The coronavirus outbreak has been going on for almost six months now, but in the US, the economic effects of shutting down businesses and confining people to their homes is just starting to bite. From Sophie Quinton at pewtrusts.org:
DENVER — Economists who advise the Colorado legislature told lawmakers in mid-March to expect a roughly $800 million revenue decline for the next fiscal year as people travel and dine out less during the coronavirus pandemic.
That estimate already looks far too optimistic. “The forecast that we released in March — we weren’t imagining the world that we’re living in right now,” said Kate Watkins, chief economist for the Legislative Council Staff, the nonpartisan research arm of the Colorado General Assembly.
Governors nationwide have ordered businesses to close and people to stay home in order to slow the spread of the novel coronavirus. But the public health measures have created an economic crisis that will, in turn, hit state and city budgets.
Now policymakers are scrambling to figure out how much spending power they’re losing at a moment when they need money to fight the pandemic and help laid-off workers and struggling businesses.
Who wants to put US shale oil drillers out of business more, Russia or Saudi Arabia? From Tyler Durden at zerohedge.com:
While it appears an expected emergency virtual OPEC+ meeting planned for Monday has been postponed, pushed back to later in the week to allow more time for negotiations, it’s likely that we’ll actually see the heated blame-game for the collapse in oil prices ratchet up — and oh,in the meantimeoil is set to crater come Monday as the feud is only expected to get uglier.
Indeed the aggressive war of words has started, with Putin offering a biting Russian narrative aimed at the Saudis in remarks Friday: “It was the pullout by our partners from Saudi Arabia from the OPEC+ deal, their increase in production and their announcement that they were even ready to give discounts on oil” that drove the crash alongside the double-whammy of the coronavirus-driven drop in demand, Putin said according to Bloomberg.
“This was apparently linked to efforts by our partners from Saudi Arabia to eliminate competitors who produce so-called shale oil,” Putin continued. “To do that, the price needs to be below $40 a barrel. And they succeeded in that. But we don’t need that, we never set such a goal.”
Editor’s Note: Vladimir Pozner is Russia’s most influential TV political-talk-show host, journalist and broadcaster.
Pozner has hosted several shows on Russian television, where he has interviewed famous figures such as Hillary Clinton, Alain Delon, President Dimitri Medvedev and Sting.
Pozner has appeared on a wide range of networks, including NBC, CBS, CNN and the BBC. In his long career, he has been a journalist, editor (Soviet Life Magazine and Sputnik Magazine) and TV and radio commentator, covering all major events in Russia.
Pozner has appeared on The Phil Donahue Show and Ted Koppel’s Nightline.
He co-hosted a show with Phil Donahue called Pozner/Donahue. It was the first televised bi-lateral discussion (or “spacebridge”) between audiences in the Soviet Union and the US, carried via satellite.
In 1997, he returned to Moscow as an independent journalist.
Doug Casey’s friend Mark Gould sat down with Pozner in Moscow to help us better understand the relationship between the US and Russia.
International Man: Naturally, Americans have a lot of misconceptions about Russia. The US government and media offer an overly simplistic and unfavorable view of the country.
Political correctness came quickly to the coronavirus outbreak. From James Corbett at off-guardian.org:
Are you interested in talking about…things? You know, the kind of things that we’re not allowed to talk about anymore? You know, since the…uhhh…“The Event“?
You are? Great. I mean, you might have noticed things are getting a bit hairy out there. As in, you’re likely to get your head bitten off for daring to suggest that things may not be totally ok with the “new normal.”
It seems all these new social norms and cultural taboos that have arisen in the past few weeks have also created a raft of new thoughtcrimes: Things that must not be spoken for fear of being expelled from polite society . . . or worse.
That’s why it’s so vitally important for us to speak out about our concerns before these socially-policed thoughtcrimes become literal crimes. As I’m sure you know, if these new social norms are not confronted, voicing dissent will soon become impossible.
So, allow me to voice some thoughtcrimes of my own. But be forewarned: I assure you that you will find at least some of my ideas to be offensive. You will disagree with them strongly. You will become irate.
The real question is: What are you going to do to those voicing opinions you disagree with? Engage in dialogue with them? Or demand that agents of the state scrub their speech from the internet and lock them in a cage for their thoughtcrime?
Well, either way, I’ve already committed thoughtcrime numerous times in recent weeks, I might as well share them with you. Are you ready? Let’s go.
1. We have met the enemy . . . and it is our neighbors
The central bankers are making their last stand to stop their sworn enemy, deflation, with copious amounts of debt. It can’t work. From Tom Luongo at tomluongo.me:
We are at a critical moment in the history of politics and markets. Everyday the U.S. government stares into the fiscal and monetary abyss and chucks trillions in hoping that will be enough to finally fill it.
We stand by hoping that it will work to reflate markets collapsing from a catastrophic mispricing of assets. At least some of us do. I don’t.
I hope it fails and it’s because those inflated prices fuel the very global political order that is anathema to human advancement.
President Trump is finally happy with his FOMC chair, Jerome Powell, after he opened the door to unlimited quantitative easing, nearly unlimited liquidity injections via the repo markets, and taking interest rates to the zero-bound.
It’s clear that the Keynesians at the Fed and the U.S. Treasury Dept. have no answers to the problems in front of them. They are simply doing what they always do when a crisis hits. Print money and hope someone still believes the new money is worth buying.
The sudden supply and demand side shock to the global economy thanks to the COVID-19 coronavirus is outside of their frame of reference.
To best understand what we’re dealing with here you have to understand how these people think. Modern economic theory, based on John Maynard Keynes’ General Theory of 1936, imagines the economy as a bathtub.
And that bathtub is constantly draining as credit is destroyed. Money flowing out of the economy has to be replaced with a constant stream of new money, in the form of new credit, or the bathtub drains. The velocity of new money has to keep up with old money or the system drains.
As much as Covid-19 is a circuit breaker, a time bomb and an actual weapon of mass destruction (WMD), a fierce debate is raging worldwide on the wisdom of mass quarantine applied to entire cities, states and nations.
Those against it argue Planet Lockdown not only is not stopping the spread of Covid-19 but also has landed the global economy into a cryogenic state – with unforeseen, dire consequences. Thus quarantine should apply essentially to the population with the greatest risk of death: the elderly.
With Planet Lockdown transfixed by heart-breaking reports from the Covid-19 frontline, there’s no question this is an incendiary assertion.
In parallel, a total corporate media takeover is implying that if the numbers do not substantially go down, Planet Lockdown – an euphemism for house arrest – remains, indefinitely.
Michael Levitt, 2013 Nobel Prize in chemistry and Stanford biophysicist, was spot on when he calculated that China would get through the worst of Covid-19 way before throngs of health experts believed, and that “What we need is to control the panic”.
Let’s cross this over with some facts and dissident opinion, in the interest of fostering an informed debate.
The only mystery about the looming sovereign debt crisis is why its taken so long to arrive. From Simon Black at sovereignman.com:
At the turn of the century in the year 1300, the Republic of Florence’s public debt was quite manageable at just 50,000 gold florins. That’s less than $100 per capita in today’s money.
By 1338, after a series of costly wars and expensive public works projects, Florence’s debt had ballooned to 450,000 gold florins. Four years later (after yet another war) it had grown to 600,000 gold florins.
This was crippling to public finances given that the government of Florence was paying between 10% and 15% interest on its debt.
To make matters worse, some of Florence’s most prominent banks had made bad loans to foreign governments– most notably to King Edward III of England, who had suffered terrible defeat against France in what would become known as the Hundred Years War.
Edward would ultimately default on his Italian bank loans, sparking a terrible banking crisis in Florence.
News traveled quickly that the most powerful financial center in Europe was in trouble. The government was near ruin, and the banks were collapsing.
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