What we’re reading (9/20)
“Storm Coming” (The Grumpy Economist). A very thoughtful, albeit disconcerting, post by Stanford economist (and author of one of the best asset pricing textbooks) John Cochrane. “[A]s an economist I predict people's behavior by asking what is natural given their incentives and the rules of the game as they are. That thinking leads to a dark place. […] Imagine, as seems quite possible, that Trump scores an early lead in the days after the election, with a narrow electoral college majority, though losing the popular vote, with 90% - 10% losses in the deep blue cities. Trump declares victory. Blue cities erupt in protest. As mail in votes come in and are tabulated, Biden gets closer and closer and by his party's count has won. But lawyers have already fanned out around the country. Every single smudged postmark, questionable signature is challenged by both sides […] What do you do if you are president with cities burning? You send in the troops. Republicans will call it ‘law and order,’ ‘protecting life, property and the rule of law.’ Democrats will decry this as ‘martial law,’ and a ‘coup.’ And with some justification: To their view, protesting such a presidential outcome is the same as protests all over the world, in Hong Kong, in Iran, in Belorussia, that aim to topple illegitimate regimes, though those regimes are ‘lawful’ by their laws and procedures for implementing those laws.”
“No Jobs, Loads Of Debt: Covid Upends Middle-Class Family Finances” (Wall Street Journal). “Millions of Americans have lost jobs during a pandemic that kept restaurants, shops and public institutions closed for months and hit the travel industry hard. While lower-wage workers have borne much of the brunt, the crisis is wreaking a particular kind of havoc on the debt-laden middle class.”
“Are You A Winner Or Loser Under Joe Biden’s 401(k) Plan”? (Investor’s Business Daily). “White House hopefuls Joe Biden and Kamala Harris are proposing 401(k) changes to turbocharge retirement planning and saving for people in the two lowest tax brackets. But if your income is above $400,000 — in the upper part of the 35% bracket or anywhere in the 37% — you would be hit with extra tax of up to $206 for every $1,000 you contribute to your 401(k) plan. Everyone in between? People in the 22%, 24%, 32% and most in the 35% brackets? The Biden campaign has said the changes would be structured so that taxes do not rise for people earning up to $400,000. They'd get a pass on the higher tax.”
“The Easy Part Of The U.S. Economic Recovery Is Over. Now Comes The Hard Part” (MarketWatch). “With confidence shaky, so many people out of work, and the coronavirus still spreading, the U.S. can’t recover more rapidly, economists say. Many businesses face ongoing restrictions on occupancy while millions of Americans continue to practice social distancing and shun normally crowded places such as airports, malls and hotels.”
“Sonoma’s Vaunted Wineries Embrace Online Sales, Budget Pricing To Woo Pandemic Drinkers” (Washington Post). “Grape growers that once focused on selling to high-end wineries are lowering their prices and supplying cheaper brands. Wineries that can no longer count on tourist visits are replacing in-person events with online campaigns. Restaurants that boasted of expansive wine lists now tout their to-go cups.”
