Author: admin

Coronavirus Is Causing Freaky Friday for Helicopter Parents

The COVID-19 crisis has produced an interesting role reversal.

Many people over the age of 50 are currently being hectored by their protective progeny to keep safe and practice social distancing—no more lunch with friends, or church, or cards, or even strolling the neighborhood. Wash all the clothes you went out in today, including daddy’s jeans… bring Clorox wipes… use baggies for gloves…. etc.

Frankly, I’m fine with this. Hectoring is where it’s at in these times of global crisis. Hector on, I say! But it does feel just the tiniest bit like Freaky Free-Range Friday.

In the movie, Freaky Friday, 16-year-old Lindsay Lohan and her “mom,” Jamie Lee Curtis, switch bodies for one day of role reversal. Hilarity and empathy ensue. And there’s something to that idea. For the longest time I have been contemplating a notion sent to me by Emily Adams, a Free-Range Kids / Let Grow enthusiast in Canada, who said that parents would stop micromanaging their kids’ lives if they had to live for one day the way today’s kids live.

They would get up, and instead of being able to get themselves to work, they would be strapped into the backseat in a five-point harness and driven there, even if they work just three blocks away. When they got to their job, their kids would stand next to them until the very last minute when they entered their office buildings. And even then, their children would peer through the windows to make sure they were walking safely down the halls.

After work, the parents wouldn’t have time to unwind or go for drinks. Their children would pick them up from work and take them to something enriching, like two-hour chess lessons. But they couldn’t go into the lessons until the children signed them in at the front desks.

If the parents were wiped out after chess and really ready for that drink, first they would need to spend 20 minutes reading something at their current vocabulary level or just a smidge above—maybe a chapter of Tolstoy. Then they would have to write what they thought would happen next to Natasha and Prince Andrei, and the child would read what they had written and initial it.

(Younger kids could swap out the Tolstoy for a trip to the park where the kids would stand under the jungle gym, arms outstretched, while their parents climbed.)

Come evening, the children would prepare their parents a meal and cut it into tiny pieces, so the parents wouldn’t choke and also wouldn’t hurt themselves with sharp knives. Then it would be time for more reading, and a homework project that the children would tell them how to do while insisting that this is YOUR project, and then lights out.

Today’s young adults were recently kids, which means they spent a whole lot of time being micromanaged. They also spent a whole lot of time being told that very safe things—like waiting in a car for five minutes, or crossing a quiet street—were actually risky. Every danger from minuscule to mammoth was considered a threat to be mitigated by any means necessary. That’s why parents bought baby knee pads, and stood next to their kids at bus stops in super safe neighborhoods.

Faced today with a real, gigantic, literally life-threatening risk, overprotection seems like a totally appropriate response. I’ve got no problems with it. The fact that young people want their parents safe and are prescribing precautions is heartening.

But it’s also a chance to think back on all that overprotection we parents did in those halcyon, pre-virus days and wonder if it was truly necessary.

from Latest – Reason.com https://ift.tt/2WIaQzz
via IFTTT

Libertarian Party’s Presidential Nominating Convention in Coronavirus Limbo

On Tuesday, the city of Austin, Texas, issued a coronavirus-avoidance stay-at-home order that permits residents to leave their homes only for “essential” work and activities, such as providing medical care or buying groceries. The order, which lasts preliminarily until April 13, could have at least an indirect impact on the 2020 presidential race.

That’s because Austin is the site for what was scheduled to be the May 21-25 Libertarian National Convention, and because the convention—quite unlike its Democratic and Republican counterparts—is the sole venue and mechanism by which the party’s presidential and vice presidential nominees are determined. Rather than arrive with delegate slates earned in binding state primaries and caucuses the months before, Libertarian candidates show up, vie for scarce space on the debate stage, then endure however many rounds of voting it takes (lowest candidate lopped off after each round) among the 1,000 or so delegates in attendance until someone wins 50.1 percent of the vote.

But then COVID-19 hit.

“We are evaluating all of our contingency plans,” Libertarian National Chair Nicholas Sarwark told Reason Friday. “There’s a range of options that range from, if we don’t have a convention at all, then the national committee remains in place for another two-year term…and the vice presidential and presidential nominees would be chosen by the national committee…[to] the opposite end of the spectrum, [which] is somehow the curve gets flattened and bent and Texas becomes a safe haven for uninfected people or whatever, and we all just show up in Austin in a room with a thousand people packed closely together just like we were always planning.”

“I think both of those extremes at the ends are not likely outcomes.”

So what are the contingencies in between? The Libertarian National Committee (LNC) is scheduled to discuss precisely that a special meeting conducted via Zoom Thursday night at 9 p.m. ET. Sarwark reckons that some kind of remote meeting, or an Austin plus remote hybrid, might be set up with a pared-down agenda focusing mainly on candidate selections both for the presidential ticket and the LNC.

The convention website on March 19 informed delegates, “The Coronavirus crisis is of an incredibly fluid nature, and as of the writing of this 61 days before our event, it is still too early to make any ‘permanent’ plans…Expect more definitive guidance as to the plan for the event about one month before the delegates and attendees are scheduled to arrive for registration and credentialing. For now, we can expect release of more definitive guidance on 4/20.”

Added Sarwark: “Basically the convention oversight committee meets weekly with updates and is in constant contact with the venue, and then they give me updates at a slightly lower periodicity. We’re looking at probably somewhere around 30 days out, maybe three weeks out, to make a final decision.”

There have been seven nonbinding Libertarian primaries and caucuses thus far, with longtime libertarian intellectual Jacob Hornberger getting the most votes among human contenders in five, and political satirist Vermin Supreme in the other two. (Because we’re talking about Libertarians, “None of the Above” received the most votes in the North Carolina primary, and “no preference” won in Massachusetts, where there was also a 23 percent chunk of write-in candidates that have not to my knowledge been tabulated.)

In the overall popular vote thus far, according to this Wikipedia page, Hornberger leads Supreme 22 to 10 percent, with 1996 L.P. vice presidential nominee Jo Jorgensen just behind with 9 percent.

The rolling shutdowns across the country—postponing primaries and most large gatherings—alter the basic calculus for winning delegate votes, which is usually: Show up to state conventions, glad-hand, and perform in debates. “That’s when I do most of my sales, if you will,” Vermin Supreme told Reason Saturday. “And conversions, and convincing the skeptical, and the questioning, and the people who don’t know me other than the meme, although you would think they would by now, but it seems that’s often not the case. So that is certainly affecting the campaign strategy.”

The L.P.’s presidential nominating process can be a lengthy event, filled with horse-trading and intrigue. Since the goal is to win a majority of delegates on-site, and since the L.P. is a threadbare operation based on much volunteer work and self-financing, candidates have in prior cycles invested much energy into making sure friendly state delegates show up. Canceling or significantly physically altering the Austin gathering will certainly upend business as usual for America’s third party.

Still, Sarwark says, “We’re trying to model [responsible] behavior in our party so that the American people can see that that is the sort of leadership we would bring to the White House should they choose to not select the Hobson’s choice between a malignant liar and a familiar figurehead.”

from Latest – Reason.com https://ift.tt/3ajnYPz
via IFTTT

Environmentalist Group: “Corona Is The Cure – Humans Are The Disease”

Environmentalist Group: “Corona Is The Cure – Humans Are The Disease”

Authored by Paul Joseph Watson via Summit News,

A climate change group that aligns itself with Extinction Rebellion posted stickers claiming that coronavirus is a “cure” for the “disease” that is humanity.

“Earth is healing. The air and water is clearing,” tweeted Extinction Rebellion East Midlands.

“Corona is the cure. Humans are the disease!”

The post shows stickers with the same message and the Extinction Rebellion logo plastered on lamp posts.

When another branch of Extinction Rebellion challenged that this “does not follows XR’s principles,” the East Midlands chapter doubled down.

“We are pointing out that from the perspective of the Earth, humans behave like a disease. The idea is not to be,” they responded.

While Extinction Rebellion East Midlands may represent little more than the ravings of one idiot, the notion that humanity somehow deserved coronavirus and that it’s good for the planet has been widely shared by environmentalists and celebrities.

After actor Idris Elba tested positive for coronavirus, he claimed that COVID-19 was the planet “reacting to the human race” as revenge for climate change.

Despite numerous claims that nature is ‘flourishing’ and animals are thriving thanks to coronavirus, it turns out that most of those stories are fake news.

*  *  *

My voice is being silenced by free speech-hating Silicon Valley behemoths who want me disappeared forever. It is CRUCIAL that you support me. Please sign up for the free newsletter here. Donate to me on SubscribeStar here. Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown.


Tyler Durden

Wed, 03/25/2020 – 12:00

via ZeroHedge News https://ift.tt/39hpfpk Tyler Durden

Japan’s QE On Verge Of Failure As Nobody Wants To Sell To The BOJ

Japan’s QE On Verge Of Failure As Nobody Wants To Sell To The BOJ

Over a decade since central bankers started a stealthy nationalization of capital markets by purchasing a wide range of securities from Trasuries, to MBS, to corporate bonds, to ETFs and single stocks, their actions are finally catching up to them, and in the process breaking the very markets central bankers have worked so hard to prop up. And nowhere is this more obvious than in Japan, where the shrinking universe of Japanese government bonds (as a reminder the BOJ now owns more than 100% of Japanese GDP in JGBs) is “causing havoc” in Japanese money markets as the Bank of Japan continues to buy while dealers refuse to sell.

The result is that rates in Japan’s repo market, which traditionally connects holders of bonds with investors looking to borrow them, jumped to a record Tuesday (although they since retreated on Wednesday) because as Bloomberg notes, “the introduction of cheaper, more regular dollar-swap auctions has generated huge demand from U.S. currency-starved dealers who are keeping their JGBs to put them down as collateral.”

So here is what the math looks like now that the Fed has launched enhanced swap lines with central banks such as the BOJ, allowing local entities to obtain dollar funding at much lower rates: in last week’s first round of the Fed’s revamped dollar-swap auctions, banks borrowed greenbacks for about 3-months at 0.37%, a massive discount to the near 2% it would cost them in the currency swap market. $32 billion was alloted in the first operation.

This huge difference in available borrowing costs, highlighted in yellow in the chart above, means JGB holders who still haven’t offloaded to Kuroda are now unwilling to participate in the BOJ’s bond purchases.

This was readily apparent in Monday’s Rinban operation (i.e., Japan’s POMO) across 5-to10-year bonds which saw the lowest offer-to-cover ratio on record, as dealers refused to sell to the BOJ! Other tenors also saw a sharp drop in the amount of bonds offered to sell.

“Demand for JGBs as collateral and its importance now is heightening.” SMBC Nikko rates strategist Souichi Takeyama told Bloomberg. And here is the big problem that is now facing the BOJ: “There is little incentive to sell to the BOJ because there are more effective ways to make use of JGBs.”

In other words, unless the BOJ provides dealers with a substantial “pick up” in principal relative to market prices, dealers will simply hold on their bonds as they can earn far more by simply renting the bonds out than purchasing any comparable securities. However, that would be frowned upon as it would constitute a clear subsidy to the local banks which, ironically, have been crushed in recent decades by the lack of net interest margin with the entire Japanese yield curve trading flat.

Making matters worse, the surge in demand comes at a time when the Bank of Japan is stepping up its own JGB purchases, in its bid to provide liquidity to financial markets grappling with the worsening coronavirus outbreak. However, with banks now openly refusing to sell to the BOJ, either the Japanese QE will fail, or bond prices will have to rise much more, pushing yields even lower, and further impairing bank interest margin calculations. On net, as Bloomberg notes, “that means less supply available for Japanese banks who have so far tapped over $150 billion in ultra-cheap dollar funding.”

The bottom line, according to Takeyama, is that “there is risk that the BOJ offers may not get sufficient bids.”

In other words, we may have finally hit a point where the market becomes self-stabilizing, as the very mechanism that central banks used to nationalize capital markets results in so much distortion that market participants no longer have an incentive to use it. In short, QE in Japan, which was first among the developed nations to hit the zero bound (and drop below it) and the first to exponentially ramp up bond purchases, is now on the verge of failure.


Tyler Durden

Wed, 03/25/2020 – 11:45

via ZeroHedge News https://ift.tt/2QK6GmZ Tyler Durden

Most Politicians Are Disingenuous Opportunists. The Coronavirus Outbreak Only Makes That More Obvious.

One month and one day ago, President Donald Trump took to Twitter to declare that the COVID-19 outbreak was “very much under control in the USA.”

“Stock market starting to look very good to me!” the president declared.

Since then, the Dow Jones Industrial Average has lost about 25 percent of its value—and that’s after a significant uptick on Tuesday. Also, the COVID-19 outbreak is very much not under control in the United States, as you’ve probably noticed.

A few weeks before the president sent that tweet, members of the Senate Intelligence Committee were given a classified briefing about the coronavirus. Sen. Richard Burr (R–N.C.), the chairman of the committee, immediately sold more than $1.7 million in stocks. Publicly, however, he downplayed the threat posed by the virus. “The United States today is better prepared than ever before to face emerging public health threats, like the coronavirus,” Burr wrote in an op-ed for Fox News on February 7—though he reportedly delivered a much more alarming message to a small circle of friends and campaign donors around the same time.

After weeks of dismissing the pandemic as no biggie, Trump was suddenly taking the outbreak more seriously by the first week of March. “There is no testing kit shortage, nor has there ever been,” the president assured Americans while he took a televised tour of the Centers for Disease Control and Prevention (CDC) on March 6. “Anybody that wants a test can get one.”

That wasn’t true. And when it became too obviously untrue for even Trump to deny, the president said, “I don’t take responsibility at all,” when asked about the very-obvious-and-quite-alarming lack of testing kits on March 13.

With millions of Americans out of work and the country facing the prospect of a recession unlike any in recorded history, Congress got to work on a stimulus package that was supposed to tide workers over until the virus passed and the economy reopened. Partisan disagreement sank a Senate coronavirus bailout bill on Monday, so Speaker of the House Nancy Pelosi (D–Calif.) rode to the rescue with a $2.5 trillion spending plan that included such pandemic essentials as $35 million in funding for a performing arts center in Washington, D.C., new rules requiring more diversity on corporate boards, and new emissions requirements for airplanes.

Pelosi withdrew that proposal on Tuesday afternoon. But the $2 trillion spending bill that appears ready to pass the Senate on Wednesday contains a few questionable provisions of its own, like codifying regulations that limit arbitration agreements, a huge giveaway to trial lawyers.

Having failed to predict the future at the beginning of the outbreak, Trump is now determined to rewrite the past. “I have always known this is a real pandemic,” he said on March 17. During an appearance on Fox News on Tuesday, the president said he took decisive action to slow the advance of the virus “very early” despite taking “a lot of heat” from unnamed others who disagreed with him.

The list goes on and on.

All of this is, on one hand, an extension of the thesis that politicians are merely using the coronavirus outbreak to push for policies they already wanted—or, more broadly, that they are behaving the way they always did. Congress has an incentive to do favors for friends and politically-connected industries. Individual members of Congress are self-interested human beings willing to profit off their positions. Trump wants the stock market to go up and doesn’t want to be held responsible for anything. None of this is new information.

Yet, at another level, this constellation of individual actions becomes a damning portrait of a system that is neither trustworthy nor trying to gain that trust. Libertarians should know better than to expect elected and appointed officials to be angels, of course, but the coronavirus outbreak has once again exposed the extent to which they are, with rare exception, little more than disingenuous opportunists.

“If you want to know why people are so vulnerable to conspiracy theories and to misinformation,” writes Kevin Williamson at National Review, “it is in part because they believe that they are being lied to by those with whom they have entrusted great power, that the truth is being kept from them by design.”

Consider merely the past 24 hours. On Tuesday, Trump declared his intention to have the country back to normal by Easter Sunday (April 12). Early Wednesday morning, however, Congress struck a deal with the White House to pass a $2 trillion spending bill that’s being pitched as a vital mix of stimulus and bailouts intended to keep the country from slipping into a prolonged recession. But if things are going to be back to normal in less than three weeks, why is a massive stimulus necessary? Someone isn’t telling the truth.

Add into the mix the various and sundry failures of the so-called fourth branch of government: the bad regulations at the Food and Drug Administration (FDA) that continue to slow the deployment of masks to places where they are needed, the CDC botching the COVID-19 testing rollout.

There will be heroes that emerge out of this. Doctors, nurses, medical students who are allowed to graduate early so they can join the fight against the coronavirus are leading contenders. Private businesses that are surging their operations to supply more medical gear deserve mention. But when all of this is over, we should also remember that government officials mostly did what they can always be counted on to do. They’re doing little but standing in the way, deflecting blame, and seeking to exploit human suffering for a political agenda, or merely to boost their own chances of re-election.

from Latest – Reason.com https://ift.tt/2UheFdo
via IFTTT

How COVID-19 May Move Markets From Here

How COVID-19 May Move Markets From Here

Authored by Patrick Hill via RealInvestmentAdvice.com,

As the pandemic drives markets to the 2018 lows, certain relationships in trends between the markets and the COVID-19 virus are evident.  As social distancing increases, markets continue to fall. So, by looking at the expected breakout levels of the virus, we can assess possible market reactions.

The chart below shows the inverse correlation between the expected peaks of the virus and potential lows in the markets: 

Source: FIPhysician – & Patrick Hill  – 3/18/20

In the COVID-19 – SPX model above, the steep red line is a forecast of new cases if social distancing were not in place.  The green line shows how social distancing will flatten the curve of new cases. The blue curve shows how growth in the pandemic may unfold doubling every 4 – 7 days.  The lower chart shows how social distancing correlates to movements in the SPX. As the number of cases peak, there is a related trough in the SPX. Looking at present levels, we are likely to see more selling as the number of cases increases to a possible low of 2000 in the May-June time frame.

Epidemiologists currently forecast the COVID -19 pandemic will unfold in two waves, with the current breakout and remission during the summer followed by a possible second breakout in the fall and winter of this year.  Researchers think the closest analog to the COVID -19 pandemic is the Spanish Flu in 1918, which came roaring back the following winter resulting in a second wave of even greater infections and death. 

The first blue dot shows where the SPX is today at this early stage in the pandemic.  The SPX index may continue to fall as the economic damage increases and GDP declines in the first and second quarters. Two consecutive declines will officially put the economy in a recession.  

The SPX may fall to 2030 in this first wave, which represents a Fibonacci retracement of 50 % from the 2008 low to the 2020 peak. 

From there, markets may rebound back up to 2350, a Fibonacci retracement of 61% as the virus breakout fades, relief rally emerges, and economic activity picks up.  However, as this occurs, higher interest rates from massive stimulus spending may weigh on financial markets, as seen in the spike of bond yields, the decline in gold prices and other safe haven assets. 

Consumers who are already financially stretched are being furloughed or laid off, which will trigger loan defaults.  Finally, corporations are now at the highest level of debt since 2008 and are experiencing a steep decline in sales, causing a cash squeeze leading to layoffs.  The most important consideration is that the virus is exposing the heavy reliance on debt on major institutions and consumers in our economic system.

The slide into a recession is evident in announced layoffs by significant corporations. Marriott and other hotels have announced thousands of layoffs. Other hospitality industry companies will follow. Harley-Davidson, GM, Ford, Fiat Chrysler, Nissan, and Tesla have all suspended manufacturing for several weeks in the U.S. Thousands of workers are on furlough until manufacturing resumes. There is a growing risk consumer demand may not return to pre coronavirus levels forcing permanent layoffs.

While manufacturing is 30% of GDP, services contribute 70% of GDP.  Many services can be offered online or via web conferencing.  The present social distancing experiment will provide significant insights into how well the economy can perform when many knowledge workers are working from home.  If working from home is successful, we expect to see more companies permanently move employees to their homes to reduce office space and cut expenses. This has grave implications for the commercial real estate industry and investors of those properties. 

The diverse U.S. economy is likely to recover quicker than the world economy.  However, an earnings recovery may stall due to the fact most S&P 100 companies derive 55% of their sales from overseas and 60% of their profits from international markets.  

Looking at a possible second virus wave in the fall, it is likely that economic damage will grow worse due to increasing unemployment, declining corporate spending, falling consumer spending, and a resumption of social distancing. The second wave fits a decline model seen in 2000 from the Y2K software bug scare.  That crisis was an external event, causing a demand shock, though little supply shock.  The bottom for the NDX did not happen until 18 months after the market peak. The virus seems to be compressing the market drop period as there have been three trading halts of 7% in the markets in just eight days of trading.  SPX support is near 1810 – 1867 in 2016, just above the Fibonacci 38% level of 1708.

In our post of February 14th about the coronavirus triggering a downturn, we saw the strong possibility of the economy sliding into a recession.  In the post we noted that Allianz Chief Economic Advisor, Mohammed El-Arian observed that we are likely headed into a U or L shaped recession:

“…analysts and modelers should respect the degree of uncertainty in play, including the inconvenient realization that the possibility of a U or, worse, an L for 2020 is still too high for comfort.”

Hope is not a strategy. Of course, we hope the virus is contained, lives saved, and the economy can weather the stress on corporations and consumers.  However, as long term investors, we need to look at the reality of what may happen based on research and plan our strategic investments accordingly. Plan for the worst, and hope for the best.


Tyler Durden

Wed, 03/25/2020 – 11:30

via ZeroHedge News https://ift.tt/3br4jh4 Tyler Durden

Stop Ignoring the Different Needs of Rural Areas and Cities Responding to COVID-19

One-size-fits-all, top-down policies are poor matches for communities of widely varying density, character, risks, and concerns. Unusually for a modern politician, Arizona Gov. Doug Ducey acknowledged this last week. When asked why he was less eager than his counterparts elsewhere to order statewide restrictions in response to the COVID-19 pandemic, Ducey answered:

We want to make decisions that protect public health first and foremost, but also take into account that we have a large state and things are different in Tombstone than they are in Tucson; they’re different in Gilbert than they are in Globe. I’m going to respect local leaders’ decisions.

As COVID-19 spreads across the country, it affects different places in different ways, with some of the starker contrasts being those between cities and rural areas. Ignoring those differences doesn’t just paper over reality; it may exacerbate existing national political tensions.

As I write, New York City is the new epicenter for COVID-19 infections in the U.S. It’s a center for international travel, drawing visitors and people on business from all over the world, with a dynamic culture and a thriving economy. The city is also very densely populated, with over eight million people concentrated so that there are 27,000 of them per square mile. Those factors make New York—the city where I was born—a prime incubator not just for ideas and prosperity, but for new diseases.

“New York is far more crowded than any other major city in the United States … All of those people, in such a small space, appear to have helped the virus spread rapidly through packed subway trains, busy playgrounds and hivelike apartment buildings,” The New York Times reported this week.

Fortunately, as befits a prosperous metropolis, New York City is also home to a long list of hospitals, many of them world-class. That doesn’t mean they won’t be overwhelmed—they’re getting slammed, with worse to come. But they’re top-notch institutions with excellent personnel and resources.

By contrast, Yavapai County, Arizona—where I now make my home—has a total population of around 232,000 people in an area half again as large as Connecticut, with 26 of them per square mile. Dispersed as they are, people in Yavapai County face less danger of infection than do the residents of urban areas. Unfortunately, that doesn’t mean the place gets to sit out the pandemic; COVID-19 is here, and my wife is masked and hoping for the best at her pediatric clinic every day. But it is less of an all-pervasive threat.

Another difference is our medical infrastructure: A thinly populated area with resources to match, Yavapai County has the Yavapai Regional Medical Center, the Verde Valley Medical Center, and a Veterans Affairs facility, for a total of fewer than 400 beds. Which is to say, like other rural areas, Yavapai County offers a lower risk of contagion, but very limited capacity for helping those who do contract COVID-19.

Looking at the characteristics of these very different worlds, and having lived in both, it’s difficult for me to imagine pandemic approaches that make equal sense for places where exposure to others is inherent in exiting an apartment as well as those where “social distancing” is life as usual.

That urban-rural difference is reflected in people’s views of the pandemic.

“The people most likely to say the disease threatens ‘day-to-day life’ in their communities are those living in urban areas in states that have seen relatively high numbers of cases,” with suburban and then rural residents lagging well behind in their perception of danger, Pew Research reported last week.

As does everything in our tribal world, this difference of opinion has political implications. Urban to suburban areas tend to be Democratic, and rural to exurban areas tend to be Republican, which is part of the reason that the country is split into warring camps. That shows in polling about COVID-19, with Pew finding many more Democrats and Democratic-leaning independents (44 percent) than Republicans and Republican-leaning independents (26 percent) seeing the virus as a threat.

Other polls find similar partisan differences, with an NPR/PBS-NewsHour/Marist poll reporting that a majority of Democrats view the virus as a “real threat” while Republicans see it as “blown out of proportion.” Likewise, a Kaiser Family Foundation poll found that 30 percent of Republicans had suffered disruptions to their lives from the virus, compared to 49 percent of Democrats.

That last poll is especially interesting, since it’s not about perceptions but experiences. It suggests that largely urban Democrats are experiencing a different pandemic than largely rural Republicans. That makes sense. By and large, the two groups live different lives, geographically and culturally distinct from one another. Their experiences in many ways are going to differ as a result; COVID-19 is just one more part of the divide.

That divide doesn’t have to be world-shaking if it’s one based on choices. To live in an urban area is to choose to experience life differently than people who live in a rural area. But that divide can be deepened and widened if it’s made worse by decisions imposed from the top without regard for differences in needs, values, and experiences.

Yet top-down and one-size-fits-all appeals to a lot of people who either don’t understand or don’t give a damn that other people live different lives.

Describing the national pause in economic activity as “worse than the problem,” President Trump says he “would love to have the country opened up and just raring to go by Easter.” He calls for a quick return to normality that might work better for some areas than for others depending on the local severity of the pandemic and people’s ability to weather a lockdown with jobs and businesses intact.

His doppelganger, Governor Andrew Cuomo of New York, insists “there should be a uniform federal standard for when cities and states should shut down commerce and schools, or cancel events.” He also wants the federal government to nationalize the production and distribution of medical supplies—a terrible idea under any circumstance, and one that’s bound to interfere with communities’ ability to find their own way through this crisis by subjecting them to decisions made far away.

Of course, Trump is playing to a Republican, heavily rural base, while Cuomo strokes his own urban, Democratic supporters. Neither seems to see any reason why the response might need to vary according to local conditions.

Let me emphasize here that I’m not a pure localist. My preference is always for addressing problems without using coercion. Nobody should get to impose their wills on others, no matter how pure they believe their motivations or how wisely informed they claim to be.

But short of leaving people alone, if government is going to do anything, it should act with respect for the differences among us—like the widely varying densities, preferences, and resources of places like New York City and Yavapai County. If political officials don’t care that “things are different in Tombstone than they are in Tucson,” they risk giving way to even more resentment and antagonism between rural and urban Americans.

from Latest – Reason.com https://ift.tt/2Uh9uds
via IFTTT

Most Politicians Are Disingenuous Opportunists. The Coronavirus Outbreak Only Makes That More Obvious.

One month and one day ago, President Donald Trump took to Twitter to declare that the COVID-19 outbreak was “very much under control in the USA.”

“Stock market starting to look very good to me!” the president declared.

Since then, the Dow Jones Industrial Average has lost about 25 percent of its value—and that’s after a significant uptick on Tuesday. Also, the COVID-19 outbreak is very much not under control in the United States, as you’ve probably noticed.

A few weeks before the president sent that tweet, members of the Senate Intelligence Committee were given a classified briefing about the coronavirus. Sen. Richard Burr (R–N.C.), the chairman of the committee, immediately sold more than $1.7 million in stocks. Publicly, however, he downplayed the threat posed by the virus. “The United States today is better prepared than ever before to face emerging public health threats, like the coronavirus,” Burr wrote in an op-ed for Fox News on February 7—though he reportedly delivered a much more alarming message to a small circle of friends and campaign donors around the same time.

After weeks of dismissing the pandemic as no biggie, Trump was suddenly taking the outbreak more seriously by the first week of March. “There is no testing kit shortage, nor has there ever been,” the president assured Americans while he took a televised tour of the Centers for Disease Control and Prevention (CDC) on March 6. “Anybody that wants a test can get one.”

That wasn’t true. And when it became too obviously untrue for even Trump to deny, the president said, “I don’t take responsibility at all,” when asked about the very-obvious-and-quite-alarming lack of testing kits on March 13.

With millions of Americans out of work and the country facing the prospect of a recession unlike any in recorded history, Congress got to work on a stimulus package that was supposed to tide workers over until the virus passed and the economy reopened. Partisan disagreement sank a Senate coronavirus bailout bill on Monday, so Speaker of the House Nancy Pelosi (D–Calif.) rode to the rescue with a $2.5 trillion spending plan that included such pandemic essentials as $35 million in funding for a performing arts center in Washington, D.C., new rules requiring more diversity on corporate boards, and new emissions requirements for airplanes.

Pelosi withdrew that proposal on Tuesday afternoon. But the $2 trillion spending bill that appears ready to pass the Senate on Wednesday contains a few questionable provisions of its own, like codifying regulations that limit arbitration agreements, a huge giveaway to trial lawyers.

Having failed to predict the future at the beginning of the outbreak, Trump is now determined to rewrite the past. “I have always known this is a real pandemic,” he said on March 17. During an appearance on Fox News on Tuesday, the president said he took decisive action to slow the advance of the virus “very early” despite taking “a lot of heat” from unnamed others who disagreed with him.

The list goes on and on.

All of this is, on one hand, an extension of the thesis that politicians are merely using the coronavirus outbreak to push for policies they already wanted—or, more broadly, that they are behaving the way they always did. Congress has an incentive to do favors for friends and politically-connected industries. Individual members of Congress are self-interested human beings willing to profit off their positions. Trump wants the stock market to go up and doesn’t want to be held responsible for anything. None of this is new information.

Yet, at another level, this constellation of individual actions becomes a damning portrait of a system that is neither trustworthy nor trying to gain that trust. Libertarians should know better than to expect elected and appointed officials to be angels, of course, but the coronavirus outbreak has once again exposed the extent to which they are, with rare exception, little more than disingenuous opportunists.

“If you want to know why people are so vulnerable to conspiracy theories and to misinformation,” writes Kevin Williamson at National Review, “it is in part because they believe that they are being lied to by those with whom they have entrusted great power, that the truth is being kept from them by design.”

Consider merely the past 24 hours. On Tuesday, Trump declared his intention to have the country back to normal by Easter Sunday (April 12). Early Wednesday morning, however, Congress struck a deal with the White House to pass a $2 trillion spending bill that’s being pitched as a vital mix of stimulus and bailouts intended to keep the country from slipping into a prolonged recession. But if things are going to be back to normal in less than three weeks, why is a massive stimulus necessary? Someone isn’t telling the truth.

Add into the mix the various and sundry failures of the so-called fourth branch of government: the bad regulations at the Food and Drug Administration (FDA) that continue to slow the deployment of masks to places where they are needed, the CDC botching the COVID-19 testing rollout.

There will be heroes that emerge out of this. Doctors, nurses, medical students who are allowed to graduate early so they can join the fight against the coronavirus are leading contenders. Private businesses that are surging their operations to supply more medical gear deserve mention. But when all of this is over, we should also remember that government officials mostly did what they can always be counted on to do. They’re doing little but standing in the way, deflecting blame, and seeking to exploit human suffering for a political agenda, or merely to boost their own chances of re-election.

from Latest – Reason.com https://ift.tt/2UheFdo
via IFTTT

FDIC asks Americans to keep their money in the banks

Yesterday the Chair of the FDIC released an astonishing video asking Americans to keep their money in the bank.

Accompanied by soft piano music playing in the background, the official said:

“Your money is safe at the banks. The last thing you should be doing is pulling your money out of the banks thinking it’s going to be safer somewhere else.”

Amazing. I was half expecting her to waive her hand and say, “These aren’t the droids you’re looking for…”

As I’ve written before, there’s $250 TRILLION worth of debt in the world right now: student debt, housing debt, credit card debt, government debt, corporate debt, etc.

And let’s be honest, some of that debt is simply not going to be paid.

Millions of people have already lost their jobs. Millions more (like the 10 million waiters and bartenders across America) are barely earning anything right now because their businesses are closed.

A lot of those folks have no emergency savings to fall back on during times of crisis, so they’re going to be forced to choose: pay the rent, or buy food.

The government has already suspended evictions and foreclosures, which is a green light for people to stop paying the rent or mortgage.

And that means banks will take it in the teeth.

This is what happened back in 2008– millions of people across the country stopped paying their mortgages, and the banking system nearly collapsed as a result.

Today it’s a similar situation; a lot of people are going to stop paying their mortgages, credit cards, auto loans, etc. And that directly impacts the banks.

Businesses are in deep financial trouble too.

According to the Wall Street Journal, the median small business in the United States has a cash balance that will last them just 27 days.

And many are operating with an even smaller safety net; the median restaurant, for example, has a cash balance of just 16 days.

These businesses have been told to close down due to the Corona Virus. And it’s likely that many of them will never re-open.

A lot of these companies also have debt. And if they close, those debts will never be repaid.

Even big businesses are susceptible to failure.

Every airline, cruise ship operator, hotel, retail chain, etc. is on the ropes, and each of these companies has borrowed billions of dollars.

This pandemic could easily push several big companies into bankruptcy.

You probably know that old saying– if you owe the bank a million dollars and can’t pay, you have a problem. If you owe the bank a billion dollars and can’t pay, the bank has a problem.

That’s what we’re seeing now.

Countless unemployed individuals, millions of shuttered small businesses, and bankrupt big companies collectively owe the banks trillions of dollars. And many of them can’t pay… which means the entire banking system has a problem.

How much money will the banks lose because of this pandemic?

It could easily end up being hundreds of billions of dollars, even several trillion dollars.

No one knows. But it’s not going to be zero. It’s silly to think that banks are immune to the Corona virus, or to assume that not a single bank is going to run into problems.

Don’t get me wrong– I’m not saying that the banking system is about to collapse. There are stronger banks and weaker banks. Many of them will survive, others will fail.

What I am saying is that there are enormous and obvious risks that threaten the banking system.

As I’ve written several times over the past few weeks: Anyone who says, “No, that’s impossible,” clearly doesn’t have a grasp of what’s happening right now. EVERY scenario is on the table, including severe problems in the banking system.

But the FDIC insists that there’s nothing to worry about.

That’s ridiculous. The FDIC only has $109 billion to insure the entire $13 trillion US banking system. That’s less than 1%!

The FDIC also insists that they’ve always been able to prevent depositors from losing money. “Not a single depositor has lost money since 1933.” And that’s true.

But they’ve never had to deal with this before. Neither the FDIC, nor any bank, has ever had to deal with a complete shutdown of the economy… or potential losses of this magnitude.

The Covid-19 impact on the banking system could be 10x bigger than the housing meltdown in 2008.

If the pandemic ends up causing trillions of dollars of loan losses, the FDIC won’t have enough ammunition to fix it… and that doesn’t even consider trillions of dollars more in potentially toxic derivatives exposure.

So to casually brush off these risks and claim that everything is 100% safe seems incomprehensible.

It also raises an interesting point: why is the FDIC asking us to NOT withdraw our savings?

If the financial system is so safe, it shouldn’t matter to them whether or not people keep their money in the banks.

Yet they still felt the need to specifically ask people to NOT withdraw their money… and tell us that we shouldn’t keep cash at home.

I’ll reiterate a point that we’ve made again and again at Sovereign Man over the years: it makes sense to have some physical cash in an at-home safe.

I’m not suggesting you keep your life’s savings in physical cash. But a month or two worth of expenses won’t hurt.

There’s very little downside– your bank probably only pays you 0.01% anyhow, so it’s not like you will be giving up a ton of interest income.

And given that the FDIC is specifically saying that you shouldn’t do this, a prudent person might wonder what’s really going on.

Source

from Sovereign Man https://ift.tt/2vTaPOw
via IFTTT

CME Urged To Change Physical Gold Delivery Rules Amid Market “Breakdown”

CME Urged To Change Physical Gold Delivery Rules Amid Market “Breakdown”

Over the past decade, one of the most fascinating observations in the world of precious metals has been the bizarre decoupling in the supply/demand dynamics and thus pricing, between paper and physical gold.

And, as we detailed yesterday, that decoupling has become extreme.

A surge in demand for physical gold – that results in precious metal vendors and exchanges becoming sold out in very short notices – has created shortages in some geographical locations that is stressing gold markets drastically.

Don’t take our word for it. Even the venerable Financial Times reports that traders have reported and lamented a growing global shortage of gold bars, as the coronavirus outbreak both disrupts supply and stokes demand, “with one business comparing the frenzied buying of the yellow metal with the consumer rush for toilet roll.“

Yesterday, Saxo Bank’s head of commodity strategy, Ole Hansen, observed that a lockdown is occurring in two biggest gold hubs in the world, New York and London,  so many traders are working from home. “This has caused a breakdown in the marketplace”, he said.

“There is no price discovery in the market right now,” he said Tuesday morning.

“If you need to borrow gold in the OTC [over-the-counter] markets right now, you are going to pay a king’s ransom.”

And that ‘broken’ market is no more evident than in the decoupling between spot and futures markets.

The gap between gold futures on the CME’s Comex exchange in New York widened above London spot prices by as much as $80 per ounce – or over 4% – on Tuesday. The two usually remain within a few dollars of one another, and the gap skewed trading in the London market, causing activity to fall as traders feared shutdowns of air travel and precious metal refineries due to the coronavirus outbreak will make it harder to ship bullion from London to the United States to meet contractual requirements.

And so, under pressure from the London Bullion Market Association (LBMA) and several major banks that trade gold, the CME Group has reportedly  changed its contract-delivery rules to allow gold bars in London to be used to settle its contracts to ease disruption to trading.

As Reuters reports, London is a key gold storage center, where thousands of tonnes of metal underpin trading, but it uses 400-ounce bars which must be melted down and recast as 100-ounce bars to be accepted by Comex in New York.

The LBMA and executives at major gold-trading banks asked CME to allow 400-ounce bars to be used to settle Comex contracts, said the two sources, both of whom were involved in the discussions.

“It’s totally logical,” said an executive at a gold-trading bank. “In London there’s no shortage of metal.”

Notably, Reuters admits the sources said the CME had not yet made a decision, and any change to its rules would likely take several days to implement and require regulatory approval.

No matter whether they approve it or not, there are serious cracks starting to appear in the paper gold markets as the world reaches for ‘money’ as The Fed explicitly admits to infinite dollar debasement capabilities.


Tyler Durden

Wed, 03/25/2020 – 11:15

via ZeroHedge News https://ift.tt/39dVw0d Tyler Durden