I said earlier that the 2nd & 3rd order effects of this bug could end up being more serious than the bug itself. The disruption in the ‘Supply Chain’-Logistics– the business of moving things to where they need to be, can and is causing things like this to happen.


Wisconsin farmers forced to dump milk as coronavirus slams a fragile dairy economy.

About 7 o’clock Tuesday night, Golden E Dairy got the call that any dairy farmer would dread. They were being asked to dump 25,000 gallons of fresh milk a day because there was no place for it to go as the marketplace for dairy products has been gutted by the closure of restaurants, schools, hotels and food-service businesses.

An hour later, the family-run farm near West Bend opened the spigot and started flushing its milk into a wastewater lagoon — 220,000 pounds a day through next Monday.

It was surreal, said Ryan Elbe, whose parents, Chris and Tracey Elbe, started the farm in 1991 with about 80 cows and grew it into an operation that today milks 2,400.

“We thought this would never happen,” Elbe said. “Everybody’s rushing to the grocery store to get food, and we have food that’s literally being dumped down the drain.”

But the Wisconsin dairy industry has been dealt a harsh blow from the economy that’s been slammed by coronavirus shutdowns. About one-third of the state’s dairy products, mostly cheese, are sold in the food-service trade.

Dairy farmers, whose product is highly perishable, are seeing processing plants close or curb production, forcing them to flush their milk down the drain if there’s no other buyer.

“I think that a lot of milk will all of a sudden be dumped. Everyone across the industry is feeling distressed now,” said Julie Sweney, spokeswoman for FarmFirst Dairy Cooperative in Madison.

“Over the last several hours I have heard this is unfolding. There is definitely a strain on markets now. The whole consumption rate for milk is so much different than it was before COVID-19,” Sweney said.

“We need to figure this out now, not in the next couple of weeks,” Elbe said.

“I know many industries are experiencing hardship now. This is just the story of ours,” he added.

Normally, his family’s milk goes to a Kemp’s processing plant owned by Dairy Farmers of America. But that plant is full to the brim, as are many others across Wisconsin.

Some of the larger DFA members were asked to dump their milk this week because, as Concentrated Animal Feeding Operations, or CAFOs, it could be monitored in their regulated wastewater lagoons.

“You can’t just dump milk in a field,” Elbe said.

There’s simply too much of it now, according to DFA based in Kansas City.

“This, in combination with the perishable nature of our product, has resulted in a need to dispose of raw milk on farms in some circumstances,” Kristen Coady, a DFA vice president, said in a statement provided to the Journal Sentinel.

They may be coming to realize that Trump was right all along.


The Coronavirus Is Becoming A Public Relations Disaster For China.

It was only a matter of time before the coronavirus pandemic started to show a rupture in Western relations with China. Today, the market got some of the first hints of a rising probability of “decoupling”.

Evidence came today in the form of two BBC reports, one of the U.K. government of Boris Johnson (who has COVID-19 now) saying there would be ramifications for China failing to share how they stopped the virus from spreading. One such punishment was getting rid of Huawei in their 5G program.

Over the weekend, the Daily Mail reported that the Johnson team doubted China’s SARS-CoV-2 infection count, which totals around 81,000, saying they were probably off by a factor of 40.

The wide spreading disease throughout Europe is turning people off to China in leadership positions who, only a few months ago, were fine with Beijing and thought the U.S. trade war with China was just Trump being Trump………

Goodbye, Green New Deal

After a couple of weeks of great economic sacrifice, it’s already proving hard for Americans to take. No one will sign up for a lifetime of it.

What will happen next with the coronavirus epidemic is unknown, but it seems certain to claim one very high-profile victim: the so-called Green New Deal.

Good riddance.

The current crisis in the U.S. economy is, in miniature but concentrated form, precisely what the Left has in mind in response to climate change: shutting down large sectors of the domestic and global economies through official writ, social pressure, and indirect means, in response to a crisis with potentially devastating and wide-ranging consequences for human life and human flourishing.

What is under way right now in response to the epidemic is in substance much like the Green New Deal and lesser versions of the same climate-change agenda: massive new government spending, political control of critical industries, emergency protocols modeled on wartime practice, etc.

But the characters of the two crises are basically different.

Set aside, for the moment, any reservations you might have about the coronavirus-emergency regime, and set aside your views on climate change, too, whatever they may be. Instead, ask yourself this: If Americans are this resistant to paying a large economic price to enable measures meant to prevent a public-health catastrophe in the here and now — one that threatens the lives of people they know and love — then how much less likely are they to bear not weeks or months but decades of disruption and economic dislocation and a permanently diminished standard of living in order to prevent possibly severe consequences to people in Bangladesh or Indonesia 80 or 100 years from now?

For years, we’ve been hearing, “This is climate change” and “That is climate change,” every time there’s a flood or a storm. If that’s the fact, then climate change is, relatively speaking, manageable. There is no way Americans—or people around the world—are going to agree to endure anything like the current economic downturn in order to prevent problems of that nature.

“Oh, but we’ll find them jobs in the new green economy!” comes the response. “It’ll be a net positive!” As though petroleum engineers were lumps of labor that could be reshaped at will by a committee of lawyers in Washington, if only we gave them the power. Nobody is buying that. Not many people are that stupid.

Those spring-break clowns down in Florida and the “coronavirus party” doofuses in Kentucky are We the People, too, and if they are not willing to spend a couple of weeks watching Netflix to save grandma’s life — or their own lives — then do you really think they’re going to take an economic bullet over the prospect of losing 3 percent of world economic output a century from now to global-warming-mitigation costs?

What we are seeing right now is what it looks like when Washington tries to steer the economy. There are times when that is necessary, and this is one of those times. But emergencies do not last forever, and emergency measures should be, by nature, temporary. The attraction of the climate-change crusade is that it creates a permanent state of emergency. The Left wants very much to convince Americans that climate change presents an emergency of the same kind requiring the same “moral equivalent of war” worldwide mobilization.

A couple of months of this is going to be very hard to take. Nobody is signing up for a lifetime of it.

MAKE AMERICA AUTARKIC AGAIN

Domestic supply chains, not global ones, will save us.

The past year has seen America’s industrial and consumer supply chains threatened by two critical events: the rise of Huawei as a Chinese state-backed telecoms giant, and the outbreak of the coronavirus (also originating in China). These two threats have laid bare the unsettling fact that the American economy has become so heavily globalized that we are unable to ensure consistent and safe supply of everything from pharmaceuticals to consumer electronics.

For decades Americans have enjoyed access to cheap goods, due in large part to the fact that we’ve outsourced our industrial and supply capacity to cheap, overseas markets like China and Vietnam. The free traders, roosting in their D.C. think tanks and on Wall Street, worry that the U.S.-China trade war is uprooting our supply chains and that Huawei (shown to have deep connections to the Chinese intelligence apparatus) is only a theoretical threat. They tell us that we must come to terms with China’s rise, that there is no other way. But what if there was?
My critics will more than likely dismiss this idea either insane or reckless. But throughout the late 19th and 20th century, it was a policy that led to prosperity and self-sufficiency. I’m talking about autarky. In our over-globalized world, a policy of total autarky is infeasible. But a degree of autarky should be recognized as self-evidently in America’s national interest.

 Autarky, for those unfamiliar, was an economic and industrial policy of self-reliance wherein a nation need not rely on international trade for its economic survival. This is not to say that said nation rejected international trade or isolated itself from the global economic order, rather that it merely could survive on its own if necessary.
 Though it has a long history, the concept of autarky saw a flourishing in the 18th, 19th, and 20th centuries. In the early days of the American republic, Alexander Hamilton advocated for a limited measure of autarky. Hamiltonian autarky—or industrial self-reliance—aimed to protect weak American industries from foreign manipulation by the likes Great Britain and France. Today, we must look to protect what remains of American industry from the manipulations of state-backed industrial sectors in China.

Other proponents of industrial self-reliance ranged from European left-syndicalists to the interwar fascist governments in Italy, Spain, and Portugal. In this regard, French philosopher Georges Sorel proved profoundly influential.
While some might try to paint industrial self-reliance as an idea rooted in contemporary leftist (though not liberal) thought, there remains a great tradition of autarky in Hamiltonian conservatism and the Prussian economics of the German-American Friedrich List, among others.

When Hamilton said, “Industry is increased, commodities are multiplied, agriculture and manufacturers flourish: and herein consists the true wealth and prosperity of a state” he certainly wasn’t advocating for the United States to become economically reliant on foreign powers. Rather, he was envisioning a strong and independent nation that could stand on its own in the world.
The Threat is Real

For the most part, one would assume that the United States could easily adopt some degree of autarky, and maybe so. However, recent events suggest otherwise.
The FDA has expressed serious concerns that the outbreak of the coronavirus threatens U.S. pharmaceutical supply chains—as a great deal of our drugs are manufactured not in America but in China. The U.S.-China Economic and Security Review Commission’s 2019 report, submitted to congress, warned that China had become the world’s largest pharmaceutical ingredient producer and, with state backing, was looking to accelerate the growth of its pharmaceutical industry as a part of its current 13-Year Plan. Most disturbingly, the report notes:

As a result of U.S. dependence on Chinese supply and the lack of effective health and safety regulation of Chinese producers, the American public, including its armed forces, are at risk of exposure to contaminated and dangerous medicines. Should Beijing opt to use U.S. dependence on China as an economic weapon and cut supplies of critical drugs, it would have a serious effect on the health of U.S. consumers.

The FDA, in a similar report to Congress, has laid out a plan for the U.S. to achieve some level of independence from China when it comes to pharmaceutical manufacturing and production:

…FDA believes that advanced manufacturing technologies could enable U.S.-based pharmaceutical manufacturing to regain its competitiveness with China and other foreign countries, and potentially ensure a stable supply of drugs critical to the health of U.S. patients. Advanced manufacturing is a collective term for new medical product manufacturing technologies that can improve drug quality, address shortages of medicines, and speed time-to-market.

We’ve seen, albeit most likely temporary, adoptions of autarky in response to the coronavirus already. New York state has begun the manufacture of its own hand sanitizer, as it is cheaper than purchasing it via the global economy.

The New York Post editorial board rightly ran an editorial calling for the restoration of pharmaceutical manufacturing in Puerto Rico—once the backbone of the American drug industry. The editorial, I suspect much to the chagrin of free traders, puts it bluntly:

About 90 percent of the active ingredients (manufactured “precursors”) used by US drugmakers now come from China. With that country’s factories largely shut down by the outbreak, America’s pharmaceutical supplies are at risk even as the virus hits here. The Food and Drug Administration fears a shortage of widely used generic drugs.

Moving to ensure some domestic capacity for future crises is a no-brainer. And boosting Puerto Rico, now struggling with a debt crisis plus hurricane and earthquake damage, should be one, too.

Besides the threat of global supply chain shutdowns because of disease outbreaks like coronavirus, there is the grave concern that the equipment and products we are purchasing from overseas could be used against us in both peacetime and times of war.

As China’s telecom giant, Huawei is without a doubt an instrument of the Chinese political and military state. Huawei employees have been linked to Chinese military and intelligence agencies. Huawei’s Silicon Valley office has been credibly accused of stealing trade secrets from the American technology company Cisco Systems.
Even more concerning is that U.S. allies like Great Britain appear to be set on moving forward with the use of Huawei technology, threatening our mutual intelligence and security agreements. And this dangerous behavior isn’t just limited to Huawei. Chinese companies have routinely engaged in intellectual property theft and other illegal tactics—both to gain a competitive edge and to undermine U.S. interests.

Taking Back the Reins
But pursuing autarky among the pharmaceutical industry and technology sectors is just a small—albeit critical—part of what should be a greater pursuit of American economic self-reliance. Coupled with the adoption of sound industrial policy, like that advocated by Oren Cass and Senator Marco Rubio, autarky could help foster a burgeoning policy of social corporatism in America—returning us to an era of self-reliance and industrial strength.

In his most recent piece, Cass notes that sound industrial policy has allowed nations like Germany and Japan to retain strong manufacturing sectors. Cass also emphasizes the pivotal importance of manufacturing, not just for the economy, but for American communities:

When communities lose manufacturing—which is not the only form of tradeable production, but certainly the primary one—they begin to “export need.” You see this across America, in the dilapidated shopping centers that still have sparkling occupational therapy offices. They are literally the exporters for those towns, exporting to the nation’s taxpayers the care of local residents on disability. That’s how the community attracts resources. This might look fine in the aggregate consumption data, but we should not consider such outcomes equal, or acceptable.

Finally, manufacturing is unique for the complexity of its supply chains and the interaction between innovation and production. One of the most infuriating face-palms of modern economics is the two-step that goes like this: First, wave away concern as other countries with aggressive industrial policies…attract our critical supply chains overseas, explaining that it doesn’t matter where things get made. Second, wait for people to ask “why can’t we make this or that here,” and explain that of course we can’t because all of the supply chains and expertise are entrenched elsewhere. It’s enough to make one slam one’s head into the podium.

It should be also noted that to varying degrees these countries have at times—though perhaps not permanently—implemented autarky.

Critics, namely neoliberal internationalists and free-trade libertarians, will assuredly wail and gnash their teeth about the bounty of cheap consumer goods we have “won” from free trade, but to that I would caution: The United States risks becoming its own special category of the “sick man”—an obese has-been that sinks into a recliner and stuffs its face with cheap consumer goods provided by its global rivals, looking back woefully on its glory days. But it is not yet too late.
We can still set forth on a bold new path. Yes, it will require a retooling of how we view the world and ourselves, and the adoption of old ideas for a new future. But there is hope. Through sound industrial policy, through government research and development aimed at once again sparking innovation, and through degrees of autarky, we can wrest our global supply chains from the grips of our global competitors and reignite America’s industrial capacity for the 21st Century.

The market doesn’t seem to be overly concerned about this (DJIA + 1,351.62 today), probably because it was expected.


A record 3.28 million Americans applied for unemployment benefits last week due to coronavirus

The numbers: The number of Americans who applied for unemployment benefits last week rocketed to a record 3.28 million as large parts of the U.S. economy shut down and companies laid off scores of workers to cope with the coronavirus pandemic.

The seasonally adjusted increase in initial jobless claims from March 15 to March 21 was the largest ever, easily crushing the previous record rise of 695,000 in October 1982. The tally in the prior week was 282,000.

The sudden surge in claims is likely just the beginning. Waves of fresh layoffs are expected with many states ordering nonessential businesses to close.

Wall Street was bracing for a terrible number. Economists polled by MarketWatch had forecast a 2.5 million increase. Just a few weeks ago, new clams hovered near a 50-year low.

The actual or unadjusted number of new claims, meanwhile, was 2.9 million, according to new figures released Thursday by the Labor Department.

The freedom included being able to go to the LGS and buy what guns, ammo & whatever else you decide you need to help ensure your safety.


Why Economic Freedom Is Critical to Beating the Coronavirus

The debate in the United States over whether to move away from free markets and toward socialism may change dramatically as the latest coronavirus spreads throughout the world. That’s because in the fight against the global pandemic, we’ll likely witness one of the most compelling arguments in our lifetimes emerge in favor of free-market systems – and lives will be saved in the process.

The pandemic will demonstrate that nations with the freest markets and freest people tend to have the health care systems with the greatest capacity to handle such a crisis. Free-market incentives have produced health care systems that have better capacities in terms of beds, equipment and medical personnel to handle increased caseloads. Those incentives have also spurred innovations that have led to some of the greatest medical advances in history.

Moreover, nations with both private-sector companies that are financially incentivized to work quickly for a cure, and governments willing to remove regulatory obstacles to innovation, are more likely to develop the treatments to abate the disease or possibly even find a cure.

Countries with freer markets also tend to be more resilient in times of crisis and more capable of handling external shocks. Thanks to their free-market incentives as well as the flexibility to respond to changing conditions that comes with less government central planning, they have the widest availability of food, medicine, and other crucial necessities.

This is not conjecture. The Heritage Foundation’s annual “Index of Economic Freedom,” the latest edition of which was released just days ago, provides the indisputable data showing that citizens who live in nations with greater economic freedom have better health outcomes overall.

Economic freedom is represented by a variety of factors such as smaller, less intrusive government; lower taxes; reduced regulations on people and businesses; an environment that makes it easier for average citizens to start or operate a business; and the protection of private property rights, including protections like patents for new innovations.

The index has measured economic freedom in approximately 180 countries around the world for the last 26 years and shows that greater economic freedom has decreased poverty, created more prosperous economies, and increased positive health outcomes and life expectancies across the globe. Greater economic freedom has led to better health care systems, better education systems, a greater abundance of food, cleaner environments, and a higher quality of life for citizens.

Recently, Heritage Foundation researchers put the Index of Economic Freedom side-by-side with the Johns Hopkins’ Global Health Security Index, which measures countries’ capabilities to prevent, detect, and respond to infectious disease threats. Not surprisingly, they found a high correlation between economic freedom and health security.

Countries that Heritage ranked as “free” or “mostly free” in the economic freedom index also tended to score the highest on the health security index, while countries ranked as “mostly unfree” or “repressed” tended to score the lowest, indicating a poor ability to respond to infectious diseases.

In the coming months, we will be watching how countries across the economic freedom spectrum respond to the coronavirus pandemic. I have little doubt that we’ll see it’s the world’s freest nations that will do the best job of finding treatments and possibly a cure. Ultimately, their medical advances will be shared with all nations and used to save lives around the world.

That isn’t gloating; that is a sincere hope that such a critical demonstration of the power of economic freedom will encourage every nation to adopt more free-market approaches so that their citizens don’t just overcome this pandemic, but go on to live longer, healthier, and more prosperous lives.

It’s also my hope that some in our own government learn these lessons as well and don’t use this crisis as an opportunity to erode our personal and economic freedoms and push for spending free-for-alls. Any legislation to address the crisis must be targeted to the people who actually need it, temporary for only as long as the crisis lasts, and transparent – directed at fighting the coronavirus and aiding public health, not aiding special interests.

That is how we will emerge from this pandemic stronger than we were before.

Again;  Any questions why I call them demoncraps?
It reminds me of Maureen O’Hara’s line in ‘Big Jake‘ after Wayne opens the strongbox:
I don’t think we’ve got any other choice than to give them what they’ve asked for


Pelosi’s extortion is a spark that may start a national fire

Nancy Pelosi, with a major assist from Elizabeth Warren and the capitulation of Chuck Schumer, scuttled Senate negotiations Sunday over a rescue bill to help people left unemployed and businesses at risk of collapse from a government-ordered economic shutdown in response to the Wuhan coronavirus pandemic.

Pelosi’s move, at so many levels, is so outrageous, it could become a spark that sets a national fire.

It wasn’t just the disruption of negotiations which were close to conclusion. The bill Pelosi put forward is a liberal laundry and wish list of things they know they could not get enacted unless the nation were in a vulnerable position. It’s the extortionist’s price for the release of your loved ones.

I don’t think Pelosi and many other Democrats are aware of the fury they are about to unleash in the nation.

I think Chuck Schumer, for all my criticisms of him, understands this, which is why there still is a chance of a Senate deal being reached despite and without rewarding Pelosi’s extortion.

It’s getting hard not to hate.

Globalization is the first casualty

“The suddenness with which this has happened is also stunning. The globalists who excoriated Trump as a racist xenophobe might have to face the fact that events have been proving him right: we do need to make America great again. It’s not academic, it’s not just a campaign slogan. It’s a reality staring us in the face.”

The Wuhan Virus and the Imperative of Hard Decoupling

It won’t be easy or painless, but the role China has played in exacerbating the fallout from the coronavirus crisis ought to force Americans to fundamentally reconsider the relationship.

Did the Federal Reserve Just Purposely Try to Crash the Stock Market?

Unless the Federal Reserve is purposely attempting to spread panic on Wall Street, the decisions that the Fed just made don’t make any sense at all. Back on March 3rd, the Federal Reserve announced an unscheduled emergency interest rate cut for the very first time since 2008. Wall Street immediately interpreted that as a “panic move” and the Dow Jones Industrial Average ended the session down 785 points. So Fed officials had to know what was going to happen once they announced an even bigger unscheduled emergency interest rate cut on Sunday. Predictably, stock futures hit “limit down” very rapidly, and now investors are bracing for a week of tremendous carnage.

But this didn’t have to happen. Yes, we witnessed three of the worst trading days in U.S. stock market history last week, but on Friday the Dow Jones Industrial Average was up 1,985 points. It was an absolutely epic rally, and if the Fed had not caused so much panic there may have been a good chance that the rally could have continued into next week.

In other words, U.S. stocks just had one of their best days ever, and there didn’t appear to be a need for any “emergency intervention” by the Fed.

If the Federal Reserve had just waited a couple of days until their normally monthly meeting, and if the Fed had just cut rates a quarter point, that would have likely been greeted by the markets with warm enthusiasm.

But instead, Fed officials decided to load up their bazooka and go for broke on Sunday. In addition to using up all of their “interest rate ammunition” in one epic volley, the Fed also officially restarted quantitative easing…

The Federal Reserve, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” cut interest rates to essentially zero on Sunday and launched a massive $700 billion quantitative easing program to shelter the economy from the effects of the virus.

The new fed funds rate, used as a benchmark both for short-term lending for financial institutions and as a peg to many consume rates, will now be targeted at 0%-0.25% down from a target range of 1% to 1.25%.

These moves have “panic” written all over them, and investors immediately responded accordingly…

Dow Futures Jump 800 Points After Wall Street Suffers Worst Day Since 1987 Market Crash

Remember, I did ask if you could say ‘Roller Coaster’

Stock futures were higher Tuesday morning after Wall Street suffered massive losses on Monday amid concerns over the economic impact from the coronavirus outbreak.

At around 4:30 a.m. ET, Dow Jones Industrial Average futures rose 800 points, indicating an implied open of more than 1,000 points. S&P 500 and Nasdaq 100 futures were also higher.

Those moves came after President Donald Trump tweeted: “The United States will be powerfully supporting those industries, like Airlines and others, that are particularly affected by the Chinese Virus. We will be stronger than ever before!”

Trump calls on Americans to cease hoarding food, supplies

From numerous reports, that plea isn’t really working all that well.

WASHINGTON (AP) — President Donald Trump is calling on people to stop hoarding groceries and other supplies as one of the nation’s most senior public health officials urged Americans to act with more urgency to protect themselves and others against the coronavirus. Dr. Anthony Fauci said he would like to see aggressive measures such as a 14-day national shutdown.

“You don’t have to buy so much,” Trump said at a news conference. “Take it easy. Just relax.”

Trump assured Americans, after speaking with leading grocery chain executives, that grocers would remain open and that the supply chain remained healthy. Speaking at the same White House news conference, Vice President Mike Pence urged Americans to buy only the groceries they need for the week ahead.

The comments from the president came Sunday after the government’s top infectious disease expert said he would like to see Americans to hunker down even more to help slow the spread of the coronavirus.

Still, Fauci said travel restrictions within the United States, such as to and from hard-hit Washington state and California, probably would not be needed anytime soon.

Officials in Washington were preparing for what was expected to be a long-haul effort to try to stem the virus that has upended life around the globe.

“The worst is yet ahead for us,” Fauci said. “It is how we respond to that challenge that is going to determine what the ultimate endpoint is going to be.”

Trump, on the other hand, offered an optimistic outlook even as officials said the infection rate in the U.S. was surging. The president acknowledged that the virus was “very contagious” but asserted that his administration had “tremendous control” over the spread of the disease………..

Pence said that he and the president would brief the nation’s governors on Monday “specifically about our expanding testing to the American people.”

Answer

Coronavirus has put globalisation into reverse

………..The spread of the epidemic amounts to an experiment in deglobalisation. Barriers are being put up not to halt trade and migration flows but to stymie the spread of infection. The economic effects, however, are similar: snarled-up supply chains, lower business confidence and less international trade.

Policymakers can provide stimulus to support growth but can do little against the shock to economies’ capacity to produce goods and services. This leaves the global economy largely at the mercy of nature. How much worse the impact on global growth becomes will depend on how quickly the virus can be contained.

Wall Street bounces back after worst day since Black Monday
Wall Street got a boost after House Speaker Nancy Pelosi said lawmakers and the White House were close to a deal on economic relief.

Remember when I asked if you could say ‘Roller Coaster‘? These low prices are just too much of a temptation for playas in the market.

Wall Street rallied on Friday, bouncing firmly back after the worst day for markets since the Black Monday crash in 1987.

The Dow Jones Industrial Average soared by around 1,200 points, with the S&P and Nasdaq surging by around 5 percent each.

The boost in stocks came after lawmakers and the White House appeared closed to finalizing an economic relief package to address the coronavirus pandemic.

“I think we’re very close to getting this done. The president is absolutely committed that this will be an entire government effort, that we will be working with the House and Senate,” Treasury Secretary Steven Mnuchin told CNBC Friday morning.

 

Dow futures point to opening bounce of 1,100 points after Trump floats payroll tax cut

Can you say ROLLLLLER COOAASSTTERRRRRR? I thought you could.

Stock futures rallied back early Tuesday morning after the S&P 500′s worst day since the financial crisis.

Around 6:15 a.m. ET Tuesday, futures on the Dow Jones Industrial Average indicated an opening surge of 1,100 points on Tuesday. S&P 500 futures and Nasdaq-100 futures also pointed to a sharply higher open for the two indexes on Tuesday.

Stock futures erased big losses in after-hours trading Monday and turned positive after President Donald Trump floated the idea of “a payroll tax cut or relief” to offset the negative impact from the coronavirus. The potential tax incentives come on top of an $8.3 billion spending package Trump signed last month.

Coronavirus updates: Fear batters the economy as U.S. death toll rises to 26

I’ll repeat. The secondary effects of this bug are showing to be worse than the bug itself.

Wall Street reeled and millions of Americans worried after the stock market’s worst day since the 2008 financial crisis. The Dow Jones Industrial Average fell [today] more than 2,000 points, or nearly 8%, based largely on concern over the coronavirus and oil prices.

The U.S. death toll rose to 26 and several members of Congress are in self-quarantine after possible exposure. Despite contact with some of those lawmakers in recent days, President Trump has not been tested for the coronavirus, according to his press secretary.

We Need Hard Decoupling: The coronavirus crisis is underscoring the need to re-examine old ideologies about globalization and modernization.

The realization is finally sinking in across the U.S. policy community: The belief in “globalization” as a sure path to modernization has been perhaps the greatest delusion to have seized American elites since the conviction that the United Nations would eliminate the problem of war from the international system. The current coronavirus crisis may have put an exclamation point on this truth by exposing key vulnerabilities caused by farming out critical elements of the U.S. supply chain to China. But the diagnosis and remedy have been clear for a much longer time: We need a hard decoupling from China.

The national security predicament the United States finds itself in has deeply entrenched ideological roots. Until the Trump Administration confronted China, multiple U.S. administrations had fundamentally misread the pathway the People’s Republic of China (PRC) would follow as it used access to Western markets and technology to modernize its economy. Today we have been forced to address the consequences of three decades of massive wealth and knowledge transfers to a power that—left unchecked—could bring about a fundamental structural shift in the international system.

Over the past three decades globalist ideology has fueled the greatest centralization of market and supply chains to date, creating a system in which a single point of failure can disrupt the manufacturing of consumer goods. Apple’s recent difficulties with Foxconn and iPhone manufacturing are just the tip of the iceberg. China accounts for the vast majority of production of rare earth elements, which are vital to consumer electronics. Eighty percent of key ingredients for U.S. brand-name and generic drugs come from abroad, mostly from India and China. But the problem goes beyond consumer goods. In the event of a military conflict—whether in the Pacific or elsewhere—a paucity of diverse supply sources and regionalized distribution chains with built-in redundancies poses an immediate challenge to planners and operators alike. Over the years, this process—which I call the “radical centralization of market networks”—has been accompanied by the seepage of Western technology to China.

While the West’s hard power margins are indeed shrinking, the focal point of the Chinese onslaught is not first and foremost the theft of our technology and know-how. Rather, the principal challenge facing the United States and its allies is one that is internal to our own polity.  It rests on our competitor’s ability to exploit our own set of legacy assumptions about the purportedly inevitable waning of the nation state and the universalization of participatory democracy as a direct consequence of globalization and market-driven modernization across the world. Even though evidence to the contrary has been piling high for the past thirty years, the globalization paradigm still dominates a large segment of U.S. policy debates.

This ideological dimension constitutes arguably the most important vulnerability of the West in its accelerating great power competition with China. During the Cold War, the ideological contest was for hearts and minds; now the struggle has shifted predominantly to our home terrain, where the idea of globalization as a panacea for the presumed systemic ills of the nation state is crowding out alternative solutions. Three decades of assurances from Washington, echoed out of Berlin and Paris, that institutions trump culture and, most importantly, that the best pathway forward for humanity lies in the formation of one global market and one set of democratic principles (notwithstanding the mundane obligatory mantra that “diversity is our strength”) have effectively disarmed our polities when it comes to confronting the reality of resurgent great power competition and predatory behavior by our adversaries. Market access-cum-export-driven modernization was supposed to bring about the eventual democratization of Russia and China; instead, the two countries have adopted revisionist-nationalist and techno-nationalist postures, respectively.

The greatest risk in the current stage of U.S.-Sino competition is not the larger structural inevitability of conflict between a rising and declining power—the much-discussed “Thucydides’s trap” from Graham Allison’s bestselling book—but rather the more urgent and potentially dangerous driver of China’s growing ability to penetrate and shape the U.S. economy, financial and digital spaces, and, by extension, political processes. Beijing’s power to compete with the United States rests on its “transformational capability” that relies on access to American society while its own remains largely contained within a Communist Party-controlled digital landscape.

The risk China poses to the United States in geostrategic terms—from the Western Pacific through Eurasia, the Middle East and North Africa, and the High North—extends beyond traditional indices of hard power calculus into the digital domain, where our adversary benefits from access to our networks, and through them to our society.

In the last decade the challenge posed to our national security by communist China has morphed from now-familiar predatory market policies into a military challenge of the kind that may ultimately outstrip anything the United States has seen since the Japanese imperial project of the early 20th century. The signs that China is seriously gearing up for a confrontation with the United States are plain to see, especially in the maritime domain. Though the U.S. Navy remains dominant, Chinese shipyards nonetheless continue to churn out new vessels at an unprecedented rate, the Chinese navy’s missile arsenal is growing, and Beijing is rapidly expanding its overseas port network. The same goes for conventional, nuclear, cyber, and other realms. In short, the PRC is gearing up to launch a multi-theater, multi-domain challenge to the United States.

Chinese techno-nationalism remains largely misunderstood and, more importantly, unappreciated in the West. The society remains insulated and run by the Communist Party. In effect, a 90-million-strong Communist elite controls 1.4 billion PRC citizens, while the PRC continues to leverage the digital era to enhance its economic, political, and ultimately military reach by working through our digital infrastructure, tapping into our educational and research institutions and media—and thus increasingly also our political processes. This leaves the United States with no alternative but to make an effort to disconnect our supply chain from China’s, while at the same time developing regional networks as alternatives to the current model.

The bad news is that decoupling the U.S. economy from China’s may cause short-term pain. The good news is that the United States has alternatives when it comes to the labor market and natural resources, both domestically and across the Western hemisphere. It also has an enduring structure of alliances across the Atlantic and the Pacific that—when firmed up—will give America an unbeatable advantage in its competition with China. The key, however, is to re-examine the dogmas of the past three decades and bring a fresh set of assumptions to the task of understanding where the world is heading: not toward a “global” utopia, but to a destination chosen by self-constituting polities and in alignment with their national interests.

Dow futures drop over 1,000 pts as oil plunges 30%

Dow futures fell 1,200 points to start the week, oil plunged 30 percent as the coronavirus spreads and quarantine measures are taken.

The major futures indexes are indicating a drop of almost 5 percent when trading begins on Wall Street.

At one point, the stock fall triggered a halt in trading after a 5 percent drop.

Asian stock markets plunged Monday after global oil prices nosedived on worries a global economy weakened by a virus outbreak might be awash in too much crude.

Tokyo’s benchmark tumbled 5 percent, while Hong Kong was down at least 4.4 percent. China’s Shanghai Composite was off 3 percent.

In Europe, London’s FTSE wad down 3.6 percent, Germany’s DAX fell 3.4 percent and France’s CAC dropped 4.1 percent.

Oil prices are plunging amid concern a dispute among producers could lead a global economy weakened by coronavirus to be awash in an oversupply of crude.

Currently, Brent crude, the international standard, was down $10.84, or 23.9 percent, to $34.45 per barrel in electronic trading in London. Benchmark U.S. crude fell $10.70, or 25.9 percent, to $30.56.

The dramatic losses follow a 10.1 percent drop for U.S. oil on Friday, which was its biggest loss in more than five years. Prices are falling as Saudi Arabia, Russia and other oil-producing countries argue how much to cut production in order to prop up prices.

Tourism is 10% of GDP in France, 13% in Italy, 15% in Spain. And Now it’s in Free Fall
“If the situation of generalized panic continues, thousands of businesses, especially small ones, will first enter a liquidity crisis, then close their doors.”

This is all happening just weeks before high season is about to get under way. But with millions and millions of tourists voting with their feet by staying at home, one of Europe’s most important and (until four weeks ago) fastest growing industries is taking a hammering.

The world right now is full of places that should be teeming with people but are not, including many iconic tourist landmarks and attractions. In Italy, home to Europe’s third biggest tourism industry, large parts of the country are on lock down after being hit by the biggest outbreak of the COVID-19 outside of Asia. Many of the most famous tourist attractions have been closed and big international events, including the Venice Carnival, have been cancelled.

The impact on the country’s tourism industry has been brutal, prompting panicked representatives to warn that a “generalized panic” over coronavirus could “sink” the sector. “There is a risk that Italy will drop off the international tourism map altogether,” said Carlo Sangalli, president of Milan’s Chamber of Commerce. “The wave of contagions over the past week is causing huge financial losses that will be difficult to recoup.”……

In the three most affected regions — Lombardy, Veneto and Emilia-Romagna (in descending order) — cancellation rates on bookings of hotels, flights and apartments have reached as high as 90%. These three regions also happen to be the main motor of Italy’s economy, accounting for 40% of Italy’s GDP. ……

“In recent history Italian tourism has never experienced a crisis like this,” Vittorio Messina, National President of Assoturismo, stated in a press release. “It is the darkest moment. Not even 9/11 affected it so heavily.”…….

In Spain, tourism is even more important to the national economy, generating approximately €180 billion a year — close to 15% of GDP. In 2019, Spain was the second most visited country in the world, attracting 83.7 million foreign tourists……………

France, with 89 million tourists in 2018 (last year’s figures are yet to be released), the most visited country in the world, is also feeling the fallout from of COVID-19. Tourism contributes about 10% to GDP. France’s Finance Minister, Bruno Le Maire, said two weeks ago that the outbreak had triggered a 30%-40% plunge in the number of overseas visitors. At that point, the virus was barely present in the country. Now, it’s in all 13 of France’s metropolitan regions, as well as French Guiana.

This is all happening just weeks before high season is about to get under way. But with millions and millions of tourists voting with their feet by staying at home, one of Europe’s most important and (until four weeks ago) fastest growing industries is taking a hammering.

 

U.S. added 273,000 jobs in February, smashing expectations.

March 6 (UPI) — The U.S. economy added 273,000 jobs in the month of February , the Labor Department said Friday in its monthly report.

Employment in healthcare and social assistance increased by 57,000, the report said, and the food services industry added 53,000. Government employment rose by 45,000.

The unemployment rate dipped slightly to 3.5 percent, Friday’s report noted.

The figure crushed most analysts’ expectations, as Wall Street anticipated job growth of about 175,000. February job growth was on par with January, which saw 225,000 new positions.

Wednesday, ADP and Moody’s Analytics reported 183,000 jobs for the month of February.