COVID-19 notes
The winners and losers. End Coronavirus.org
Following a conference call with Chinese experts on March 18, Costa Rica
was the first and only Central American country to immediately adopt
hydroxychloroquine against COVID. The resulting divergence of
the course of the pandemic grows more spectacular day after day.
Face coverings
for the public: Laying straw men to rest
Why Americans
are tiring of social distancing and hand-washing – 2 behavioral scientists
explain
In Ethics and International Affairs: Justifying
Lockdown
Throughout most of the world, significant restrictions have been placed
on freedoms to move about, to associate in public, and to be in many public
spaces. These practices are often collectively referred to as “lockdown.” Few
of us enjoy lockdown, and a small minority is furiously protesting against it.
In the United States, which currently has many more COVID-19 infections than
any other country in the world, some protestors have been gathering to call for
these lockdowns to end, and for a return to work.1 And in most places
governments are indeed beginning to relax, to varying degrees, the very
substantial restrictions that lockdown has involved.
For many, a first reaction to the protests was shock at how reckless they
seemed, given the continued prevalence of the virus there.2 There are clear and
legitimate concerns about whether the relaxation of lockdown restrictions is
premature in the Unites States and many other parts of the world. But the
question such protestors and others are raising—how the often very significant
costs that are being coercively imposed upon populations can be justified—is a
sensible one that deserves a reasoned response. Without such a response, we
will not be able to think clearly about the conditions under which relaxing
these restrictions is justified, or about when, should things take a turn for
the worse, they should be reinstated. Our aim in this brief essay is not to
defend a particular policy or attitude toward lockdown measures in the United
States or elsewhere, but to consider the scope and limits of different types of
arguments that can be offered for them. …
Half of newly
diagnosed coronavirus cases in Washington are in people under 40
Regular Related Fare:
Danielle DiMartino Booth: Powell's Problem? 'He Can't Print Jobs,' Says Fed
Watcher
“He can’t print jobs. He can’t print cash flow. And he can’t print these
small businesses back into business that the PPP failed,” the Fed critic said,
referring to the Paycheck Protection Program.
Joe Carson: Ouch: Q1 S&P
500 Profits Post Record Decline
Investors believe that a policy of easy money and excessive liquidity
have squashed corporate liquidity and solvency risks. That's a false narrative. Record collapse in profits and rising debt
levels increase solvency risks. Companies cannot be profitable without being
solvent. Once the reality of the record plunge in corporate
profitability and solvency risks sets in the equity market could retest the
lows of March.
Bill Blain: A New Dawn?
Over the past few weeks there has been an extraordinary shift in the
market’s mindset. We have moved from expectations of a stock market wipe-out
and bond Armageddon into a full-blown expectations-led rally. This is not about
a bear-trap rally anymore – although it might become one again if the virus
confounds us! In the next few days, I confidently expect stocks will make new
record highs as governments are bounced (rightly or wrongly) into re-opening
the global economy.
There is nothing normal about what’s happening. We are stuck in the
middle of an economic crisis completely unlike anything that’s ever happened
before. It’s not about banks or collapsing financial confidence. It’s a
demand/supply shock and more – something wholly outside any previous
experience. But, it’s something we are adapting to.
Investors are fully aware of the scale of the Coronovirus economic damage
and the unknown consequences its’ triggered. They are now developing investment
ideas on where this crisis and prices go next as economies rush to reopen. They
are also factoring in how government bailouts and QE infinity have effectively
shifted sentiment away from the precipice’s edge towards more positive uplands,
and how new virus treatments and vaccines could ameliorate the crisis.
…
We are seeing a similar effect right across the economy: a re-evaluation
of how much virus triggered fears over-sold the market. The financial media is
full of stories about the global economy emerging from its coronavirus
hibernation. Activity is picking up everywhere. Governments are under enormous
pressure to facilitate opening their economies. Every single business owner and
industrial sector will come up with half-a-dozen reasons why their business is
going to benefit from re-opening, and why they should be allowed to do so.
BUT!
We remain in dangerous times...
First, we still don’t really know as much as we
should about the virus.
Chicago Fed National Activity Index
Six High
Frequency Indicators for the Eventual Recovery
The numbers just don’t add
up. Even if you treat this stuff on the most charitable of terms, dollar for
dollar, way too much of the hole almost certainly remains unfilled. That’s the
thing about “stimulus” talk; for one thing, people seem to be viewing it as
some kind of addition without thinking it all the way through first.
You have to begin by sizing up the gross economic deficit it is being
haphazardly poured into – with an additional emphasis on “haphazardly.”
Everyone forgets the last time when the government tried this, impressing
markets and the media with its huge numbers, that after it was over its
proponents complained how it wasn’t big enough… If you don’t know how big is
the abyss, if you can’t even size the thing up properly while it’s
unfolding, how can you even attempt to call it “stimulus?”
What we are dealing with today is an economic
disruption the proportions of which are an historical outlier.
…
The feds aren’t adding to an economy experiencing a mild downturn, and
therefore create an excess, they’re trying desperately to redistribute a
sufficient amount just to be able to hope they can keep this thing afloat long
enough (For what? No one wants to answer, the goalposts continue to shift.)
…
And, as you can see above, the trend in US output was
unfavorable to begin with. The American economy, like the rest of the world,
slowing down considerably before the end of 2019.
Robertson:
Investing For The End Game
… To this point, Morgan Housel recently provided a vivid
illustration of risk. Suffice it to say, when you have experienced meaningful
risk firsthand, you don’t mess around with it. In his words, “tail-end consequences – the low-probability, high-impact events – are
all that matter.”
This turns the tables on how many investors think about risk. Many
investors think of risk in relation to benchmark performance. Others think of
risk in terms of long-term averages for major indexes. Some completely
disregard low probability events. All of these overlook the
bigger point: it is the relatively rare, high-impact events that are all that
matter for the end game.
By contrast, veteran investor, Felix Zulauf, showed what such an approach to risk looks like in practice. Presenting recently at John Mauldin’s Strategic Investment Conference. Zulauf explained that he is not finding attractive investment opportunities in the presence of so many constraints on global growth and excessively high debt levels. As a result, he “has been out of the market since 2015.”
Whether we have near-term deflation due to COVID-depressionary economy…
or end up with inflation in the longer-term due to excessive money printing,
either way, PEs should go lower (from: Crestmont Research)
Coronavirus
sinks U.S. consumer spending; savings hit record high
Personal income surged a record 10.5% last month. Without the government
money, income would have declined 6.3% with business closures pushing wages
down 8.0%
Regular Fare:
Professor Steve
Keen on Canadian Real Estate & Household Debt
… One of the obvious questions was "how did Canada manage to avoid a
crisis in 2008 while its southern neighbour had such a big one?".
The answer was "because you kept your private debt bubble going
while the USA's ended".
Joe Carson: Valuations Point
To A Decade Of Anemic Returns Ahead
Why Credit
Suisse Sees 0% Returns Over The Next Decade
The Last Time
Albert Edwards Saw "Nonsense" Like This Was 2008: This Is How It
Ended
The Stunning
Chart That Blows Up All Of Modern Central Banking
Debt, where is
thy sting? The long march to angrynomics
… A fascinating new book, Angrynomics, by Eric
Lonergan and Mark Blyth, analyses what has been happening, and gives
a highly plausible explanation. They set up three versions of capitalism,
beginning around 1870.
Capitalism 1.0 was the liberal laissez-faire version
that had its heyday before 1914. Under this system, governments did not
manage the economy; they assumed that the markets would do it for them. But the
first world war destroyed the international cooperation that made the system
work and required heavy government intervention to produce the armaments that armies
needed. And then the Great Depression showed that markets do not automatically
correct. And it produced its own “angrynomics” in the form of fascism.
Capitalism 2.0 emerged after the second world war. Economic policy was
designed to avoid the excesses of the 1930s by keeping unemployment as low as
possible, with the help of fiscal policy. To keep this system stable, banks
were highly regulated and capital flows were tightly controlled. This model was
highly successful until the early 1970s; growth was high, living standards of
the poorest rose sharply and inequality fell. The period was known as the
wirtschaftwunder in West Germany. But it broke down, the authors say, because
low unemployment empowered trade unions and led to a wage-price spiral. The system
also enraged the owners of capital who suffered high taxes and low returns, and
were unable to move their money. They started to finance conservative
politicians and thinktanks who argued for a change in approach.
This led to Capitalism 3.0, what some call the
neoliberal model. This was marked by the reduction of high tax
rates, “flexible” labour markets and the decline of trade unions, along with
the rise of privatisation, globalisation and free capital movements. For a
while, this system was heralded as the “great moderation” because it produced a
long boom with low inflation. But Capitalism 3.0 was also marked by an
uncontrolled banking sector, which eventually brought ruin in 2007 and 2008.
This, the authors rightly assert, set the stage for
“angrynomics”, usually known as the populist movement. Voters had gone along with
Capitalism 3.0 while it seemed to deliver growth but for them, “flexible labour
markets” meant less job security, while globalisation meant a squeeze on their
real wages. When the banking sector caused a crash, the bankers were bailed out
but poorer voters suffered from austerity in the form of lower social benefits
and squeezed public services.
(not just) for the ESG crowd:
As with climate change, tail risk not properly taken account of
Tail risk of contagious diseases
Abstract
The COVID-19 pandemic has been a sobering reminder of the extensive
damage brought about by epidemics, phenomena that play a vivid role in our
collective memory, and that have long been identified as significant sources of
risk for humanity. The use of increasingly sophisticated mathematical and
computational models for the spreading and the implications of epidemics
should, in principle, provide policy- and decision-makers with a greater
situational awareness regarding their potential risk. Yet most of those models ignore the tail risk of contagious diseases,
use point forecasts, and the reliability of their parameters is
rarely questioned and incorporated in the projections. We argue that a natural
and empirically correct framework for assessing (and managing) the real risk of
pandemics is provided by extreme value theory (EVT), an approach that has
historically been developed to treat phenomena in which
extremes (maxima or minima) and not averages play the role of the protagonist,
being the fundamental source of risk. By analysing data for pandemic outbreaks
spanning over the past 2500 years, we show that the related distribution of
fatalities is strongly fat-tailed, suggesting a tail risk that is unfortunately
largely ignored in common epidemiological models.
…
“The central point we wish to convey is the following:
the more fat-tailed a statistical distribution, the more the ‘tail wags the
dog’.”
Scientists
Identify a Temperature Tipping Point for Tropical Forests
'Zombie fires'
reigniting in Arctic could be sign of bigger blazes to come, scientists say
Matt Taibbi: Planet of the
Censoring Humans
The campaign to remove Michael Moore’s new documentary from the Internet
– led by Moore’s erstwhile progressive “allies” – is a significant advance in
the censorship revolution
“The whole idea of the film was to ask a question – after fifty years of
the environmentalist movement, how are we doing?” recounts Moore. “It looks
like, not very well.”
Moore and Gibbs challenged the idea that both the planet and humankind’s
current patterns of industrial production can be saved through the magic bullet
of “renewable energy.”
… In Planet of the Humans, Moore and Gibbs make a complex argument. In
essence, they charge that people have become dependent upon the
high-consumption lifestyles made possible by fossil fuels, and that it’s our
addiction to that way of life, as much as to fossil fuels themselves, that is
driving humanity off a “cliff.”
Their core criticism is aimed at big-name environmental leaders like Bill
McKibben and Robert F. Kennedy, Jr., whom Gibbs and Moore argue have
de-emphasized this truth to sell a fantasy – profitable equally to industry and
environmental movements – that we can innovate our way to survival.
Crossroads for
Planet of the Humans
Other Fare:
Nothing Is
Certain But Death, Taxes, And Police Infiltration Of US Protests.
Big Thoughts (or, Social Unrest in a Time of COVID):
Yanis Varoufakis: A Chronicle of a
Lost Decade Foretold
To exorcise my worst fears about the coming decade, I
chose to write a bleak chronicle of it. If, by December 2030, developments have
invalidated it, I hope such dreary prognoses will have played a part by
spurring us to appropriate action. Before our pandemic-induced lockdowns,
politics seemed to be a game. Political parties behaved like sports teams
having good or bad days, scoring points that propelled them up a league table
that, at season’s end, determined who would form a government and then do next
to nothing. Then, the COVID-19 pandemic stripped away the veneer of
indifference to reveal the political reality: some people do have the power to
tell the rest of us what to do. Lenin’s description of politics as “who does
what to whom” seemed more apt than ever.
By June 2020, as lockdowns began to ease, left-wing
optimism that the pandemic would revive state power on behalf of the powerless
remained, leading friends to fantasize about a renaissance of the commons and a
capacious definition of public goods. Margaret Thatcher, I would
remind them, left the British state larger, more powerful, and more
concentrated than she had found it. An authoritarian state was necessary to
support markets controlled by corporations and banks. Those in authority have never hesitated to harness massive government
intervention to the preservation of oligarchic power. Why should a pandemic
change that? As a result of COVID-19, the grim reaper almost
claimed both the British prime minister and the Prince of Wales, and even
Hollywood’s nicest star. But it was the poorer and the browner that the reaper
actually did claim. They were easy picking. …
David Dayen: Unsanitized:
Social Unrest When There’s Nothing to Lose
… Decades of disinvestment and routinized brutality and structural racism
created these conditions. The officer who killed George Floyd had enough
history of violence alone to contribute mightily to this rage. (And yes, Amy
Klobuchar declined to prosecute him and many others for these crimes.)
But you cannot separate this outpouring of anger from two
months of death, economic collapse, and the disproportionate pain raining down
right now on communities of color.
Decades of environmental racism have created toxic vectors for spreading
the virus; that’s the same brutality. Minority small business owners have had a
harder time securing federal aid, owing to more distant relationships with
local banks; that’s the same brutality. African Americans are more likely to be
in “essential” jobs and unable to work from home and protect themselves; that’s
the same brutality. They’re more likely to be in prisons under perhaps the
worst conditions of this crisis; that’s definitely the same brutality. “Black
Americans are 80 percent more likely than white people to have diabetes,” which
puts them at higher risk from COVID-19; that’s the same brutality. Lack of
decent food in communities of color, and access to healthcare, and the ability
to rent enough space in shelter to physically distance—this is all brutality
against a people, manifested today but going back 400 years.
When you are either out of work or on a hair trigger because you know
you’re risking your life by going to work; when your business can’t get a
bridge loan and you know everything you worked for is about to be extinguished;
when you’re cut off from your friends and neighbors; when your source of
sustenance is the food bank; when you have nothing to lose, and then on
television you see a black man with his neck wedged between a police officer’s
knee and the pavement until he chokes, and you hear he died in police custody
after pleading “I can’t breathe,” and you remember how those words were spoken
by Eric Garner, and you hear that the man was in custody for using counterfeit
money and you don’t think that’s a sufficient reason to kill somebody, and you
recall that the Minneapolis Police Department has had a really ugly history
with the black community for a long time, and when you exhale a little because
the cops involved were fired but then the local prosecutor says this murder of
a black man doesn’t merit prosecution… what results from this injustice should
meet your expectations.
Social unrest can happen for the most unpredictable of
reasons. But this context is very predictable. In a time of despair and
hopelessness, people are quick to anger, especially when provoked. Riots are terrible and
destruction of people’s own living spaces and communities are likewise
terrible. But if you say you can’t understand it, you aren’t paying attention
to what’s happened in the last two months, in the last twenty years, and since
the first ships of Europeans and Africans arrived in America.
Kunstler: Ominous
Convergence
…Which raises some questions: how much rioting, looting, and arson will
be enough to satisfy that sense of solidarity in the quest for justice? Three
nights? Three weeks? Three months? Will it cease if and when Officer Chauvin is
charged with murder or manslaughter? How much rioting, looting, and arson will
the authorities in other cities allow to rip before they move to forcefully
stop it? Does all this disorder amplify itself in a feedback
loop as it plays out?
Those would be tough questions in ordinary times, but
we’re in an extraordinary convergence of crises that includes an unresolved
Covid-19 pandemic, an unprecedented economic collapse, and the furious
after-effects of a failed political coup that steeped the nation in delusion,
institutional breakdown, and factional enmity. Black America is not the only
group in the land that has an axe to grind.
For instance, with over 30-million suddenly unemployed, facing bankruptcy
one way or another, maybe even eviction and hunger, and tens of thousands of
small businesses failing, what will be the public mood
if the stock markets keep shooting up and up and up, as they’ve been doing for
a month? Those rising share values, which enrich a tiny percentage of the public,
are a direct result of the Federal Reserve inflating the national debt by
“printing” money-from-thin-air. It comes in the form of bonds, the interest on
which ultimately has to be paid by taxpayers. Many will not fail to notice that it smells like a scam. Will the economically
floundering public revolt against it? Will they take to the streets and start
burning down things other than police stations and AutoZones?
Could all that intersect with black street violence in cities across the
land?
…
Once cycles of violence are set in motion, they are very difficult to
stop. The animosities between different groups in the USA are not so different
in character from what’s been seen in other places around the world in recent
times: the strife in Northern Ireland, the breakup of Yugoslavia, the civil war
in Lebanon, the factional fighting in Libya, Syria, Iraq. All of them grew out
of quests for cosmic justice, and all of those conflicts produced lasting
damage to the societies they inflamed.
People Can Only
Bear So Much Injustice Before Lashing Out
… And then the stories of the killings started. In the past three weeks:
Ahmaud Arbery was lynched, on video. Breonna Taylor was killed by police in her
own bed, offscreen. And George Floyd was choked out on the street in broad
daylight by police while strangers literally begged for his life.
Seven Reasons
Police Brutality Is Systemic, Not Anecdotal
Bad Policing,
Bad Law, not 'Bad Apples,' Behind Disproportionate Killing of Black Men by
Police
Protect Yourself
From Retaliation After Riots
In the years since the Ferguson riots prominent protesters have been
systematically killed. Nobody knows who is killing them, and police somehow
can’t catch anyone. The most likely explanation is that they are being killed
by cops
Quotes of the Week:
“I don’t think many people understand how
bad the situation will be during and after the virus. Recovery and return to
normal are pretty much empty terms now.”
Andrew Ross
Sorkin: "Joe. You missed it 100% on the way down and
you missed 100,000 deaths. We can have this debate back and forth, and you can
try to question the questions I'm asking -- "
After Kernen interrupted, Sorkin boomed, losing all cool:
"Hold on, hold on. I'm not going do this with you, Joe. Every
morning, you try to question the questions I'm asking, these are questions that
investors are asking every single morning. I'm trying to get through some of
this clutter. I may be right, I may be wrong. That makes the market. It doesn't
make people good or bad or right to act the way you are. I'm sorry."
"Joseph, you didn't panic about anything. A hundred thousand people
died, Joe. All you did was try to help your friend the president. That's what
you did. Every single morning on this show. Every single morning on this show
you have used and abused your position, Joe. You have used and abused your
position!"
“A booming stock market. Rapidly expanding
“money” supply. Exceptionally loose financial conditions, with record debt
issuance. Huge inflows into corporate investment-grade and high-yield bond
ETFs. Record Treasury and investment-grade corporate bond prices. It’s easy these days to question securities market sanity. Yet it’s a
fundamental tenet of Credit Bubble analysis that things turn crazy at the end
of cycles.”
He may have a point. Race riots / anti-police-abuse-of-power riots may
have become coronavirus-lockdown riots:
Minnesota Governor Tim Walz summed-up the current chaos
erupting nationwide perfectly:
"This is absolutely no longer about George Floyd or addressing
inequities anymore. This is an organized attack designed to destabilize civil
society."
(Tensions high due to mass unemployment; economy crashed; enforced
lockdowns; polarizing inequality; bail-outs for the rich with Wall Street
booming while Main Street shuts down; … then police-killing of unarmed
African-American) (sidenote: I don’t imagine there is a lot of “social
distancing” going on during those riots… though I guess at least there is a
fair amount of mask-wearing)
Re: mainstream media coverage of the protests:
Greenwald: Good to see
@washingtonpost expressly pointing out
that the "outside agitator" narrative that was manufactured today -
along with all the other attempts to shift blame so nobody has to examine why
people are so angry - has no evidentiary basis
Johnstone: The solution to these
angry demonstrations is finger wagging. Wag your fingers at the protesters. They
will realize that they are naughty and wrong. They will stop being angry. If
they don't, wag harder. Wag harder. Keep wagging.
Tweets of the Week:
Via DB’s Slok: Past 20 years, relationship btw velocity & inflation
driven by GDP instead of money printing. Ergo, you can increase Fed balance
sheet the money supply as much as you want, if money goes into asset
transactions rather than GDP transactions, it won’t be inflationary
Fun Fare:
Gang Of Monkeys Attacks Lab Assistant, Escapes With Coronavirus Test Samples
Protestors
Criticized For Looting Businesses Without Forming Private Equity Firm First
Pics of the Week:
The future of restaurant dining? COVID bubbles?
Racism and
Violence in America
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