The Residential Library

The sometimes demented, frequently irreverent, and occasionally stupid musings of Ron Hargrove

Treat, Test, Plan, Build, Reopen

America must do many things at once….

By Mark Halperin   [April 11, 2020]

1. Almost every leader in the country (including Donald Trump and Nancy Pelosi) believes that physical distancing is the key to the progress that has been made so far and to any successful effort to defeat the virus going forward.

It is unambiguous.

And yet people all over the country are not doing their part. They are going outside when they don’t have to, not wearing masks, congregating in parks, having business-as-usual gatherings, etc.

All that could get even worse as the weather warms up and lovely spring days beckon.

And it could also get worse when people see the latest headlines out of New York (“Officials had estimated that 140,000 hospital beds might be needed to treat coronavirus patients. Only about 18,500 were in use by week’s end.”).

It reminds me of the folklore story of the wise men of Chelm, who voted unanimously to remove the “DANGER: CURVE AHEAD” signs on the twisting mountain road leading to their village because there had been no accidents there in a long time.

Please have everyone you know read this essay by Jonathan Smith of the Yale University School of Public Health.

He explains in simple and urgent terms why distancing is essential – and how easily it can all fall apart:

People are already itching to cheat on the social distancing precautions just a “little”- a short playdate, a quick haircut, or picking up a needless item from the store.

From a transmission dynamics standpoint, this very quickly recreates a highly connected social network that undermines much of the good work our communities have done thus far.

This outbreak will not be overcome in one grand, sweeping gesture, but rather by the collection of individual choices we make in the coming months. This virus is unforgiving to unwise choices.


2. Every time the president muses in public about a coming-soon reopening and every time an anonymous Trump adviser/associate is quoted saying the president is eager to save his reelection bid by lifting public health restrictions to jump-start the economy, the press becomes consumed with the notion that Trump is going to ignore his medical and science advisers and act prematurely in a manner that will lead to more deaths.

I don’t believe that will happen.

It is impossible to imagine Trump defying Dr. Birx and Dr. Fauci, and the docs are not going to support a premature opening.

Also, the governors, with few exceptions, would never support a premature reopening (and they get to actually decide what opens when).

And even if you believe the president cares only about the winning another term (and not about the public interest), you still can be confident that Trump understands that any chance he has of being reelected would be eliminated if he advocated reopening and the death and infection rates went back up.

I will be very surprised if I turn out to be wrong about this.

If there is one thing we know about Donald Trump it is this: just because he teases something out there doesn’t mean he is going to do it.

Would he like to reopen ASAP and is he constantly musing and agitating about it?


But that doesn’t mean he will do it.

So the media should stop spending so much time breathlessly suggesting that Trump is going to let more people die because of politics – and start spending more time explaining the complexities of reopening.


3. Here is a dispatch from my friend and reader Adam Keller, who owns and manages hotels around the country from his home base in California.  He is a brilliant realist, not a pessimist, and I have to say I share his deep concerns and outlook on the challenges ahead for the economy:

Every class of real estate aside from single family homes is likely in trouble.  Apartment landlords collected 69% of rent on April 1, and May 1 will be much worse.  Two weeks ago, large multi-family development owners expected to collect between 25%-50% of rent.  That means much less cash to pay debt.  Similar numbers for office space owners.  Industrial will be bad too, and retail even worse (look how many stores are closed).  Hotel revenue has gone to zero.  There is about $100 billion in securitized hotel debt coming due this year and next (with no lenders to work with, just a bunch of bondholders represented by notoriously difficult special servicers), and portfolio lenders who hold even more loans will have to take back hundreds of hotel properties.

So walk around town and think about all of the non-residential real estate that is dark or has no one paying rent.  Much of that will go back to the banks.  Incredible disruption and destruction of value.  Property taxes revenue will decline from this as well.

Government programs are of little to no help for many of the stores and businesses that are closed. We don’t need employees — we need customers.  I can get a loan and put people back to work, but there is no work to be done.  The Payroll Protection Loans (PPP) are useless for the businesses that have been most decimated — there are no customers.  The EIDL loans require (a) collateral, which no existing senior lender would allow and/or will be very difficult/slow to get, and (b) a personal guarantee for amounts over $200,000.  I predict there will be stories in several months showing restaurateurs and small business owners who take loans to try to support their businesses and then get completely personally wiped out when their businesses fail and they lose their collateral, have no money, and are personally on the hook for the loans. 

The longer it takes the government to get the money out there, the worse it will be, as businesses will die, people will have less propensity to spend, etc.  The application process is terrible.  Banks are having trouble figuring out what to do, and instructions are unclear.  Many banks are doing loans only for their own customers, and some owners have to go around town trying to find banks to lend to them.  

There will, in my mind, be several waves of layoffs in white collar jobs.  In my microcosm, we were pursuing development of another hotel.  That has stopped.  So I stopped all work with my land use attorney, our structural engineers, our architects, our landscape architect, etc. and we weren’t even close to breaking ground.  I am not sure who would start building projects when we come out of this, and I’m not sure if there would be any banks that would lend on a construction project.  Not sure what construction workers will be constructing when current projects are finished.  Marriott corporate furloughed many of their non-property operations people on April 5.  Disney is starting to furlough.  White collar furloughing will continue for a while — expensive people with not enough work to do.

I get emails in my “junk” inbox from a lot of retailers – Costco, Smith and Noble (shades and blinds), Tennis Warehouse, you name it.  I can’t imagine any of these businesses will have sales anything close to pre-COVID for some time.  Are people rushing to buy saunas?  New blinds for their homes?  On-line retail will fare better than bricks-and-mortar (many of whom will not survive at all), but the impulse buy will decrease (and Costco needs those impulse buys, groceries aside).  Many big box retailers that were having trouble will disappear (Macy’s, JC Penney, et al) faster than they would have otherwise.  I also think stores along Main Street (or the High Street, take your pick) will have a difficult time making it.  In La Jolla, that means a lot of boutiques.  But that also means jobs, no rent paid, a decimation of real estate value, etc.

I haven’t a clue what the stock market is thinking. The S&P is at the same level today as it was in June, 2019.  I have no idea how that can be.  Dividends will be cut, share buybacks will be very out of favor (maybe that won’t matter), as analysts continually lower their economic outlook.  JP Morgan and Goldman, to name two, have lowered their outlook every week for the past several weeks — from something like a 10% dip in Q2 to 40%.  This picture reminds me of Wile E. Coyote running of a cliff, legs moving in mid-air, and not plummeting until he looks up and realizes that gravity exists.  I was last mystified this way in the boom, but multiply my confusion by about 10X.

There is so much going on that it’s surreal.  

Really, in the end, I am really fortunate since my business partner and I have been ridiculously financially conservative, and we should come out fine, but probably with fewer hotels than we have now.   It will be more excruciating for people who will not have jobs when unemployment insurance runs out, or for those small business owners who will lose everything.  I can throw in the towel on an asset and wait for next time, but most people can’t.  My friends who own and run restaurants are terrific entrepreneurs, very dedicated to their employees, and they put their heart and soul into their operations.  They will be decimated.  I hope they have savings accounts and low personal cash burn rates.

I am half heartened and half bewildered by the responses I’ve seen from the populace and government (and it’s not as if the populace has been 100% great and the government 100% bad).  The government solutions seem to me to be not well thought out.  Mechanically clunky, confusing, wrong money in the wrong place at the wrong time (aside from unemployment help — but even if I had work for people to do, how would I convince someone to work when they could stay home and get $24 an hour?).  It’s as if government officials have never run an actual business (oh wait, most probably never have) or even spoken to anyone who has.  I grant that the support effort is not easy, but that doesn’t mean they couldn’t have done a better job.

The ripple effects are so great and will occur in parts of the economy most folks never see or even think of.  A friend of mine owns and runs a company that makes art canvas and frames (for art stores) and also a lot of furniture and artwork for lower-end hotels (Quality Inn, Days Inn, etc.). He’s furloughed 60% of his employees.  The PPP will work for eight weeks, then he’ll probably have to furlough them again.  I don’t expect government to solve these issues.  My point is that the talk of a V-shaped recovery is, to me, overly optimistic.  When one industry suffers, there are other, less obvious, industries that suffer along with it.

I’ll hit send — I have to deal with one of the hotels potentially going back to the lender since the government hasn’t figured out a politically acceptable means of preventing massive real estate debt collapse….

This is why we need the very best minds in business and government service to join in the effort to create a different, better reality for our economy. We need interdiction for jobs and revenue that is the equivalent of physical distancing — dramatic and course-changing.


4. This is another long essential read: the Johns Hopkins plan to build the testing and contact tracing system required as part of any reopening effort is smart and clear, and now the benchmark for our national discussion about these important issues.

The Washington Post has a phenomenal essential read on the financial, personnel, technological, and civil liberties challenges of building a testing and tracing plan that covers the whole country (as is required), especially if the Trump administration doesn’t take a more active role in getting the funding for it and designing the necessary systems.

Barack Obama is for it.

Barack Obama @BarackObama

Social distancing bends the curve and relieves some pressure on our heroic medical professionals. But in order to shift off current policies, the key will be a robust system of testing and monitoring – something we have yet to put in place nationwide.

How Will We Know When It’s Time to Reopen the Nation?Experts offer four benchmarks that can serve as a guide for cities and states, eliminating some of the

Kudos to Apple and Google for teaming up to help solve this problem.  We need more dramatic corporate action to win this.

States are going to have to lead the way, as Massachusetts and Utah already are.  But there is simply no way this will happen without substantial financial and organizational help from the Feds.  We need to start building an army of about 100,000 tracers and we need to start building it now.

It will be difficult to find the leadership and focus to stand this up while we are still dealing with the immediate health care crisis, but there is absolutely no choice.


5. Miami is doing some ground-breaking testing to determine just how widespread infection is there.


6. Propublica makes the (accuate) case that the high rate of false negatives on the test for the virus is leading to a lot of spin-off problems for individuals, families, communities, states, and the country.

At this point many of us personally know someone who almost certainly received a false negative test result.


7. STAT has an important piece about the vast complexities involved in doling out ready-to-work certificates to those who test positive for the antibodies that provide at least some immunity.  The nation isn’t in a position to do the mass testing required to identify that group, but, even if it were, the implications of creating that privileged cohort are staggering.  These are the kinds of problems that become harder to solve the more one thinks about them.


8. The quantity and quality of PSAs is still shockingly bad.

Ohio, which has handled the crisis as well as any other state, not surprisingly has produced this super good video, cleverly illustrating the importance of physical distancing:


9. There is a long list of looming challenges that the country faces beyond the immediate crises.  Many of the items on that list are massive to the point that it is hard to get one’s arms and head around them.

This essential reading Washington Post story illustrates what I think is arguably the biggest ticking time bomb in America today: state budgets are going to be decimated, with unthinkable implications for social services, the capacity for state government to function, and the dramatic reduction in the size of the public workforce.


10. From coast to coast, the death rate at nursing homes has been a covered but still under-covered story in this crisis.

The New York Times has the statistics and stories from the Empire State.


11. Here is a sad email from a reader, whose story is tragically not all that uncommon:

My mother-in-law (age 90) has been in the hospital or rehab since 1/24/20, being treated for a venous ulcer on her ankle that would not heal. She is improving, but our dilemma is that she will likely be unable to return to her apartment in an independent living community, so we will need to find assisted living accommodations for her. (Her 100 days paid for by Medicare will be up on 5/3/20). But, many assisted living places are not currently taking new admissions. Even if they were, we can’t take her to see prospective places because they aren’t allowing visitors. Is the entire assisted living industry grinding to a halt? The end result is likely to be that she will remain in rehab after the 100 days, paying full price for that room, ~$9000 a month. Moves like this are not accomplished quickly, and we are running out of time to plan.


12. The Wall Street Journal takes up some similar themes in this extraordinarily distressing story about the many people who are dying now without having seen or being physically surrounded by those who love them most.


13. Another sad but important piece from novelist R.O. Kwon about the threat of the damage to mental health that exists now, and the need to grieve for what has been lost and will be lost.  This is a vital essay for anyone who is emotionally or mentally struggling now.


14. Wells Fargo has been trying to live down its recent abuses of its customers.

Now it appears they have forgotten any of the moral or PR lessons that they learned from that experience.  Or claimed they had learned.

Here is an email one of my readers received from “his” bank (Wells Fargo), where he has long had his personal savings, his mortgage, and his business loans:

Update on your interest in the Paycheck Protection Program

We want to keep you informed on your interest in applying for the Paycheck Protection Program (PPP) through Wells Fargo. We understand how important these resources are for you to continue operating your businesses and we are working as quickly as we can to get back to you.

While you remain in queue based upon when you submitted your initial interest, due to high demand we are not able to begin your application at this time.

All applications for the Paycheck Protection Program will be online only. We will continue to send you email updates frequently so you are informed on the status of your request to apply for the PPP through Wells Fargo. If you can apply through Wells Fargo, we will email you a link to start the application process. We are working through the queue in the order in which customers submitted their initial interest. Our branch and call center teams aren’t able to answer any questions about this status.

What you will need to submit an application
You will be asked to provide supporting documentation, such as

· Payroll tax filings

· Payroll Tax form 941

· Form 1099-Misc

· Income and expenses from a sole proprietorship

You may be able to apply elsewhere

You remain in our queue. However, since there is a limited amount of funds approved by the SBA for the Paycheck Protection Program, we want you to be aware of your options. You may want to apply elsewhere to increase your chances of receiving a loan before the funds run out. Visit the SBA website to find a full list of participating lenders you can contact. 

Keep in mind that each business may only receive one loan through the Paycheck Protection Program.

We will continue to keep you updated through email. Small businesses are the heart and soul of America, and we are committed to helping you navigate through this time.

[Emphasis added.]


15. Please help your fellow reader (and others of all ages who want to contribute their time):

I’m retired.  I know I help people by giving money to various entities in need, which I’ve done and will continue to do.  And I know I help others by sheltering in place.  And, I’m especially fortunate I can have groceries delivered to my home, which means I don’t need to walk into a grocery store and risk infecting others.  BUT, surely there must be something I can physically do from my home to help people?  I was a practicing lawyer for nearly 40 years, so I have some (limited) skills.  Lots of other retirees have skills I’m sure they’d love to use, from their homes, to help people in need.  Folks like me are NOT looking to be compensated.  We just want to help by actually doing something.  

Thoughts?  Suggestions? Please send them my way to share.

Mark Halperin is a former senior political analyst for MSNBC and as a contributor, and former co-managing editor with John Heilemann of Bloomberg Politics.

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