Category: zerohedge

Authored by Daisy Luther via The Organic Prepper blog,

So here we are. Right on the cusp of that SHTF event that we’ve been prepping for all these years.

A global pandemic.

A breakdown in the supply chain.

Shoppers who are already becoming agitated and even violent.

We’re watching it all unfold in our hometowns and across our nation right now.

Yet, somehow, it still doesn’t feel real to me. Is it just me who finds this hard to fathom? Am I the only one who still thinks doubtful thoughts? Like “No way. It’s going to be okay. You’re overreacting. It’s a little scare, just like Ebola and MERS and SARS.”

I’ve researched and written about this stuff for years. I always knew it could happen. I was whole-heartedly convinced of these possibilities and yet when this situation began to move irrevocably toward disaster, I find myself, somehow, shocked.

I can’t be the only one who has prepared for this yet still feels stuck in normalcy bias, thinking “this isn’t going to get as bad as you think” even as I watch the events unfold around us pretty much like we in the survival community always predicted. There’s still that doubtful voice in my head, making me wonder about spending even more money on another “last” shopping trip.

Heck, maybe this makes me a bad prepper. A fake survivalist. A fraud.

Or maybe it’s only natural to think that life will keep moving on pretty much like it always has.

Will Covid-19 really be the thing that brings us down? Will the nation devolve into chaos? I’d like to say no with firm conviction. After all, there have been close calls before. But the rational part of me won’t allow that firm conviction, despite the part that says, don’t be silly, everything will be just fine after a brief blip.

I believe it’s okay to feel this way as long as you don’t allow it to get in the way of your preparations or of your acceptance of the disaster when it actually unfolds in all its shocking reality.

Maybe I’m oversharing here and a whole bunch of folks will unsubscribe. I don’t know. But if others are feeling the same way, I want you to know that you aren’t alone.

Instincts vs. Normalcy Bias

I think people have come down on one of two sides since the Covid-19 virus first came onto our radar back in late December or early January. Some people have thought, “This is the next plague” while others have thought, “So what? The flu is more deadly.” Now that we’re down to the wire, we’ll soon find out which line of thinking was the most accurate.

A lot of this goes down to a decision. Are you going to believe your gut or are you going to believe the logical normalcy bias that tells you this isn’t how things go in the United States of America?

My gut has been telling me since mid-January that this thing is a major event. After all, would China have tanked its economy and locked down a city of 20 million people, welding their doors closed in many cases, if this novel coronavirus was no big deal? Would Italy have locked down their entire country and begun turning away patients over the age of 65 to funnel resources to those more likely to survive if this was just another common, everyday flu?

But the logical side of me says, “This is the US. We will be just fine.” Because we’ve always been just fine in my lifetime. We were bruised and shaken, but bounced back with fierce resolve on 9/11. We were fine when Ebola reached our shores back in 2014. We recovered after Hurricane Katrina and Superstorm Sandy and all the other named storms that have hit. We’re Americans. We are resilient. It’s who we are.

However, our resilience may not be enough to conquer a crisis that was badly mishandled from the get-go. It may not be enough to overcome less than a million hospital beds in a country with more than 327 million people. The enemy is a virus we know hardly anything about and we can’t even believe the numbers out there from China or our own government.

People are getting tense.

This afternoon when I heard there was a press conference in the Rose Garden at 3 pm, I had a bad feeling. I wondered if my calculations were off when I figured that we could begin to see major quarantines in about a week. I headed to the store with my 19-year-old daughter to get there ahead of the crowds that would certainly be imminent if such an announcement was made. We picked up extra cat litter, extra pet food, some hardware, and extra frozen vegetables.

When I went to the grocery store, I saw that frozen veggies were on sale 10 for $10. I grabbed 10 bags of frozen spinach and saw a rotund angry-looking woman glaring at me. I gave her a “what?” look and she said, “Aren’t you going to leave any for other people?”

I said politely, “I’m sorry. Did you want some of the spinach?” I picked up 3 bags from my cart and offered them to her.

She said, “No, I don’t want any spinach. A$$hole.”

I replied calmly, “Okay, well, have a nice day” and left with my spinach. I wasn’t about to get into an altercation at Kroger over a one-dollar bag of spinach the other woman didn’t even want. It looks like that de-escalation course I took paid off because my first instinct was not to be pleasant and disregard her insults.

I saw the tension on people’s faces as they pushed their carts quickly up and down the aisles, the tunnel vision obvious. If someone stopped in an aisle – a common thing to do at the grocery store – the folks behind them would give a loud sigh of annoyance. I even saw a couple of people bumping into others with their carts – whether it was carelessness or deliberately done, I couldn’t tell.

I left the store with my purchases, happy to get out of there and content with what I had. I know that I’m as well-stocked as I can get with the money that I have. If it’s not enough, then we’ll move through plans B, C, and the rest of the alphabet.

The official response

I can’t be the only person who finds the official response to be much too little, far too late.

To be perfectly clear, I don’t really blame the President or the Vice President. They’re in a rather impossible situation in which no matter what they do, the outcome is bad. If they shut everything down completely, there would be panic the likes of which we’ve never seen. And the economic fallout would be exponentially worse than it already is.

This also impairs their ability to be totally forthcoming. While people in the preparedness community would prefer brutal facts over soothing fiction, most people really don’t want to know how bad things are or how bad they’ll become. So the government will continue to dance around the subject until they can dance no more and we reach a point where the truth is obvious to even the most obvious clinger to normalcy.

On the other hand, the press conference at the White House left me feeling even more uneasy than I had felt before.

Parading a bunch of CEOs before us and showing that ridiculous flow chart that looked like something a 4th grader might hand in for a school project certainly did nothing to make me feel like things were “under control.” I don’t care at all what the head of CVS pharmacies thinks about the outbreak or his ability to keep stores running.

In fact, the main thing I gathered from that is that CVS, Walmart, and Target will be the distribution points that remain open during the crisis. Mom and Pop stores may not have access to warehouses or supplies. This way it will be easier for the government to ration things out and enforce rules like “one bag of rice per household” should it come to that. I actually posted an article about this topic a few months back.

I thought that President Trump looked and sounded unwell during the press conference. Whether that is the effect of stress or he’s become ill, it’s impossible to say.

All in all, I was not reassured by anything in that press conference.

What is exponential growth?

Rationally, I’m aware that with the increase in confirmed cases and the exponential spread of this virus, we’ve probably passed the point of no return. The New York Times explains exponential growth with this chart. These are the number of cases confirmed on certain dates.

• Jan. 21 — 1

• Jan. 28 — 5

• Feb. 4 — 11

• Feb. 11 — 14

• Feb. 18 — 25

• Feb. 25 — 59

• Mar. 3 — 125

• Mar. 10 — 1,004

And on the morning of March 14, we’re up to 2175 cases.

As the “drive-through” testing facilities open up with free tests, we can expect that number to grow quite a lot.

The magnitude of the outbreak creeps up on you; it doesn’t look like things are growing very much, and then suddenly they are. Today, the U.S. is up to at least 1,714 known cases and we’re only a couple of days on from when it was 1,004. It’s going to be 4,000 by Monday, and then it’s going to be 8,000 by next Wednesday, and then it’s…. Exponential growth is staggering when it takes over.

Exponential growth is a classic pattern in which numbers stay small initially, but then you end up with very large numbers very quickly. If you start with a certain number, and then multiply that number by a growth factor every day, depending on what that growth rate is, you’ll see the cumulative number doubling over a certain time period.

What really matters is how high that growth rate is. In the U.S. right now, according to Our World in Data, confirmed Covid-19 cases are increasing by about 30 to 40 percent per day and the total number is doubling about every two days. (source)

This is exactly the situation that China, Italy, Iran, and all the other countries with massive outbreaks have found themselves in and the United States is probably next.

Is the SHTF really happening?

We are still at a stage in a shell game and nobody knows which shell the SHTF is hiding under. Nobody knows if we can reel things in and gain control of the situation. Nobody knows if we’re going to go the way of Italy, where an entire nation is locked down and singing from their balconies to raise morale in a desperate situation.

I wonder if people who have lived through horrible situations ever imagined in their wildest dreams how bad things would get. I know that in Selco’s book, SHTF Survival Stories, he wrote about this. Nobody ever truly expected things to happen the way they did. There was a period of adjustment and all the rules changed but a lot of folks didn’t accept the changes soon enough and they did not survive.

When I silence the part of my mind that says, this can’t be happening, I’m only left with the realistic part that says, “Yes. It is.”

While we don’t 100% know how this pandemic will play out in our country, we have to be ready for things to go badly. In her book, The Covid-19 Survival Manual, Cat Ellis talked about the inability of our hospitals to handle thousands of patients. We have less than a million beds in a country of 327 million people. And most of those beds are not in places equipped to handle highly contagious sick people. And what about the people with other health issues? Our medical system won’t be able to handle exponential growth no matter how hard they try or how much they want to help.

When I look at how grocery stores and discount stores across the country look like a horde of locusts went through and decimated the inventory, I know this is a bad sign. When a friend who manages a large grocery store says to me, “Our truck was only half full today. If buying and inventory continue like this, we will be out of food by Monday,” I can only imagine the havoc that stores out of food will wreak.

It’s going to be like Black Friday times a thousand, something I’ve written about for years.

This entire thing is surreal, isn’t it?

If I’ve written about and prepared for the SHTF for years and am having trouble wrapping my head around the fact that we’re in the early stages of it, what must it feel like for someone who is brand new to the concept?

It’s one thing to watch it happen someplace far away from the screen of our laptops or televisions but entirely another to watch it unfold at home. However, we have to accept it and we have to act quickly and decisively. One of the most important things I’ve learned from Selco is about accepting the new rules.

One of the most important things he taught me is to adapt quickly (immediately) to the “new rules” that apply when the SHTF. And to do that, you need to know what it’s like so you won’t be shocked…frozen…paralyzed by the things taking place right in front of you. When there is a new set of rules, the old rules no longer apply. The rules about waiting patiently for the government to save you? The rules about how people won’t walk up and steal from you in broad daylight because they’ll be arrested? The rules that you will get paid for your work and then you can go to the store and buy what you need?

Those rules will be gone. And when you start seeing these new rules appear you will know that the sh*t has hit the oscillating device and the world as you knew it has changed.

I know this and yet I still think (hope) in one part of my mind that it won’t happen that way here. That’s the most dangerous misconception in survival.

The other part of my mind knows that it could. And that’s the part which propels me through getting prepared despite what the doubtful side whispers.

It’s not just you.

So if you’ve found yourself not quite believing what you’re seeing, not quite believing that all hell could break loose in America at any point now, you aren’t alone. If you look at everything heading to hell on a greasy slide and think it doesn’t feel real, it’s not just you. I’m feeling that way myself.

I’m sharing this because I bet a lot of people are feeling the same way. Second-guessing themselves. Doubting themselves. Feeling like they aren’t good preppers. You aren’t alone and I’ll bet a whole lot of folks who won’t admit it feel this way too.

We don’t believe it because we don’t want to believe it. We never actually wanted to be right when we stockpiled and learned skills and bought more supplies that we actually had room to house.

But the thing that puts us ahead in this situation is that we prepared anyway. We learned anyway. And when we see the more obvious signs of a societal breakdown we will be able to accept it a lot faster than those who never even considered it.

A Vancouver couple has come under fire for buying up literal truck-loads of Lysol disinfecting wipes from a local Costco and reselling them for a significant markup, according to Toronto Star reporter Douglas Quan.

Yesterday I went to a Costco store, where I stumbled across this couple loading their pickup with piles of Lysol wipes. They hit up all the local Costcos daily, clearing shelves of wipes/liquid cleaner and re-selling them on Amazon. https://t.co/sYQhfxkUrG via @torontostar

— Douglas Quan (@dougquan) March 13, 2020

Quan was on-scene to report on people stocking up on supplies when he ran into the couple, Manny Ranga and Violeta Perez, who told Quan they were buying in bulk and reselling on Amazon.

“Before I even got to the front entrance, I stumbled across this couple who were loading up the back of their Ford pick-up truck with these stacks and stacks of Lysol disinfecting wipes,” Quan said. “Naturally that piqued my curiosity, and so I approached them and started chatting with them.”

The pair explained to Quan how they hit several Costco locations every day in Vancouver, Richmond and Burnaby, buy up all the Lysol wipes and cleaning liquid on hand, then turn them around for re-sale on their Amazon store Violeta & Sons Trading Ltd.

“It’s a big opportunity with all these products,” Ranga told the Star.

Quan says they had what appeared to be hundreds of cases stacked up on Costco pallets — enough that Ranga had to take two trips to get them all home.

“They were attracting a fair amount of attention from shoppers going in and out of the store. I wasn’t the only person there that, you know, couldn’t help but stop and stare,” he said.

“One woman came up and remarked, ‘Gosh, is that all for you?‘ And another woman later on came by and said, ‘Wow, someone’s making a lot of money today.'” –CBC

A six-pack of wipes sells for around $20 at Costco, but goes for around $80 online, according to the c ouple. Ranga told Quan they’d spent around $70,000 on bulk buys and raked in around $100,000 in sales.

Amazon has since suspended the couple’s account, according to CBC.

Other profiteers have also been cut-off from online selling platforms. The New York Times is out with a Saturday piece on Tennessee brothers Matt and Noah Colvin, who set out on a 1,300 mile journey in a U-Haul truck to buy thousands of bottles of hand sanitizer and antibacterial wipes, mostly from “little hole-in-the-wall dollar stores in the backwoods,” as “The major metro areas were cleaned out.”

Matt Colvin stayed home near Chattanooga, preparing for pallets of even more wipes and sanitizer he had ordered, and starting to list them on Amazon. Mr. Colvin said he had posted 300 bottles of hand sanitizer and immediately sold them all for between $8 and $70 each, multiples higher than what he had bought them for. To him, “it was crazy money.” To many others, it was profiteering from a pandemic. –New York Times

Then, Amazon pulled his items along with thousands of other listings for sanitizer, wipes and face masks – suspending sellers and warning others that if they continue to price-gouge they’ll lose their accounts.

Ebay has followed suit with even stricter measures which prohibit the US sale of masks or sanitizer.

In early February, as headlines announced the coronavirus’s spread in China, Mr. Colvin spotted a chance to capitalize. A nearby liquidation firm was selling 2,000 “pandemic packs,” leftovers from a defunct company. Each came with 50 face masks, four small bottles of hand sanitizer and a thermometer. The price was $5 a pack. Mr. Colvin haggled it to $3.50 and bought them all.

He quickly sold all 2,000 of the 50-packs of masks on eBay, pricing them from $40 to $50 each, and sometimes higher. He declined to disclose his profit on the record but said it was substantial.

The success stoked his appetite. When he saw the panicked public starting to pounce on sanitizer and wipes, he and his brother set out to stock up. -NYT

Now, Colvin is sitting on 17,700 bottles of sanitizer with no idea where to sell them.

“It’s been a huge amount of whiplash,” he said. “From being in a situation where what I’ve got coming and going could potentially put my family in a really good place financially to ‘What the heck am I going to do with all of this?'”

Buddy, I have some terrible news: the person you said this to is a reporter for the @nytimes: https://t.co/RAe4Y9VIeY pic.twitter.com/kSMZO6bFRV

— Nick Baumann (@NickBaumann) March 14, 2020

Blowback

Massachusetts nurse Mikeala Kozlowski had some harsh words for disinfectant profiteers as she continues a fruitless search for sanitizer since before she gave birth to her first child on March 5.

“You’re being selfish, hoarding resources for your own personal gain,” she said.

Meanwhile, companies like Amazon have justified their crackdown as violating their policies.

“Price gouging is a clear violation of our policies, unethical, and in some areas, illegal,” said Amazon in a statement. “In addition to terminating these third party accounts, we welcome the opportunity to work directly with states attorneys general to prosecute bad actors.”

Read the rest of the report here.

Authored by Raghuram Rajan via Project Syndicate,

The coronavirus pandemic has taken the world by surprise and will now expose underlying economic weaknesses wherever they lie. But the crisis also reminds us that we live in a deeply interconnected world. If the pandemic has any silver lining, it is the possibility of a much-needed reset in public dialogue that focuses attention on the most vulnerable in society, on the need for global cooperation, and on the importance of professional leadership and expertise.

Apart from the direct impact on public health, a crisis of this magnitude can trigger at least two direct kinds of economic shock.

• The first is a shock to production, owing to disrupted global supply chains. Suspending the production of basic pharmaceutical chemicals in China disrupts the production of generic drugs in India, which in turn reduces drug shipments to the United States.

• The second shock is to demand: as people and governments take steps to slow the spread of the coronavirus, spending in restaurants, shopping malls, and tourist destinations collapses.

But there is also the potential for indirect aftershocks, such as the recent plunge in oil prices following Russia and Saudi Arabia’s failure to agree on coordinated output cuts. As these and other shocks propagate, already stressed small- and medium-size businesses could be forced to shut down, leading to layoffs, lost consumer confidence, and further reductions in consumption and aggregate demand.

Moreover, downgrades to, or defaults by, highly leveraged entities (shale-energy producers in the US; commodity-dependent developing countries) could lead to wider losses in the global financial system. That would curtail liquidity and credit, and trigger a dramatic tightening of the financial conditions that have hitherto been so supportive of growth.

The parade of horrible possibilities could go on. The more fundamental point to remember is that the world economy never fully recovered from the 2008 global financial crisis, nor were the underlying problems that produced that disaster ever fully addressed. On the contrary, governments, businesses, and households around the world have piled on more debt, and policymakers have undermined trust in the global trading and investment system.

But even though the world started with a weak hand, our response to the COVID-19 crisis could be far better than it has been. The immediate task is to limit the spread of the virus through widespread testing, rigorous quarantines, and social distancing. Most developed countries should be well-positioned to implement such measures; yet, Italy has been overwhelmed by the epidemic, and the US response has not exactly inspired confidence.

Looking ahead, unless the coronavirus is eradicated globally, it could always return, or even become a seasonal disruption. If an effective treatment is not discovered soon (Gilead’s antiviral drug remdesivir currently shows some promise), all countries will face a choice between walling themselves off entirely and pushing for a global effort to eradicate the virus. Given that the former is an impossibility, the latter seems the natural choice. But it would require a degree of global leadership and cooperation that is sorely lacking. The presidency of the G20 is currently held by Saudi Arabia, which is mired in internal and external disputes; and US President Donald Trump’s administration has repudiated multilateral action from the outset.

Still, some key countries could accomplish much if they stepped up to lead a global response, including by persuading more countries of the value of cooperation. For example, countries that have been relatively successful in managing the epidemic, such as China and South Korea, could share best practices. And as individual countries bring the coronavirus under control within their own borders, they could dispatch spare resources to countries that need more experienced medical personnel, respirators, testing kits, masks, and the like.

Moreover, China and the US might finally be cajoled into reversing recent tariff increases and dispensing with threats of new ones (such as on cars). While a temporary reduction in tariffs would do little to enhance cross-border investment, it would at least offer a slight boost to trade. Moreover, an accord could enhance business sentiment about the post-pandemic recovery.

Within countries, the immediate task – after implementing measures to contain the virus – is to support those in the informal or gig economy whose livelihoods will be disrupted by quarantines and social distancing. Those who are most vulnerable economically also tend to be those who lack access to medical care. Hence, at a minimum, governments should offer cash transfers to these individuals – or to everyone, if vulnerable populations are hard to identify – as well as coverage for virus-related medical expenses. Similarly, a moratorium on some tax payments may be necessary to help small- and medium-sized businesses, as would partial loan guarantees and other measures to keep credit flowing.

In developed countries, in particular, the pandemic will soon reveal just how many people have joined the ranks of the precariat in recent years. This cohort skews young and includes many of those living in “left-behind” places. By definition, the precariat’s members lack the skills or education needed to secure stable jobs with benefits, and thus have little stake in “the system.” Cash transfers would send a message that the system still cares. But, of course, far more will need to be done to expand the social safety net and extend new opportunities to the economically marginalized.

Populist parties and leaders have capitalized politically on the plight of the precariat, but they have failed to live up to their promises – even where they actually hold power. The pandemic may have a silver lining here, too. Governments that have undermined established disaster-preparedness agencies and early-warning protocols are now finding that they need the professionals and experts after all. COVID-19 has been quick to expose amateurism and incompetence. If the professionals are allowed to do their jobs, they can restore some of the public’s lost trust in the establishment.

In the political arena, a more credible professional establishment will have an opportunity to advance sensible policies that address the problems facing the precariat without ushering in class warfare. But these openings won’t last forever. If the professionals fail to capitalize on them, the pandemic will offer no silver linings – only more dread, division, chaos, and misery.

California Governor Gavin Newsom (D) issued an executive order on Thursday that allows the state to take over hotels and motels in order to convert them into medical housing for coronavirus patients, according to the Palm Springs Desert Sun. 

According to the report, patients from the Grand Princess cruise ship have already been moved to such facilities, such as a 120-room hotel in San Carlos located near San Francisco. Officials are also looking for potential patient housing in “mothballed” facilities that could be cleaned up and repurposed.

“As you can imagine, under our pandemic planning, we’re also looking to secure additional assets,” said Newsom.

Under the executive order, the state’s Health and Human Services Agency and the Office of Emergency Services can commandeer private property for coronavirus treatment, as well as offer economic relief for residents, Fox News reports.

BREAKING: CA has waived the 1 week waiting period for those unemployed or disabled as a result of COVID-19.

If a medical professional says you’re unable to work, if your hours have been reduced, or your employer has shut down — you can file a claim.
—> https://t.co/EHzOdKgoV3

— Gavin Newsom (@GavinNewsom) March 12, 2020

“This is where we need to go next, and to make sure we fully implement those procedures and protocols to slow down the spread to get through a peak and to get through the next few months, so we don’t overwhelm our healthcare delivery system,” Newsom said, according to the LA Times.

The executive order also eliminates a one-week waiting period for unemployment benefits. In Sacramento, meanwhile, the City Council approved a $1 million economic relief package in a Friday night vote which will provide zero-interest loans of up to $25,000 to restaurants, retail, daycare and other businesses which are being affected by coronavirus precautions.

Meanwhile in Los Angeles, Mayor Eric Garcetti closed City Hall to the public along with banning all events or conferences on city-owned property which will have over 50 people. Meetings will be conducted via teleconference.

“We are entering a critical period,” said Garcetti, adding “These are common-sense measures.”

There are currently 282 known cases of COVID-19 in California, which is home to around 40 million people.

Authored by Jeffrey Snider via Alhambra Investments,

Jay Powell has a lot of catching up to do, and very little time to do it. He’s squandered so much already. First his emergency rate cut blew up in his face and now his dud of a bazooka. Before the market got going, officials had already added a 25-day allotment (of bank reserves, of course) on top of the usual overnight and 14-day terms.

Obviously, it wasn’t enough; or, more accurately, it wasn’t the right thing. Undeterred, Powell’s Fed decided at some point during the disastrous morning to just say, screw it, and raise the roof. In a matter of hours, a 3-month (84-day) “repo” auction was announced, conducted, and closed.

The scale of the thing was supposed to wow you and all the suddenly impatient sellers on the NYSE (not intended as much for the repo market, as you’ll see). Half a trillion, baby! That’s the amount of “liquidity” authorities put up for bidding on this day of days.

Dealers ended up taking in all of $78.4 billion, or about 16% of what was possible. Either things aren’t nearly as bad as they seem (literally no one is buying that scenario), or something is wrong in bank reserve-land. Perhaps dealers just don’t want them, or maybe they don’t have the spare collateral to post for them.

Even the stock market (THE STOCK MARKET!!!) wasn’t impressed. It is maybe starting to dawn on folks the central truth in all this – the central bank just isn’t central. The monetary world is so much more complicated than the simple model employed by both classroom Economics and the technically deficient policymakers these days struggling just to get by on a daily basis.

The theoretical issue, much of it, stems from a misreading of the Great “Moderation.” The pre-crisis era had been written down as the product of several factors, including Greenspan’s allegedly maestro-like performance.

The Economists who coined the term Great “Moderation” weren’t actually so sure. In their groundbreaking 2002 paper, James Stock and Mark Watson pointed to one unknown factor. Unable to determine what it was, they gave up trying and just declared it random good luck.

Seriously, that’s what they concluded. That, among other factors, had for several decades kept the US system (because that’s what they studied, not the global system) fortunate enough to have been spared the plague of financial crises that used to be regular features of the economic landscape.

What these two concluded should have made monetary officials’ blood run cold:

But because most of the reduction seems to be due to good luck in the form of smaller economic disturbances, we are left with the unsettling conclusion that the quiescence of the past fifteen years could well be a hiatus before a return to more turbulent economic times.

Ben Bernanke read the piece and immediately went on a determined road-show to hog all the credit. Nonsense, he declared, it was the brand-new (the eighties) monetary policy regime (interest rate targeting, meaning expectations) that was responsible. No good luck, just Economists. Geniuses, every one.

Looking back at it now, it is much easier to see for those who honestly seek some answers. Stepping outside the central bank cult, we find that Bernanke was right – it wasn’t good luck, after all – but desperately wrong in assigning the Fed its celebratory parade. A premature parade, obviously, as he would find out, but not figure out, just a few years later.

Even 2007 had been forewarned. Though the US had been steered clear of financial crisis, the world hadn’t during this period. Smaller crises were still relatively common, and then a much bigger one in 1998. The Asian financial crisis was a regional dollar shortage, and contained, largely, within a region that wasn’t so enormous and important at the time, a test of the system that had developed from the seventies forward.

It was this new global monetary arrangement that had kept the world within narrow tolerances, the US most of all. Not Greenspan and his ridiculous show of quarter-point fed funds adjustments, instead the supremacy of global eurodollar banks that had stapled LIBOR to fed funds and policed the entire hierarchy.

The banks did the heavy money lifting for which central bankers like Greenspan and Bernanke were only too happy to take credit – while they could. So long as that hidden shadow money system in the world’s vast offshore spaces kept expanding it kept the forces of domestic and global monetary crashes at bay; not good luck but blindness.

But the Asian flu had also been a key warning for what could happen. It showed the downside of a globalized economy dependent upon the quick and easy accessibility of (euro)dollars. So long as they are available, meaning banks not central banks, everything was hunky dory; Great Moderation and whatnot.

Once they started to disappear in sufficient numbers, look the hell out!

The warning, of course, went completely unheeded; Greenspan then Bernanke more interested in the vanity of interest rate targeting and all the media and academic adulation that came with it – one pattern, at least, unbroken all the way to Jay Powell, a curious trait of incuriosity about how nothing seems to work as planned ever since, oh, 2008 or so. No one bothered to check the assumptions, even after 1998 as well as Japan’s failures with QE in the early 2000’s.

The world’s luck didn’t run out on August 9, 2007, the eurodollars did. Global dollar shortage. Ever since, it has been one global headache after another, some worse, some relatively mild. But scarcely a year has been put into the books without the words “global” “dollar” “shortage” and it hasn’t mattered one bit what the level of bank reserves were or had become during any of them.

Rising dollar means dollar shortage (see below; particularly Norway’s currency).

As Europe’s ill-fated LTRO’s (which were exactly alike these Fed “repo” operations), the Fed doesn’t plug in to this system. They don’t even speak the right language.

As I wrote back in 2017, amidst the hysteria and hype of the inflation globally synchronized growth was going to bring and the apparent return of good luck for that one year:

It was never monetary policy that created the Great “Moderation”, and outside of the narrow confines of orthodox definitions that period was never so moderate to begin with. As the eurodollar system built up, it only appeared that way because output was stable so long as what was hidden far out of view remained drastically immoderate. Now that is no longer the case, where the eurodollar system reverses, decays, and acts as an anchor upon global output, there is no stability anywhere. Suddenly exogenous shocks (like “global turmoil”) are the rule rather than the exception where even the US economy is concerned.

That about sums up 2020 so far, including the hapless Fed’s increasingly absurd flailing. Did the puppet show finally disappoint the last of its audience?

We’re not sure what it’s going to take the NHTSA to establish some sort of pattern, but sadly, if they haven’t “gotten it” by now we’re not sure that they’re ever going to. And when people start dying from these types of accidents, there’s going to be a lot of blame to go around.

Yet another Tesla has somehow wound up buried in yet another storefront. 

In Palm Springs late last week a driver suffered minor injuries after “crashing a Tesla into a building”, according to the Palm Spring Desert Sun. Stop us if you’ve seen a photograph like this one before:

The car plowed through the front of Desert Vision Optometry, also causing minor injuries to an employee. The cause of the crash remains under investigation. The car crashed through the “front of the building” and “stopped in the lobby” according to reports. Workers in the building said that no one else was injured. 

But even more noteworthy is the fact that this is the second time in a week that a Tesla has crashed through the front of the building in the Coachella Valley.

On March 4, another driver, an elderly woman, plowed her Tesla through the front of Mastro’s Steakhouse in Palm Desert. 

The Palm Springs Fire Department Tweeted out video of the latest incident, showing the Tesla lodged in the storefront: 

Alert- units are currently on scene of the 500 block of South Sunrise, vehicle into a commercial structure, at this time 2 possible patients. pic.twitter.com/8KDa5fEJyc

— Palm Springs Fire Department (@PalmSpringsFire) March 12, 2020

While the cause of the first accident is still under investigation, what exactly is it going to take for regulators to start to notice this pattern, which is becoming egregious, and begin to ask pointed questions about why, every time we see a vehicle crash through a storefront in the United States, it just happens to be a Tesla. 

We won’t hold our breath waiting for that to happen. 

 

Submitted by BullionStar.com

In the last month, from 14 February 2020 to 14 March 2020, we have seen a record number of orders, record order revenue and a record number of visits to our newly renovated and extended bullion centre at 45 New Bridge Road in Singapore.

For the above-mentioned period, we have served 2,626 customers with a sales revenue of more than SGD 50 M, which is 477% higher compared to the same period last year.

The last few days have been our busiest days of all time. Our staff members have been doing a fantastic job in going out of their way to serve as many customers as possible.

With order volume increasing to this magnitude, it’s difficult for us to timely answer all phone and support requests but we are doing our very best to keep response times down.

Gold & Silver Shortages – Supply Squeeze

The enormous increase in demand is straining our supply chains. BullionStar has supplier relations with most of the major refineries, mints and wholesalers around the world. Most of our suppliers don’t have any stock of precious metals and are not taking orders currently. The U.S. Mint for example announced just this Thursday that American Silver Eagle coins are sold out. The large wholesalers in the U.S. are completely sold out of ALL gold and ALL silver and are not able to replenish.

We are already sold out of several products and will sell out of additional products shortly if this supply squeeze continues. All products listed as “In Stock” on our website are available for immediate delivery. For items listed as “Pre-Sale”, the items have been ordered and paid by us with incoming shipments on the way to us.

Paper Gold vs. Physical Gold

As we have repeated frequently over the years, only physical gold is a safe haven.

It’s noteworthy that the paper price of gold, although up 5.7% Year-to-Date denominated in SGD, has been trading downward in the last few days.

Paper gold is traded on the unallocated OTC gold spot market in London and on the COMEX futures market in New York. Both of these markets are derivative markets and neither is connected to the physical gold market.

This means that the physical gold market is a price taker, inheriting the price from the paper market, and that the derivative markets are the exclusive and dominant price makers. The entire market structure of this financialized gold trading is flawed. So while there is unprecedented demand for physical gold, this is not reflected in the gold price as derived by COMEX and the London unallocated spot market.

By now it is abundantly clear that the physical gold market and paper gold market will disconnect.

If the paper market does not correct this imbalance, widespread physical shortages of precious metals will be prolonged and may lead to the entire monetary system imploding.

And with progressive central banks in Eastern Europe and Asia having stocked up on gold in the last three years, gold will likely be the anchor of the new monetary system arising out of the ashes.

Mainstream media assertions that “Gold has been stripped of its Safe Haven Status” are utterly ridiculous and distorted beyond belief, when in fact the complete opposite is true. Unbacked paper gold and silver may be stripped of safe haven status, but certainly not real physical gold bullion.

Physical Premiums & Spreads

The current supply squeeze and physical bullion shortage has caused and is causing an increase in price premiums. It’s currently difficult and expensive for us to acquire any inventory. We have therefore had to increase premiums on products to compensate for the constraints. We have endeavoured to also raise our prices offered to customers selling to us, but with the extreme volatility and wild price fluctuations, the spread between the buy and sell price may temporarily be larger than normal. It is regrettable that premiums and spreads are larger than normal but it is outside our control that the paper market is not reflecting the demand and supply of the physical market. As many of you know, we are one of the largest critical voices of the LBMA run paper market and its bullion bank members in London.

Please note that premiums are likely to be higher on weekends when the markets are closed compared to weekdays.

We do not take lightly the decision to alter premiums but feel that it is a better alternative than to stop accepting orders altogether during weekends. Likewise it is a better alternative than to stop accepting orders when the paper gold market is in turmoil and failing to reflect the demand and supply realities of the physical bullion market.

Currently, we are completely sold out on BullionStar Gold Bars, BullionStar Silver Bars and are running low on several other products which we are not able to replenish for now. Several stock items will therefore likely go out of stock shortly. This is despite us having been aggressively buying bullion to create a buffer reserve inventory.

Mexican Deputy Health Secretary Hugo Lopez-Gatell has considered shutting down its northern border with the US to limit the spread of Covid-19, reported Reuters. 

“The possible flow of coronavirus would come from the north to the south. If it were technically necessary, we would consider mechanisms of restriction or stronger surveillance,” Lopez-Gatell told reporters on Thursday.

The lack of test kits in Mexico and the US have made it difficult to get an accurate reading of community spreading in both countries. So far, Mexico has confirmed 16 cases and no deaths. The US has 2,174 cases and 47 deaths. 

The World Health Organization declared Covid-19 a global pandemic last week, which has rapidly spread to more than 147,000 people from Asia to the Middle East, Europe, and now to the Americas. The virus has transformed the usual US-Mexico border dispute into another crisis, not because of migrants and drugs, but rather the fear of virus transmission. 

Mexican health officials pointed out the fast-spreading virus in California could make its way through several land port of entries south of San Diego. In particular, the San Ysidro Land Port of Entry, the busiest land port in the Western Hemisphere. 

President Trump tweeted last week, “We need the Wall more than ever!” Trump made similar comments during a political rally in South Carolina last month:

“One of the reasons the numbers are so good: We will do everything in our power to keep the infection and those carrying the infection from entering our country,” he said. “You’ve all seen the wall has gone up like magic.”

Last week, Trump tweeted, “because we have had a very strong border policy, we have had 40 deaths related to CoronaVirus. If we had weak or open borders, that number would be many times higher!”

US ambassador to Mexico Christopher Landau said Thursday the virus outbreak is another reason for stricter border controls. 

“For both countries, it doesn’t benefit us to have completely open borders,” Landau said. “We see it now with the virus, and hopefully we can work closely together because in health issues, political parties and borders aren’t important.”

As virus cases and deaths rise in the US, the probabilities increase of a border shutdown or at least reduced travel through major land ports between both countries.

You’ve no doubt seen the headlines on CNN and Bloomberg.

“Coronavirus Pandemic Could Spark a Global Depression.”

“Will China Virus Trigger New Great Depression?”

There’s plenty of concern that the coronavirus outbreak is pushing us toward a crash. And after the market’s recent dive, the panic is only growing. 

Regular readers know Casey Research founder Doug Casey sees the next depression around the corner. But as he explains below, “government coercion” planted the seeds for a downturn long before the coronavirus appeared.

And Doug’s predicting this “Greater Depression” will break records…

Authored by Doug Casey via CaseyResearch.com,

Just because society experiences turmoil doesn’t mean your personal life has to. And a depression doesn’t have to be depressing. Most of the real wealth in the world will still exist – it will just change ownership.

What is a depression?

We’re now at the tail end of a very long, but in many ways a very weak and artificial, economic expansion. At the same time, we’ve had one of the strongest securities bull markets in history. Both are the result of trillions of new dollars created over the last decade. Right now, very few people are willing to consider the possibility of tough times – let alone The Greater Depression.

But, perverse though it may seem, this is the very best time to think about it. The U.S. economy is a house of cards, built on quicksand, with a tsunami on the way. I urge everyone to read up on the topic. For now, I’ll only briefly touch on the nature of depressions. There are at least three good definitions of the term:

1. A period of time when most people’s standard of living drops significantly.

2. A period of time when distortions and misallocations of capital are liquidated.

3. A period of time when the business cycle climaxes.

Using the first definition, any natural disaster can cause a depression. So can living above your means for long enough. But the worst kind of depression has not just economic effects, but economic causes. That’s where definitions two and three come in.

What can cause distortions in the way the market operates, causing people to do things they’d otherwise consider unreasonable or uneconomic? Only government action, i.e., coercion. This takes the form of regulation, taxes, and currency inflation.

Always under noble pretexts, government is constantly directly and indirectly inducing people to buy and sell things they otherwise wouldn’t, to do things they’d prefer not to, and to invest in things that make no sense.

These misallocations of capital subtly reduce a society’s general standard of living, but the serious trouble happens when such misallocations build up to an unsustainable degree and reality forces them into liquidation. The result is bankrupted companies, defaulted debt, and unemployed workers.

The business cycle is caused mainly by currency inflation, which is accomplished today by the monetization of government debt through the banking system; essentially, when the government runs a deficit, the Federal Reserve buys its debt, and credits the government’s account at a commercial bank with dollars. Using the printing press to create new money is largely passé in today’s electronic world.

Either way, inflation sends false signals to businessmen (especially those who get the money early on, as it filters through the economy), making them overestimate demand for their products. That causes them to hire more workers and make capital investments – often with borrowed money. This is called “stimulating the economy.”

Inflating the currency can actually drive down interest rates for a while, because the price of money (interest) is lowered by the increased supply of money. This causes people to save less and borrow more, just as Americans have been doing for years. A lot of that newly created money goes into the stock market, driving it higher.

It all looks pretty good, until retail prices start rising as a delayed consequence of the increased money supply, and interest rates skyrocket to reflect the depreciation of the currency.

That’s when businesses start failing. Stocks fall. Bond prices collapse. Large numbers of workers lose employment.

Rather than let the market adjust itself, government typically starts the process all over again with a new and larger “stimulus package.” The more often this happens, the more ingrained become the distortions in the way people consume and invest, and the nastier the eventual depression.

This is why I predict the Greater Depression will be… well… greater. This is going to be one for the record books. Much different, much longer lasting, and much worse than the unpleasantness of 1929-1946.

*  *  *

As Doug said, the Greater Depression is on the horizon. Smart investors should start preparing now… and gold offers one of the best ways to protect your portfolio. That’s why you need to watch this short video, where Doug lays out exactly what’s happening in the gold market right now. And a shocking new rule – the first of its kind in 45 years – that’s putting gold back in international headlines. It’s already setting off a buying frenzy… a “gold panic” unlike anything we’ve seen since the early 1970s. Go here for the full story… including details on the five explosive gold stocks that are the best way to play this boom.

The academic best known for coming up with the idea of the VIX – also know as Wall Street’s fear gauge – says that the fear looming over the markets now is far greater than the fear we faced in 2008. 

Dan Galai, a professor at the Hebrew University of Jerusalem told Bloomberg:

 “The level of uncertainty is even beyond what we saw in 2008 immediately after Lehman Brothers collapsed.”

Galai continued: 

“If you look at 2008, it spiked and then within a day or two, it was going down very fast. Here, it’s been steadily going up instead of going down. It’s more violent, and it’s more persistent.”

The VIX is an indicator of expected near-term swings in the S&P 500 and has closed above 45 for four days in a row, which is the longest streak of this kind since 2009. It closed on Friday at 63, despite stocks spiking during the last half hour of trading. The VIX spiked up to 76 on Thursday, as stocks experienced the largest one day drop since October 1987.

Galai notes that monetary response likely won’t do much to stave off the problem.

 “I don’t think interest rates have any effect right now. Monetary steps, in my view, are completely redundant,” he said.

Galai had proposed using gauges to measure volatility in 1989 and his proposal led to the CBOE VIX. Galai likens strategies that short volatility – including one that buried a Credit Suisse short-volatility note in 2018, as a “substitute for Las Vegas”. 

Now you tell us…