All of a sudden, events are looking a bit fluxy out there, as though the world is shuddering through some spooky ch-ch-ch-changes, like a monster waiting to be born, with strange convergences of ecology, politics and economy, and there’s only so much you can do to prepare, really. Criticality is in the air!
The horses are out of the barn on the Wuhan Coronavirus. Air travel was curtailed too late in the game — and still only partially — with asymptomatic-but-infectious human carriers winging to every corner of the world and probably contaminating airports all along the way. There’s plenty of thought and counter-thought on what exactly is going on behind the scenes in China. The ruling party has knocked itself out demonstrating its earnestness in the crisis, performing great feats like the construction of a one-thousand-bed hospital in ten days, shutting down the lunar new year festivities (like cancelling Christmas here), and locking down a hundred million citizens in quarantine. Pretty impressive.
But there’s also a theory that the Coronavirus affords a cover for cascading failures in China’s corrupt and shifty banking system. The country had already stepped across some frontiers in demographics, energy consumption, and industrial growth that were shoving it toward contraction for the first time in two generations. Coronavirus has shut down a lot of production in big things like cars and big-little things like cell phones, and supply lines are shutting down to world markets. This amounts to the first big test of the integrated global economy, as well as the world’s debt-saturated business model.
When a lot of parties and counterparties can’t pay each other because their revenue flows are cut off, the securities, currencies, equities, and other abstract representations of wealth go south. The US and Europe are no better positioned for a crisis in their banking arrangements, and confidence is starting to crack. Both economic mega-regions have relied on central banking hocus-pocus to prop up stock markets and maintain the illusion that the logic of bonds still applies. The first thing to go moneywise in a contracting financial system is the magic of compound interest.
The US Federal Reserve has been massively gaming the Repo markets — overnight lending that uses bonds as collateral — since September, raising suspicions that more than one of its “primary dealer” banks are insolvent. Juicing them with “liquidity” is like painting over sheetrock infested with black mold. Looks good for a week or so, and then you’re in intensive care. Nobody knows yet what the effect of Britain’s escape from the EU will do to the Union’s remainers, but Europe’s bonded debt arrangements are even dodgier than America’s, since there is absolutely no EU central control of each member’s fiscal affairs. Anyway, the meta-trend now is the devolution of governance from giant-and-central to smaller-and-local, so the real question is how much disorder and damage do these nations endure as that happens. It’s been manifesting vividly in France for a year in the yellow vest protests.
Here in the USA, the knock-on effects of converging crises begin to look like a game of four-dimensional eight-ball. The oil markets are getting slammed around the $51 hashmark, making it more difficult for the shale oil producers to meet their onerous debt repayments (in an industry that just doesn’t make a profit). Lower gasoline prices may seem like a boon for US motorists, but it comes at the expense of bankrupting more oil companies and punishing lenders like pension funds that invested in shale securities in the desperate search for “yield.” Shale never was a rational business model despite its fabulous production surge in a very short span of years. Don’t be surprised if there’s an attempt to nationalize it, which will induce new problems of capital allocation and sheer incompetence in a world where central planning of anything is more and more a bad bet.
Looming and converging multiple crises are also behind the gross disorder in US politics, though the connections may not be so discernably visible. President Trump foolishly took credit for financial markets that he had correctly described as being “one big, fat, ugly bubble,” back in the febrile days of the last election. Now it threatens to leave him holding a big fat ugly bag of trouble. That booby trap is surely more hazardous to his reelection chances than the frenetic efforts of pissants like Adam Schiff running Wile E. Coyote ambuscades in the DC Swamp. Mr. Trump spent three years working, jawboning, and bluffing over global trade arrangements that are now suddenly falling apart. How much of that will turn out to be a temporary effect of the Coronavirus, nobody knows. Or maybe it’s an inflection point in the workings of our over-hyper-complexified human ecosystem.
These shifting quandaries leave the Democratic Party between that ol’ rock and a hard place. All of their bad faith ploys against Mr. Trump have failed so far. I speak to supposedly educated people every day upon whom the failure of the Mueller Investigation, the fiasco of impeachment, and the revelations of IG Michael Horowitz have made no impression at all. The Golden Golem of Greatness is still Putin’s Puppet to them. It’s a wonder of the age that they can’t cut their losses. And now Bernie Sanders suddenly looks poised to win the Iowa caucus and inflame the not-quite-so-socialist factions of the party, who appear to be ratcheting up some Wile E. Coyote traps against him.
If that works, it’ll blow the party apart, 1860 style, into rump factions. But if Bernie somehow perseveres and gets the nomination… and the Potemkin financial markets tank… and Coronavirus turns out to be a very big deal for upsetting global trade… then, America may get its first zealous socialist president.
Yes, history repeats and rhymes and all that, but I don’t see Bernie replicating the triumphs of Franklin D. Roosevelt in Great Depression 2.0. Rather, by attempting to overlay command-and-control policies on a zeitgeist that wants to take us smaller and local, Bernie Sanders will only be bucking reality.
The net effect of Bernie Sanders in the White House will be to finish off the economy… and imagine where that will take us.
Baltimore County residents’ have had their perceptions about where their glass ends up shattered.
Over the weekend, news broke that the county—which does not include the City of Baltimore—has not been recycling the glass it’s been collecting as part of its recycling program. For the past seven years, the jars and bottles that residents dutifully placed in their blue bins have been being junked instead.
“There are numerous issues with glass recycling, including increased presence of shredded paper in recycling streams which contaminates materials and is difficult to separate from broken glass fragments, in addition to other limitations on providing quality material,” county spokesperson Sean Naron toldTheBaltimore Sun.
Glass recycling reportedly stopped in 2013, the same year the county opened a $23 million single-stream recycling facility, according to the Sun article.
Single-stream recycling refers to the practice of letting people put all their recyclables into one bin, then sorting it at material processing facilities, rather than have people sort their papers, plastics, and glass into separate containers at the curb.
Baltimore County had adopted single-streaming for all homes by October 2010, part of a growing trend among municipalities trying to boost recycling rates. The thinking was that if you make recycling easier, more people will do it.
A study from the American Forest & Paper Association found the percent of the population covered by a single-stream recycling service that included glass grew from 22 percent in 2005 to 73 percent in 2014.
The trouble with single-streaming is that placing everything in the same bin increases the chances of contamination. Non-compatible materials get mixed together or coated with food waste. So a good deal of the glass isn’t pure enough to ground down and be shipped to glass manufacturers.
Chemical & Engineering News notes that only 40 percent of glass collected by single-stream recycling services ends up being recycled into new products, compared to 90 percent of glass in multi-stream collection systems.
The same article notes that the cost of transporting heavy glass from recycling centers to glass manufacturers is often prohibitively high, meaning it’s often more economical to just make glass out of new materials.
Regardless of the material in question, the American recycling industry has been going through a crisis over the last several years. Rising rates of contamination and the effective closure of a major export market in China, which stopped accepting most American plastic, have left material processing facilities with no willing buyers. Many of the recyclables that are collected therefore end up in landfills or incinerators.
And that’s what’s been happening to Baltimore County’s glass. Yet county officials are wary about telling people to stop recycling the stuff, according to the Sun. People, they fear, will fall out of the recycling habit. Ritual is apparently more important than actual reuse.
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Donald Trump’s presidential campaign, like Michael Bloomberg’s, sponsored a Super Bowl ad featuring a black woman. In Bloomberg’s case, the woman was Calandrian Kemp, a gun control activist whose 20-year-old son, George, was shot to death during a 2013 brawl at a park in Richmond, Texas. Trump’s ad focused on Alice Johnson, a nonviolent drug offender whose sentence the president commuted in 2018. Trump’s decision to emphasize criminal justice reform makes political sense, but it also reflects a seemingly genuine concern about cases like Johnson’s that might lead to more progress in this area.
“Alice Johnson was sentenced to serve life in prison for a nonviolent drug offense,” the TV spot’s opening caption says. “Thanks to President Trump, people like Alice are getting a second chance.” That’s followed by footage of Johnson reuniting with her family and tearfully thanking Trump for setting her free. “Politicians talk about criminal justice reform,” another caption says. “President Trump got it done. Thousands of families are being reunited.”
The ad refers not just to the act of clemency for Johnson, whom Trump introduced during his 2019 State of the Union speech, but also to his support for the FIRST STEP Act, a 2018 law that shortened the sentences of many federal drug offenders. Although that law did not go as far as other sentencing reform bills that Congress has considered in recent years, it is accurate to say that it will benefit thousands of current federal prisoners, considering both its retroactive application of the shorter crack cocaine sentences that Congress approved in 2010 and its expansion of time credits for good behavior and for participation in job training and rehabilitation.
Going forward, other changes made by the law, including reductions in mandatory minimum sentences for repeat offenders, modification of enhanced penalties for drug offenses involving firearms, and an expanded “safety valve” that enables certain defendants to avoid mandatory minimums, are expected to result in shorter prison terms for more than 2,000 people each year. These are significant improvements, and Trump deserves credit for signing the bill despite resistance from hard-line Republicans such as Sens. Tom Cotton (R–Ark.) and John Kennedy (R–La.).
The ad’s claim that other politicians merely “talk about criminal justice reform,” while Trump “got it done,” is more dubious. The Fair Sentencing Act, which prescribed the shorter crack sentences that the FIRST STEP Act made retroactive, was approved nearly unanimously by Congress in 2010 and signed into law by Trump’s predecessor, Barack Obama. And after a disappointing start, Obama ultimately granted 1,715 commutations, more than any other president in U.S. history and more than his 13 immediate predecessors combined. Almost all of the beneficiaries were drug offenders.
So far Trump has commuted just six sentences, including Johnson’s and one other drug offender’s. But that is actually six times as many commutations as Obama approved during his first term. Trump could still do much more good with his clemency powers if he is re-elected and puts his mind to it. Whether he is inclined to do that is another question.
Trump’s concern about “very unfair” drug sentences seems sincere, if intermittent and inconsistent. “Alice’s story underscores the disparities and unfairness that can exist in criminal sentencing, and the need to remedy this total injustice,” he said in last year’s SOTU address. He bragged that the FIRST STEP Act had “reformed sentencing laws that have wrongly and disproportionately harmed the African American community.” But it’s not clear whether Trump recognizes that the law he signed, as its name suggests, was relatively modest and that further reform is needed. It does not bode well that Trump, even while decrying unjust crack sentences, favors harsher penalties for drug offenses involving fentanyl.
Trump, who received just 8 percent of votes cast by African Americans in 2016, obviously has a political interest in improving his image among blacks, not to mention white moderates who care about criminal justice reform or who see his support for shorter drug sentences as a reassuring sign from an administration that is frequently portrayed as racist. Trump’s other Super Bowl ad brags that “unemployment for African Americans fell to a new low” under his administration.
Bloomberg faces a somewhat similar problem, given his long history of staunch support for the New York Police Department’s “stop, question, and frisk” program, a position he repudiated only upon launching his 2020 presidential campaign. But while the former New York City mayor’s focus on guns in his Super Bowl ad is of a piece with his defense of that racially divisive program (which he portrayed as an effective deterrent to gun carrying), Trump’s emphasis on criminal justice reform is surprising given his Nixonesque “law and order” platform in 2016. And while much of Bloomberg’s gun control agenda involves sending more people to prison for longer periods of time, Trump chose to highlight policies that move in the opposite direction.
Still, it is highly uncertain whether a re-elected Trump would expend any more political capital on this issue, which is not mentioned at all in the “Law and Justice” section of his campaign website. The phrase “criminal justice reform” appears just twice on the website: in a survey question asking which issues the Trump campaign should emphasize and on the “Black Voices for Trump” page, which includes a link to a Washington Timesstory about the Super Bowl ad.
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Baltimore County residents’ have had their perceptions about where their glass ends up shattered.
Over the weekend, news broke that the county—which does not include the City of Baltimore—has not been recycling the glass it’s been collecting as part of its recycling program. For the past seven years, the jars and bottles that residents dutifully placed in their blue bins have been being junked instead.
“There are numerous issues with glass recycling, including increased presence of shredded paper in recycling streams which contaminates materials and is difficult to separate from broken glass fragments, in addition to other limitations on providing quality material,” county spokesperson Sean Naron toldTheBaltimore Sun.
Glass recycling reportedly stopped in 2013, the same year the county opened a $23 million single-stream recycling facility, according to the Sun article.
Single-stream recycling refers to the practice of letting people put all their recyclables into one bin, then sorting it at material processing facilities, rather than have people sort their papers, plastics, and glass into separate containers at the curb.
Baltimore County had adopted single-streaming for all homes by October 2010, part of a growing trend among municipalities trying to boost recycling rates. The thinking was that if you make recycling easier, more people will do it.
A study from the American Forest & Paper Association found the percent of the population covered by a single-stream recycling service that included glass grew from 22 percent in 2005 to 73 percent in 2014.
The trouble with single-streaming is that placing everything in the same bin increases the chances of contamination. Non-compatible materials get mixed together or coated with food waste. So a good deal of the glass isn’t pure enough to ground down and be shipped to glass manufacturers.
Chemical & Engineering News notes that only 40 percent of glass collected by single-stream recycling services ends up being recycled into new products, compared to 90 percent of glass in multi-stream collection systems.
The same article notes that the cost of transporting heavy glass from recycling centers to glass manufacturers is often prohibitively high, meaning it’s often more economical to just make glass out of new materials.
Regardless of the material in question, the American recycling industry has been going through a crisis over the last several years. Rising rates of contamination and the effective closure of a major export market in China, which stopped accepting most American plastic, have left material processing facilities with no willing buyers. Many of the recyclables that are collected therefore end up in landfills or incinerators.
And that’s what’s been happening to Baltimore County’s glass. Yet county officials are wary about telling people to stop recycling the stuff, according to the Sun. People, they fear, will fall out of the recycling habit. Ritual is apparently more important than actual reuse.
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via IFTTT
Donald Trump’s presidential campaign, like Michael Bloomberg’s, sponsored a Super Bowl ad featuring a black woman. In Bloomberg’s case, the woman was Calandrian Kemp, a gun control activist whose 20-year-old son, George, was shot to death during a 2013 brawl at a park in Richmond, Texas. Trump’s ad focused on Alice Johnson, a nonviolent drug offender whose sentence the president commuted in 2018. Trump’s decision to emphasize criminal justice reform makes political sense, but it also reflects a seemingly genuine concern about cases like Johnson’s that might lead to more progress in this area.
“Alice Johnson was sentenced to serve life in prison for a nonviolent drug offense,” the TV spot’s opening caption says. “Thanks to President Trump, people like Alice are getting a second chance.” That’s followed by footage of Johnson reuniting with her family and tearfully thanking Trump for setting her free. “Politicians talk about criminal justice reform,” another caption says. “President Trump got it done. Thousands of families are being reunited.”
The ad refers not just to the act of clemency for Johnson, whom Trump introduced during his 2019 State of the Union speech, but also to his support for the FIRST STEP Act, a 2018 law that shortened the sentences of many federal drug offenders. Although that law did not go as far as other sentencing reform bills that Congress has considered in recent years, it is accurate to say that it will benefit thousands of current federal prisoners, considering both its retroactive application of the shorter crack cocaine sentences that Congress approved in 2010 and its expansion of time credits for good behavior and for participation in job training and rehabilitation.
Going forward, other changes made by the law, including reductions in mandatory minimum sentences for repeat offenders, modification of enhanced penalties for drug offenses involving firearms, and an expanded “safety valve” that enables certain defendants to avoid mandatory minimums, are expected to result in shorter prison terms for more than 2,000 people each year. These are significant improvements, and Trump deserves credit for signing the bill despite resistance from hard-line Republicans such as Sens. Tom Cotton (R–Ark.) and John Kennedy (R–La.).
The ad’s claim that other politicians merely “talk about criminal justice reform,” while Trump “got it done,” is more dubious. The Fair Sentencing Act, which prescribed the shorter crack sentences that the FIRST STEP Act made retroactive, was approved nearly unanimously by Congress in 2010 and signed into law by Trump’s predecessor, Barack Obama. And after a disappointing start, Obama ultimately granted 1,715 commutations, more than any other president in U.S. history and more than his 13 immediate predecessors combined. Almost all of the beneficiaries were drug offenders.
So far Trump has commuted just six sentences, including Johnson’s and one other drug offender’s. But that is actually six times as many commutations as Obama approved during his first term. Trump could still do much more good with his clemency powers if he is re-elected and puts his mind to it. Whether he is inclined to do that is another question.
Trump’s concern about “very unfair” drug sentences seems sincere, if intermittent and inconsistent. “Alice’s story underscores the disparities and unfairness that can exist in criminal sentencing, and the need to remedy this total injustice,” he said in last year’s SOTU address. He bragged that the FIRST STEP Act had “reformed sentencing laws that have wrongly and disproportionately harmed the African American community.” But it’s not clear whether Trump recognizes that the law he signed, as its name suggests, was relatively modest and that further reform is needed. It does not bode well that Trump, even while decrying unjust crack sentences, favors harsher penalties for drug offenses involving fentanyl.
Trump, who received just 8 percent of votes cast by African Americans in 2016, obviously has a political interest in improving his image among blacks, not to mention white moderates who care about criminal justice reform or who see his support for shorter drug sentences as a reassuring sign from an administration that is frequently portrayed as racist. Trump’s other Super Bowl ad brags that “unemployment for African Americans fell to a new low” under his administration.
Bloomberg faces a somewhat similar problem, given his long history of staunch support for the New York Police Department’s “stop, question, and frisk” program, a position he repudiated only upon launching his 2020 presidential campaign. But while the former New York City mayor’s focus on guns in his Super Bowl ad is of a piece with his defense of that racially divisive program (which he portrayed as an effective deterrent to gun carrying), Trump’s emphasis on criminal justice reform is surprising given his Nixonesque “law and order” platform in 2016. And while much of Bloomberg’s gun control agenda involves sending more people to prison for longer periods of time, Trump chose to highlight policies that move in the opposite direction.
Still, it is highly uncertain whether a re-elected Trump would expend any more political capital on this issue, which is not mentioned at all in the “Law and Justice” section of his campaign website. The phrase “criminal justice reform” appears just twice on the website: in a survey question asking which issues the Trump campaign should emphasize and on the “Black Voices for Trump” page, which includes a link to a Washington Timesstory about the Super Bowl ad.
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Two people were killed and another wounded in a shooting at a Texas A&M University dorm hall on Monday at its campus in Commerce, Texas, according to campus police and media reports.
A twitter account believed to be associated with the university confirmed the two deaths.
There have been 2 confirmed deaths. The third victim has been taken to the hospital for treatment. UPD has stationed officers throughout campus, including all key gathering points, for the safety of the campus community.
We will continue to share updates as they are available.
The university police said all classes were canceled for the rest of the day amid an active criminal investigation. Texas A&M’s campus in Commerce, Texas, is over 200 miles north of Texas A&M’s main campus in College Station.
Why 3,254 Is The Only Number That Matters For Traders Today
When commenting on the crash in Chinese stocks late on Sunday night, we pointed out that US equity futures had managed to buck the liquidation trend seen across Asia, rebounding from Friday’s rout lows, rising into the mid-3200s, a level which was critical because as we had pointed out previously on Friday, this is roughly where the critical gamma “flip” level was, below which gamma transforms from a risk dampener into a risk accelerator.
On Monday morning, Nomura’s cross-asset strategist and quant, Charlie McElligott, picked up on this key point again, one which he has been covering for years, and writing that indeed, should stocks fail to rebound from their Friday open, it could get messy as consolidated option positioning shows both dealer gamma and delta is now negative…
… with dealer now back in a short gamma position for the first time since the start of the October meltup. In fact, it now appears that the gamma “flip” level is 3,254, which explains why market makers who hope to preserve the bullish benefits of positive gamma are fighting so hard to keep the S&P at this level. Not surprisingly, at last check, the S&P was trading right on top of this level.
For those confused, here is a quick refresher: gamma-linked indicators are designed to estimate whether hedging by market makers is currently suppressing or elevating volatility. Positive gamma leads to dampening of index moves because the hedgers need to sell when the market moves up and vice versa. Negative gamma leads to hedgers exacerbating volatility as they sell when the market moves down and buy when it goes up. The chart below from SocGen shows that the S&P500 spot moving into negative gamma territory (below the red line) is consistent with higher levels of VIX, which in turn leads to further selling in the S&P, a greater disconnect from gamma, and even higher volatility, and so on, in a feedback loop.
Like Nomura’s McElligott, SocGen’s derivatives strategy team estimated last week that aggregate dealer gamma had briefly moved into negative territory on the S&P500, and remains close to it, a byproduct of the notorious “gamma gravity” effect whereby gamma flip levels tend to serve as “strange attractors” for the broader market, something we have discussed since 2018.
McElligott underscores this point, and notes that once again, the change in the gamma “impulse” took place concurrent with a large move in the S&P.
Alternatively, as a function of market reflexivity, one could claim that it is the drop in gamma that leads to higher vol, and lower prices. Direction of causality notwithstanding, the bottom line is simple: 3,254 is the one level that every trader should be focusing on to determine what the market will do in the very short term, and should SPX spot fail to rise above the gamma flip level, there is great potential for a period of higher turbulence in the short term.
There is another reason why traders should be closely watching the battle over 3,250, and it has to do with an entirely different set of investors: CTAs.
According to Charlie, the Nomura QIS CTA model shows that despite the overall signal for the SPX position remaining “+100% Long” as of this morning (as all three time horizons with any “weighting”—3m, 6m and 12m—are all still “buy” signals), the short-term 2w window has flipped “Short” due to the recent impulse move lower/the jump higher in trailing realized vol — which means that the “gross” exposure in the SPX futures position has been deleveraged from the two year “high” of 60.3% made last week, now reduced to this morning’s 49.8% position
And while the 2-week signal in the CTA model is already a “Sell,” if today the S&P closes flat, or worse, red, McElligott would “expect to see the 1-month signal turn “Sell” tomorrow as well.” Still, the only signals that matter for now are the 3m, 6m and 12m models — thus the position maintains the overall “+100% Long” status.
But that too will change if SPX spot closes below gamma, as dealers now are “incentivized” to chase the market lower, resulting in lower prices, higher VIX, an even greater delta between spot and gamma, even more selling, etc. in a feedback loop; and with VIX spiking it would eventually push all CTAs signals more bearish, until eventually all those green “100% longs” start shrinking until eventually they all go flat, and then turn negative, as CTAs officially join the selling frenzy.
Bottom line: keep an eye on where S&P closes the day: 3,254 is all that matters.
If we accept what is known about the virus, then logic, science and probabilities all suggest we brace for impact.
Here’s a summary of what is known or credibly estimated about the 2019-nCoV virus as of January 31, 2019:
1. A statistical study from highly credentialed Chinese academics estimates the virus has an RO (R-naught) of slightly over 4, meaning every carrier infects four other people on average.
This is very high. Run-of-the-mill flu viruses average about 1.3 (i.e. each carrier infects 1.3 other people while contagious). Chris Martenson (PhD) goes over the study in some detail in this video.
Let’s say the study over-estimates the contagiousness due to insufficient data, etc. Even an RO of 3 means the number of infected people rises geometrically (parabolically).
This matters because it negates any plan to track every potentially infected person who came in contact with a carrier.
Coronaviruses tend to be contagious in relatively close contact (within two meters / six feet) but masks may not be enough protection, as it may spread by contact with surfaces and through the eyes.
All available evidence supports the conclusion that this virus is highly contagious, i.e. it isn’t that difficult to catch.
2. Along with its contagiousness, the most consequential feature of this virus is that asymptomatic carriers can transmit it to other people, who will also be unaware they’ve been infected with the pathogen.
This means carriers have no reason to self-quarantine until they develop symptoms, which may be a week or more after they’ve begun spreading the virus to others.
It’s easy to imagine a situation where an asymptomatic carrier from Wuhan took a flight to Beijing, infecting passengers and people in the airport, who then got on flights going to international destinations, where a few days later they become asymptomatic transmitters of the virus.
(The passenger from Wuhan might also have boarded a flight to the U.S. in Beijing, before flights from Beijing were restricted.)
By the time the initial individual carrier from Wuhan develops symptoms, the virus has already gone through two geometric expansions and everyone infected has no idea they even have the virus.
Common sense suggests that airplanes, airports, crowded markets, elevators–any confined space where a number of people might pass through a two-meter contagious circle around the carrier– might result in a contagion rate far above 4.
It seems entirely possible for one carrier in crowded, constricted areas to infect 12 people, who might infect 12 others. If these 144 individuals infect 12 others, that’s 1,728 infected people from one carrier.
That may sound extreme, but it’s easy to imagine 100+ people passing within two meters of a carrier in crowded venues or touching surfaces just touched by the carrier. It could be that only one in ten exposed people catch the virus, but if the carrier is in close proximity to 120 people, that means 12 individuals will contract the virus.
3. Nobody seems to be tracking the origin point of travelers. If an asymptomatic carrier from Wuhan took a train or flight to Beijing last week (exposing other passengers to the pathogen) and then boarded a flight from Beijing to SFO (San Francisco), the presumption would be that the traveler is from Beijing.
Tens of thousands of people have boarded flights in China over the past month and deplaned in international destinations. The likelihood that some consequential percentage of these travelers originated from Wuhan, or were infected by someone from Wuhan, is high.
It’s basically impossible to thread these three points together and not conclude that a massive expansion of the virus is about to manifest in dozens of international destinations.
Put another way: this virus is a nearly ideal combination of contagiousness and asymptomatic transmission that enables a rapid spread of the virus via people who have no idea they’re carriers.
4. Locking down major cities is a good strategy to contain the spread of the virus if the lockdown outlasts the contagious period of every carrier–say, two weeks–and the lockdown isn’t porous enough to enable an RO of above 1. (Reducing the RO to 1.5 will still enable an expansion of asymptomatic carriers.)
But given that 5 million people already left Wuhan, and some consequential percentage are likely to be carriers, then this doesn’t stop all those travelers from initiating geometrically expanding epidemics in all Chinese cities that aren’t locked down.
As I noted in a recent blog, a very large number of non-resident migrant workers from rural, impoverished western China live and work in every major Chinese city. Once their ability to make a living in the informal economy is impaired, their only choice is to either return to their home village/town or seek work in a city that hasn’t been locked down.
This mass movement of informal-economy workers more or less insures the virus has spread far and wide from Wuhan long before the city was fully locked down.
Locking down Beijing and Shanghai might limit the spread of the virus in these mega-cities, but it won’t stop the virus from spreading to every city that has yet to be fully locked down.
These conclusions are drawn from what is already known about the virus. There would have to be a complete revocation of all that is known to change the parabolic trajectory of the epidemic.
5. The mortality rate of the virus is hard to pin down for a number of reasons. One is that mortality is a time-series, meaning counting those who have died isn’t an accurate measure of all those who are infected who may die in the near future.
Furthermore, the official totals are suspect, as numerous anecdotal reports have come out indicating people who died were mis-classified as victims of “pneumonia.” Other reports indicate the overwhelmed healthcare system in Wuhan has been sending corpses to be cremated without proper identification of the cause of death.
It appears Chinese officialdom is reverting to the same tactics used in 2003 to suppress data about SARS and downplay the dangers of the pathogen. It seems highly unlikely that the death totals being announced are accurate, and highly likely that the totals are a fraction of actual deaths.
There isn’t enough trustworthy data to estimate the mortality rate of the virus, but even the official totals, when coupled with the number of patients in intensive care, suggests a higher rate of mortality than typical flu viruses but less than SARS 9%.
What’s worrisome is the official attempt to downplay the danger of the virus naturally reduces the incentive to be extra-cautious, self-quarantine, etc.
In effect, under-reporting the true mortality rate is actually encouraging the spread of the disease by diminishing the resolve of those worried about dying to be extra-cautious.
If early evidence that a cocktail of anti-viral and HIV medications can reduce mortality is confirmed in large-scale trials, that good news has to tempered with the stipulation that these drugs don’t reduce the risks of contagion; the expectation of a ready cure will also act to reduce the incentives to be extra-cautious. This expectation of a ready cure may be premature, but even if the cocktail meets high expectations, it doesn’t mean the virus won’t spread and sicken those who catch it.
If the cocktail only works on certain classes of patients or is ineffective in some cases, the presumption that a 100% cure is now available could actually accelerate the contagion as authorities and individuals clamor for an immediate “return to normal life.”
Authorities are like the officers on the Titanic who were tasked with both reassuring the passengers everything was under control and urging them into the lifeboats: you can’t tell everyone the risk is low and everything’s under control but it’s also high enough that you better get in a lifeboat. This is a classic double-bind. In the confusion, few understand the risk remains high and act accordingly.
6. Given all this, it seems inevitable that the handful of cases outside China will expand rapidly in the weeks ahead, and the impossibility of tracking all those who came in contact with carriers means the spread of the virus cannot be contained except by locking down all transportation and cities where the virus has spread.
7. Restrictions are half-measures. U.S. travel bans, for example, exempt U.S. citizens / green card holders and their immediate families. This amounts to thousands of people who will be allowed into the U.S. from China with a caution to monitor themselves for 14 days.
8. As I mentioned in the blog a week ago, a large number of Chinese people work overseas, and they will be returning to their jobs this coming week, as the official New Year’s holiday ended 2 February. While some airlines have stopped flights to and from China, not all airlines have done so. So these workers have a number of ways to get back to their overseas jobs: catch a flight to somewhere outside China and then catch a flight to Europe, Africa, the U.S. etc.
If you’re not sick, or only have the sniffles, you don’t want to be stuck in China. You want to get back to your job. If you do have the sniffles, you wear a mask and take over-the-counter medications to reduce fever. You tell yourself the risk of having the coronavirus is low and so you proceed on that basis.
9. The quarantines in China are more porous than advertised. Thousands of people are coming and going into quarantined cities every day. How long can China quarantine tens of millions of people before supplies are exhausted and the financial pain becomes unbearable? If the quarantine ends and there is still a pool of carriers in the city, the virus will quickly re-emerge. The quarantine is only effective if literally every last carrier of the virus either dies or recovers and is no longer contagious.
If 100 asymptomatic infected people move into the city after the quarantine is lifted, this pool of carriers will re-introduce the virus, which will spread anew.
Quarantining a few cities and leaving hundreds of other cities, towns and villages as reservoirs of the virus insures the virus will return to the quarantined cities as soon as the restrictions are lifted.
To stop the spread of the virus, every community, village, town and city in the entire nation would have to be locked down.
The horse already left the barn a month ago, and so closing the barn door now has little effect. Five million people already left Wuhan and tens of thousands have already traveled to dozens of other countries. The virus can no longer be contained with half-measures. Yet half-measures are all the authorities are willing to impose.
Nassim Taleb co-authored a paper (download available on his site) that explained why the only way to limit the spread of the virus is to severely limit connectivity of people and transport: the more connections exist, the greater the number of avenues for the virus to spread.
If China reduced connections with the rest of the world to zero, even for a month, the financial impact would trigger a global recession due to the fragility of the global economy and its dependence on China. Since authorities are unwilling to risk a global depression, they pursue half-measures which insure that multiple pathways for the pathogen to spread remain open.
10. The general assumption in the U.S. is that this will all blow over and the virus will burn itself out as a result of the Chinese quarantines and U.S. travel restrictions. This is akin to passengers on the Titanic looking around 10 minutes after the minor collision with the iceberg and seeing zero evidence the ship was in danger of sinking. Yet the ship’s sinking was already inevitable despite the lack of visible evidence.
For the virus to burn itself out, all of these conditions must hold: only a handful of the tens of thousands of people who’ve landed in the U.S. from China over the past month are infected with the virus, and virtually every one of the infected people, despite having no symptoms, will rigorously self-quarantine themselves for 14 days to insure they won’t infect anyone else.
Furthermore, these carriers can’t have transmitted the virus to others on their airline flight, in the airport, in baggage claim, in Immigration Control, in the subway, etc. before they started their rigorous 14-day self-quarantine. In other words, not one person exposed to the virus caught it.
In addition, those expecting the virus to burn itself shortly must assume that no one slipping through the exceedingly porous restrictions will be an asymptomatic carrier, and that any asymptomatic carriers that do slip through will not have any close contact with other people.
Lastly, those expecting the virus to burn itself shortly must assume that the virus will not mutate into a more contagious or deadly form, even though viruses mutate at very high rates: the more people carry the virus, the greater the opportunities for a mutation to occur that can be spread to other hosts.
None of these assumptions are even remotely realistic.
Neither is the expectation that an effective vaccine will be ready for mass inoculations in a month or two. Realistic timelines for an effective vaccine are four to six months for development of a vaccine, then additional months to test its safety and effectiveness and more months if all goes well to produce hundreds of millions of doses of the vaccine, and then more time to distribute the vaccines.
It’s natural to grasp at straws in crisis, and natural to take every false dawn for sunrise. Announcements that the rate of infection is slowing will be taken as evidence the virus will soon be completely under control, when a decline from RO 4 to RO 3 or RO 2 doesn’t mean the virus is about to disappear; all it means is the rate of expansion has declined. Premature announcements of a cure will encourage a complacent expectation of a quick return to “normal life” that will be severely challenged by the “Wave Two” global expansion of the virus.
The economic, political and social consequences of the extreme measures required to control the spread of the virus (total lockdown of an entire country’s transportation systems)–or the failure to pursue such extreme measures, enabling the spread of the virus–are the second-order effects I’ve been exploring in recent blog posts: consequences have their own consequences.
If we accept what is known about the virus, then logic, science and probabilities all suggest we brace for impact.
John Solomon’s Laptop Stolen Near White House Using ‘Sophisticated Device’; Contained Sensitive Data On Ukraine, Bidens
A thief absconded with John Solomon’s laptop on the eve of the Senate impeachment trial, snatching the evidence-filled device out of the investigative journalist’s car which was parked near the White House, according to RealClearInvestigations, citing a report by the D.C. Metropolitan Police Department.
Solomon told RCI‘s Paul Sperry that the laptop – which has since been recovered – contained ‘notes on Ukraine and former Vice President Joe Biden and other sensitive information.’
The case is currently under investigation by a MPD detective.
The Secret Service is also involved in the matter, which appears suspicious. Break-ins are rare in the high-security area where the crime occurred, just outside the White House perimeter, and a sophisticated device appears to have been used to get into the vehicle.
In the early evening of Jan. 20, the police report states, Solomon’s Apple MacBook laptop and computer bag, valued at around $1,800, were stolen from his 2019 Toyota SUV parked at 1776 F St. NW, across from the White House’s Eisenhower Executive Office Building. No windows were broken, and there were no other signs of forced entry. Authorities suspect the thief or thieves used an electronic jamming device to open the car door lock.
Nothing else was stolen from the vehicle, according to Solomon, including his US Capitol press security badge.
The computer bag was discovered the next day a block away from where his car was parked, with the contents dumped out on a picnic bench near the FDIC building – a location with no security cameras which authorities described as one the rare “dark spots” in the area.
Solomon says he is working with a computer forensics experty to determine whether any of the information on his laptop was exploited, or if his hard drive was scanned.
“It’s a pretty professional job,” said Solomon, adding “but it’s probably just a coincidence.”
“It was probably just a street criminal searching for pass codes,” he expounded. “Or it could be someone searching for my Ukraine stuff. We don’t know at this point.”
Solomon targeted by Democrats
As Sperry notes, Solomon’s private phone number was published by House Intel Chair Adam Schiff (D-CA) in December, while citing the journalist at least 35 times in his impeachment report over Solomon’s involvement in reporting Ukrainegate from the perspective of the prosecutor who former Vice President Joe Biden had fired while he was investigating Ukrainian energy giant Burisma – whose board Hunter Biden sat on.
“I’m the only [reporter] who ends up having his records released,” Solomon told Fox BusinessNews recently.
“It makes me wonder whether it’s a political payback, because a few months ago, I wrote a story exposing the fact that Chairman Schiff had met with Glenn Simpson at the sidelines of the Aspen Institute at a time when he shouldn’t have been having contact with Glenn Simpson,” he added. “It feels like a political payback.“
Two years in, Canada still isn’t bringing in nearly as much tax revenue from marijuana sales as it had projected. Its mistakes provide some valuable lessons for other governments hoping legalization can balancing their budgets.
The National Postreports that the country’s government had expected to bring in $100 million in revenue for fiscal year 2019–20. Now it’s projecting only about $66 million in revenue, a third less.
This will be the second fiscal year that Canada has earned less than projected. It’s also the second fiscal year that Canada has permitted recreational sales for marijuana. For fiscal year 2018–19, when the country was setting up its marijuana sales system, it took in only half the money it projected: $18 million instead of $35 million.
The biggest problems are top-down controls and a poor roll-out. Canada and its provinces maintain tight controls over permits and monopolize the supply process. When the system was launched, Canada had neither enough marijuana to sell nor enough brick-and-mortar shops to sell it. The process of getting a license to operate a storefront in different provinces could be slow, and governments were not able to respond to the demand. Those who didn’t have access to local vendors had to turn to the sole online vending site that was operated by the government and have it delivered.
But Canada does seem to be learning from these lessons, slowly. The percentage of this year’s projected revenue gap is smaller than last year’s, in part because provinces are easing up and allowing more storefronts to open. Internal statistics showed that retail sales accelerated once people had easier access to shops. That seems like a super-obvious lesson, but at least they’re learning it!
One other thing Canada learned as it legalized was not to overtax (unlike California and Washington state, where prices of legal weed are so high that the black market remains dominant). Canada’s national statistics bureau determined that legalization has caused the price of black market marijuana to drop in order to compete against the legal shops. Legal marijuana in Canada is costing about $10 Canadian per gram—about $7.50 in U.S. currency. Compare that to Los Angeles and San Francisco, where, thanks to all the taxes on the state and local level, consumers are paying up to $18 per gram.
Canada probably could have avoided some revenue problems if provinces hadn’t been so slow to let shops open. It’s a lesson people like Rhode Island Gov. Gina Raimondo should keep in mind as she pushes for recreational legalization in her own state.
The Rhode Island Democrat is proposing (for the second year in a row) legalizing recreational marijuana sales in order to fill gaps in the budget with the revenue the state will bring in. To maximize this revenue, she wants to create a complete state monopoly, forcing residents to turn to government-run shops. She would put limits on how much marijuana a person could purchase per shop visit and continue to ban people from growing their own marijuana.
The missed revenue targets in Canada and California should serve as lessons for other jurisdictions looking to legalize. When government looks at new markets solely in terms of the cash it can wring out of them, it may end up getting much less than it expected. Consumers will keep turning to cheaper alternatives—legal or not.
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