think that this is going to be much more profound and longer lasting, and have wider ranging effects than people are maybe accounting for right now?

Marc Chandler 12:24
Yeah, sure. That’s a good question. I do think that we get a little V shaped recovery. So q3 or q4 should be very strong. But I’m also the camp that says that there are some serious like distributional issues in the US they will limit growth, that, that even if we have a strong bounce back in the economy, we still have a that might not there’s going to be some fundamental changes to how we do business. I think that people are just feeling a freedom. I think you know that the BLS, the Bureau of Labor Statistics says about 30 million Americans can work from home. And I think some of us who some some people who do experience I think they see a freedom, and maybe even a boost of productivity, because you got to cut out that commute time. So I think I think one of the other things, I think, especially for people are looking at the markets. One of the things I think I’ll come from this isn’t money itself, the coins and notes we keep in our pocket. This is a this is a, this is like a contagious vehicle. And I think it will help accelerate the move to and I’m not talking about the cyber currencies like Bitcoins. I’m talking about the digital currencies if central banks will come out with and I think you’ll see a china really taking a lead on this. They already have a lot of patents, they’re already moving in that direction. I think this will accelerate that move to official digital currencies.

Nathaniel E. Baker 13:47
Do you even need that though, because all the electronic commerce that happens now, you can do anything with your credit card. I mean, even here in the US, which by the way is far behind Asia, when it comes to point of sale transactions with these credit cards if you’ve ever been to China or other parts of Asia, you know, but but even still, you can still use your credit card in, you know, here in New York, you go into a bodega, you can use it. Sometimes they try to make you charge at least five bucks or something or I went into one the other day, and they they said there was no minimum, but they charged me 50 cents, because I was only buying two things or something. But the point is that you can, you can make these, you can use this now you don’t even really need cash. And also further to that I saw a tweet. Just yesterday, I think that somebody was talking about how she had gone into a store and they said, No more cash only credit cards. And you know, she was she was very concerned about this. And I replied her and I said Well, to be honest with you, I’d be more concerned if it was the other way around. Because, you know, as long as we can use our credit cards, and as long as all that infrastructure is still working, where you can process things you can pay for things online, you can pay for things. We can’t go into stores anymore, but on the Delivery apps, right? Everything could just kind of keep humming. Whereas once that shuts down and you need cash, you’ve got bigger problems, right? So yeah,

Marc Chandler 15:08
yeah. So say for me that the problem with the credit cards is that the kind of utility businesses pay a few percentage points and their profits. Ultimately, it’s based on a bank, a bank. And so we want to somehow we want to create a digital currency. But I think to your point, though, China’s really done it through a mobile apps. So I think we have to find an american way to do it, because so many people are not banked, and I relatively new to that. But I fully agree with you that that the CIO was looking at like, what are they going to be the changes on the other side of this crisis? And I think one of those changes is moving in whether it’s more like your idea of a greater reliance on credit cards, or figuring out maybe I think that like the thinking has to progress where, you know, during the in the 19th century, early 20th century, what were utilities they were the electrical Water gas coming into your house, maybe in this new age. Maybe there’s other things that are utilities, like access to like a credit or debit card, maybe it has to be that the central bank has to keep the account instead of the local bank. So that really redefines the purpose of banks, like banks have a utility function, and they have a casino function, let the investors deal with the casino function, maybe the utility function should be taken away from them. So, like the postal savings like they do in Japan, so I can see a lot of things. I guess my point really is that, yes, this is a probably a short term shock, major shock to the global economy. But there are some things that probably going forward are going to change society. So this becomes one of those before and after moments.

Nathaniel E. Baker 16:47
Very interesting. Okay. Marc Chandler, I want to come back and ask you some more about your background, and some more ideas for investors going forward. But let’s first take a short break.

Moderator 17:02
You’re listening to the Contrarian Investor Podcast. You’re on iTunes, Spotify, Stitcher, and other platforms where podcasts are found. Subscribe and supply an honest rating. We on social media search for Contrarian Investor Podcast on Twitter and Instagram. You can find us on LinkedIn as well go to forward slash contrarian podcast. We want to hear from our listeners email your thoughts to feedback at contrarian a repository of all podcast episodes and materials is available on our website Now back to the program. Here’s Mr. Baker.

Nathaniel E. Baker 17:43
Okay, welcome back. Marc Chandler. This is the section of the podcast where we’d like to introduce our guests a little bit more closely and have him or her describe his or her background to listeners and tell us basically, where they’ve come from and And how they came out to be this at this stage of their careers, I guess. So why don’t you take it away? And tell us about about that?

Marc Chandler 18:08
Yeah, so I guess my background is probably very surprising to many people. Maybe the most interesting thing, so I grew up in Chicago, but I went to my family made the access to the suburbs, and I was always very politically aware. And I organized a strike in high school and got kicked out of high school. I tried so even though I have two master’s degrees, I don’t have a high school diploma. Okay. And so I guess I guess, this kind of experience is really like a critical I think for like, the kind of mind that you want for someone like myself my job as a strategist, having to like doubt everything. be skeptical of it is like they surely believe like nothing they see and only or you should believe like Nothing you hear and only half of what you see. Hmm and so a very skeptical mind especially skeptical about authority and authority doesn’t just mean the government but it means any concentration of power. And so I also read about the same time I got kicked out of high school. And this also illustrates another thing about my who I am is I was working at I come from a lower middle class background and I had a work in high school I was working at Burger King and lost that job because I tried to unionize it and as you probably know, there’s no Union as eight other countries have unionization fast foods Americans don’t. And I yeah, I lost that battle and I ended up having to I worked at frozen ice cream and frozen yogurt shop.

Nathaniel E. Baker 19:46
Did you try to unionize them too?

Marc Chandler 19:48
No. too small, but but I ended up I hadn’t really thought thoroughly out and I and it turned out that like I didn’t have a clue what I was gonna do that winter ice cream shop closes down So, I ended up going to Burger King and promising I won’t cause you any trouble yet. So, but I so I go to college and it’s funny a lot of colleges accept students who are you know, you have to take the AC t test or the SH t test. You have to like have you you have to have your head on straight to some extent. But you don’t need a high school diploma to get to a lot of colleges, universities, especially these days where they were actually more at ability they’d like yeah, the sheepskin. So anyways, I have a background undergraduate and undergraduate school. I studied what I thought were the social sciences that’s really what I wanted to study people how they think and from people from but as anthropology sociology, I really tend to do undergraduate I focused on political science at the School of North Central just in decal in North Central is in Naperville, Illinois outside of Chicago. I still I have two majors one was political science and the other words what they call it humanities, religion, history philosophy, and I was turned out From a teacher who still is a professional, he teaches at Rutgers now in American history. And I liked it so much I studied with his professors. I went to Northern Illinois decal to get a master’s in American history, I really focused on two things. One was Frederick Douglas, who was a slave. And the challenge is how do you fight a system that’s backed by law? In the sense of slavery, it took three Amendments of the Constitution to get rid of slavery. So how do you find a system that has the authority of the law behind it, I thought, in my own mind, that’s what I was gonna have to do. And then, studying American history, naturally took me into modern foreign policy, America’s like, was born at the age of empire, and all these sort of fancy itself as an empire itself of some sort. And so I studied American foreign policy. And that’s what took me into international relations where I did another master’s degree in what I thought was political economy. And I thought, that’s what the Original thinkers like about capitalism like Adam Smith political economy. So I looked around at the time, this is a early 80s. And what school has a good program in international relations, political economy? Well, it turns out the two schools did. One was Princeton, the Woodrow Wilson School, and the other was the University of Pittsburgh to Graduate School of Public and International Affairs. I, of course, apply to both of them. And in the effort for Princeton, the Woodrow Wilson School you had to write a position policy paper. And, again, what would like policy paper Be it was why Brazil should declare a unilateral moratorium on their debt? Hmm. A very unpopular. I don’t know if that topic, my point of view, or might be my writing ability kept me back. I wasn’t accepted at Princeton, as I went to the University of Pittsburgh, and lo and behold, what they thought of political economy. That’s how politics screws up the economy. It was like It was a libertarianism slash, what sort of classical liberalism, minimal state governments only screw things up. So I, when I got out of school then two master’s degrees, I knew what unemployment was, but I didn’t know what it meant for like the markets. And so the one thing I could do, I thought was right, I used to write for underground newspapers that got incorporated school newspapers. I used to like this comic called for the dissent from the Supreme Court and always be like finding something to like, hold up what might be good against what’s perfect. And so I found a job looking through the newspapers, I didn’t know people in the industry or anything like that. But for me, I had already I appreciate how the currency markets the dollar was in the middle of a huge rally when I got into graduate school, and I had a job at the Florida Chicago Mercantile Exchange as a reporter, covering the currency futures, and T Bill eurodollar futures. And occasionally I’d have to like this was the first set of question As to Radio Shack, trs 80. S is small screen, and I used to have a phone hookup cradle it put the handheld phone into this cradle to make sure it got to the signal to send it to my editor. So I did that for a few years. And I realized about like, why the markets how the markets really work. The market is reward people who have an opinion, you don’t have to be right. You need an opinion, you need to have some way to synthesize the news. And what does this mean? So to answer the question about what does this mean, and why is this important? What should I do? And so, I became an analyst at Dean Witter Reynolds at a time before was bought by Morgan Stanley. And then I did a stint at a hedge fund for a while that blew up when the Europeans widen out the currency ranges to 6%. And I did this I did a whole thing for a bunch of large banks, Deutsche Bank, HSBC, and I spent the last 1314 years at Brown brothers Harriman and old fashioned partnership bank Value Investing, they were actually the custodian as a function. That’s how I got involved. A custodian being the back office for a lot of mutual funds and asset managers who needed to transact, make the currency transactions. People are like, you might have a 401k you have some money in a fidelity bond fund or a Matthews Asian fund. So brown brothers would sort of act as a custodian for this and into the currency transactions. So I was able to deal with them I create the largest s&p 500 companies, the largest asset managers, but for me, the problem was it is I think, a challenge for many people in their careers. Now, is that progress technological progress means that couple things it means that largely a lot of the large asset managers have a artificial intelligence using algorithms to execute a trades people are people like us who are bringing money to the to the to the asset managers, we are not we see the problem with the equity fund managers, the active fund managers and many of us are choosing passive index funds. These people needed less less people like me, we I was able to add less value. And I’m still committed to adding value when I can and so I joined this boutique. About a year and a half ago Bannockburn, global forex small group of people offices, there’s like one or two person offices throughout the country. And instead of helping the large asset managers and the the wholesale market institutions, Bannockburn really helps us small and medium sized businesses, and I can add a lot more value to them. It’s much more challenging. The third like David Goliath stories give you an example, the large asset managers and the large companies, they buy foreign exchange, they depress the foreign exchange as a spread between the bid and the offer. And these clients the largest players in the market, if you look at your screen is four points four places on the other side of the decimal point, but there’s really a fifth one for the wholesale market. With small and medium sized businesses are paying. So we’re talking about for these large businesses, then we’re talking about a thousandth of a penny spread. Between the bid and the offer, the small and medium sized businesses are talking to these days, they’re paying three sometimes 4%. Because it treated like there’s a wholesale and retail price for money, and I spent most of my career on the wholesale, sales wholesale side. And now I’m trying to help retail, get those institutional capabilities, institutional pricing, institutional analysis. And so I’m finding a sort of latent career finding new ways to add value. Interesting.

Nathaniel E. Baker 27:39
Yeah, and speaking on podcasts is certainly one and people with with your background, a diverse set of educational and professional experiences and having you know that rebellious streak especially is something that, you know, I very much look for when I’m having people on the show to kind of, as the name suggests, presented contrary View. Right? So what is your what is something that you think that we’re all missing here in the market and economies? You we talked before about how this is a big event? Obviously, you know, you go back through your history, I mean, it’s, you know, it’s pretty funny at the outset of this thing. Maybe not funny, but everyone was saying, well, this is an exogenous shock the economy isn’t okay shape, and nobody but that and that’s true, but World War One was also an exogenous shock, right? And that changed everything right? I mean, in 1914, you had kings and queens running around Europe right and you know, that was all thrown overthrown pretty much and at least in Germany and Russia, etc. But you know, you had countries created out of out of nothing, you had all kinds of you know, women’s right to vote. You really that that changed everything the whole colonial system was kind of didn’t wasn’t ended then but it was certainly kind of put on life support and then World War Two, pretty much ended it. But the point is that we have these major events in our lives 911 people said was going to be one certain ways it was you can’t fly like you did before 911. What other types of things and this gets us maybe off track a little bit and more into the realm of society, but nevertheless, I do think we should address it and what types of changes do you think might be coming down here and what might be created as a result of this whole Corona crisis?

Marc Chandler 29:26
Yeah, good question. I said that, you know, the, during the great financial crisis, Bernanke, he said something like, it says something to the effect, like there’s no atheists in a foxhole. There’s no ideologues in a crisis. And I think that this public health crisis reveals, in a very profound way, the problems with the minimal government, the libertarian type of point of view here, and I think it’s like you know, for many years we’ve been saying, you know, as a country in the US, and the emphasis on individualism, serve civic responsibilities. civic duty, this seems to be like suckers pay out like you try to get out of jury duty. You look out for yourself. And I think that I think that a crisis like this makes us I mean, I think those kinds of things leave us ill prepared for this kind of crisis. Social, I mean, we’ve like really dissolved social trust language has been debased. And I think that it cost us as a society, our ability, our resilience, and so I hear you that like, you buy a good stock and bad things happen and the stocks gonna sell off. You do the right thing, and sometimes you still get punished. But I think, but but I think what happens is that you buy like a value, something that you could buy something of value, it might still get hit. But we’re not talking about sort of like what they talked about when you’re getting in a boxing match or something that how much of it’s not like, how hard you get hit, it’s how hard of a punch you could take and still come back on how resilient you are. And I’m afraid that for me, I think that’s one of the things that have come from this is the In this minimal state, the the I mean, what are we what are what are those people called who who are like not political appointees are just like bureaucrats who do their job. And they really the deep state. Is this hill you have to like demonize is the EU is really the the biggest threat to America really the Federal Reserve? Is it really, and so. So I think one of the things they’re going to have to change, I think in order for us to be more resilient, is that some kind of sense of civic duty or civic responsibility? The idea of these, you see these pictures on social media, people say 25 or so going to the bar still thinking that they’re like immune, it is some kind of Boomer remover, no social responsibility. And I think they’re saying the same thing for I mean, it’s not just like, I don’t want to say millennials in that, but I think that we’ve we’ve eroded the sense of, of community. And a lot of it’s not like one thing has caused it but a lot of different forces. I think about a Robert putnams book, why we bow alone. Like what happened to the 50s and 60s, people belong to a lot of these bowling leagues, and now we don’t anymore. What’s happening? I see someone else, you know, I see you got the headphones on. And I see I sometimes make a mental count when I’m in the subway, how many people in my subway car have headphones on? And it didn’t really I just kind of ironic, it seems to me like, part of it. modernity is dead. Lately, it’s like, in my book called politically kind of tomorrow I talk about this as sort of custom made but mass produced, produced music, but we can custom make the decisions we want to listen to. We can watch those shows we want to watch if anything can be like individualized or we get other benefits of being mass produced as far as costs and everything. And so maybe this uh, maybe this, this covert 19 crisis just shows us the extent of which this atomization of society has other consequences when we have to deal with group problems. Everything I was gonna say about the market economy itself is that I put it like this that, you know, oftentimes I find in my reading and talking with people that they see some problem with the market economy. 19th century you could have capitalism, slavery was so important for industrial capitalism, you couldn’t have capital without slavery. And then if women got to vote, their goes to household. And all the, and we told that for a while, you know, we, you know, when people were much younger, say 3040 years ago, we were kids used to go swimming in the Hudson River in New York, and then a large company polluted it. And do we still pay that price for that? And the idea was, well, he had to pollute, because otherwise if you got if you were green, you couldn’t make any money. Right. And now, I think that we’ve seen that capitalism has this resilience, that the problems that people point to can be addressed the process I see is that sort of like at some people, you know, some people I know their biggest weakness comes out of their biggest strength. It can’t just be reformed away. It’s a much more nuanced type of problem. And I’d say that about capitalism. I think that we’ve reached a stage in capitalism, where I think it’s like the Midas like King Midas and Greek mythology. Everything we touch turns to gold. We are wealthier beyond our imaginations. And we have so much money we don’t know what to do with it all. So we look for create new assets like bitcoins to absorb some of this like a carbon trap. I think that capitalism has produced a surplus, you know, people these days we think about like things like high cholesterol, heart disease, what are these caused by? It’s caused by too much of a good thing. Most of our problems seem to me to be too much of a good thing pollution, the vapid melting of the equator or the sorry, the, the Antarctica and the snow caps. What is happening is too much Have a good thing too many cars too much carbon dioxide. And so I worry that this that this age that we’re in is one of surplus and the most troubling surplus is that of capital. before the crisis hit, we’re looking at something like $15 trillion or so of negative yielding bonds. There’s a story about this, you know that pork prices jumped in China, there’s a story about a guy who’s taking a half a pig home to his family, and the back you know, you drive you drive his motorcycle had a half a pig, and he was hijacked. And the hijackers let him keep the motorcycle. Okay, so we live in this world of, of incredible surplus. And when things are not in surplus, when things are in surplus, we understand it right? The price of oil has dropped because there’s a lot more supply than demand. Well, there’s nothing special about money. Money operates I think the same way. The reason that we have negative interest rates are so low interest rates is not because the central banks are are buying up bonds and this year that the reason we have low interest rates is partly because growth is low. growth potential is low inflation is low, but ultimately, because we have too much money too much, right? It wants this zero they want they have to safety over investment.

Nathaniel E. Baker 36:18
But then wouldn’t higher interest rates kind of be a solution to that? Because if you put the right if you if you increase the savings rate, and you give people reasons to save money versus spend it and circulate it out there, wouldn’t that be one way to deal with it?

Marc Chandler 36:32
There’s a higher interest rates to like lock that money up, like another carbon trap, like locked that money up. So in fact, in the realm of circulation, we can do things like that, but it’s not like I say, itself. So what happens is the banks that have more money, and what do they do with that money? They use that to speculate they leverage that. So yeah, so I’m not sure that like boosting savings rate, I think like boosting consumption for people I mean, there’s so many people that have, I think it was like 30% of Americans don’t have like $400 in the bank. Yeah, we want we want them to be consuming like you were me, Mike. Mm hmm. Right,

Nathaniel E. Baker 37:12
Okay. One other thing here is that, you know, you seem to win when it comes to the central banks. And I’m not going to be one of these people who says we should abolish the Fed and go back to a gold standard and do all that. But on some level, you have to see, especially if you go back into the recent economic history here. And you look at what starting with the Greenspan fed, and how they flooded money in the early 2000s, to respond to 911 and then kept interest rate rates way too low for way too long, which created the housing bubble. And then the Bernanke, he came in and started to raise rates gradually, and that caused the bubble to burst. And then you had the great financial crisis. And then you had you QE QE QE infinity which then created this 10 year? Everything bubble One could say. And now you’re back to zero again, after these latest cuts. On some level isn’t, couldn’t you make the argument that this is all created by Central Bank missteps starting with the Greenspan fed, and that there should perhaps be some level of accountability of the fed to the voters? You know, the central bank, we call it a central bank. I mean, and it effectively is, but as you know, this wasn’t created until 1914, or making 15. Right? And there was a need to do this at the time, right, because you kept having these bank grants and stuff, but nevertheless, there’s not really anything in the constitution for this. And the Fed kind of operates as its own little thing. It’s funded actually by the banks, right. As you know, it’s not funded by taxpayers. It’s something that people get wrong quite a bit. So On some level, there’s like a first the fact that they have misstepped over the last 20 years, and then also the fact that yeah, that they’re not really accountable as a government body. And maybe maybe they should be and maybe there should be as a way for voters to vote out the chairman or something like that. I don’t know. I’m just throwing it out there. But there’s some level of accountability. Right. I mean, what do you think of all that?

Marc Chandler 39:24
Yeah, no, I think you raise a good point. I think this is very much like, for me, like, very true to, to the American like what America’s contribution to political philosophy, right, and that is distrust. So the Europeans would say something like, I think was Lord Acton power corrupts. absolute power corrupts absolutely. I think the American version of it is power corrupts, so let’s hold it. Let’s democratize it and hold it accountable. Right. And I think that’s the American answer is much more pragmatic. On the other hand, there are parts of the government, they are not so answerable to voters directly and important branches. I think about the Supreme Court. When the Constitution was written, even senators were not elected by people but were elected by state houses. And so. So I so I think that for me, I’d say that the way that the central bank works in our society is its is its job is really to look out for the system as a whole, to make sure that system as a whole for capitalism, if that’s socialism by any means. They want to make sure capitalism works out not for any individual capitalist, industry or capitalist person, but for capitalists as a whole. And that really is a is a requires some work in the financial sort of financial space we have in the direct economy. So they’re really for the bank’s money supply and interest interest rates. To your point, if I think that if you ask me if there’s a fancy fed made mistakes, I’d say sure. There’s private sector make mistakes. Sure. Is there any way to avoid this probably not. How to make the central bank more accountable. I’m not sure I’m not sure that the best way to make it accountable I think they’re things like that we that we have in other things, term limits, perhaps three terms, three, six year terms, was maybe too much for Mr. Greenspan, maybe, maybe one term was too small. For Yellen. I’m just doing it out to meet it. So maybe some term limits to reach your point about accountability. I’m not sure how to do it. I mean, part of the problem is that in other countries, I can’t think of a central bank that is directly accountable. But I could see how you could have extra is supposed to be someone aboard a governor who’s supposed to be representing the interest of community banks.

Nathaniel E. Baker 41:41
Right. Yeah, exactly.

Marc Chandler 41:44
So I can see how I can see there’s ways to like get it more representative without necessarily letting people vote on the next chairman.

Nathaniel E. Baker 41:51
Yeah, Or maybe you have something I mean, the president right now appoints the Fed. The Fed president, right. I don’t know anything about him. I probably should know more about it. governors are appointed. And you have all these local Feds right. And

Marc Chandler 42:04
essentially, the governors are appointed by the President with the approval of the Senate. But the local banks should have they rise up to the local bank or the local bank, like the New York Fed or the St. Louis Fed, they’ll pick one of their own if someone who they want at a local level of the President, I think tends to be approved by the FOMC. I’m not sure if that’s a law or not. But I think that typically, and that’s why I like say the New York Fed is so important, because if the feds execution desk, and a chair or the head of the New York Fed, sometimes could go to the Fed or be the chairman of the Fed.

Nathaniel E. Baker 42:35
Right. Right. Yeah. And probably making them directly accountable to voters is perhaps completely insane. But just because of the level of knowledge they need to have, but, you know, right now, it’s tied so closely to the executive branch, right to the to the President. And, you know, the Supreme Court vote works like that. But maybe there’s another way to do maybe there’s a Senate Banking Committee, I don’t know, but you know, maybe not. Maybe it works fine. Maybe Maybe like you said, just some trimming around the edges.

Marc Chandler 43:02
Nobody It is true that they’ve tried to do other things to try to make them accountable, like having the chairman obligated to give to do about twice a year to the before testified before Congress, or even the press conferences. To your point. It was incredible for years other central banks, we have press conferences. And and this is so for me, like when I say no credit should be what should go like wasted. I think it’s one of the things we get is like you pointed about a woman’s right to vote and things. I think every when we have a big crisis, we extend the franchise. Vietnam was a crisis for society standard franchise. I want in my book this politically kind of tomorrow, I try to anticipate the extension of a franchise, who would it go to 16 year olds, lower the age by two years. Here’s why they did it in Scotland for the referendum, because a lot of important issues are about the future. And I know you say about 16 year olds, they’re not mature enough. Same thing people said about 18 year olds, but also 16 year olds when they’re not going to vote too high, too high. numbers.

Nathaniel E. Baker 44:01
Yeah, but then well, that’s the case. Why don’t we just make it 12 year olds are not gonna vote nine numbers either, right? Yeah.

Marc Chandler 44:06
Yeah. No, I think I think that you could say that 16 the government says, you can. You’re at an age in which you’re allowed to drive a killing machine called a car. Yeah, that 16 year old suicide of an age of maturity or something like that. So about what I see happening is like it like this. I say the Scottish referendum. It was about the future. 16 was the right to vote in some states. Try and some of us primaries 17 year olds get to like to vote in the primaries, and if they can’t vote in the general election. So I think like we should be trying to think creatively, but extending the franchise, take advantage of this crisis, while officials sort of like have to like they know that we sort of have an agreement the same way that Chinese people do think that the leaders have to deliver the goods as a rising living standard, so that our children live better than we do, but that that dream is being lost. And I think the political and economic elite know that anti bias and bread and circuses don’t count now, extended franchise. Even the white house right now is talking about a version of UBI that universal basic income 70 every adult $1,000 or something like that. This is an incredible time we’re going through it. There’s only ideological like, holds don’t work. So I’m hopeful that out of this crisis comes new, like civil liberties.

Nathaniel E. Baker 45:24
Hmm. That’s a nice way to end. Mark. In closing, why don’t you just let our listeners know where they can find you on the line and elsewhere?

Marc Chandler 45:33
Sure. So I have a, I have a blog, you mentioned our mark to market. I update that six days a week, at least once a day institutional level analysis that I’m providing to our clients as well. And I’m also on Twitter in terms of social media called mark making sense. I know it sounds kind of egomania, but that’s what it was. My first book was called Making Sense of the dollar. And a young woman working for me, Margaret Kepner, who is brilliant, well ahead of her time, knowing how important social media was going to be. And yeah, she hooked me up. So we went and sat with some marketing. So mark making sense at mark making sense on Twitter, so feel free. I’m on LinkedIn as well. And I like having dialogues with people. That’s how I learned. And and I don’t know, you know, I think it’s sort of like what Mark Twain said. I said he did. I’m sorry, it was a Thomas Edison. He said he did fine. He and fail. He found 10,000 ways it didn’t work. And so I think that’s why I think there’s some of us who have been around the markets a long time, gray hair, a lot of scar tissue, and but happy to happy to learn new things.

Nathaniel E. Baker 46:42
Very good. Okay, wonderful. Well, that’s a good way of closing. Thank you, Mark. thank everyone for listening. And thank

Moderator 46:48
Thank you for listening to the Contrarian Investor Podcast. We hope you enjoyed this episode. To subscribe to this podcast. Simply open your favorite podcast software and search for contrarian investor. Follow us on social media by searching for contrarian investor on Twitter and Instagram. Send us your thoughts on feedback at We look forward to speaking to you again next time.

Transcribed by

Leave a Comment

Season 2, Episode 10: Coronavirus Crisis Continues, Expect ‘Rolling’ Recessions

With Rachel Ziemba, Geo-Economic and Country Risk Expert

Rachel Ziemba joins the podcast to discuss the continuing, and intensifying economic impact from the coronavirus.

It’s become clear that the crisis has caused a demand shock that will likely bring “rolling recessions” in its wake. The most likely scenario appears to be for a “W-shaped” recovery. In the meantime, there is still a lot that go wrong.

Content Segments

  • The demand shock, shift in demand, and rolling recessions (4:27)
  • Unique characteristics of the coronavirus crisis (7:57)
  • Oil and oil-producing countries may be at most risk. Sino-U.S. relations can be expected to suffer (16:35)
  • Background on the guest (25:55)
  • Discussion of historical parallels: some similarities, but there is no precedent (30:16)
  • The unlikely prospect of a “V-shaped” recovery (36:26)
  • How deep might the trough be? (39:55)
  • Are there any safe harbors from this? (47:57)

For more information on the guest:

Not intended as investment advice.

Leave a Comment