Category: zerohedge

Authored by Patrick Cockburn via The Independent,

The fear caused by the coronavirus outbreak is greater than that provoked by a serious war because everybody is in the front line and everybody knows that they are a potential casualty. The best parallel is the terror felt by people facing occupation by a hostile foreign army; even if, in the present case, the invader comes in the form of a minuscule virus.

The political consequences of the Covid-19 pandemic are already vast because its advance, and the desperate measures taken to combat it, entirely dominate the news agenda and will go on doing so for the foreseeable future, although it is in the nature of this unprecedented event that nothing can be foreseen.

History has not come to a full stop because of the virus, however: crucial events go on happening, even if they are being ignored by people wholly absorbed by the struggle for survival in the face of a new disease. Many of these unrecognised but very real crises are taking place in the Middle East, the arena where great powers traditionally stage confrontations fought out by their local proxies.

Top of the list of critical new conflicts that have been overshadowed by the pandemic is the battle for the throne of Saudi Arabia: Crown Prince Mohammed bin Salman (MbS), whose dwindling band of admirers describe him as “mercurial”, this month launched a sort of palace coup by arresting his uncle, Prince Ahmed bin Abdulaziz, and his cousin, Prince Mohammed bin Nayef, whom he displaced as crown prince in 2017.

The new purge of close relatives by MbS may be motivated by his wish to eliminate any potential rivals for the crown who might step forward upon the death of King Salman, his 84-year-old father. This need to settle the royal succession has become more urgent in the past few weeks because the US presidential election in November might see the crown prince lose an essential ally: Donald Trump, a man who has become increasingly discredited by his shambolic response to Covid-19, and who faces Joe Biden’s emergence as the likely Democratic candidate for the presidency.

Trump has been a vital prop for MbS, standing by him despite his role in starting an unwinnable war in Yemen in 2015 and his alleged responsibility for the gruesome murder of Saudi journalist Jamal Khashoggi in Istanbul in 2018. MbS has denied personal involvement in the killing, but told PBS last year: “It happened under my watch. I get all the responsibility, because it happened under my watch.”

The record of misjudgements by MbS after he established himself as the de facto ruler of Saudi Arabia five years ago makes Inspector Clouseau seem like a strategist of Napoleonic stature by comparison. Every one of his initiatives at home and abroad has stalled or failed, from the endless and calamitous war in Yemen to the escalating confrontation with Iran that culminated in Tehran’s drone and missile attack on Saudi oil facilities last September.

The latest gamble by MbS is to break with Russia and flood the market with Saudi crude oil just as world demand is collapsing because of the pandemic’s economic impact. In living memory in the Middle East, only Saddam Hussein displayed a similar combination of hubris and erratic performance that inspired disastrous ventures such as the Iraqi invasion of Iran in 1980 and of Kuwait in 1990.

I once asked a Russian diplomat knowledgeable about the workings of the Iraqi ruler’s inner circle why none of his senior lieutenants, some of whom were intelligent and well informed, had warned him against taking such idiotic decisions. “Because the only safe thing to do in those circles was to be 10 per cent tougher than the boss,” explained the diplomat. MbS reportedly shows similar impatience towards anybody critical of the latest cunning plan.

When it comes to the oil price war, the likelihood is that the Kremlin will have thought this through and Riyadh will not. Russian financial reserves are high and its reliance on imports less than during the last price conflict five years ago between the two biggest oil exporters. Inevitably, all the oil states in the Middle East are going to be destabilised, Iraq being a prime example because of its complete reliance on oil revenues. Iran, suffering from the worst outbreak of Covid-19 in the region, was already staggering under the impact of US sanctions.

In time, the Russians may overplay their hand in the region – as all foreign players appear to do when over-encouraged by temporary successes. For the moment, however, they are doing nicely: in Syria, the Russian-backed offensive of President Assad’s forces has squeezed the rebel enclave in Idlib without Turkey, despite all the belligerent threats of President Erdogan, being able to do much about it.

These developments might have provoked a stronger international reaction two months ago, but they are now treated as irrelevant sideshows by countries bracing themselves for the onset of the pandemic. It is easy to forget that only 10 weeks ago, the US and Iran were teetering on the edge of all-out war after the Iranian general Qassem Soleimani was assassinated at Baghdad airport in a US drone strike. After ritualistic Iranian retaliation against two US bases, both sides de-escalated their rhetoric and their actions. Rather than drastically changing course, however, the Iranians were probably re-evaluating their strategy of pinprick guerrilla attacks by proxies on the US and its allies: this week, the US accused an Iranian-backed paramilitary group of firing rockets at an American base north of Baghdad, killing two Americans and one Briton. Iran has evidently decided that it can once again take the risk of harassing US forces.

Covid-19 is already changing political calculations in the Middle East and the rest of the world: a second term for President Trump looks much less likely than it did in February. The election of Biden, an archetypal member of the Washington establishment, might not change things much for the better, but it would restore a degree of normality.

Trump’s foreign policy in the Middle East and elsewhere has always been less innovative in practice than his supporters and critics have claimed. Often, in Iraq and Afghanistan, it was surprisingly similar to that of Barack Obama. The biggest difference was Trump’s abandonment of the nuclear deal with Iran, but even there Trump relied on the “maximum pressure” of economic sanctions to compel the Iranians to negotiate. For all Trump’s bombast and jingoism, he has never actually started a war.

However, this is now changing in a way that nobody could have predicted, because in its political impact the pandemic is very like a war. The political landscape is being transformed everywhere by this modern version of the Great Plague. By failing to respond coherently to the threat and blaming foreigners for its spread, Trump is visibly self-isolating the US and undermining the hegemonic role it has played since the Second World War. Even if Biden is elected as the next president, the US will have lost its undisputed primacy in a post-pandemic world.

As coronavirus spreads throughout the United States, millions of panicked Americans have been hoarding everything from canned food to absurd amounts of toilet paper. Images of empty store shelves are compounding the situation, as worries over shortages amid a potential quarantine have added to the surge in purchases.

According to the nation’s largest retailers, meat producers and dairy farmers however, there’s plenty of food in the country; the problem is that the supply chain wasn’t designed to handle this type of nation-wide surge in purchases and is now scrambling to catch up, reports the New York Times.

Industries that are calibrated to supply consumers with just enough of what they need on a given day cannot keep up with a nationwide surge of relentless shopping fueled in large part by fear. –NYT

As distributors and retailers struggle to restock shelves with a sudden demand for canned soup and oat milk, industry officials insist that these are temporary problems.

“There is food being produced. There is food in warehouses,” said North American Meat Institute CEO, Julie Anna Potts. “There is plenty of food in the country.”

Costco COO Ron Vachris said in a Saturday interview “Our stores are getting stocked every day,” adding “Transportation is functioning, our suppliers are working around the clock and the flow of goods is strong.”

Notably, hot dog orders at Costco and Walmart have increased by as much as 300% according to meat suppliers – with some hot dog plants adding Saturday and Sunday shifts, and are shipping Memorial Day stockpiles to meet the surge in demand. Hot dog makers say they have a year’s supply of ingredients such as garlic, according to the report.

Meanwhile, the National Chicken Council says they aren’t seeing any disruptions in production – and that “ample surplus supplies of chicken” are currently in cold storage – 950 million pounds worth, according to government data.

None of this matters to shoppers facing empty shelves right now, however.

“The trouble is that the hoarding hasn’t abated. We’re just seeing the very beginning of this kind of behavior,” he added. “The question is: How long will it take for industry to catch up?“

Authored by Bruce Wilds via Advancing Time blog,

More than a few reasons exist to vehemently oppose the federal covid-19 economic rescue package. This is the hastily drawn up package, which Trump said he fully supports and is rapidly working its way through Washington on its way to becoming law. The two major reasons for strongly objecting to this bill are, we have no idea what it will cost and it will totally miss its target while dealing a crushing blow to small businesses across America. Still, because of politics, the measure passed in an overwhelming 363-40 vote in the House soon after Speaker Nancy Pelosi, and Treasury Secretary Steven Mnuchin reached an agreement.

Politics And Grandstanding For The Masses

The 110-page bill is being painted as proof lawmakers could work together during a crisis after being sharply divided over party lines during the failed impeachment of President Trump.  By framing the poorly and hastily crafted pork-packed bill this way promoters are positioned to demonize those unwilling to support it. The chamber approved the bill less than an hour after the text was released. This bill is aimed at assisting millions of Americans directly and is in addition to the $8.3 billion emergency spending bill already approved to curb the spread of covid-19.

Jim Banks, a congressman from northeast Indiana was among 40 Republicans who opposed the bill. Interestingly, the rest of Indiana’s nine-member delegation, six Republicans and two Democrats, voted in favor of the act which has been named “Families First Coronavirus Response Act.” Banks claimed it was because “Some language will mean major harm for small businesses and our economy.” Bank’s office referred to a message sent to House leaders from the National Federation of Independent Business, which objected to a provision of the legislation that would require employers with fewer than 500 workers to provide paid medical and family leave. The question is, how many struggling businesses with two to twenty workers have the resources to weather this storm.

90% Of Businesses Are Small

The bill scheduled to go to the Senate will provide free testing for the virus, expand unemployment assistance and increase spending on nutrition programs. Banks tweeted: “There is much in this bill we need to pass, but as the NFIB said in their letter of opposition, the bill would impose potentially unsustainable mandates on small businesses’ hurting not helping the backbone of our local economies.”

The NFIB correctly contends that “many small business owners simply cannot afford the cost of the new mandate at the same time as they experience increasingly slower sales.” The advocacy organization said that many businesses “may not stay afloat” long enough to claim quarterly tax credits provided by the paid-leave provision. According to the bill, employers would have to provide 14 days of paid sick leave for at least two-thirds of a worker’s pay. This applies to employees who have the coronavirus, are caring for a family member who has it or who need to care for children due to facilities being closed. For those now forced to take on this burden, this is enough to make their heads spin, unlike government agencies small business owners cannot turn to taxpayers when they can’t pay their bills.

Below is a list of what this legislation promises to do:

• Requires private health plans to cover covid-19 testing at no cost, and allocates $1 billion for testing for uninsured Americans

• Ensures employers with fewer than 500 employees and government employers offer two weeks of paid sick leave through 2020.

• Requires those same employers to provide up to 3 months of paid family and medical leave for people forced to quarantine due to the virus or care for family because of the outbreak

• Offers payroll tax credits for employers providing those leave benefits

• Puts $1 billion into emergency state grants for providing unemployment insurance benefits. It includes $500 million for staffing and logistical costs for states, with an additional $500 million reserved for states that see a 10% increase in unemployment

• Puts $500 million into food assistance for low-income pregnant women and mothers with young children, $400 million into local food banks and $250 million into a senior nutrition program

• Suspends the Supplemental Nutrition Assistance Program work requirements for the duration of the crisis

In an effort to silence GOP opposition Trump wrote this bill “will follow my direction for free CoronaVirus tests, and paid sick leave for our impacted American workers.” He also said he directed Mnuchin and Labor Secretary Eugene Scalia “to issue regulations that will provide flexibility so that in no way will Small Businesses be hurt.” Many political pundits see Trump’s declaration of a national emergency on Friday and his endorsement of this package as an effort to mitigate damage from his administration’s initially weak response to the crisis.

In what appeared a contrived stunt to rally stocks, Trump declared a national emergency, 15 minutes before the market closed on Friday. In his declaration, Trump said he would temporarily waive the interest on federal student loans but more importantly directed his administration to buy oil for its strategic reserve. This caused oil and stocks to soar. The reality and fears of widespread economic disruption with workers, either sick or laid off has resulted in all major U.S. stock indexes dropping by more than 8% for the week despite rising on Friday.

As expected, in a series of tweets, the president said “I fully support” the legislation negotiated by Pelosi and Treasury Secretary Steven Mnuchin and said he looks forward to signing it “ASAP!” The Senate has canceled its recess plans and is expected to take it up Monday. Senate Majority Leader Mitch McConnell said senators “will need to carefully review” the proposal. “But I believe the vast majority of Senators in both parties will agree we should act swiftly to secure relief for American workers, families, and small businesses,” he said.

4,000 Queue For Hours At Chicago O’Hare

It is difficult to think the incompetent clowns in Washington have a handle on the cost of this bill or that the Congressional Budget Office has had time it asset it. The information is so sparse few of us are able to get details about the language it contains but one thing is certain, the politicians are rushing to pander and pour forth “free stuff.” Sadly, few are considering the unintended consequences that will flow from their so-called efforts to blunt the economic damage of the global pandemic.

Never underestimate the stupidity of government. An example of their lack of competence can be seen at the 16 US airports approved to handle Americans returning to the country. At these airports, unimaginable long lines of people crowd together for hours and hours without masks. This is also playing out in other airports, a passenger arriving at JFK confirmed that they were told to share pens and there was no hand sanitizer. “So if we didn’t have the virus before, we have a great chance of getting it now!” one passenger stated.

The reason to vehemently oppose the “Families First Coronavirus Response Act.” is that it is ill-conceived. Why will anyone want to work, especially government workers when they can get paid to stay home? How do you staff healthcare facilities when nobody comes to work? The greatest irony of this farce is that small business owners will be the first to take it on the chin. Privately-owned companies with fewer than 20 are the backbone of America and what makes it work. This means Trump may not understand at what point a small business becomes a medium or large business or simply doesn’t care. Ironically, the members of the NFIB strongly supported this same President that is throwing them under the bus.

While many townships and cities were in the process of limiting hours for their restaurants and bars, there was a small collective of people out trying to get their last hours of socializing in before what feels like an inevitable nationwide lockdown.

While some across the country are working hard at their social distancing practices, others, like Nicole Zanetti, were heading out to bars like “The Pig and the Parrot” in Hoboken, New Jersey, hours before the city was put on lockdown.

Zanetti told Bloomberg: “Yes, I’m nervous about getting the virus, and I don’t want to give it to other people. But it can’t stop us from going out and drinking and having a good time.”

Actually, Nicole, if the virus kills you, yes it can. But we digress…

The mayor of Hoboken, Ravinder Bhalla announced that restaurants would be limited to delivery or pick up options beginning 11AM Sunday and imposed a curfew of between 10PM to 5AM to support social distancing efforts. 

Xavier Jones, a contractor from East Orange said: “Ten to 15 years from now, we’re going to look back and say this was silly. Yes, it is killing people, but we shouldn’t be shutting down bars and restaurants given what we don’t know.”

Bimal Patel, a tourist from Philadelphia, said: “Instead of closing things down, I feel like they should limit hours or limit the capacity. There should be a better way of handling it than shutting everything down and impacting the economy that way.”

The mayor was following suit of those around the world who have implemented similar restrictions. But in Paris and Lyon, just like in Hoboken, young kids flocked to cafes and bars before they shut down. People close to the border with the Netherlands hopped the border to “party and shop there”. The Dutch media is calling it “coronatourism”. 

Alysia Camacho, who works at a dental office in New Jersey concluded: “I do think about spreading it to elders because obviously we have elderly people in our families. But at the end of the day, what can we do but live our lives?”

 

Authored by Andrew Critchlow via S&P Global Platts,

Oil price wars rarely achieve their objectives. Saudi Arabia and Russia racing to out-pump each other is unlikely to be any different.

Instead of declaring a victory in seizing market share back from their common rivals in the form of US shale, the main protagonists in Moscow and Riyadh are more likely to cause long-lasting damage to petrodollar economies already under pressure from demand destruction caused by climate change action and the onslaught on the global financial system from the coronavirus pandemic.

The effective collapse of the OPEC+ coalition when the group and its allies failed to agree on an additional 1.5 million b/d of cuts on March 6 has triggered a 30% collapse in prices, with no floor in sight. Brent crude is now below $30/b and test levels last seen back in 2004. Some industry veterans even fear prices could plummet further to historic lows.

Platts Oilgram News front page from September 1960

Abdullah bin Hamad al-Attiyah, Qatar’s former oil minister and OPEC president, fears markets are entering virtually uncharted territory.

“I saw the first shock and the first collapse and this is worse,” said the former OPEC grandee in an interview from Doha with S&P Global Platts on March 9.

“My expectation is for oil to fall below $20/b. We have seen it before.”

OPEC/North Sea price war

Al-Attiyah was referring to the time when former Saudi oil minister Zaki Yamani, under pressure from the kingdom’s late ruler King Fahd, launched the OPEC cartel into a price war with ascendant North Sea producers. The strategy saw crude fall to $10/b and Yamani losing his job. Within a year, Saudi Arabia was forced into an ignominious reversal in tactics in a desperate attempt to boost prices.

Al-Attiyah sees echoes of the crisis playing out in today’s market between Russia and the kingdom.

“I was there when OPEC had its emergency meeting in 1985 and Sheikh Yamani said open full production and the North Sea producer will come begging to Vienna,” said Al-Attiyah.

“They never came and it took us 15 years to properly recover. We have to learn.”

Despite the best efforts of Saudi Arabia, OPEC and fluctuating prices, North Sea producers have proved remarkably resilient. Better technology and efficiency means the offshore basin continues to play an important role in the market. Although the best days are over, its resilience was underscored recently by the start of the giant 450,000 b/d Johan Sverdrup field.

How low can Russia go?

Instead of learning from the 1980s debacle of taking on the North Sea, Riyadh and its Persian Gulf allies were intent on escalating their feud with Russia.

The kingdom heavily discounted its official selling prices to Asia and signalled it would push sustainable capacity up to 13 million b/d. The UAE quickly followed Saudi Arabia’s lead stating it would expedite plans to raise capacity to 5 million b/d.

In response, Russia’s oil minister Alexander Novak said the world’s largest producer of commodities could potentially raise output by 300,000 b/d quickly.

The Kremlin is adamant it can still balance its budget at around $40/b, but the country also exports vast quantities of other raw materials and enjoys a flexible exchange rate, providing it with an economic buffer that Saudi Arabia doesn’t have.

“Everyone will be the loser from this,” said Al-Attiyah.

US shale operators look vulnerable

Unless it can eventually push prices back above its fiscal breakeven of around $80/b, the kingdom faces the prospect of running a decade of budget deficits. It is also being forced to drain its foreign currency reserves, which were intended to fund diversification.

“For now it will be survival of the fittest and markets will have to hope a new deal can be struck,” said Chris Midgley, head of analytics at S&P Global Platts. But hopes of an early peace have been dashed by the cancellation of the OPEC+ joint technical meeting scheduled for March 18, after Saudi refused to send a representative.

Despite their differences, both Saudi and Russia have a mutual interest in seeing the current collapse in prices damage US shale producers.

Once seemingly an unstoppable force in the oil market, North America’s debt-laden operators now look vulnerable. The US Energy Information Administration forecasts US output to peak just above 13.2 million b/d next month before falling by as much as 660,000 b/d into 2021.

Texas oil barons are spooked. Fracking tycoon and executive chairman of Bakken driller Continental, Harold Hamm has accused Saudi Arabia of “dumping” its crude on the market to damage shale producers. Hamm’s protests didn’t fall on deaf ears in the White House.

President Donald Trump announced late Friday the Federal Government will fill up the Strategic Petroleum Reserve “to the top” to help support the energy industry.

Despite the presidential intervention, Hamm and the entire industry are right to be concerned as the coronavirus pandemic destroys demand as airlines cancel flights and global trade seizes up.

The International Energy Agency forecast on March 9 a full-year reduction in demand of 90,000 b/d in 2020, the first annual fall since 2009. S&P Global Platts Analytics has revised down its 2020 demand growth forecast by over 1 million b/d, from 1.33 million b/d, to just 240,000 b/d.

“2020 is the worst year I have seen since I was born in 1952,” warned Qatar’s Al-Attiyah.

A plan to give each adult American $1,000 is picking up steam in Congress after Sen. Mitt Romney (R-UT) supported the idea on Monday, along with Sen. Tom Cotton who says he’s working on legislation that would include cash stipends.

The plan is also backed by several House Democrats, who believe putting cold, hard cash in the hands of American consumers will mitigate the ongoing collapse in consumption due to the Wuhan coronavirus epidemic, according to Bloomberg.

Among economists, the idea of across-the-board cash handouts as a response to the epidemic has been rapidly gaining support. That’s mainly because the scale of the shock has become much clearer, as swaths of the economy — from air travel to bars and restaurants — essentially shut down.

As a result, analysts worry that some of the virus-relief proposals already in the pipeline will be too narrow. –Bloomberg

Several prominent economists have backed the stimulus check plan, including President George W. Bush’s economic adviser Gregory Mankiw and his Harvard coleague Jason Furman. In a Monday blog post, Mankiw wrote that many Americans have little to no savings, and it’s hard to identify the “truly needy,” which makes blanket handouts ideal in the current crisis.

“Sending every American a $1000 check asap would be a good start,” he wrote.

The collapse in consumption was pointed out this week by Goldman Sachs, which cut US Q2 GDP expectations to -5%, down from its previous forecast of 0%.

Data from online restaurant reservations also points to a large drop in restaurant visits, especially in the worst affected cities such as Seattle.

While we are not assuming an Italy-style national shutdown in the US, the experience of countries like Italy, Spain and France offers some indications of the impact that extreme local-level quarantines could have. -Goldman Sachs

And as we’ve noted over the past week, there has been carnage across multiple industries, from airlines, casinos, hotels and cruises – to OpenTable reservations cratering.

That said, $1,000 isn’t going to make people get on an airplane, go to a restaurant, gamble in a casino or stay in a hotel – though it’s enough for a month or two of food for a small family, or help with rent or a mortgage. The idea is also supported by Treasury Secretary Steven Mnuchin, who brokered the House coronavirus bill wit Speaker Nancy Pelosi.

Democratic Representatives Tim Ryan of Ohio and Ro Khanna of California are proposing to send checks to Americans who earn less than $65,000, which would mean approximately two-thirds of households would qualify. Those checks would range from $1,000 to $6,000 depending on income.

Senate Democratic leader Chuck Schumer said Monday he will propose a $750 billion package that would would “mainline money into economy and directly into the hands of families that need it most.” -Bloomberg

President Trump, on the other hand, has advocated for a payroll tax cut.

Beyond the cash-handout, the Senate is now discussing a vote on a bill which would expand paid sick leave.

 

Authored by Edward Curtin via Off-Guardian.org,

The coronavirus panic has resulted in hordes of people running after toilet paper. Such actions are the flip side of running with the bulls, except that I suspect those who run with the bulls have some sense of why they do it. I imagine the thrill is a bit different, even if the goal is similar.

The overriding narratives of every society are composed of myths and symbols. Societies operate within controlling mythic symbol systems whose primary purpose is to allow people to move through their lives on automatic pilot, believing they are safe from death and chaos in the arms of the authorities. All cultures revolve around death and the need to control people’s fears of it through the construction of symbols of reassurance.

People need to be convinced that they are protected. In “normal” times, all this goes relatively smoothly and the symbols of protection – such as the military, the primary institutions, and photos of the political leaders against a backdrop of flags – serve as a comforting security blanket. In times of extreme stress, however, whether real or created, the system of reassurance breaks down and people panic.

Enter the coronavirus and the run on toilet paper. Many economists and psychologists have commented on the fear that motivates this hoarding behavior. Most commentaries are true as far as they go. The problem is they don’t go very far and never touch the real issue. Hoarding is obviously done to quell the fear of running out. But running out of what?

Why toilet paper? The explanations I have seen say that toilet paper is an essential household item that is easy to hoard because it has no expiration date and comes in large packages that are light and easy to carry and store. All true. Fear induces hoarding, and people have gone insane hoarding all kinds of items, as if the plague to end the world were upon us, which is what the mass media keeps repeating as it whips up lunatic reactions. The end times are near! The Grim Reaper is at your door!

The authorities have inflamed this fear, as authorities are apt to do, since fear, and the fear of death and disease, is the greatest way to control people. Remember the aftermath of the attacks of September 11, 2001. Fear went rampant and people ran to religious services for a while as elements within the U.S. government sent anthrax through the mail to heighten the fear.

But anthrax was nothing compared to the coronavirus’s spread and panic. With the 2001 attacks, the terrorist fear soon went onto the back burner to simmer away for all these years and keep everyone on an emergency fear footing so the government could execute its war and Patriot Act plans with little rebellion. It worked very well. Constant fear and anxiety became the norm as people internalized the 9/11 meme and its emergency phone number reminder.

But now the coronavirus panic is running wild and we don’t know when it will end. But why this frantic race to scoop up toilet paper? The answer should be quite obvious, but it isn’t because it is unconscious. People react to the real biological fear of death by adopting any means that might protect them from it. Excrement is the fundamental symbol of death. It suggests we are bodies and nothing more; that the symbols of transcendence, whether religious or secular, are mirages. Shit has always been so associated, and always will.

It has also long been associated in the Western imagination with the devil, Satan, the Lord of the underworld, who rules the pit of smelly steaming death where the bodies of people are deposited down in the earth to rot away. That’s it. No heaven, no immortality, just maggots in the dirt where shit descends. The thought that that is all we are doesn’t go over well with many people.

To accept that we are only bodies, and that civilization and cultures have been constructed upon symbols created to tell us this isn’t true are pipe dreams, is the fear that runs rampant in days such as these, with the coronavirus allegedly stalking everyone as if it were Mister Pumpkin Head ready to pounce.

The fundamental human fear is that we, like excrement, are destined to be buried and forgotten; that we will be buried in the earth or flushed down a toilet. The fear is that “dead” excrement is what we are and that all the shiny symbols erected by civilization to say we are more are just bullshit.

This fear is compounded when science often claims that everything religions have ever taught is hocus pocus. The religious symbol systems that were the overarching bulwarks of western civilization have been replaced by science and technology. But these twins have no answer for the fact of death, except to say it is inevitable and maybe we can help you to live a bit longer. Many people, if only unconsciously, might not be satisfied with that answer.

So when death comes courting in the guise of a so-called plague or pandemic, toilet paper will keep you safe and clean. You can wipe away any reminder that you are mortal and will return to the earth; that you will rot there unless you somehow believe in the transcendent spirit of days gone by.

Rather than focus on all the death unleashed by government violence – their alleged protectors – people are easily manipulated into fearing the wrong things and unconsciously seeking some innocuous symbol that might do the job.

Running with the bulls gives people the thrill of teasing death while defeating it. It must be very exciting.

Running after toilet paper is quite dull by comparison, but it serves a similar purpose.

It’s the people’s vaccine against death.

Just hours after S&P took the machete to Exxon’s long standing AA+ credit rating, moments ago the rating agency went after the company which until just a few weeks ago seems invincible, and whose stock price has crashed from $350 to $130 in a little over a month after it announced it was fully drawing down its revolver: Boeing.

S&P cut Boeing’s credit rating by two notches late on Monday, to BBB from A-, as its “cash flows for the next two years are going to be much weaker than we had expected, due to the 737 MAX grounding, resulting in worse credit ratios than we had forecast.” In addition, S&P notes, “the significant reduction in global air travel due to the coronavirus will likely result in an increase in aircraft order deferrals, further pressuring cash flows.”

And worst of all, Boeing will likely be downgraded again, as S&P kept it on Credit Watch negative, meaning it may be just a matter of time before Boeing is downgraded to junk, making it the world’s most iconic fallen angel.

More details from the downgrade:

Cash flow and credit ratios will likely be much weaker than we had expected for the next two years.   We now expect free cash flow to be an outflow of $11 billion-$12 billion in 2020 and an inflow of $13 billion-$14 billion in 2021. This compares to our previous expectation of positive $2 billion in 2020 and $22 billion in 2021.

The significant difference is due to an absence of MAX predelivery payments (PDP) into 2021, higher and more front-loaded cash compensation to airlines, additional cash costs related to the production halt (including supplier support), and lower MAX production rates and deliveries than previously expected.

We are also now expecting weaker cash flow from the rest of the business due to cuts to 787 production (including lower PDPs), delays to the first 777-9 delivery, and lower cash flows at the defense and aftermarket segments.

This results in higher debt levels in 2020 (with balance sheet debt peaking at more than $46 billion, including the debt from the Embraer joint venture) and a weaker improvement in 2021, with funds from operations (FFO) to debt in 2020 now likely to be only about 5% (previous expectation was 29%) and about 30% in 2021 (previous expectation was 75%). This forecast remains highly uncertain with the potential for increased downside from the coronavirus.

Why is S&P really taking this draconian action, which could topple one of the beacons of US manufacturing into junk status? Simple: in the past two years, Boeing feasted on cheap debt, doubling its debt load in one year.

But wait there’s more.

Just a few days after drawing down on its revolver, Bloomberg reported moments ago that Boeing is now also seeking “short-term aid” in talks with the White House and lawmakers; in other words a “bailout.”

• *BOEING SEEKS SHORT-TERM AID IN TALKS W/WHITE HOUSE, LAWMAKERS
• *BOEING AID WOULD BE FOR ITSELF, SUPPLIERS, AIRLINES AMID VIRUS
• *BOEING TRYING TO AVOID LAYOFFS, SUPPLIER MELTDOWN

We have one small problem with that: while Boeing was perfectly happy to load up on as much debt as it could over the past decade, the bulk of the proceeds was used for none other than enriching its shareholders and management, with zero consideration for those same employees and suppliers that the company suddenly cares so much about now. And Boeing certainly didn’t care about its passengers and clients when it cut every corner it could find to design the 737 MAX, a plane that was “designed by clowns, who are in turn supervised by monkeys.”

As the chart below shows, Boeing has repurchased over $100 billion in stocks since 2013, helping push its stock to all-time highs not that long ago.

So, no, nobody in their right minds should give Boeing even one penny in “short term aid”. Instead, management and the board should be ordered to sell as much stock as they need – you know, the opposite of buying it back – to maintain the business, even it means sending the stock price crashing far lower.

Because it’s called capitalism, and because there is no reason why taxpayers should foot the bill for a company which instead of saving cash when times were good, was handing it out to shareholders and a handful of executives, and which should now for some insane reason be eligible for a bailout when times suddenly go bad.

No: force Boeing – and others like it that spent billions repurchasing its stock while incurring massive amounts of debt – to sell its stock. After all that’s what a public company’s stock is – a currency – and just as Boeing could repurchase it when it had cash, and lifted its stock price to all time highs, it should now sell its stock and use the proceeds to fund itself, like any other corporation does when it needs funding. Last time we checked, Boeing’s market cap was $73 billion, and it certainly afford to drop much more as the company now does the buyback in reverse.

This is also a warning to Congress and the White House: if chronic stock repurchasers such as Boeing, are bailed out instead of ordered to find their own sources of liquidity, there will be a mutiny in America and rightfully so, because it was Boeing’s shareholders that got rich on the way up, and now it is somehow up to taxpayers to make sure the company, loaded up with record amounts of debt used to fund buybacks, survives one more quarter.

That, in a word, is bullshit.

If anyone at this point could possibly still have any doubts the proverbial shit has hit the fan, mass closures and billions lost has come to a place which never shutters day or night:

GM Resorts International announced Sunday it is temporarily suspending operations at all Las Vegas properties “until further notice” effective Tuesday.

Casino operations are set to close Monday, followed by hotel operations. The company will not be taking reservations prior to May  1.

This means closure of Bellagio, MGM Grand, Mandalay Bay, The Mirage, Luxor, New York-New York, Excalibur, and Park MGM, among others. Wynn Resorts also announced closure of its two luxury-hotel casinos for at least two weeks. This includes all nightclubs, day clubs, spas, salons and gyms on these properties, after by end of last week some properties began taking temperature checks of patrons entering.

Currently there at least two confirmed cases of MGM employees with COVID-19: one at Luxor and another at Wet Republic pool, with 26 confirmed cases in Nevada as of late Sunday. This after a guest reportedly attending a convention at MGM’s Mirage tested positive last week, which may have further infected several employees.

“It is now apparent that this is a public health crisis that requires major collective action if we are to slow its progression,” MGM Chairman and CEO Jim Murren said.

“We will plan to reopen our resorts as soon as it (is) safe to do so and we will continue to support our employees, guests, and communities in every way that we can during this period of closure,” Murren added.

While salaried employees “should expect to continue working until further notice,” the Las Vegas Review-Journal writes based on a Sunday letter addressed to MGM employees it obtained, many thousands if not tens of thousands of other full-time employees are expected to be furloughed or laid off.

The letter details plans to pay any of those laid off “two weeks from their last day of work, and all employees on the company’s health plan will maintain benefits through June 30,” according to the Review-Journal. Unions are reportedly negotiating.

This is unreal. When I ran the military bomb squad in Las Vegas, we had special procedures for dealing with an IED on the Strip because it was too expensive for the casinos to close for a single MINUTE. https://t.co/TnnqJZtgwp

— Brian Castner (@Brian_Castner) March 16, 2020

Wynn CEO Matt Maddox said his employees will get paid through the crisis and closures. “Based on what we’re seeing, our business volumes are going to be basically empty over the next few weeks,” Maddox said. 

“Our hotel occupancy will be in the low teens – and that, to me, is not our concern. What our concern is that we all get through this together.” He indicated further that employees won’t have to worry about pay. 

“What we’re going to do through these challenging times is make sure that all of our full-time employees – whether you’re in a closed outlet or you’re working here – will be getting their pay,” he added. “We don’t know where this is going to end, but we do know that it will.”

To give an idea of just how rare or more simply unprecedented and unheard of such a mass Vegas strip closure like this is, no doubt with billions of dollars at stake and fluttering out the window, consider the ominous words of Brian Castner, currently a weapons specialist with Amnesty International’s Crisis Team, and formerly a bomb squad chief in Las Vegas.

“This is unreal. When I ran the military bomb squad in Las Vegas, we had special procedures for dealing with an IED on the Strip because it was too expensive for the casinos to close for a single MINUTE,” the bomb disposal expert observed.

And we’ll just leave it right there. 

What a time for war to be brewing in the Middle East yet again: Washington warned Iraq’s government on Monday it is ready to act “self-defense” if American forces come under attack. This follows last week’s rocket attacks on Taji base just north of Baghdad, which houses US troops. At least two Americans have been killed in the recent attacks, blamed on Iran-backed militias, especially Kataib Hezbollah.

Pompeo told Iraqi PM Adil Abd al-Mahdi in a phone call that Baghdad “must defend Coalition personnel supporting the Iraqi government’s efforts to defeat ISIS,” according to a Monday State Dept. press release.

Those “responsible for the attacks must be held accountable,” the statement warned. The US “will not tolerate attacks and threats to American lives” and will take “military action as necessary in self-defense,” it added. 

Defense Secretary Mark Esper said last week “all options” remain on the table, and that President Trump had authorized a military response. An initial Pentagon response did come last Thursday in the form of broad airstrikes across southern Iraq, targeting at least 5 Kataib Hezbollah military sites. 

Iraq was prompt to condemn the US strikes which left at least 6 dead, most Iraqi national military personnel, as well as one civilian. 

Meanwhile, Iraq’s Foreign Ministry says it will submit a formal complaint to the UN Security Council condemning the repeat US violations of Iraqi sovereignty. 

“Iraq will complain to the United Nations and the Security Council about overnight U.S. air strikes, a spokesman for the foreign ministry said on Friday,” Reuters reports. “The Iraqi military said earlier on Friday that the air strikes had killed six people and described them as a violation of sovereignty.”