Managing Coronavirus     
Winston Churchill once observed, "When the situation was manageable it was neglected. Now that it is thoroughly out of hand we apply too late the remedies which might have effected a cure. We lack foresight, have an unwillingness to act when action would be simple and effective, and lack clear thinking." 
The 'Business Cycle' was first described in Clement Juglar's "Des Crises Commerciales" which he published in 1860. He suggested cycles run their course in seven to eleven years. Expansions and contractions are the natural 'rhythm' of the economy; the Reagan Boom, the Dotcom Bust, the Housing Boom, the Subprime Crisis (which morphed into the Great Recession), and now the Coronavirus Recession. What can we learn? 
As public health authorities aggressively moved to contain the coronavirus, business and personal incomes fell abruptly. Our credit based economy has been a source of progreess, but it is also a source of danger. Shrunken incomes and cash flow lead to financial misfortune. Long term, there is no 'free lunch'. While personal liberties and the economic welfare of every American citizen are currently negatively impacted, government borrowing not used to invest and provide for the future will lead to a future suffocation of economic growth. 
Individual Economic Agents      
There is a special type of uncertainty in a system with decentralized decisions. Our credit system partitions and distributes this uncertainty. A fundamental feature of such a credit based economy is that economic agents accept and establish commitments based on their expectations of an uncertain future. Both the taking and extending of credit are expressions of those individual expectations. With increasing confidence there is a reduced expectation for a need of cash reserves. Excessive credit encourages instability in the financial structure of Governments and of individual economic units. 
Pandemics, Panics and Crisis      
A panic is a function of liquidity. Risk stems from the lack of marketability of assets that cannot be sold quickly enough to minimize a loss. Panic sales lead to deflation, a Crisis of Solvency, and then Bankruptcy. The extended low interest rate environment the U.S. Federal reserve engineered supported asset price stability and maintained an economic expansion. But now no one has a grasp on the duration of the impact of the Coronavirus. Uncertainty remains while the mandated shutdowns are a 'crisis' for business owneers. 
At the peak of the tulip bulb mania, in March 1637, tulip bulbs sold for more than 10 times the annual income of a skilled craftsman. Everyone imagined that the passion for tulips would last forever. People were purchasing bulbs at higher and higher prices, intending to re-sell them for a profit. The market collapsed when traders could no longer find buyers willing to pay increasingly inflated prices. What did the panicked speculators do? They sought help from the Government! 
Ordinarily greed and fear are cited as the driving emotions of market participants. Closer examination however discloses that 'hope' and 'fear' are the primary emotions. Hope causes us to continue to buy after asset prices have already gone up. The result? We buy at the top. Fear causes us to sell after asset prices have already gone down; we then sell at the bottom! We are most enthusiastic when we should be cautious, and most hesitant when we should be bold. 
Crowd Psychology      
Humanity is extremely uncomfortable with uncertainty. As a result we try to substitute herd instinct for certainty. Most people don't know what a crowd is, much less how to recognize it, and still less whether they are part of the crowd. The 'crowd' has been studied in terms of historical events rather than as a mental process that happens to individuals. It's seen as some kind of anonymous 'they' who get caught up in a runaway market. A basic distinction between the individual and the crowd is that the individual acts after reasoning, deliberation, and analysis. A crowd acts on feeling, emotion, and impulses. Once individuals have formed a crowd they act in a manner quite different than if in a state of isolation. 
Poor Decisions      
We are in part responsible for government borrowing. Kennedy had it right when he said, "Ask not what your country can do for you, but what you can do for your country." There are different types of borrowers. Hedge borrowers expect to meet obligations from their cash flows. Speculative borrowers can meet interest payments but must constantly roll over their debt to be able to repay their original loan. Ponzi borrowers can neither meet their interest nor their original loan commitments but rely on inflation and their ability to tax their consitutents. Which is our Government? 
Without returning to work our future in unstable. In good times, leveraging returns by borrowing is viewed as a certain road to wealth. As individual businesses fail and as government revenues are unable to support debt repayment the danger grows. As in the Tulip Bulb mania, when things don't work out and a crisis appears, people turn to the Government. For the last seventy years our Government has sought to stop the business cycle by spending and guaranteeing more and more debt. It has done this with deposit insurance, 'too big to fail' bailouts, and now with the Coronavirus. We are at a point never reached before. The U.S. economy is imperlied by public debt. The private economy by layoffs, restructurings, and asset liquidations. More debt is not the solution. 
Remember the Mark Twain saying "History doesn't repeat, but it does rhyme?".      
What decisions are you going to make? Some say the future cannot be predicted, I say, the way to predict your future is to create it. It's not too late to get prepared. Let's get back to work while being responsible for our actions.      
About Our Law Firm

We provide peace of mind by creating and managing structures that allow you to grow and protect your business, legacy, and personal wealth. "Where you'll be tomorrow, depends on what you do today."

Lechner Law Office, P.C.
Law and Professional Center
Orland Hills, Illinois 60487-4623
Paul Lechner Esq., CPA 
Office: 708.460.6686

The Lechner Group, Ltd.
Business Advisory Services  

The Lechner Group, Ltd. is a public accounting and business consulting firm focused on business counsel, transactional diligence, and tax advisory services. We add value to your business strategies by providing a combination of financial, audit, and tax expertise. Combined with legal services (which are provided separately by the Lechner Law Office, P.C.) we offer privately held business owners an attractive package of comprehensive services. 

Find out more by calling Paul Lechner at 708.460.6686.