Good news for the young?
As always, when a grotesquely overpriced market regains a sense of normality, the media narrative is of complete disaster. It exclaims about how much money has been “lost”, as if it really ever existed in the first place.
Of course, a crash is disastrous for some. For example: over-leveraged speculators or the small number of people who planned to sell equities to fund their lifestyle. For many though, especially younger people, the market retreating from irrationally high levels is a cause for celebration (see also: the property market).
Young people who don’t have the majority of their wealth tied to equities or real assets now have a chance to purchase companies at a more reasonable price (specifically, a lower multiple of earnings). For every loser, there is a winner — just don’t expect to read about it.
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It’s time to go… Jack
This might become a weekly column. We have a new “World’s Most Fireable CEO”: Jack Dorsey.
There have been calls for Dorsey to be sacked as CEO of Twitter for years — he is also, inexplicably, CEO of Square — but it’s looking increasingly likely these days after activist investor Elliott Management took a stake.
Dorsey may have gotten a temporary reprieve with news overnight that private equity firm Silverlake will take a $1 billion stake in the embattled tech business, but Twitter has been a serial under-performer under his leadership. It has fallen 6.2% since 2015, compared with Facebook’s 121% rise. Not only does Dorsey inexplicably have two major CEO roles, but he also recently announced plans (now retracted) to spend half his time in Africa. Yep, seriously.
It seems a matter of time before Dorsey (whose Game of Thrones-style rise to become Twitter’s CEO was well-chronicled in Hatching Twitter) exits quietly from his dual roles. Even when he’s fired from Twitter, Dorsey needn’t complain too much — he owns 13% of Square, worth around US$5 billion.
The former CEO of collapsed satellite business NewSat, Adrian Ballintine, has faced justice for his crimes, and will spend a decade behind bars for stealing hundreds of thousands of dollars from shareholders.
Oh wait, that didn’t happen.
Ballintine did funnel $357,000 of company money to his private yacht business, but he certainly will not be seeing the inside of a prison cell any time soon. Instead, Ballantine and his co-conspirator (his accountant) received a grand total of “$22,500 [in fines] after pleading guilty to three charges of making or authorising a false or misleading statement”.
Ballintine and his accountant, Jason Cullen, created false invoices which were paid for by NewSat to their business, Cresta Motor Yachts. NewSat collapsed in 2015, wiping out almost $300 million in investor and lender money.
One suspects, had an Indigenous teenager in the Northern Territory stolen $100 from a local supermarket, they would probably face harsher sanctions than Ballantine.
Trump’s decent talking point
It’s not often one says this, but Donald Trump may have made a fair point. Trump’s handling of the COVID-19 mess has been utterly disastrous, but he made a lot of sense when noting that the World Health Organisation (WHO) was overstating the COVID-19 fatality rate:
Well, I think the 3.4% is really a false number … You know, all of a sudden, it seems like 3 or 4%, which is a very high number, as opposed to a fraction of 1% … They don’t know about the easy cases because the easy cases don’t go to the hospital. They don’t report to doctors or the hospital in many cases.
It has been widely reported that COVID-19 appears to have minimal effect on children and for many, the symptoms are no worse than a mild cold (in fact, the asymptomatic nature of the virus in most is probably its most dangerous characteristic). The New England Journal of Medicine noted that:
Of note, there were no cases in children younger than 15 years of age. Either children are less likely to become infected, which would have important epidemiologic implications, or their symptoms were so mild that their infection escaped detection, which has implications for the size of the denominator of total community infections.
Even FactCheck.org seems to agree that Trump is right on this occasion.
According to the chair of vaccinology at the University of Pennsylvania, Paul Offit, the current scenario is similar to the swine flu epidemic of 2009. At one point, he said, the mortality rate was thought to be much higher than the 0.01-0.03% it turned out to be. He thinks the mortality rate for coronavirus will similarly plummet and the “false notion that it is more likely to kill you than influenza” will disappear.
Offit believes there has been a “wild overreaction” to the disease, in part because it is new. “We’re more the victim of fear than the virus”.