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Covid Tradeoff July 25, 2020

Posted by shaferfinancial in Uncategorized.
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So, little is talked about the tradeoff between mitigation of Covid 19 and jobs. But it is clear that there is a tradeoff.

For example, Vermont. The Republican governor, Scott, has been very aggressive with mitigation despite the numbers of infections being low and percent positive on testing being the lowest of all states. Just yesterday he ordered a face covering mandate. This in a state that hasn’t had a death in over a month, has one of the lowest deaths per million (90) and is presently averaging 7 positive tests per day and has 2 people in the hospital in the whole state for Covid.

So how is Vermont doing with jobs? Vermont has lost 13.2% of their jobs due to Covid. Well, they are 5th worst behind Hawaii (15.8% loss of jobs), New York (15.1%), Massachusetts (14.4%), and New Jersey (13.5%).

Hawaii is an outlier because of its dependence on tourism ie people flying from various places. The other 3 states had a severe outbreak of Covid that required the harshest mitigation possible.

What about the current surging states. Well Florida, Arizona, Texas and Utah never had a harsh shutdown and their economy is much better than average. Florida -6%, Texas -5.3%, Arizona -3.3% and Utah lost 2.8% of their jobs. Utah stands out as having 85 deaths per million, one of the lowest among the states. Arizona is 432, Texas is 170 and Florida 263. Of note is that Arizona and Florida have large numbers of older folks living both within long term care institutions and outside of them.

So while the media is screaming because of the surges in those states, the vast majority of people are better off with at least a job to pay the bills. And the vast majority of deaths still is among the elderly with 45-50% of deaths being among nursing home patients.

Again, it’s a tradeoff. But, let the politicians be honest about it. Sacrifice 50 million jobs to attempt to protect elderly folks (and fail at that for the most part). I’m not a proponent of either side, just feel a conversation needs to be had on it for the future.

Good News on Covid July 10, 2020

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Decided to do a comparison from 1 month ago to today. Picked a state that is considered a hot spot and a place I use to live:

Just did a cursory view of hospitalizations from Florida comparing rates from 1 month ago to today: Ages 15-24 Hospitalization rate went from 3% to 1% of positive cases. age 25-34 from 6% to 2%. Age 35-44 10% to 4%. Age 45-54 13% to 6%. age 55 64 19% to 10%. Age 65-74 33% to 19%. So, in the younger age groups it dropped 66%. Middle age groups it dropped 50% and older age groups 40%.

Percentage of cases (due to who they test most likely) Age 15-24 increase from 9% to 16% Age 25-34 increase from 16-21%. Age 35-44 stayed the same 16%. Age 45-54 Dropped 17% to 15%. Bottom line is that hospitalization rates dropped in all age groups, but most acutely in younger age groups. And average age of cases are trending much younger.

So combining the two; the recent surge in Florida is concentrated in the younger age groups where we are seeing significantly less hospitalizations.

Isn’t this good news? I mean really good news…….why isn’t it being covered? Without testing demographics, we can’t state definitively that they are testing more younger people than 1 month ago, but the evidence seems it is more likely than not that they are.

And here is another thought; Since the percentage positive in Florida has gone from 5% to 15% in that time period, doesn’t this mean that Florida is getting to some level of herd immunity protection soon?

For Perspective CDC Mortality Chart July 10, 2020

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Most Recent CDC Mortality Chart

CDC estimates for Infection Fatality Rate May 25, 2020

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https://www.cdc.gov/coronavirus/2019-ncov/hcp/planning-scenarios.html

I will save you the math:  .26% IFR for all cases.  But half the cases are from nursing homes, so it is significantly less, perhaps half as much for non-nursing home individuals.

Now will you start to believe me?

On Covid 19; According to the CDC it’s over May 24, 2020

Posted by shaferfinancial in Covid 19, Interesting Reading, paradigm shift, Retirement Income, trust, Uncategorized.
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It’s hard to reconcile seemingly conflicting information/data coming in at the same time. So, I’m sure when people see this, there won’t be much they will find that is believable. But, pandemics go in stages.  1st stage is community spread, where an infected person enters the community and it spreads from person to person.  Then the virus burns out for several reasons some known and some unknown. Seasonal affects. Enough cross immunity is developed. The people who are going to get sick from the virus have already gotten sick. Etc. Finally, there are usually smaller waves that come into a community annually or occasionally. During all this the virus mutates into different forms which usually are less virulent forms of the virus. But it is impossible to predict when and how bad the waves will be.

 

Update: I was wrong.  The waves are very large in several states.  Mostly young and unaffected folks are getting infected and spreading this.  Also some small rural communities of mostly minority population are see high rates of infections, hospitalizations and deaths. Fortunately, overall, the hospitalizations and deaths per infection are going down significantly.  Unfortunately, the fear mongering is not.  Some front line workers and scientist think the virus has mutated to a more infectious, but less virulent form. Hopefully they are correct.

 

nchs-mortality-report.gif (900×580)

 

Look at the above graph from the CDC.  Note the spike in Pneumonia, Influenza and Covid mortality. When we reach the peak of the curve (about 3-4 weeks ago, was when the epidemic in the USA was essentially over. Now we are just dealing with the fallout. Note the sharp decline over the last 3 weeks. That is another indicator that community transmission of the virus was done.

But, how can this be?  Aren’t people still getting infected and dying???

Yes.  Again aftermath of the viral spread. Deaths are 2-4 weeks after infection. When a person tests positive for the viral infection, that is 3-7 days after infection. The majority of new infections are from institutions like nursing homes and prisons.  Doesn’t this mean the pandemic is still going strong?  No, it means that moved to a cluster phase, where people not in the general public or have jobs that get them large viral loading are getting infected.

 

What other proof is there. Well Emergency Room Visits are way down.

 

 

These are the CDC charts for ER visits. Notice the peak was around week 14-15 of the year. So middle of April. Note, that in the second chart that combines all influenza like illnesses (ILI), we are now below baseline. This indicates we are now below normal for emergency room visits for ILI’s. Most of the remaining COVID visits from the first chart are probably from nursing home and prison clusters along with health care workers and prison guards.  This is the last remnants of the viral epidemic that remains.

Please note, we are probably going to live with this virus for a long time, vaccine or no vaccine. Time will tell if it will fade into the tapestry of ILI’s, peaking in the winter and fading into the summer.

 

So, now you are probably pointing to all this and saying look how well the shelter in place is working. Well, there is an increasing amount of evidence that mitigation strategies didn’t mitigate much.  And there seems to be one item they can say by comparing different countries with different mitigation strategies. That is there is no scientific evidence that shelter-in-place worked to avoid the spread of Covid.

And just for fun, here is an article detailing how this strategy came into being in the USA. There is a link to the scientific paper written by epidemiologist of the time (2006).

 

Here is a key paragraph:

“There are no historical observations or scientific studies that support the confinement by quarantine of groups of possibly infected people for extended periods in order to slow the spread of influenza. … It is difficult to identify circumstances in the past half-century when large-scale quarantine has been effectively used in the control of any disease. The negative consequences of large-scale quarantine are so extreme (forced confinement of sick people with the well; complete restriction of movement of large populations; difficulty in getting critical supplies, medicines, and food to people inside the quarantine zone) that this mitigation measure should be eliminated from serious consideration…”

And:

“Travel restrictions, such as closing airports and screening travelers at borders, have historically been ineffective. The World Health Organization Writing Group concluded that “screening and quarantining entering travelers at international borders did not substantially delay virus introduction in past pandemics . . . and will likely be even less effective in the modern era.”… It is reasonable to assume that the economic costs of shutting down air or train travel would be very high, and the societal costs involved in interrupting all air or train travel would be extreme. …”

Finally:

“During seasonal influenza epidemics, public events with an expected large attendance have sometimes been cancelled or postponed, the rationale being to decrease the number of contacts with those who might be contagious. There are, however, no certain indications that these actions have had any definitive effect on the severity or duration of an epidemic.”

Happy reading…….

The 2006 Origins of the Lockdown Idea

 

 

Musings on Covid 19 May 1, 2020

Posted by shaferfinancial in paradigm shift, trust, Uncategorized.
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There is so much panic and subterfuge now around Covid 19, that it is close to impossible to write anything based on what the science is demonstrating without having people jump right to criticism and emotional outbursts. Note the craziness over the release of pre-prints of the antibody testing now ongoing. People weren’t willing to allow science to guide their opinions and the outcry and criticism of the Stanford research was laughable. And it turns out that now multiple studies with various sampling methods, many randomized are proving the Stanford researchers correct. USC researchers, University of Miami researchers, Harvard researchers and the state of NY public health researchers all concur that there are many many people out there that have had the infection without symptoms. And the worst part is this is great news. It means the virus isn’t as deadly as we thought.

The 2008-2009 H1N1 pandemic provides an interesting comparison. This influenza A pandemic started in the US and like Covid was a novel virus. It spread to the rest of the world and in its first year it was estimated to have killed 360,000 people. So far, it has been estimated that Covid 19 has taken 233,000 deaths.

But that is where the comparison stops. That strain of H1N1 mostly killed children and young adults. While the average age of death for Covid 19 is around 80. It was thought that the reason for this was that older people had antibodies from a previous strain of H1N1, that occurred many years before. That is why this pandemic was much worse in 3rd world countries, than the US. While we had 12,000 deaths here in the US, countries with larger percentage of the young had much worse deaths. By June, the end of the influenza season the CDC reported more than 1 million cases in the US. 980 schools were closed in early May in places that had significant activity. The pandemic that started in mid-April was essentially done by mid July of that year. It has reappeared yearly since then, but in much reduced numbers. In July of the first year clinical trails started for a test. And by September 15th a vaccine had been made. A second wave started in late September causing school closure again. But that second wave subsided in 2 months. The vaccine was distributed to the public in December of that year and provided significant immunity. This H1N1 infection faded into the background and is still with us today. There were some hospitals that erected tents to treat patients because of overflow from this virus.

Note our response to a virus that was killing children and young adults. It was rational. School closures in hot spots. Erecting tents to provide health care in areas that were overrun with patients.

Now, what we know of the COVID 19 virus is it is killing older people at a much greater rate than the H1N1 virus killed young folks. That is common sense, of course, as 80 year olds are much sicker in general and don’t have reserves to overcome novel viruses or strong immunity systems. And I say this without prejudice or meanness in mind. The life span of someone born in 1940 (80 years ago) was 70. These folks dying of Covid 19 have already outlived their peer group by 10 years or more. And this is what we are seeing. The oldest and sickest people, mostly in long term institutional care, are dying from Covid 19, while each younger segment are mostly recovering and at the youngest age groups showing little or no symptoms.

So that begs the question, Why, like the 2008-09 pandemic, did we not do a vertical integration mitigation strategy? In other words, in the 2008-2009 pandemic we closed schools in heavily impacted areas because the children were the ones most heavily impacted. Why did we not lock down long term care facilities, shelter in place orders for those 65 and older who don’t work, masks for health care workers who work with the elderly, etc.? Why instead did we do a horizontal mitigation strategy, closing down our entire society? And don’t say we didn’t know, because we did from both China and Italy/Spain. We knew who was at risk and how to best protect them. Don’t say in order to protect Grandma, we needed to keep their grandchildren out of school, because that violates all we know about how to stop pandemics and what we have done every time since WW2.

Next post I will take a look at the 1957 flu pandemic.

I hope I have left you with some more understanding of pandemic societal reactions and some deep questions.

Be safe.

COVID 19 April 11, 2020

Posted by shaferfinancial in Uncategorized.
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Because I live in a sparsely populated state and live next to an even more sparsely populated state, I can track the virus cases pretty closely. According to the University of Washington modelers, Vermont is past peak and here in New Hampshire we are basically at peak. So far about half the deaths in New Hampshire are of institutional residents (Nursing Homes, Disabled Home). In Vermont where the deaths are detailed, 20% of all cases are from 2 nursing homes.

This is very frustrating for me, because the institutions of long term care should have been put into lockdown day 1 of this pandemic. I know this is “Monday morning quarterbacking” to some, but it is really what history tells us we should do for our most vulnerable citizens. I find it hard to believe after all we have experienced over the years with pandemics, that this wasn’t the first move. In addition, stay at home orders should have been issued for all non-working folks over the age of 60. I believe there was no need to crash the economy to protect folks. So many people think that “flattening the curve” was about saving lives, when it wasn’t really. In fact, at the end of the day, it will probably cost us lives.

Flattening the curve was an attempt to keep peaks from overwhelming the medical system, but it elongates the curve and when we reach herd immunity. And it is only herd immunity that protects our most vulnerable population. At the end of the day, I might be wrong and this virus behaves differently than all the other virus pandemics, but I think history will prove me right. This won’t be the last virus to reach pandemic status. Are we going to crash the economy every time??????

Yes, there are hot spots that require assistance with more medical workers, equipment, PPDs, etc. But, we have the know how to set up temporary MASH units for these hot spots. And yes, they would have been temporary. The virus will kill folks. That is the bottom line. That is biology or nature. Nature is bigger than us, something we need to admit. People die, something we need to admit.

At the end of the day, will more people die of this virus or from the effects of unemployment, stress, violence, homelessness, etc. that the stay at home orders caused?

Will the governors double down now and continue to issue stay at home orders even when we are weeks beyond peak?

Locally, the town of Hanover is upset because 85 or so students returned to campus (mostly international students). They feel this could overwhelm the town??????? One person quoted as saying having all these “vectors” coming back to town is a terrible injustice to Hanover. No comment on when they closed campus and sent thousands of “vectors” all over the world a month ago. I guess it was OK for colleges to send their “vectors” home, but not when a few students come back to town.

And on one evening the students were caught not social distancing and playing beer pong in their off campus apartment. Gasp…….How long before many more break social distancing requirements? I mean we can just social distance for months and months, right, with no negative effects……..

Maybe we should have given them the anti-body test to see if they are part of the cure (crowd immunity)?

OK…just my opinion and one of a small but getting more vocal minority.

Hearing from many clients lately April 6, 2020

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Been hearing from some of my clients lately. They are thanking me for getting them into an EIUL policy. This is typical when we see large stock market drops like we have seen. It is also very gratifying!

Had one client with an interesting point of view and plan of action. This client was a few months short of their 8th year anniversary of their EIUL. They had max-funded their policy, which means making 5 annual payments and then stopping. They had not decreased their face value as of yet.

In preparing for the conversation I ran their numbers and found that they had an average interest return of 8.52%. They had remained in the original suggested option of the S&P 500. Now 8 years ago when we first set it up that was the best option and their 8.5% return suggested it had worked pretty well for them. Since the cap rates for that option have gone down significantly there are several new options added on to their policy that demonstrate better historic numbers. So we discussed changing over to one of those new options.

But, what they suggested was they had a significant amount of cash in a savings account getting a small percentage of interest and they wanted to know if they could move it over to the policy. We found they could. So they are able to leverage their policy as a safe place to put their cash and gain a much higher return. In two years they will have gotten through those 10 years of high expenses and adding in money now doesn’t increase the expenses. So it was a great place to put their money. They are getting up there in years (late 50s) and getting close to retirement so this will up the amount they can take out annually significantly.

As an aside, I tried to talk the husband into getting an index annuity a few years ago as he closed in on retiring. He wasn’t convinced at the time. He could have gotten into a product that guaranteed him 10 years of 7.5% returns every year (as long as he took it as income). Instead he has a significant amount of market risk now. This along with the virus causing him business slowdown has caused him concern. This life insurance policy is their port in the storm and I thought adding in an annuity with the 7.5% with some of their retirement would make it bulletproof.

Finally, the Covid19 virus has caused the cap rates and participation rate for the uncapped option to drop for every policy out there. This is a reaction to the economy crashing and market variance going ballistic. It was nice that none of the clients I have talked to were worried about it, and most thought as I do that once we get the economy back moving the cap rates/participation rates would go back up.

Finally, a comment on the 8.52% my client has gotten inside her policy. I regularly check these out for my long term policies and this is marginally higher than the average I have looked at. The range for long term policies seems to be 7.8% to 8.8%. Note these are actual returns, not illustrated ones.

Got some TIME on my hands……COVID19, March 27, 2020

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In the past I have been unwilling to go beyond posting about financial ideas on this blog.

But, the COVID19 panic has given me much more time to post.  So, I will post, trying to be as apolitical as possible.

The governor of Vermont (a Republican for all you who don’t know) has canceled the school year.  My son is a High School senior at a school in Vermont. He is devastated. At first when he got a 3 week vacation he was pretty happy, but now realizing he won’t get closure with his friends he is pretty upset.

So, why close schools for 3 months?  Yea, I know all about the “curve” and the modeling.

Two news items have caught my attention.

First, an Italian Medical Scientist who advised the government of Italy made a few comments on the death rate in Italy:

“According to Prof Walter Ricciardi, scientific adviser to Italy’s minister of health, the country’s mortality rate is far higher due to demographics – the nation has the second oldest population worldwide – and the manner in which hospitals record deaths.

“The age of our patients in hospitals is substantially older – the median is 67, while in China it was 46,” Prof Ricciardi says. “So essentially the age distribution of our patients is squeezed to an older age and this is substantial in increasing the lethality.”

But Prof Ricciardi added that Italy’s death rate may also appear high because of how doctors record fatalities.

“The way in which we code deaths in our country is very generous in the sense that all the people who die in hospitals with the coronavirus are deemed to be dying of the coronavirus.

“On re-evaluation by the National Institute of Health, only 12 per cent of death certificates have shown a direct causality from coronavirus, while 88 per cent of patients who have died have at least one pre-morbidity – many had two or three,” he says.”

 

The first part is mostly known.  But think about the fact that 12% of the recorded COVID19 deaths are directly from the virus?????

Here is a little personal story:

My father went into a nursing home at age 95 due to my mother being in the last stages of Breast Cancer and not being able to care for him (my mom was 21 years younger). Most people in nursing homes get few visitors. But, for the 4 years he was in a nursing home we visited him 3-4 times a week (each year we took a 1 week vacation where we couldn’t visit). Every Sunday for 3 1/2 years we went to the nursing home, loaded him into the car and went out to eat as a family.  For the last 6 months we brought him to our house on Sunday for that meal.  He had dementia, but he always knew who I was and who his only grandchild was (He called him “the boy”). He took great joy in hanging out with “the boy.” He walked without a cane or a walker right up to his death (although he was unsteady on this feet the last couple years). Several times he got infections (pretty standard for being in a nursing home) and once he ended up in the hospital for a few days. Each infection made him weaker overall.  There were some workers in the nursing home that suggested we not treat the infection. But, I resisted and instructed the doctors to treat the infection. Maybe, it was wrong, but he was still happy to see us and eat Sunday dinners with us.

An infection is what precipitated his death.  He had a UTI and the staff did not tell us or note it for a few days.  I came to visit him a couple times while he was “not feeling well.” After maybe 5-7 days of the infection, the doctor called me and told me.  Again I instructed him to treat the infection, but it was too late at this point.  He had a heart attack and then after moving to a hospital the final stroke that killed him.

What is the point of this story?  Well on his death certificate it listed MI and CVA (heart attack and stroke) as the cause of death, not the UTI.  Probably should have just listed old age.  If it was in the COVID19 age, and he tested positive, it would have been listed as a COVID19 death.

The second thing that caught my eye was the NY governor saying that they were not denying anyone ventilator care and that some were on ventilators for 2-4 weeks before dying.

Would they have put my father on a ventilator if he was positive?  I hope not, but it sure sounded like it.  My father being in a nursing home with advance directives might have protected him from this, but who knows.

Finally, Ferguson the Brit whose modeling caused much of the panic has released new modeling that moves the deaths in Britain from 500,000 (10 days ago) to less than 20,000 now.  But what caught my eye was him saying that 50% of those deaths would have happened by the end of the year without COVID19 infection because of how sick these people are.  WOW…….now we are talking about the same effect as the influenza.

So, again schools in Vermont are shut down for 3 months.  Gyms, non essential businesses, restaurants, hair cutting salons all shut down.  Stay in home orders. Economy crashed. And the modeling as it gets better data, looks like the flu.

So, I wonder what is going on in New York City that they are running out of ICU beds and ventilators.  And what about New Orleans?? Is this because they have changed their end of life medical decisions?

Just food for thought??????

Maybe all this was worth it?  Maybe not?  But we are down this road and must deal with the repercussions. Maybe the early modeling will prove to be accurate.  Maybe it will prove to be wildly pessimistic.

Protect your assets as best as you can. Deal with your states mandates as best you can. But, keep hopeful and don’t let the media panic you.

Could you have avoided the loss of savings in your 401K? March 27, 2020

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Of course. If you had read any of my blog you know you could have.
Total losses due to the stock indexes dropping 30-40% from my clients?
$0

That’s right, EIULs don’t go negative, only share in the positive movement.
I’ve written many posts on this.
Time to get off the stock market roller coaster?
Time to get another EIUL?
Time to set up your children for the future?

Think this is the last virus induced panic?