Haves vs Have Nots

By Chief

With the coronavirus lockdown continuing until at least May 31, as announced by the Bay Area Counties today, I wanted to examine a new kind of income inequality being created by the government’s ruling class. I was always told when I was younger there were two classes haves and have nots, and that it was capitalism’s fault. Most of my classmates believed it, and as I went through college (also known as finishing school in Europe) all my classmates believed capitalism was the cause of this inequality. Fast forward 10 years and we get government sponsored class warfare. Yes, indeed we do with the government declaring what is essential and non-essential. The economic winners picked by government can continue working while the rest, currently north of 26 million people, are kept in lockdown and essentially under house arrest. This arbitrary situation is furthering the divide not helped it.

Since we are now looking at a June 1st opening date at the very earliest, let’s examine what that means for non-essential workers.

• They will now be missing at least 4 pay checks (2 in April, and May)
• Be late/past due on potentially 2 months of rent/mortgage and car payments
• Likely 60 days’ worth of credit card charges/money borrowed at a large interest clip
• Student Loans might give you an extra 90 days and then what
  

In short, significant stress and anxiety about the future.

Even if we take the above at face value, and include a government stimulus of $1,200 plus, and maybe rent/mortgage forbearance, this is a recipe for chaos. Imagine having young children cooped up, yourself included, also a spouse. Nothing to do but look at four walls and a roof…. keep in mind the park may be open, but the jungle gym is closed. How do you keep the kids sane, and the marriage on an even footing? Just because it’s a special circumstance does not stop the past due notices from coming monthly since the mail still comes every day. If you own payments an asset that can be repossessed/foreclosed on, rest assured the lender will make all attempts to re-coup their investment.

Meanwhile, both groups are eligible for the stimulus check and the deal offered by the mortgage company for a year of no payments due to Covid-19.

Contrast that with an essential worker. That person may be required to work, likely under different circumstances, but they remain on the payroll. Essential workers get a pretty sweet deal if you ask me because they receive both the benefits of working and the benefits of the nonessential. Think about the extra money that can be banked while household payments are put off, maybe even interest free?

Which camp would you rather be in? Keep in mind if you were declared a non-essential business you must keep your doors locked. Your landlord may not be quite so forgiving, and one thing is certain, your auto finance lender may be processing re-po paperwork and having it ready.

In closing, this is not to say the haves will be wealthy, as that is not and will not be true. It is strictly to point out that the haves will be able to retain their current lifestyle while the have nots will not be so lucky. As things currently stand, short of an exceptionally large government stimulus on a monthly re-occurring basis, the have nots will not make it out of this is decent shape. Think of it like the banking/financial/credit crisis of 2006-10. Once again if you are not a chosen member of the government class or “essential” to the economy, remember too big to let fail, your life will be forever flipped upside down.

I say forever because many young folks may have placed a down payment on a house, ditto for a car, and now by the power of a few in our government, they are experiencing the loss of everything. Life is in transition as they go from a house in a decent part of town to a studio apartment in a not so nice part; from 2 nice cars, to 1 commuter class car. Their credit is shot, and they may soon be trying to retain a bankruptcy attorney to charge off credit card bills. Mind you the payments could all be made while working, but due to a government mandated shutdown, they were wiped out.

To add insult to injury, any government aid will likely continue to aid everyone, both essential and non-essential. Causing a greater void among those who have, and those who have not.

Keep in mind, the May 31st date to stay under lockdown is a sliding scale, as it has already been pushed back twice. (Editor’s Note: while editing this post, local station KOVR is saying that the stay at home order may not be lifted until October.) In addition, we’ve already witnessed firework shows on July 4th as well as the county and state fairs cancelled. The State Fair typically happens toward the end of July to beginning of August.

I spoke with a couple folks with connections to the Governor and they feel July will be a reasonable time to “open up the economy in tranches.” Oh, by the way; religious services/ball games/and restaurants are near the end of the line, so plan on being long-term out of work; all while folks who are essential continue to remain employed/thriving.

Chief