Providing Alcohol to an Alcoholic

Symptoms of a High Functioning Alcoholic

OPEC backs biggest oil cut since 2008 crisis

OPEC agreed on Thursday to cut oil output by an extra 1.5 million barrels per day (bpd) in the second quarter of 2020 to support prices that have been hit by the coronavirus outbreak, but made its action conditional on Russia and others joining in.

Notice that this and pretty much every other news report you read never explains the thermodynamic implications of what they report, because they are ignorant of, and/or deny, the relationships between wealth creation, credit availability, and fossil energy consumption.

Oil producers today cut production by about 1.5%.

Why? Because demand for oil is falling and the world has limited storage capacity. Oil must be burned at about the same rate it is produced. If they don’t curtail production prices will fall below the cost of production and everyone will lose money, except of course shale oil producers who have always lost money.

Why is oil demand falling? Because the oil powered machines that produce and deliver almost all of the things we use and eat are slowing down, which means economic growth is slowing or possibly declining.

What happens if economic growth stops or declines? Our banking system becomes fragile because the design of our debt backed fractional reserve monetary system requires growth to function.

Put more simply, money and debt retain value, and credit remains plentiful, only in the presence of economic growth.

Why are credit and debt important? Because our standard of living depends on them. For example, today you can save 5% of the price of a house, get credit for 95% in the form of a mortgage, and immediately enjoy 100% of the house. Your mortgage, in turn, funds someone else’s retirement portfolio. Without plentiful credit, most people will not enjoy their own home, or car, or iPhone, and most people will not be able to retire.

I explained the importance of growth and why we can’t have it forever in more detail here.

How have our leaders responded? Canada announced an emergency interest rate cut yesterday in the hope of stimulating economic growth. Our prime minister is planning to spend more printed money to stimulate growth.

Will it work? Does providing alcohol to an alcoholic work? Yes, for a while, unless he’s already too drunk, but doing so makes his bottom more painful.

How do you know when an alcoholic is too drunk? You offer him free liquor and he does not drink.

How do you know when an alcoholic has not yet bottomed out? He kills his hangover the next day with a drink.

How do you know when it’s too late to save an alcoholic? He dies from an overdose.

How do you know when an alcoholic is clean? He decides to promote and vote for a birth lottery.

<Edit Mar 8>

I’m going to go out on a limb and say the correction has begun that those of us with defective denial genes have anticipated since the rocket scientists that lead us “fixed” the too much debt crisis in 2008 with more debt. They’ll try again this time but I suspect the alcoholic is too drunk to drink. I don’t know if the drunk will respond if they try extreme measures like intravenous white lightning. Assuming he doesn’t, my guess is 20-50% of paper wealth will vaporize in this step down. There are more steps to follow in coming years until the alcoholic bottoms out when his preferred drink, oil, is gone. There’d be much less pain for all if he’d sober up now.

102 thoughts on “Providing Alcohol to an Alcoholic”

  1. How long does it take for an alcoholic to notice you tricked him with apple juice?

    I’m guessing about the time it takes a container ship to travel from Shanghai to Los Angeles.

    “The Lights Are On But No One’s Working”: How China Is Faking A Coronavirus Recovery

    Argh. A Wenzhou-based factory owner tells how district officials are telling him his closed factory (he has no workers) must turn on the machines and consume electricity or he’ll get “a visit”. Higher ups are watching the electricity numbers.


  2. Russia says nyet. How long before high cost producers start to fail? Will governments nationalize them?

    OPEC’s plans for deep and prolonged output cuts were derailed as non-OPEC producer Russia refused to support the move, arguing it was too early to predict the impact of a coronavirus outbreak on global energy demand, sources told Reuters.


    1. Time to make some popcorn.

      A three-year pact between OPEC and Russia ended in acrimony after Moscow refused to support deeper oil cuts to cope with the outbreak of coronavirus and OPEC responded by removing all limits on its own production.
      The collapse of the deal sent Brent futures tumbling 9.4%, the biggest daily percentage fall since December 2008, to settle at $45.27 a barrel.
      Saudi Arabia’s index closed down 8.32% at its lowest since November 2017, with most of its constituents trading in the red.
      State-owned Saudi Aramco tumbled 9.1%, its sharpest percentage fall in a day, to 30 riyals ($8.00). The stock traded below its initial public offering price of 32 riyals for the first time..


    2. Yes, I was going to post that Guardian live feedjust reported Saudi’s cut price to $30/b from 57 or so. That’s the opposite of a supply cut of course. Exxon and Shell lost at least a quarter of market cap as the stock market digested this.


  3. Despite Vox reporting about a year ago [ ] on the extreme risks of gain-of-function research, they published an article [ ] two days ago condemning “conspiratorial claims” that COVID-19 may have been bioengineered despite the extraordinary evidence linking the current COVID-19 outbreak and this form of research on coronaviruses at Wuhan’s BSL-4 lab. This virus should not exist. I should no longer be astonished at human stupidity and denial, but I guess I still am.


    1. Thanks. I agree with VOX that we should ignore political pundits who for the most part are idiots with an agenda.

      I do not think we should ignore really smart apolitical scientists familiar with the relevant research. I’m an engineer and not a biologist, but this analysis by J.C. seems very credible to me. Note that J.C. does not think the virus was engineered, nor that the Chinese had ill-intent. Just research conducted by multiple countries including China that probably should not be taking place due to the risk, and one virus under study got away from the lab, as others apparently have in the past. I observe that the VOX article debunking the claims did not address any of the evidence presented by J.C..


      1. Rob, my understanding is that gain-of-function research IS/INVOLVES bioengineering. I will have to read further on this matter as I could very well be mistaken. Thank you for the link to the JC On a Bike video- I viewed it and it is tremendously good, as is the article upon which it is based.


  4. Doug Nolan, my favorite debt analyst, on the bubble.

    More than a decade ago, I began warning of the risks of an inflating “global government finance Bubble”. Policy makers had resorted to an unprecedented expansion of central bank Credit and sovereign debt to reflate global finance (and economies). And for years policymakers have administered near zero rates and egregious “money printing” operations to sustain history’s greatest Bubble, in the process extending a dangerous cycle. The unprecedented inflation of government finance has been alarming enough. Yet I worry most about this “infinite multiplier effect” and how leveraged speculation infiltrated all nooks and crannies – as well as the very foundation – of global finance.

    As I have stated repeatedly over the years, contemporary finance appears miraculous so long as it is expanding/flourishing – so long as new “money”/liquidity is created through the process of financing additional speculative holdings of financial assets. The new securities-related Credit fuels asset inflation, self-reinforcing speculation and more powerful Bubbles. Importantly, credit growth associated with global securities and derivatives speculation expanded to the point of becoming the marginal source of liquidity throughout international financial markets. After first ignoring it ascending role, central banks moved to accommodate, nurture and, finally, to assertively promote financial speculation. The risk today is that this unwieldy Bubble inflated beyond the capacity of central bank control.

    Bubbles and resulting manias take on lives of their own. They cannot, however, escape harsh realities: Fragilities only build up over time, and Bubbles don’t work in reverse. Collapse becomes unavoidable, with any serious de-risking/deleveraging dynamic leading to a contraction of marketplace liquidity, a spike in risk premiums, illiquidity, panic and dislocation. It’s the modern form of the old-fashioned bank run. That’s where we are today.

    As far as I’m concerned, the evidence is indisputable: We have been witnesses to history’s greatest – and most precarious – globalized Bubble. If traders want to play for “oversold” bounces and the inevitability of more QE, it’s their money. But Bubbles invariably burst – and there is now a clear and present catalyst. The world is at the cusp of momentous change. Everyone has tried to remain convinced that risk can be ignored, with central bankers having everything under control. Yet the scope of global financial excess, myriad imbalances and structural impairment now dwarfs the capacity of central bankers to sustain market confidence, speculative excess and economic growth.

    Liked by 1 person

  5. Corals, as all species, except humans, have not evolved to deny reality.

    A study published Tuesday in Scientific Reports shows that stony corals, which provide food and shelter for almost a quarter of all ocean species, are preparing for a major extinction event.

    The research team—which includes scientists from The Graduate Center, CUNY; Baruch College; Scripps Institution of Oceanography; University of Haifa; University of Leeds; and GEOMAR Helmholtz Centre for Ocean Research—found that corals are currently exhibiting a suite of dynamic survival responses that correspond with their last major extinction 66 million years ago. These coral traits include increased prevalence of deep-water residing, cosmopolitan distributions, non-symbiotic relationship to algae, solitary or small colonies, and bleaching resistance.

    “It was incredibly spooky to witness how corals are now exhibiting the same traits as they did at the last major extinction event,” said Professor David Gruber, a researcher and marine biologist with The Graduate Center, CUNY and Baruch College. “Corals seem to be preparing to jump across an extinction boundary, while we are putting our foot further on the pedal.”

    h/t Apneaman


  6. Notice, as usual, the news media that informs us never contemplates physical limits to growth. It seems “why?” is not in their vocabulary.

    Interest rates on a range of U.S. government bonds have plunged to all-time lows as investors seeking relative safety from stocks have furiously snapped them up . (As the price of a bond goes up, its interest rate, or yield, declines.)

    The yield on the 10-year Treasury — a benchmark for mortgages and other consumer debt — was 1.9% as recently as Dec. 24. On Friday, it dipped below 0.7 percent before finishing the day at 0.79%.

    “The bond market is already pricing in a worst-case scenario — a U.S. and global recession,” said Scott Anderson, chief economist at Bank of the West.

    The plunging yields across bond markets could hamstring the Federal Reserve’s ability to respond to a future recession. During previous economic slumps, the Fed has sought to drive down longer-term rates to try to stimulate borrowing and spending. But with those rates already nearly as low as they can go, the Fed now has less firepower at its disposal.

    The shrunken bond yields will also make it harder for those who invest in them to earn much income: The return on the benchmark 10-year Treasury note is now less than half the inflation rate. After adjusting for inflation, an investor who buys a Treasury will effectively lose money over the course of the loan.


  7. On the one hand B.C. to date has done more COVID-19 tests than all of the US. On the other hand, they should have closed YVR airport a month ago when they saw China building emergency hospitals and bulldozing streets.


  8. Circuit breakers blew a fuse tonight.

    Will central banks tomorrow be able to print faster than the machines trying to sell?

    Futures on the S&P 500 were halted Sunday night after they declined 5%. So-called circuit-breaker levels are the thresholds at which exchanges halt or close marketwide trading due to extreme declines. These levels are calculated daily, based on the previous day’s close in the S&P 500.

    Liked by 1 person

  9. “Just by chance you crossed the diamond with the pearl
    you turned it on the world
    that’s when you turned the world around”



    1. For some strange genetic reason my brain does not understand anything that has even a hint of poetry. I prefer clear non-obfuscated sentences that use the minimum number of words required to communicate an idea. These lyrics by Steely Dan (thank god for google) are the exact opposite. Even some artsy poet expert dude doesn’t seem to understand what Steely Dan is saying.

      If you’re asking did I write this high on acid, the answer is no. It’s just that there’s so little discussion of reality in our culture that seeing it for the first time can seem like an acid trip. 🙂


  10. Admirers of the Maximum Power Principle (MPP) theory which explains the behavior of all life, including humans, may enjoy this podcast interview by physicist Sean Carroll that explains the brain’s function as modelling the world to minimize free energy.

    If you tell me that one of the world’s leading neuroscientists has developed a theory of how the brain works that also has implications for the origin and nature of life more broadly, and uses concepts of entropy and information in a central way — well, you know I’m going to be all over that. So it’s my great pleasure to present this conversation with Karl Friston, who has done exactly that. One of the most highly-cited neuroscientists now living, Friston has proposed that we understand the brain in terms of a free energy principle, according to which our brains are attempting to model the world in such a way as to minimize the amount of surprise we experience. It’s a bit more complicate than that, but I think we made great headway in explicating some very profound ideas in a way that should be generally understandable.

    Karl Friston received his medical degree from King’s College Hospital, London. He is currently Professor at the Institute of Neurology, University College London, and Wellcome Principal Research Fellow and Scientific Director of the Wellcome Trust Centre for Neuroimaging. Among his major contributions are statistical parametric mapping, voxel-based morphometry, and dynamical causal modeling. He is a Fellow of the Royal Society, of the Academy of Medical Science, and of the Royal Society of Biology. Among his awards are the Young Investigators Award in Human Brain Mapping, the Minerva Golden Brain Award, the Weldon Memorial Prize, the Charles Branch Award, and the Glass Brain Award for human brain mapping.


  11. Joe Rogan’s interview today with Michael Osterholmis, an expert in infectious disease epidemiology, will wake a lot of people up that have been snoozing or denying. I’m glad I’ve finished preparing. Expect a run on food soon.

    Big takeaway points for me:
    1) May be as bad as the 1918 Spanish flu.
    2) Very hard to prevent transmission (washing hands not good enough, must stop breathing the same air as other people)
    3) Infected people spread the virus for several days before showing or feeling any signs of sickness.
    4) US is totally unprepared with no plans and a limited stockpile of supplies and drugs that are mostly made in China. (I don’t know about Canada’s readiness but I’m betting it’s not much better.)
    5) Expect it to be worse in North America than China because obesity worsens the outcome and 50% of people here are obese.
    6) Not a short term problem, expect many months of troubles.
    7) Lots of false or misleading information is circulating.


    1. Thanks Rob. I don’t often do Joe, but this is one of the exceptions for sure.

      Woe the diabetic, middle aged obese smoker eh?

      My mom is 74 & I need to go help her a bare minimum of once a month. I help her with her monthly Big pension cheques shopping – push her buggy, load the van & carry 2-3 loads of groceries & supplies from the underground parking up the stairs to her condo. Mom’s got a bad knee & struggles with stairs. I also take out her recycling & garbage. I’m also her mechanic (80%). Mom still drives, but only in the daytime & not in heavy rain or snow, so I sometimes have drive her to important appointments. Last week she called because her radiant heat was dead, so I headed over. She has a programmable digital thermostat. Takes 2 AA batteries. They died. She is clueless about that sort of thing & shit breaks (entropy) all the time. My point? How do I prep/self quarantine & fulfill a son’s duty? Hell if I know. I think it’s always been extremely hard for the hyper social ape to isolate come plague time. Power to you if ya can.

      In 1918 in the US the rural-urban split was 50/50 & in 2019 was 19.3% rural (US census). City or country there are way way less people who grow any food at all now. Not many have big barrels of sacks of flour, rice, beans, etc like was normal for almost all country folk in 1918. Most country folk today go shopping all the time. They are still largely dependent on JIT. My Baba who died in 1985 lived 5 clicks from downtown Calgary & her entire back yard was a massive productive garden. She canned like crazy. They had a huge basement pantry with hundreds of big glass nason jsrs full of beets, carrots, green beans, jams, etc. She even kept making peasant noodles, egg-flour-water-salt, right up to her last years. They were not poor. Gov pensions & CN Rail pension, mortgage long paid. Their frugality & preps came from having lived in the Ukrainian as peasants/working class & lived through WW1, Spanish flu, Great Depression, harsh Commie policies & famine.

      Experience is a great teacher & best prepper motivator ever.


      1. You’re in a tough spot Apneaman. I wish you well.

        I regularly help my elderly aunt and uncle, both with serious health problems, who live at home on their own. They have a constant stream of health workers and other people through their home which worries me. I’ve been over encouraging and helping them to stock up. I told them they should get what they need now because I’ll be avoiding the stores shortly. They live much like your Baba. They have a small 33′ wide city lot on which they grow a huge crop of tomatoes, raspberries, and rhubarb. They buy produce in bulk and can every year. My uncle has a friend with an acreage where they grow veg, eggs, chickens, and turkeys. I usually help with the slaughter in the fall. My aunt sells the eggs to her network of city friends. They bake and make their own snacks. Waste nothing. Recycle. Drive little. Fly none. Entertain themselves with local live concerts. I love and admire them very much.


  12. Mac10 explains that the herd that was in denial is getting ready to stampede.

    The Dow just traveled 6,000 bi-directional points in 24 hours. That’s 25%. Yes, you read that right. The Dow traded a quarter of its value in two trading sessions.

    There is NOTHING normal about that. Not only is realized volatility off the charts, but much of it is occurring off hours. Which is not captured in the conventional volatility metrics. Yesterday (Monday) the VIX options were delayed open because the CBOE couldn’t find any market makers.

    Obviously the panic will be epic. Imagine being in stock holdings and unable to sell as the casino opens limit down and then goes offline for the remainder of the day. The way the circuit breakers work is that -7% triggers a :15 minute time out. -13% triggers another :15 minute time out. And -20% triggers a halt for the remainder of the day. It’s not hard to imagine the stock market halted for the day by 10:15 am. Yesterday, the 7% circuit breaker was triggered for only the third time in U.S. market history.

    ETFs will be the fatal weakness as they come totally unhinged from their underlying holdings. First we had the repo crisis which locked up overnight markets. Now the paralysis is spreading as reported by Zerohedge yesterday:

    ZH: There Is No Liquidity

    “The problem with passive investing is that while it propels market dutifully higher, when stocks crash, ETFs reverse, and a painful selling liquidation commences, one which takes a long time to stop, or as Bloomberg puts it, “when the market goes into freefall, they are required to sell the underlying asset, prompting a frantic search for anyone who will buy it.”

    On the other side of this gong show no one will trust ETFs ever again. They will be considered a failed way to invest. And a hazard to orderly markets.


  13. It’s sad that the only budget response our leaders consider these days is money printing. How about, for example, redirecting funds from non-essential spending like the military, or increasing taxes on the wealthy? Relying on money printing will not end well. Where are the adults?


  14. Paywalled

    ‘We’re hustlers’: Amid coronavirus fears, this couple has made more than $100,000 reselling Lysol wipes

    “VANCOUVER—As Manny Ranga and his spouse, Violeta Perez, loaded up their Ford F-150 pickup exterior a Costco close to downtown Vancouver this week, some passersby couldn’t assist however cease and stare.

    What stood out wasn’t simply the sheer quantity of the couple’s buy. It was the truth that it was all the identical product: Stacks upon stacks of Lysol disinfecting wipes.

    “Is that each one for you?” one stranger requested.

    “Cleansing firm,” Perez answered.

    She was technically appropriate — they’d simply cleaned out the shop.

    The couple say they’ve made a bundle previously three weeks hitting up each Costco retailer within the area every day, shopping for up as many Lysol wipes and liquid cleaners as they will — spending 1000’s of at a time — after which reselling them, totally on Amazon, to non-public people and corporations.

    Amid the rising coronavirus outbreak, the hoarding and reselling of sure family provides to make a fast buck has turn into a world phenomenon, contributing to frenzied panic shopping for by customers who’ve been fed a gentle weight loss program of pictures of empty retailer cabinets on social media.

    Ranga, 38, stated one six-pack of wipes that goes for $20 at Costco can fetch 4 occasions that on-line. (A verify of Amazon on Thursday confirmed six-pack was going for $89 underneath their vendor identify “Violeta & Sons Buying and selling Ltd.”)

    After shelling out about $70,000 in bulk buys, Ranga stated they’ve made greater than $100,000 in gross sales.

    “It’s a giant alternative with all these merchandise,” he stated.

    Amazon was stated to be cracking down on “dangerous actors” who have been elevating costs on primary wants merchandise by blocking or eradicating provides. “There isn’t any place for worth gouging on Amazon,” the corporate stated, in line with media studies.

    The federal government in Japan, in the meantime, reportedly launched new guidelines making the reselling of face masks for revenue against the law punishable by a one-year jail time period or a hefty nice.

    Ken Whitehurst, government director of the Shoppers Council of Canada, stated Thursday that whereas it’s not clear what impression large-scale shopping for and promoting of merchandise is having on the general provide chain in Canada, he takes a dim view of people that would exploit feelings.

    “It makes you queasy within the abdomen when individuals exploit an emergency solely for the aim of constructing few additional ,” he stated.

    Retailers can all the time train casual provide administration by limiting how a lot of a product could be purchased at one time, he stated. Whereas there are legal guidelines geared toward addressing “unconscionable pricing,” authorities authorities will sometimes solely intervene in the event that they know that important security pursuits of the general public are being compromised.

    The truth that the Japanese authorities stepped in with new guidelines on reselling masks sends a sign that it is a state of affairs the place “residents are in it collectively,” he stated.

    “My statement is the Japanese authorities is making a press release that … people who find themselves doing this must cease and take into account the contribution they might be making to public hysteria.”

    After filling up the mattress of his pickup with stacks of wipes, Ranga drove again to the couple’s Vancouver dwelling to unload the merchandise. Perez, 37, stayed behind, holding watch over a second trolley-load, whereas munching on a Costco scorching canine.

    “Somebody’s making some huge cash,” stated a curious passerby.

    Perez defined their enterprise enterprise was sparked a couple of weeks in the past once they went to the shop to purchase provides, together with hand sanitizer. A girl stopped them exterior the shop and provided to pay them double what they’d paid, she stated.

    The couple, who describe themselves as dwelling builders, instantly noticed a possibility.

    Manny Ranga and his say they’ve made a bundle in the past three weeks buying cleaning supplies and Lysol wipes in bulk, then reselling them on Amazon.

    “The whole lot we do, we’re within the second,” she stated. “We’re hustlers.”

    It’s easy provide and demand, Perez stated. And proper now, there’s “excessive demand.”

    Daily, whereas a nanny cares for his or her three younger youngsters, the couple followers out throughout the area, hitting up Costcos in Vancouver, Richmond and Burnaby working with fast effectivity.

    Timing, she stated, is the whole lot. Present up later within the day and generally a variety of inventory is gone.

    By no means miss the newest information from the Star. Join our newsletters to get at this time’s high tales, your favorite columnists and plenty extra in your e mail inbox.

    Perez stated whereas some Costco workers have responded to their day by day visits with a “good for you” perspective, some retailer managers greet them extra icily and have informed them buyer complaints are mounting.

    The shop close to downtown Vancouver threatened to impose limits on how a lot might be bought at one time, Perez stated.

    “It’s not honest,” she stated. “We’re not the one ones who do it.”

    The Star reached out to Costco for remark however didn’t obtain a response.

    The enterprise has became an all-consuming affair. Perez stated her husband opened a Fed-Ex account and acquired tape weapons and different delivery provides.

    If consumers are native, he’ll make deliveries in particular person. In any other case, he’ll ship them by the submit workplace.

    Perez stated she truly needed her husband to attend a pair extra weeks earlier than promoting, however he was too “excited” to get began.

    Later, on the couple’s dwelling, as Ranga transferred one other truckload of wipes into his storage, he defined why he’s primarily specializing in wipes and cleansing liquids and never different in-demand merchandise, comparable to rest room paper.

    Rest room paper packages are “too large” and “tougher to ship.” As a result of the six-pack wipes already are available in protecting wrap, he can simply slap on a delivery kind and ship it off.

    His dwelling storage isn’t the one place the place he shops his merchandise; there’s additionally a automotive wash in south Vancouver the place he drops off provide, he stated.

    Archipelago Auto Spa proprietor Jerry Hu later confirmed to the Star that he helps Ranga promote a number of the cleansing merchandise.

    However it seems, he’s received his personal facet gig, too — promoting face masks.

    Hu pointed to 1 nook of his automotive wash the place there was a small stack of stock. He stated he’s received about 50 containers left after shopping for 1000’s from suppliers in the US after which promoting them on WeChat and different social media channels.

    Lots of his earlier consumers resold them to locations in China, he stated. Now his prospects are shopping for for home use.

    He stated his revenue margins have ranged from 20 to 30 per cent.

    Requested if he felt dangerous that he was probably depriving prospects of key provides throughout a well being disaster, Ranga famous that there are a lot of individuals shopping for provides and hoarding it for themselves. At the least he’s placing it again out for consumption.”

    Fucking scum bags. If they were shot & robbed I’d laugh.

    This behavior only increases the fear, anger & panic. It also makes the case for invoking anti gouging measures. Left unchecked it helps create/worsen the conditions that will bring on martial law. File under knock on effects.

    Early days of Covid are exposing the fragility of the fantasy system.


  15. How a Guy From a Montana Trailer Park Overturned 150 Years of Biology

    Biology textbooks tell us that lichens are alliances between two organisms—a fungus and an alga. They are wrong.

    “He has shown that largest and most species-rich group of lichens are not alliances between two organisms, as every scientist since Schwendener has claimed. Instead, they’re alliances between three. All this time, a second type of fungus has been hiding in plain view.

    “There’s been over 140 years of microscopy,” says Spribille. “The idea that there’s something so fundamental that people have been missing is stunning.”


  16. Forget toilet paper, it’s time to panic buy stocks because there’s no need for a functioning economy for stocks to go up, just plentiful denial and some money printing, maybe. 😦


  17. Mac10 nails it, but doesn’t understand the underlying energy cost driver:

    Contrary to what every economist is saying right now, there is nothing temporary about this economic downturn.

    The asset bubble WAS the economy.

    The scariest thing that happened this week wasn’t the fall in the stock market, it was the collapse in the Treasury market. Despite the largest Fed bazooka in history, the Treasury bond market ended the week with massive losses. Goldman Sachs via Zerohedge attempts to understand the total collapse in liquidity in stocks and bonds that took place this week. They appear to be at a loss as to how this could happen, however the answer is blatantly obvious: Central banks created the illusion of one-way markets. Which meant that entering this market sell-off everyone was on the same side of every trade. Now, as they are panicking to get out, there are no buyers – even for Treasury bonds. This liquidity collapse is extant in every asset class outside of cash/money markets.

    Earlier this week (Tuesday), I predicted this one-way collapse would happen and I said that any asset that needs a bid won’t find a buyer. The one exception I said was Treasuries. I was wrong. Even Treasuries went bidless despite outright central bank purchases. In other words we’ve reached a point at which it’s not enough to have central bank backing, now central banks have to be on the other side of EVERY trade in order to prevent asset prices from falling. When long-term t-bonds got bid up to the point where their yield was the same as cash, they got liquidated on a scale that dwarfed central bank buying.

    What is happening in t-bonds is a mild version of what is taking place in every other asset class now going bidless. Which is why volatility is rising across the board, because bid/ask spreads are blowing out to record wides.

    I have little doubt that the Fed will eventually take over the entire Treasury market. The same way the Japanese government now controls JGBs and holds them to the zero bound. However, gamblers in other asset classes won’t be so lucky. The Fed is not going to take over the Miami condo market. Nor are they going to bail out Tesla gamblers. We are entering the zone of extreme deflation.


    1. Thanks. I too am leaning towards a fairly steep decline. Everything we’ve done over the last 20 years in response to systemic overshoot problems has increased the steepness of our decline.

      The author, like most, confuses capitalism with our monetary system. There’s nothing inherently wrong with capitalism as long as it does not use a debt backed fractional reserve monetary system, and as long as there are taxation policies in place to prevent the wealth gap from growing to a socially destabilizing level.

      He also blames the elite without acknowledging that most non-elite want to become elite.

      He also fails to mention that nothing will improve without rapid population reduction.


  18. Our idiot leaders are panicking.

    Panicked Fed Slashes Rates to Near 0%, Throws $700 Billion QE on Top, after $1.5 Trillion Shock-and-Awe Repos Fizzled. Stock Futures Plunge 5%, Hit Limit Down

    These unprecedented measures show just how panicked the Fed has become about liquidity in the market, about the banks, about the Treasury market, about the repo market, and generally about the Everything Bubble that it had spent a decade inflating so assiduously.


  19. JC’s back and asks how come the news media can spend 10 minutes explaining why we should vote for Joe instead of Bernie, but can’t spend 2 minutes to explain the implications of printing $1,500,000,000,000 to prop up the stock market?

    Is it stupidity or denial? I suspect both.


  20. Nice big picture essay today by Paul Arbair.

    …it looks like we might finally being caught up by what we have been trying to ignore and dismiss for decades: the limits to economic growth that some system scientists have been warning us about for several decades. We have managed to push back these limits for a while through debt-fueled financialization, globalization, liberalization and ‘technologization’, and also in the last decade through monetary adventurism. All we have managed to do in the end is to convert the world economy into a ‘bubble machine’, in which GDP grows essentially as a result of debt-fueled asset bubbles being blown, and periodically goes up in smoke when those bubbles burst. These tricks have however largely played out, and they have stocked up problems that are now overwhelming our capacity to address them. The ‘Limits to Growth‘, in fact, have finally arrived. They don’t look exactly as expected, and they happen to be wearing a face mask, but they have arrived.


  21. Mac10 recaps the monkey zoo today.

    We must never underestimate how crazy things can become in this insane asylum.

    The Fed couldn’t wait until Wednesday to squander what was left of their dry powder yet again attempting to rescue trapped gamblers from the towering inferno of Trump Casino. When the futures opened on Sunday night just minutes after the Fed announced they were slashing interest rates and re-starting QE, they were limit down in :5 minutes. I have to believe it was the fastest -5% decline in history. Clear indication that the smart money no longer trusts the Keystone Kops in leadership. I am referring to computer algos, not the artificial intelligence of the human kind.

    At the Monday open, there was no open. The casino tripped the -7% circuit breaker before the start of trading. The net result was a 9:45 am open with the casino trading -9% from the start. Similar to every other bailout rally of the past two weeks, gamblers did everything possible to stage a rally off the lows during the middle of the day. And then it all fell apart at the end of the day. Nevertheless, once again the daily bailout had the effect of sponsoring still more BTFD complacency at a new lower level.

    Kudlow and Mnuchin keep insisting this is not a recession. They are right, this is now a depression. A total collapse in GDP. Goldman Sachs sees -5% in the second quarter (April – June). I suggest that is highly optimistic.

    As the deflationary forces grow ever-stronger, the Trump Administration falls further behind the curve. Their policy ideas now no more than sound-bite gimmicks. The sad fact is that the government is out of dumb ideas. Both fiscal and monetary stimulus are entirely depleted. There is no mechanism for fiscal policy to reach the middle class.

    The only next step is to nuke the credit markets with MMT for the masses, which I have said they would be loathe to take. And yet once again I underestimated how ideologically flexible today’s capitalists have become. Remember when Ocasio-Cortez suggested MMT for the masses and was roundly derided as a Communist? Well, that’s because she is a Democrat. Now that Republicans are in dire fear of losing the election, it’s their idea now:

    “Cash handouts to all American households are gaining support in Congress as the best way to shore up an economy brought to a near-standstill by the coronavirus.

    Republican Senator Mitt Romney gave his backing to the idea on Monday, proposing to immediately send $1,000 checks to every adult American, and Republican Senator Tom Cotton also said he is working on legislation that would provide cash stipends.

    Among economists, the idea of across-the-board cash handouts as a response to the epidemic has been rapidly gaining support”

    Once again, we see that for Banana Republicans ideology is no match for existential elections.

    Switching topics from printing money back to the collapsed economy, what this Coronavirus has achieved is the final and total Amazonification of the economy. Stoned gamblers sitting at home day trading stocks, receiving printed money by PayPal, and ordering everything online, while the real economy implodes.


    1. I think a couple of other countries (oz for sure) have already helicopter dropped money. I hope Trudeau sends my MMT cheque soon – while there are still supplies in the stores.


  22. Nate Hagens with his take on the virus. He expects a 10% drop in GDP this year, followed by a short term recovery, followed by a much bigger 30+% decline over the next decade due to limits to growth.

    “This is a depression, not a recession, but we will likely recover in the short term.”

    “The economic impacts will be much larger than the expected deaths of a few million people”.

    “It’s all about declining energy benefits. November 2018 is now cemented as the date of global peak oil”.

    No discussion of the only policy that will help in the long term, rapid population reduction.


  23. I’m torn on Chris Martenson. On the one hand he is an honest aware hard working source of good data about the virus. Martenson has put out a video almost every day since about 2 months ago when it was obviously a big problem in China on it’s way to us, and when almost no one else was talking about it. On the other hand, he’s using this crisis as an opportunity to grow his business. All of us have strengths and weaknesses so I can live with the two views given that I think he is honest with good ethics.

    In today’s video he takes his gloves off by calling out the US’s corrupt corporate democracy. It seems he is trying to motivate the average citizen to revolt against their system. Good on him. If I lived in the US I would go bat shit crazy if the proposed corporate bailouts for cruise ship companies and airlines, and other grossly undeserving companies, goes ahead.

    This one’s worth a watch as it also includes new insights into what’s behind the decisions our leaders are making, or in some cases, not making.


    1. I hear you. It’s almost like “Disaster Capitalism” lite or sumthin. He is American after all & “prospering” is a tenet of the faith down there. It’s practically considered a right of the exceptional people/nation. Way down south they don’t wish you a Happy New Year, they wish you a prosperous one. It’s kinda hard to blame them when they’ve been cramming all that shit in their heads going back to the first assholes off the first boat. I also don’t see much evidence for free will period. Funny that I can’t stop blaming & judging & mocking much of the time. There’s my cognitive dissonance right there. Thanks evolution —- bastard!


    2. Curious to know how you think Martenson is “using this crisis as an opportunity to grow his business”? Without a doubt his YT viewership is up enormously but I haven’t noticed any obvious attempt by him to cash in on that.

      Please elaborate.


      1. Many but not all of Martenson’s videos include a plug to become a paying member of his site for access to virus related information “too sensitive” to discuss in his public videos. He’s not the only doomer trying to cash in and I still think on balance he’s a good man.

        Out of curiosity I checked in recently to see if climate change was front and center in his forums and it’s still not. In the early days of Peak Prosperity I decided not to join because climate change was a taboo topic despite it being an even bigger long term threat than peak oil. Most American’s deny the reality of climate change and he chose to prioritize membership revenue over speaking the truth.


      2. It’s not a new thing for Chris. His site has a paywall. Apparently if you sign up you’ll be given access to special secret information. I think Chris also mails a limited edition Jr Doomer decoder ring to all his paid subscribers. Chris is clever. Chris knows people desire exclusivity & will pay for it. I don’t know what information is behind the paywall, but I’ll wager I could find all or most of it for free. That being said, I give kudos to Chris on the flip side. His free stuff, which is plenty & most of it is very informative. If the average pleb never read anything Chris wrote & only watched his Crash Course on youtub, they would know more about what really makes the world go around & have a fairly good idea of what’s coming. Of course it all depends on if the information can make it through their cognitive bias brain filters.


    1. Yes I also noticed Cohen has gone insane when he said we had recovered from the 2008 crisis. Our idiot leaders fixed the 2008 too much debt crisis (which was rooted in overshoot) by adding more debt thus worsening our overshoot. Now we pay the price for not living within our means.


      1. What happens if this next round of bailout does not work? Anarchy, mass death, war. Unlike 2008, reforms are too late to matter much. Not that I believed at the time Obama & Co would try, but there was still some room to slow down without radical changes. Do the masters of the universe have any other choice at this time?


        1. I don’t know if bailouts this time will work. I do know that if they do work we will have civil society destroying inflation a few years later. Inflation caused citizens of a wealthy technologically advanced democratic country to support Hitler and his war and his genocide.


  24. When the tide goes out, we get to see who’s naked.

    Profits from having more revenue than expenses will once again matter.

    Good riddance Tesla and all the other companies that never had to return a profit since the idiots in charge dropped the cost of money to zero.


  25. Aussie billionaire investor warns of a near total shutdown of the world economy over the next two to six months, calling on governments to increase stimulus packages while taking emergency measures to avoid a depression.

    First collapse and deflation, then hyperinflation, and then history might repeat itself? Rob, any comment?


    1. That Aussie billionaire’s not too bright. We are in a depression. We don’t need stimulus with printed money that will only make the next crisis even worse. We need wise husbandry and deployment of real resources. How about, for a start, shutting down 50% of the military and using the saved funds for local food production? The laid off military people can cultivate the fields for minimum wage which they should be grateful for receiving.

      There’s no longer a need for a large military because we’ve already burned all the good booty and a war will only burn up what remains even faster.


  26. As for the virus, I have no confidence. I’m undecided. Different numbers. Different infectious disease experts saying different things. I get the biology & precautionary principle, but I’m in limbo on how bad it will be. If the body count is not at least 2-3 times as high as the seasonal flu it will result in even less confidence & more skepticism by the herd. My old jr high buddy is convinced it’s a plot perpetrated by the infamous “They”.


    1. I’m erring on the side of caution until we better understand the data. I see preliminary numbers I do not like. Could be good for my young son with a good job who cannot afford to buy a home because of the giant bubble the morons in charge inflated.


      1. Hell Rob, I never knew you had a son. Maybe you mentioned it before & I missed it. I’ve found knowing at least some basic personal details of my online friends helps me to better understand where they’re coming from. Hey, if there’s a significant die-back a better paying position might open where your son works. Like a mini black death scenario.

        Births minus deaths is at least 250,000 a day. Any infectious disease will have to take out that many per day just to break even & 365 days of that is a little over 91 million. Doing the math is why I don’t buy any Covid for depopulation. It’s not good at killing, but it seems good enough to rock the global economy although it was a house of cards long before the Covid kid rode into town. A strong fart could have knocked it over.


  27. After we’ve developed herd immunity and/or a vaccine (best case 12-24 months from now), and if the economy attempts to resume operating at a level similar to that a month ago, we are likely to experience energy shortages, which means we will probably never fully bounce back. Hope for the best but plan for a much leaner world in the future.

    Here’s a nice explanation of why we should expect 12-24 months of disruption to the economy.

    There are essentially three ways out of this mess.
    – vaccination
    – enough people develop immunity through infection
    – or permanently change our behaviour/society

    Chris Martenson in his YouTube video today explained that we need 75-80% of the population to have been infected to achieve herd immunity. Italy, the worst suffering country in the world, has only 0.8% of it’s population infected so far which means it has 1000 times as far to go to achieve herd immunity.

    Steve St. Angelo here explains that the coming contraction of US oil production will be swift.

    U.S. shale oil production at the end of 2018, not including 2019’s production, fell from 7.3 mbd to 3.9 mbd in just ELEVEN MONTHS!! LOL. That is the natural decline rate of U.S. shale oil. Thus, if the industry added NO NEW WELLS in 2019, the shale oil industry would have lost 3.4 mbd.

    Tim Watkins elaborates further in an essay today…

    The reason we have a “pandemic crisis” has less to do with the emergence of a novel coronavirus that with the fragility of the complex interconnected global economy that we have built in an attempt to counteract the impact of the remorselessly growing energy cost of energy. Fragility – for example, in the form of dangerously exposed just-in-time supply chains – is the inevitable cost of complexity. In the absence of an abundant energy-dense alternative to our now depleting reserves of fossil fuels in general and oil (which fuels 90% of global transport) in particular, future resilience can only be bought at the cost of simplification and localisation.

    This sounds technical, but it has ramifications for all of us now that our governments and central banks have decided to harvest all of the fruits of the magic money tree in one last ditch attempt to keep the system going. The point of interaction between the financial economy and the real economy is the interest that is charged on the new currency which is borrowed into existence. Currency itself is merely a social convention which allows us the illusion of carrying wealth forward into the future; it has no intrinsic value. A worker provides labour and services to an employer in exchange for currency that is assumed to be of equivalent value. At some time in the future the worker will attempt to use that currency to purchase goods and services of equivalent value to the work provided to the employer. New currency must ultimately generate new value (in the form of energy-dependent goods and services) in order to maintain its nominal value and to repay the interest on the debt. If, however, new goods and services are not – or more importantly cannot – be created, the result is widespread debt defaults and/or inflation.

    The financial response to the pandemic assumes that the post-virus economy can grow at rates not seen since the early 1960s. But there is no real world energy source that would allow us to grow at even a fraction of that rate. As Tim Morgan explains:

    “[L]ess-than-expected access to oil would have some very specific consequences. With population numbers still growing, we’ll need to keep on increasing the supply of petroleum products to essential activities, such as the production, processing and distribution of food. You’ll know that my expectations for ‘de-growth’ anticipate a lot of simplification and ‘de-layering’ of industrial processes, and there’s no reason why this shouldn’t apply to food supply. But it remains hard to see how we can supply more food from less oil.

    “In short, there are reasons to suppose that oil supply constraint is going to have a disproportionate and leveraged impact on the discretionary (non-essential) applications in which petroleum is used. At the same time, faltering energy supply – and a worsening trend in surplus energy, reflecting the rise in ECoEs – is likely to leave us a lot less prosperous than conventional, ‘economics is money’ projections seem to assume.”

    One conclusion we might draw from this is that as we are obliged to direct an increasing amount of energy both at replacing energy supplies and maintaining our critical infrastructure, then a large part of what we were doing before the pandemic struck is going to be impossible in the years afterward. Ironically, the process of self-isolation – whether voluntary or imposed by law – allows us to differentiate between those things – utilities, food supplies, telecommunications, healthcare, etc. – that we must maintain for as long as possible and luxuries like commercial air travel that turn out to be anything but essential in an age of teleconferencing. The political consensus which is emerging against the bailout of airlines (the political right because of the widespread engagement in stock buy-backs; the left because of desire to impose conditions; greens because of the impact on the climate; and libertarians because of free market purity) may well begin to extend to whole sectors of the global economy as we are increasingly obliged to simplify to a far less material post-viral economy.


  28. Mac10 with some very nice prose on capitalism. I’d change the last word from delusions to denial.

    As for the Federal Reserve, they are about to learn a very important lesson in asset pricing and markets in general – one the BOJ and PBOC have already found out the hard way. The reason the Fed can’t rescue U.S. stocks, corporate bonds, muni bonds, WTI crude, Emerging market currencies, Bitcoins, small businesses, Miamis condos, Vancouver crack shacks, Boeing, airlines, cruise ships, all restaurants, hotels, strip malls, stop me any time – is the same reason they can’t even control the Treasury market. Because they are not on the other side of EVERY trade.

    You see, what the other central banks have learned the hard way is that just because an idiot pays a million dollars for a brick, doesn’t make ALL bricks worth a million dollars.

    ALL global assets are right now being re-rated lower with respect to what they are worth vis-a-vis collapsing liquidity and collapsed demand.

    Which is why, despite the largest Fed stimulus package in history TODAY, the Trump Casino finished the week at the very lows of the week. One more sugar rally down the drain.

    Today’s fake-believe capitalists are about to find out the meaning of true capitalism, the real kind wherein losses fall where they may, sans bailout.

    REAL capitalism. The kind where you suffer from your own delusions.


  29. I want to see a much leaner world now. I want to the herd humbled & scared. Mass printing money to try & maintain the ponzi consumer orgy is probably the worst case scenario for the youth because it will only make the next consequence worse. It’s a big clusterfuck. What I want to see don’t matter. I’ll just wait and see. The only I feel certain about is their massive propaganda machine, MSM, think tanks, etc, will continue to blame it all on the virus. The Covid kid was framed!


    1. The dialogue in our society is incredibly shallow. Everyone clamoring for bailouts. Not one asking where is the money going to come from?

      There is no money. We have no savings. We have no surplus. Even before the crisis we were borrowing at insane unsustainable levels, now we need more, a lot more. The next crisis, as a consequence will be worse, much worse.

      Lots of elephants in the room, and not a single adult.


  30. Wolf Richter on the deflating bubble…

    This move put the S&P 500 back where it had first been on February 9, 2017. Over three years of gains gone up in smoke in less than a month.

    The rug is getting pulled out from under stocks by numerous factors. On top of the list is the simple fact that the historic stock market bubble and the most exuberant stock market euphoria in my lifetime, when stocks are the most precarious, collided with the coronavirus.

    After this started to wreak havoc and stocks began to crash, two other huge factors came into play: One, share buybacks have mostly come to a halt as companies are now struggling for liquidity in an effort to survive this. And two, for the same reasons, dividends are getting cut brutally, all around.

    The bond market too is showing the biggest stress since the days of the Lehman bankruptcy, as yield spreads are blowing out in the $3.3-trillion category of BBB-rated bonds, which are just above junk bonds, and in the $1.3-trillion junk bond universe.


  31. Doug Nolan on the improbability and deadly risks of trying to reflate the bubble.

    Nolan’s almost an adult. He gets most of the story expect the all important connection to energy cost.

    I’ve been dreading this. In the midst of all the policy responses to the collapse of the mortgage finance Bubble, I recall writing something to the effect: “I understand we can’t allow the system to collapse, but please don’t inflate another Bubble.” It was obvious early on that policymakers had every intention to reflate Bubbles.

    There was a failure to grasp the most critical lessons from that terrible boom and bust episode: Aggressive monetary stimulus foments market distortions, while promoting risk-taking, leveraged speculation and latent risk intermediation dysfunction. Years of deranged finance ensured unprecedented economic imbalances and deep structural impairment. There was no predicting a global pandemic. Yet today’s acute financial and economic fragility – and the risk of financial collapse – are directly traceable to years of negligent monetary management.

    I have to adjust my message for this post-Bubble backdrop: I understand we can’t allow the system to collapse, but Please Don’t Completely Destroy the Soundness of Central Bank Credit and Government Debt. Does anyone realize what’s at stake?

    I don’t see another Bubble on the horizon. Each reflationary Bubble must be greater in scope than the last. Mortgage finance was used for post-“tech” Bubble reflation. Policymakers unleashed the “global government finance Bubble” during post-mortgage finance Bubble reflation. Massive international inflation of central bank Credit and sovereign debt went to the heart of global finance – the very foundation of “money” and Credit.

    There is no greater Bubble waiting in the wings to reflate the collapsing one. We are instead left with desperate measures to expand central bank “money” and government borrowings that will surely appear absolutely reckless in hindsight.

    Confidence has been shattered. Faith that central banks have everything well under control has been broken. Myriad fallacies have been exposed. Central banks can’t guarantee liquid markets, especially in a Bubble-induced highly levered speculative environment. The entire derivatives universe has been operating on the specious assumption of liquid and continuous markets. History is unambiguous: markets experience bouts of illiquidity, dislocation and panicked crashes. The fantasy that contemporary central bank monetary management abrogates illiquidity and market discontinuity risks is being debunked. The mania in finance has, finally, run its course.

    Leverage has to come down – and I believe it will stay down for years to come. A month ago risk could be disregarded – had to be disregarded. Market, financial, economic, social and geopolitical risks matter tremendously now, and they will matter going forward. In the best-case scenario, the coronavirus peaks over the coming weeks. I don’t want to ponder the worst-case.


  32. Something looks off. Shortly before I hit the sack at midnight, I read an update on Italy – over 4k dead. Same numbers this morning. It could be they are overwhelmed. They look overwhelmed to me.


  33. George Mobus on economic collapse.

    Unfortunately the way our global means of production and distribution are so strongly interdependent, and thus brittle, if you break anything you break everything. Once this virus begins to subside you cannot just restart everything. We will be lucky if this ends in a ‘simple’ depression. But I really don’t think that is going to be the playbook. The Great Depression was ended not so much by the onset of WWII but by the fact that we had access to cheap oil and coal to power the reconstruction of industry. WWII just provided the impetus to reconstruct industry rapidly and at the scale that took place. We do not have the luxury of having access to cheap energy now.

    h/t Apneaman


  34. The EU was created with strong budget rules to prevent a repeat of the Weimar hyperinflation that caused the election of Hitler.

    They just revoked the rules.

    The European Union executive moved to formalize a deal reached by EU finance ministers on March 5 to suspend EU budget rules that limit borrowing, giving hardest-hit Italy and other governments a free hand to fight the coronavirus.


    1. Bag of tricks almost empty. They are not out of choices, just out of choices to preserve the hierarchy & their position in it.


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