One River Asset Management: Without The Fed And Treasury Bailouts, Stocks Would Be Down 50-80%

Authored by Eric Peters, CIO of One River Asset Management

Tales of Survival (as excerpted from the author's note)

The United States is a business, run by corporate CEOs, who own the politicians. America is many other things as well, some beautiful, others terrible, wrapped in founding myths as all great companies are. Rugged individualism. American Exceptionalism. No nation in world history has risen to a challenge like the USA, this we know. We win big wars, always. SEALS kill the bad guy, inevitably. There’s no stronger ally, no fiercer enemy, than the USA. In business too. Technology. Science. Innovation. Trade. Healthcare. And finance of course.

The US Treasury has unlimited credit. The Federal Reserve, infinite paper. No currency can match the dollar. Yet, from another all-time high in the S&P 500, the pinnacle of global power, the US has plunged into a depression of unknown duration.

The president announced a ‘whole-of-government’ response. The Federal Reserve and Treasury implemented a breathtakingly unprecedented suite of monetary and fiscal programs, without which stocks would surely be down 50-80%.

But that was the easy part. Next comes 15-25% unemployment. Mortgage delinquencies, foreclosures. WWII-sized deficits and debts. And we’re told 100k-240k Americans may die. That this is success. We could deal with that tragedy under the right circumstances. But Beijing claims only 4k Chinese died, and while the real number is surely higher, just 1.3k Germans have died. How can we exceptional Americans have failed so spectacularly? Rest assured, we will soon find someone to blame.

And stunned by today’s quantum leap in our existence, we are as deeply divided as at any time in living memory, disorganized, undisciplined. Democrats already blame Republicans.

Republicans blame the impeachment process. Conservatives blame CNN. Liberals blame Fox. The elderly blame spring-breakers. Millennials blame Boomers. But in time, America is sure to blame its CEOs, who leveraged the nation, stripped it of competent civil servants, strategic stockpiles, essential services and social safety nets, then took the money. When the catastrophe arrived, they fired their workers, and demanded yet another bailout from the politicians they bought.

But of course, that path would be better than the alternative. Which is that Americans, struggling to process such a colossal failing, and feeling out of control, are led to direct our anger toward another nation.