Philadelphia Safe Injection Site Opening Delayed

A nation-first site for users to safely inject drugs will not be opening in Philadelphia this week after all.

A U.S. attorney from the Justice Department is taking the project to court to stop them, but that’s not what caused the delay. The roadblock is an angry response from people in the neighborhood.

Officials and activists with the non-profit Safehouse have been working on plans to open a privately operated, donor-funded safe injection facility (SIF). The place would give drug addicts a place off the street where they can inject under the watch of trained medical professionals who could respond to overdoses.

They’ve been fighting the U.S. Department of Justice, which thinks this harm reduction tool is against federal law and encourages drug use. The feds lost the first round of the fight when a federal judge ruled against them last October.

But last week, when Safehouse announced its first site to open, it was not in the Kensington neighborhood, as everybody thought it would be, but in South Philadelphia, a few miles away. Some residents felt blindsided.

Kensington is infamous for open use in homeless encampments—and for high rates of overdoses and deaths. South Philadelphia has its share of drug deaths, too. But the announcement nevertheless sparked outrage, prompting organizers to pull back and “regroup” to decide the best course of action. The lease they had arranged in South Philadelphia has been cancelled.

Christopher Moraff, who has been doing street-level coverage of Philadelphia’s drug abuse crisis for years, reports in Filter that while Kensington was planned for an initial SIF, Safehouse worried that it would not be able to immediately meet demand; meanwhile, the owner of the building they were intending to lease got cold feet and pulled out. Safehouse Vice President Ronda Goldfein told Moraff that they picked South Philadelphia as another location because that part of the city has the second-highest number of drug fatalities.

A big difference in drug use patterns made people more comfortable with having a facility in Kensington than in South Philadelphia. Despite the overdose statistics, Moraff explains, most of the drug abuse in South Philadelphia takes place behind closed doors:

In contrast to Kensington, which is known for its open-air drug markets, drugs and drug paraphernalia are not visible on the streets of South Philly. Most dealers conduct their business by phone and sometimes make house calls. The population is predominantly Italian American, with a tradition of children continuing to live in their parents’ homes into adulthood.

The majority of fatal overdoses here happen inside the home, with no one present to intervene. Compare that to Kensington, where injection drug use is often conducted in the open, and frequently in groups. Kensington’s proximity to Prevention Point Philadelphia also provides ready access to naloxone and sterile syringes.

No comparable program serves people who use drugs in lower South Philly. Few of the injecting drug users I’ve spoken with here carry naloxone, and for most, the only way to obtain sterile syringes is to purchase them from a pharmacy, making access less likely.

Many South Philly residents fear that opening the facility there will draw in Kensington users or even cause a surge in open outdoor use even though the point of a SIF is to serve as an alternative to this behavior.

It’s an unfortunate setback for Safehouse. But with luck they’ll find a path forward and we can start seeing whether SIFs can help reduce overdose deaths, help reduce the spread of diseases, and help connect addicts to resources to assist them.

 

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Platts: 4 Commodity Charts To Watch This Week

Platts: 4 Commodity Charts To Watch This Week

Via S&P Global Platts Insight blog,

From crude oil to gas to gold, commodities markets continue to be affected by the outbreak of coronavirus and the impact it has had on global economic sentiment. Read on for our pick of unfolding market trends from S&P Global Platts news editors.

1. Oil traders brace for weak demand

What’s happening? A state of contango – where prices for forward delivery are higher than those for nearer delivery dates – has spread through the Dubai crude oil market, implying traders are bracing for unusually weak demand in the second quarter and beyond. Oman crude also fell into contango at the end of last week, ending the month at parity with Dubai.

What’s next? Market conditions will increase pressure on OPEC and its non-OPEC allies to agree to extend and deepen production cuts at their meeting in Vienna from Thursday. As things stand, it is likely the Asian market will demand deep price cuts to Middle Eastern grades. Prices are expected to be issued from next week onwards.

2. NYMEX natural gas futures hit 4-year low

What’s happening? The NYMEX prompt-month natural gas futures contract tumbled to its lowest level in nearly four years on February 27, settling at just $1.75/MMBtu. A steady decline in the benchmark futures price this winter comes amid sluggish residential-commercial demand and a struggle to absorb mounting US supply.

What’s next? From November 1 to date, US production has remained near record highs, averaging over 92.3 Bcf/d. This winter should see storage levels finish the current withdrawal season almost 250 Bcf above the five-year average, according to S&P Global Platts Analytics. Reduced summer-season injection demand could potentially be exacerbated by the shut-in of LNG export facilities in response to the coronavirus.

3. Copper, gold move in tandem in response to coronavirus

What’s happening? Copper, often cited as a bellwether for the global economy, has been hammered on coronavirus fears. Meanwhile, there has been a hefty inflow of capital into gold, one of the market’s favorite safe haven trades. This has seen the correlation between the two prices narrow, indicating that economic sentiment is turning increasingly sour.

What’s next? Eyes are on how quickly the virus will spread, and the lasting impact on the global economy. The London Metal Exchange three-month copper price dropped nearly 10% to $5,573/mt by February 28. Conversely, most analysts expect continued strength in the gold price, which touched a near-seven year high of $1,689/oz last week.

4. Brazilian corn farmers keep close eye on weather

What’s happening? Corn planting in Brazil’s Mato Grosso region accelerated in the week ended February 21, with sowing completed in 79.6% of the projected harvest area, above the five-year average of 72.6%, according to the Mato Grosso Institute of Agricultural Economics. The region is Brazil’s largest corn producer, accounting for over 50% of exports.

What’s next? Farmers will be watching the weather closely. Corn planting during the ideal time – by the end of February – gives a good yield if weather conditions are favorable. Pre-harvest corn sales in the state have been brisk so far and the availability of corn for exports will depend largely on domestic sales and corn prices, which continue to remain firm.


Tyler Durden

Mon, 03/02/2020 – 14:30

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Kudlow, Mnuchin Favor Fed Rate Cut As Virus Fallout Response; Fiscal Stimulus “Not Under Heavy Consideration” In White House

Kudlow, Mnuchin Favor Fed Rate Cut As Virus Fallout Response; Fiscal Stimulus “Not Under Heavy Consideration” In White House

After last week’s not one but two Bloomberg op-eds by the Fed’s biggest ever dove, Narayana Kocherlakota, in which the former Minneapolis Fed president advocated not just a rate cut, but an emergency intermeeting rate cut, we said that with the idea now “incepted”, it was only a matter of time before officials took it on as their own.

And sure enough, with the market now holding the Fed hostage and – in agreement with both Goldman and Bank of America – pricing in not just one but two rate cuts on or before March 18 as if the global economy is on the verge of a depression, moments ago Bloomberg reported that as part of the Trump administration’s idea to contain the economic and market fallout from the rapidly spreading coronavirus, because somehow printing more money will help thousands of sick Americans defeat the deadly virus, the two most important people in Trump’s advisory orbit, National Economic Council director Larry Kudlow, and Treasury Secretary Steven Mnuchin, both favor the Fed cutting interest rates before its next scheduled meeting on March 17 and 18. As Bloomberg further adds, within the White House, a rate cut is currently the most actively discussed economic measure to combat the virus, the people said.

To the White House’s chagrin, however, the market was hardly excited by this incremental update-cum-trial balloon, because traders have already priced in not just one but two emergency rate cuts, and as such what the White House is proposing is not incremental.

Worse, it suggests that some of the various fiscal stimuli that had been floated including payroll tax cuts, or even Hong Kong-style money paradrops are not being discussed, and that once again it is up to Powell to bailout permabuls.

Which also is not news: on Friday, Fed Chair Jerome Powell already signaled the central bank is open to a rate cut, in a rare statement on Friday before markets closed. Powell said the coronavirus “poses evolving risks to economic activity,” and that the central bank will “use our tools and act as appropriate to support the economy.”

Meanwhile, on Monday, after Powell failed to act over the weekend, the president made plain his feelings about the independent central bank on Monday, tweeting that Powell has been “slow to act.” Naturally, even that is not new, with Trump frequently criticizing Powell for not being dovish enough, and has urged the Fed to cut rates below zero even before the coronavirus outbreak.

Which is why the real news reported by Bloomberg, and which is hardly risk-asset positive, is that within the White House, there have also been discussions of an economic stimulus package that would likely be heavily weighted toward tax cuts, but it’s not under serious consideration.

This means that unlike countries like Italy, which over the weekend promised a $4 billion package including tax credits and liquidity support for businesses, and China whose regulators announced a waiver for small companies struggling to repay loans, Trump plans on leaning on the Fed to prevent a recession.

Which begs the question: what can the Fed actually do to restore an economy that is crippled by fear of pandemic, and since it can’t print antibodies, will the Fed merely spike stocks briefly, only to see them tumble in coming days when the pandemic gets even worse and the disconnect between the economy and markets is back to the widest it has ever been.

That said, there is yet hope on the fiscal side: as Bloomberg reported earlier, Mnuchin and his G-7 counterparts are holding a phone call on Tuesday to discuss coordinating responses to the economic threat of coronavirus, a report which helped kick start today’s monster rally, which however will hardly last.


Tyler Durden

Mon, 03/02/2020 – 14:09

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Philadelphia Safe Injection Site Opening Delayed

A nation-first site for users to safely inject drugs will not be opening in Philadelphia this week after all.

A U.S. attorney from the Justice Department is taking the project to court to stop them, but that’s not what caused the delay. The roadblock is an angry response from people in the neighborhood.

Officials and activists with the non-profit Safehouse have been working on plans to open a privately operated, donor-funded safe injection facility (SIF). The place would give drug addicts a place off the street where they can inject under the watch of trained medical professionals who could respond to overdoses.

They’ve been fighting the U.S. Department of Justice, which thinks this harm reduction tool is against federal law and encourages drug use. The feds lost the first round of the fight when a federal judge ruled against them last October.

But last week, when Safehouse announced its first site to open, it was not in the Kensington neighborhood, as everybody thought it would be, but in South Philadelphia, a few miles away. Some residents felt blindsided.

Kensington is infamous for open use in homeless encampments—and for high rates of overdoses and deaths. South Philadelphia has its share of drug deaths, too. But the announcement nevertheless sparked outrage, prompting organizers to pull back and “regroup” to decide the best course of action. The lease they had arranged in South Philadelphia has been cancelled.

Christopher Moraff, who has been doing street-level coverage of Philadelphia’s drug abuse crisis for years, reports in Filter that while Kensington was planned for an initial SIF, Safehouse worried that it would not be able to immediately meet demand; meanwhile, the owner of the building they were intending to lease got cold feet and pulled out. Safehouse Vice President Ronda Goldfein told Moraff that they picked South Philadelphia as another location because that part of the city has the second-highest number of drug fatalities.

A big difference in drug use patterns made people more comfortable with having a facility in Kensington than in South Philadelphia. Despite the overdose statistics, Moraff explains, most of the drug abuse in South Philadelphia takes place behind closed doors:

In contrast to Kensington, which is known for its open-air drug markets, drugs and drug paraphernalia are not visible on the streets of South Philly. Most dealers conduct their business by phone and sometimes make house calls. The population is predominantly Italian American, with a tradition of children continuing to live in their parents’ homes into adulthood.

The majority of fatal overdoses here happen inside the home, with no one present to intervene. Compare that to Kensington, where injection drug use is often conducted in the open, and frequently in groups. Kensington’s proximity to Prevention Point Philadelphia also provides ready access to naloxone and sterile syringes.

No comparable program serves people who use drugs in lower South Philly. Few of the injecting drug users I’ve spoken with here carry naloxone, and for most, the only way to obtain sterile syringes is to purchase them from a pharmacy, making access less likely.

Many South Philly residents fear that opening the facility there will draw in Kensington users or even cause a surge in open outdoor use even though the point of a SIF is to serve as an alternative to this behavior.

It’s an unfortunate setback for Safehouse. But with luck they’ll find a path forward and we can start seeing whether SIFs can help reduce overdose deaths, help reduce the spread of diseases, and help connect addicts to resources to assist them.

 

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38% Of People In Survey Are Avoiding Corona Beer Due To Coronavirus

38% Of People In Survey Are Avoiding Corona Beer Due To Coronavirus

A survey of more than 700 beer drinkers has revealed some stunning results. First, there are apparently no signs of intelligent life for the human race left on Earth. And second, people are completely ignorant as to what the coronavirus is, how it is transmitted and what can be done to prevent it.

We say that because 38% of those people surveyed have said they “would not, under any circumstances,” buy Corona beer as a result of the deadly coronavirus spreading, according to KRON/CNN. There’s obviously zero link between the two, aside from them both having similar names. 

16% of the people surveyed said they “were not sure” whether the virus is related to Corona beer and 14% of respondents who regularly drink Corona beer said they would no longer order it in public. 

Sometimes your brand just gets unlucky. 

Ronn Torossian, Founder and CEO of 5WPR, the public relations firm that conducted the survey said: “There is no question that Corona beer is suffering because of the coronavirus. Could one imagine walking into a bar and saying ‘Hey, can I have a Corona?’ or ‘Pass me A Corona’?” 

He continued: “While the brand has claimed that consumers understand there’s no linkage between the virus and the beer company, this is a disaster for the Corona brand. After all, what brand wants to be linked to a virus which is killing people worldwide?”

Constellation brands, brewer of the beer, says the timing couldn’t be worse. They were on the precipice of introducing a new Corona branded hard-seltzer product for the summertime. Promotion for the drink, which uses the phrase “coming ashore soon”, has already been criticized. 


Tyler Durden

Mon, 03/02/2020 – 13:50

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The Fight Over Colorado’s Death Penalty Was Shaped by the Families of Murder Victims

The Colorado House of Representatives passed a bill last week that would end the death penalty in the state. The legislation is now headed to Gov. Jared Polis’ desk, where he is expected to sign it. The bill will not directly affect the cases of the three men currently on death row in Colorado, but the governor has indicated that if the bill becomes law he would seriously consider commuting their sentences to life in prison.

Two of the men on death row, Robert Ray and Sir Mario Owens, were convicted and sentenced for murdering Javad Marshall-Fields and his fiancée, Vivian Wolfe. State Sen. Rhonda Fields (D–Aurora) is Marshall-Fields’ mother, and she is one of the few Democrats in the Senate who has remained opposed to a repeal. Indeed, her strong opposition sank a previous repeal effort and has encouraged other politicians to oppose repeal.

State Rep. Tom Sullivan (D–Aurora) has led a similar opposition effort in the House. Sullivan’s son was killed in the 2012 Aurora Theater shooting. Though shooter James Holmes was eventually sentenced to life in prison, Sullivan maintained that he would continue fighting for the death penalty in the state.

But the families of murder victims have not all come down on the same side of the issue. Some have spoken up in favor of the bill. The American Civil Liberties Union released a video earlier this year featuring Coloradans who opposed the death penalty despite losing a loved one to murder. Some of these testimonies were taken to the state Capitol: Sharletta Evans, whose 3-year-old son was murdered, and Victoria Baker-Willford, whose mother was murdered, told lawmakers why they were opposed to the death penalty despite these tragedies. Some have religious objections, while others said the death penalty would just bring further trauma.

Now that the repeal bill has passed, advocates have had a chance to reflect on the fight.

“While Republicans are not in the majority in the Colorado Legislature, they are among the prime sponsors of the bill, and their support has made it possible to repeal the death penalty,” says Hannah Cox, national manager of Conservatives Concerned About the Death Penalty. “They are backed by a wide coalition of faith leaders, murder victims’ family members, former members of corrections, and yes, grassroots conservatives, all who feel it is far past time for this antiquated system to be left in the history books.”

“167 innocent people have been officially exonerated from death row since 1973,” adds Cassandra Stubbs, director of the Capital Punishment Project at the ACLU. “There is no excuse for any government that respects justice, fairness, and human dignity to continue to execute its people.”

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The Fight Over Colorado’s Death Penalty Was Shaped by the Families of Murder Victims

The Colorado House of Representatives passed a bill last week that would end the death penalty in the state. The legislation is now headed to Gov. Jared Polis’ desk, where he is expected to sign it. The bill will not directly affect the cases of the three men currently on death row in Colorado, but the governor has indicated that if the bill becomes law he would seriously consider commuting their sentences to life in prison.

Two of the men on death row, Robert Ray and Sir Mario Owens, were convicted and sentenced for murdering Javad Marshall-Fields and his fiancée, Vivian Wolfe. State Sen. Rhonda Fields (D–Aurora) is Marshall-Fields’ mother, and she is one of the few Democrats in the Senate who has remained opposed to a repeal. Indeed, her strong opposition sank a previous repeal effort and has encouraged other politicians to oppose repeal.

State Rep. Tom Sullivan (D–Aurora) has led a similar opposition effort in the House. Sullivan’s son was killed in the 2012 Aurora Theater shooting. Though shooter James Holmes was eventually sentenced to life in prison, Sullivan maintained that he would continue fighting for the death penalty in the state.

But the families of murder victims have not all come down on the same side of the issue. Some have spoken up in favor of the bill. The American Civil Liberties Union released a video earlier this year featuring Coloradans who opposed the death penalty despite losing a loved one to murder. Some of these testimonies were taken to the state Capitol: Sharletta Evans, whose 3-year-old son was murdered, and Victoria Baker-Willford, whose mother was murdered, told lawmakers why they were opposed to the death penalty despite these tragedies. Some have religious objections, while others said the death penalty would just bring further trauma.

Now that the repeal bill has passed, advocates have had a chance to reflect on the fight.

“While Republicans are not in the majority in the Colorado Legislature, they are among the prime sponsors of the bill, and their support has made it possible to repeal the death penalty,” says Hannah Cox, national manager of Conservatives Concerned About the Death Penalty. “They are backed by a wide coalition of faith leaders, murder victims’ family members, former members of corrections, and yes, grassroots conservatives, all who feel it is far past time for this antiquated system to be left in the history books.”

“167 innocent people have been officially exonerated from death row since 1973,” adds Cassandra Stubbs, director of the Capital Punishment Project at the ACLU. “There is no excuse for any government that respects justice, fairness, and human dignity to continue to execute its people.”

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The Fruitless Narco Wars

Bogota, Colombia—Colombia is about to dust off a controversial weapon from the bloodiest period of the nation’s decades-long battle against cocaine production. The aerial fumigation program was halted in 2014 after the World Health Organization said the main herbicide used in fumigation, glyphosate, probably causes cancer in humans. Experts also pointed to the program’s decreasing effectiveness.

Colombia is currently confronting a massive spike in cocaine production. In 2019, police and army units destroyed a record amount of coca fields—the raw ingredient used to make cocaine—using dangerous manual search and eradicate methods.

Yet during this same period, Colombia produced more cocaine than at any other time in its troubled history, according to the United Nations Office on Drug and Crime (UNODC). The United States has attributed this recent rise to the halting of Colombia’s aerial fumigation program in 2014.

Local counter-narcotics experts, human rights groups, environmental experts, and the UNODC, by contrast, have criticized aerial fumigation as ineffective, as a health and environmental hazard, and as a waste of money.

WOLA, an advocacy group for human rights in Latin America, has presented evidence suggesting that aerial fumigation actually worsens the social damage caused by coca cultivation.

The Colombian Ministry of Justice announced the decision to resume aerial fumigation in December as part of an approach to “utilize every tool at the disposal of the National government to combat narco-trafficking.”

The decision comes on the heels of threats last year by President Donald Trump to revoke aid to the South American nation over U.S. frustration with spiraling cocaine production. Colombia has “done nothing for us,” as Trump put it. He even threatened to de-certify Colombia as a partner in the drug war, a decision that would leave America’s closest ally in South America in the same category as Venezuela.

A U.S. Embassy Bogota spokesperson told Reason, “An integrated coca eradication program that uses all tools, including manual eradication, crop substitution, alternative development, and aerial eradication, offers the best chance to reduce the high cocaine production that threatens the people of both countries.

In 1998, Colombia produced 90 percent of the world’s cocaine, or just over 600 metric tons. In 2017, Colombia produced more than double that amount: 1,379 metric tons, according to UNODC, and the figure continues to rise.

Global cocaine sales have grown since the late 1990s (after tapering off in the early 2000s) and currently account for more than $150 billion annually, according to the Organization of American States (OAS). Those gains, which dwarf the profits of any legal corporation in the world, fund armed groups, destabilize governments, and empower criminals across all of Latin America. During that same period, domestic consumption of cocaine in Colombia has quadrupled.

Civil War, Narco-Wars, and Plan Colombia

Colombia first began fumigation in 1994 at the insistence of the United States. Colombian drug cartels had recently begun domestically cultivating coca, which they had previously imported from Peru and Bolivia, and Colombian production was skyrocketing. The U.S. decision would prove to be a fateful one. It inspired a period of heavy U.S investment and military involvement as part of an anti-drug initiative called “Plan Colombia.”

Plan Colombia would balloon over the next decade to involve direct military support and training for a Colombian government that found itself besieged not only by the after-effects of the narco-wars of the late 1980s and early 1990s, but by an ongoing civil war as well. As the issues became increasingly intertwined, the United States would find itself increasingly mired in the bloody conflict.

The U.S. transferred $10 billion in bilateral foreign assistance to the Colombian government between 2000 and 2016 to fund Plan Colombia, according to Jorge Mantilla, criminology researcher at the University of Illinois at Chicago. The U.S. also provided helicopters, planes, training, and intelligence.

After the death of Pablo Escobar, the fall of the Medellin cartel, and the subsequent collapse of the Cali cartel in the late 1990s, the cocaine industry became increasingly fractured, and the main armed actors in Colombia’s ongoing civil war, right-wing paramilitary “self-defense forces” and left-wing rebel group the FARC, became major players..

According to Luis Moreno, a former U.S. narcotics affairs section director and coordinator for Plan Colombia, “The FARC were strangling [Colombia]. Our goals were threefold; deprive the rebels of their funding, drive up the price of cocaine in the U.S. while reducing its purity, and make it less available in the United States.”

Data from the early 2000s seems to suggest that the coordinated efforts were initially successful, and led to a temporary plateau in Colombian cocaine production. Today, the U.S. government calls the program a success and claims that Plan Colombia set the stage for Colombia’s historic 2016 Peace Accord as a weakened FARC agreed to lay down arms and join the government. Critics offer a less rosy view.

‘A Horrible Human Price’

“Fumigation dispersed coca crops across all of Colombia,” says Gimena Sanchez-Garzoli, Andes director for human rights group WOLA. “As fields were destroyed, armed groups simply pushed into new territories and planted smaller farms among food crops, displacing vulnerable communities or forcing them into their employ.”

Critics call this phenomenon, which displaced millions of Colombians and led to the spread of armed groups across the country, the “Balloon Effect.”

“The rate of re-plantation from forced eradication is [around] 60 percent, meaning that regarding coca production the impact of Plan Colombia couldn’t be called a full success,” says University of Illinois at Chicago criminology researcher Jorge Mantilla.

“The Colombian government cites the hectares of coca fields that have been destroyed, but the narcos simply pushed into new areas, and the price of cocaine has not been impacted,” observes Sanchez.

She believes that while it is arguable that Plan Colombia helped foster an environment for the peace accord, “the efforts came at a horrible human price.” Farmers often planted coca alongside sustenance crops, she points out, and fumigation destroyed indiscriminately, directly harming the food security of vulnerable communities who often had no choice for survival but growing coca. A critical lack of infrastructure made transporting legal crops to market next to impossible, and farmers viewed the aerial attack on coca as an attack on their communities.

Thousands of civilians were also killed during the anti-narcotics program, often at the hands of government forces. Over 3,000 farmers were slaughtered by Colombian soldiers during the conflict and later dressed up as rebels, a ploy to inflate casualty numbers.

Moreno, who headed up U.S. efforts in Colombia between 1997 and 2001, says that “we made extreme efforts to be responsible, we never followed when rebel groups fled to areas [such as] National Parkland and the protected areas of the Amazon jungle. Critics don’t realize how dangerous this work was and how careful we were.”

“Aerial fumigation by itself is neither efficient nor cost-effective,” counters Sanchez. She believes a resumption of the program will endanger an already precarious peace.

“The people took a great risk and made heroic efforts to implement this peace,” Sanchez points out, “and now they risk having their crops burned down by a government that hasn’t lived up to its promises to invest in their communities.”

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Klobuchar Drops Out Of Dem Race, Will Endorse Biden

Klobuchar Drops Out Of Dem Race, Will Endorse Biden

The culling of the Democratic field continues…

Following Tom Steyer and Pete Buttigieg, Minnesota Senator Amy Klobuchar has become the latest Democratic primary candidate to end her campaign following Joe Biden’s first-place win in South Carolina.

Sources say she will endorse Joe Biden, which is hardly a surprise. Buttigieg is reportedly meeting with Biden about an endorsement.

On Sunday night, we noted the following tweet from Democratic campaign insider Robyn Kanner. Looks like she was correct:

Developing…

 


Tyler Durden

Mon, 03/02/2020 – 13:35

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“This Ain’t No Foolin’ Around” – Jim Kunstler Warns “Fragile Markets Susceptible To Dangerous Disorder”

“This Ain’t No Foolin’ Around” – Jim Kunstler Warns “Fragile Markets Susceptible To Dangerous Disorder”

Authored by James Howard Kunstler via Kunstler.com,

The shadow of Corona virus creeps ever-darker across the scene like a cosmic messenger from Karma Central telling mankind to stop and assess. We’re about to find out what we’ve wrought with the wonders and marvels of globalism. Is there anything you can think of over at the Wal Mart or the Walgreens that isn’t made in China? I mean, everything from a dustpan to a lint brush? I can’t say for sure, because I’m not over in China, but the place is apparently not open for business these days. One must surmise that a lot of activities in the USA may not be open for business much longer, either.

The action in my local supermarket yesterday had an undercurrent of stealth desperation; no overt panic buying, no fighting in the aisles, but an edge of suspense. Personally, I cleaned out an entire product-line of cat food, loaded up on cooking oil, rice, dry beans, and evaporated milk — and I wasn’t the only one checking out with the sixteen-roll bindle of toilet paper. Obviously, many products were still there on the shelves to get (minus that cat food). Is the time perhaps at hand when a lot of stuff won’t be? Just sayin’.

The message is getting out — though not from US authorities yet — that everybody may soon be spending a lot of time home alone. That’s exactly what has happened in China and a region of northern Italy. France banned events with more than 5,000 people (why that number, exactly?). Japan has canceled school for the time being — duration unknown for now.  So a USA lockdown is not merely hypothetical. These, then, are two fundamental conditions the world faces for a while: nobody moves and nothing gets produced.

Are we taking this thing too seriously (some might ask)?

I don’t pretend to know the answer, except, again, to point to China and think that they can’t possibly just be fooling around with all those zombified cities and shuttered factories.

The next question might be: will the global economy return at some point to “normal” operating conditions, that is, the fabulously complex network of supply lines, markets, and payment arrangements as they worked up until January 2020?

I am for sure not sure about that. Once a gigantic and fantastically precise mechanism breaks, I doubt it comes back together neatly and quickly. In the physical universe, the power of emergence is like the cue ball on a billiard table, and it appears that all the rest of the colored balls will be bouncing off the bumpers and sinking into pockets for while… and eventually the global table will look a lot different.

I’ve long maintained that of all the many networked systems we depend on, banking and finance are the most fragile, the most susceptible to dangerous disorder. And, of course, that is exactly what we’re seeing in the stock markets. Trillions of dollars in notional wealth have vaporized. Over on the bond side, interest rates are crashing toward zero as loose capital desperately seeks a safe harbor. But how safe is Bond Harbor, exactly, when all the advanced nations are so deep in the borrowing hole that they can never really meet their obligations? And Gawd knows what is going on with the “innovative” financial IEDs in Derivatives Land? How can they not be blowing up with price movements of the kind that went down last week?

As that colossal hairball unravels, nobody will get paid for anything for a period of time, again, duration unknown. There was chatter last week about a supposed Sunday meeting of global Central Bank poohbahs looking to come up with a battle plan for arresting the damage. It must have been mighty secretive because there’s nothing about it on the news wires Monday morning.

But what can they do, really, except the only thing they know how to do, which is to jam more “money” into crumbling arrangements? And then, we must ask, when does this stuff lose its credibility as “money?” Answer: when the contours of the black hole it is disappearing into become obvious and undeniable — and some might argue that we can already see all that. If the equity markets turn up today, that will probably be an indication that the CB Boyz and Gurls have launched a direct stock-buying blitz… meaning that, until further notice, markets are not really markets. That would be a set-up for another round of cratering when the CBs shoot their wads on that gambit.

One thing I’m hearing a lot is how much this emergency spotlights the USA’s need to reindustrialize. That would be a natural conclusion, but I warn you it will not work out the way they’re saying. I’m not going to harp on this for now, but our energy supply situation is not what it’s cracked up to be, specifically shale oil, which depends utterly on a reliable stream of loans to keep up the incessant fracking — not a bright prospect with credit markets frozen — and above and beyond that, it’s an industry that doesn’t pay for itself, doesn’t make a red cent. So, watch for carnage in the shale oil patches. The next trick will be to nationalize the industry, and that will only add another layer to a looming national bankruptcy.

Now, that suggests to me that we’re not actually able to return to manufacturing at the scale we abandoned a few decades ago — in other words, Make America Great Again. If we make anything, it’ll be at a much smaller scale, and maybe even a scale that would seem laughably humble. When the dust settles from present financial meltdown — and that might take a while — Americans with any remaining capital might want to invest in water-power and hydroelectric sites. (Note, there are plenty here in Washington County, New York). The hydroelectric part is a bit iffy, since that does require a lot of copper and steel for the turbines. But water-power itself can drive machinery. Again, just sayin’.

Of course, one of the ironies of this situation is that the entire news media assumes that the election contest is proceeding along the usual formal trajectory. No one seems to wonder whether the party conventions can even be held if the corona virus sticks around through the spring, or even the election, for that matter.


Tyler Durden

Mon, 03/02/2020 – 13:30

via ZeroHedge News https://ift.tt/2PHZ18e Tyler Durden