The Daily Parker

Politics, Weather, Photography, and the Dog

More financial musical chairs

When the economy went into its current medically-induced coma, cash movements slowed almost to a halt in some sectors. If you had cash four weeks ago, you have probably held onto it; if you held debt four weeks ago, you probably haven't gotten all the cash flows you expected.

As yesterday's brief collapse of oil futures contracts demonstrated, the game of musical chairs almost became frighteningly real for traders:

When you read a news article or hear an economist mention the price of oil, it typically refers not to a physical barrel filled with viscous liquid but to the price of a futures contract that trades on the Chicago Mercantile Exchange. By convention, the “price of oil” is the going per-barrel price reflected in a futures contract for the ensuing month.

In the case of the most widely followed contract in the United States, that would be West Texas Intermediate crude, which you would need to physically obtain from storage facilities in Cushing, Okla., where major pipelines intersect.

Plenty of major entities trade such futures without ever thinking too much about those physical details — and certainly without getting any oil on their expensive suits. Speculators speculate, companies hedge their risks of price swings, and transactions take place at the level of abstraction on a computer screen.

But as each contract’s settlement date approaches, the financial speculators sell their contracts to “real” buyers of oil, like refineries. This can cause problems for traders who may be in over their heads. Chris Arnade, a trader-turned-author, said on Twitter on Monday that he once found himself in that position: “I ended up almost taking physical delivery of lots of oil.”

It gets worse:

All of that points to a deflationary collapse — a glut of supply of goods and services, and consequently falling prices — that surpasses anything seen in most people’s lifetimes.

Oil isn’t the only commodity with a plunging price. Corn futures have fallen 19 percent since early February. The price of inflation-protected government bonds suggests inflation will be only 0.56 percent a year over the coming five years, and the Consumer Price Index fell 0.4 percent in March.

In other words, the suckage has barely started for a lot of people.

So, instead of worrying about the end of the world as we know it, enjoy Chicago Public Rado's drone footage of a quiet city:

How crude

Demand for petroleum has crashed so hard and so fast that North American oil producers have run out of space to store the excess. This morning the price of US crude collapsed, falling 105 500% to $-2 $-37.63 per barrel; Canadian oil prices also dropped negative. That's right, if you want to take a million or so barrels off their hands, they'll pay you to do so. (This only affects delivery by month's end; for delivery in May, oil still costs $20 a barrel.)

Meanwhile, in other horrific news:

Finally, the Covid-19 emergency has led to mass layoffs of architects, one of the hardest-hit professions in any recession. I'm currently reading Robert Caro's The Power Broker, his biography of Robert Moses, and just at the point where he mentions that in 1934, 5 out of 6 architects had lost their jobs. Everything old is new again.

Minnesota under siege, day 3...

The president continues to ignore the opprobrium leveled against him after his asinine Tweets Friday morning:

In other news:

Finally, WBEZ, Chicago's NPR affiliate, has some tips for dating during quarantine.

I filled my tank today, oh boy

Remember how I love my car? I love it even more today, and I'm a bit spooked by its costs.

A new filling station opened up about 1500 m from my house, and they have the lowest gas prices around. Even though I last filled my car on November 24th, in Indiana, and even though I've driven 1,623 km since then, I still had half a tank of gas. So for $10, I put 21 L of regular into the tank, which means my car cost me 0.6¢ per kilometer to operate over the last 144 days, and I got an average of 1.3 L/100 km fuel economy.

I have not paid that little for fuel—47.5¢/L—since January 2004. (In fairness, the car I owned then used premium gas.)

That said, I have not seen that fuel price in real terms since 2002. In fact, back when I bought my first car in June 1989, regular gas cost 32.5¢/L, which would be 67.6¢/L adjusted for inflation.

We live in very strange times.

Liberate Minnesota!

No, really, the president Tweeted that earlier today:

I mean, what the actual f? (He also wants to liberate Michigan and Virginia, by the way.) Charlie Pierce warned only Monday that this kind of nonsense was coming:

The acting director of the Office of National Intelligence is encouraging citizens to break local laws, endangering themselves and others, in the middle of a pandemic. Of all the screwy moments that we have experienced since the founding of Camp Runamuck, this is going to rank very close to the top. And it is not going to be a surprise to anyone if another AstroTurf movement similar to the Tea Party rises, especially if the president* “opens up” the country at the beginning of May.

This nonsense is coming, and it’s going to be encouraged by the national government, and I don’t know how we avoid it.

Andrew Sullivan, after point out that the virus doesn't have a social message, breathed a sigh of relief that Trump is so very lazy:

But of course we all know by now, including the Republicans, that it is meaningless. Trump claims the powers of a tyrant, behaves like one, talks like one, struts like one, has broken every norm a liberal democracy requires, and set dangerous precedents that could enable a serious collapse in constitutional norms in the future.

This, in Bill Kristol’s rather brilliant phrase, is “performative authoritarianism.” It has a real cost — it delegitimizes liberal democracy by mocking it and corrodes democratic institutions by undermining them. But it is not the cost of finding ourselves run by an American Victor Orban. Orban saw the coronavirus emergency the way most wannabe strongmen would and the way I feared Trump might: as an opportunity to further neuter any constitutional checks on him and rule by decree. Trump saw it purely as an obstacle to his reelection message about a booming economy, a blot on his self-image, an unfair spoiling of his term. Instead of exploiting it, he whined about it. He is incapable of empathy and so simply cannot channel the nation’s grief into a plan of action. So he rambles and digresses and divides and inflames. He has managed in this crisis to tell us both that he is all-powerful and that he takes no responsibility for anything.

And I suspect that this creepy vaudeville act, in a worried and tense country, is beginning to wear real thin. A man who claims total power but only exercises it to protect his personal interests, a man who vaunts his own authority but tolerates no accountability for it, is impressing no one.

The emergency I feared Trump could leverage to untrammeled power may, in fact, be the single clearest demonstration of his incompetence and irrelevance

Simply put, "Trump can't lie his way out of this one," as several pundits have observed. Also:

Fun times, fun times. Good thing it will actually seem like spring tomorrow in Chicago after another snowfall last night.

And you thought things were getting better

The number of new Covid-19 cases per day may have peaked in Illinois, but that still means we have new cases every day. We have over 10,000 infected in the state, with the doubling period now at 12 days (from 2 days back mid-March). This coincides with unpleasant news from around the world:

  • Covid-19 has become the second-leading cause of death in the United States, accounting for 12,400 deaths per week, just behind heart disease which kills about 12,600.
  • More than 5 million people filed for unemployment benefits last week, bringing the total unemployed to 22 million, the highest percentage of Americans out of work since 1933. April unemployment figures come out May 8th, when we will likely have confirmation of a 13-15% unemployment rate. Note that the unemployment rate was the lowest in history just two months ago.
  • Consumer spending on nearly everything except groceries has fallen, in some places catastrophically. Chicago's heavy-rail authority, Metra, has seen ridership fall 97% system-wide and predicts a $500 million budget deficit this year. (For my own part, since my March 31st post on the subject, my spending on dining out, lunch, and groceries combined has fallen 70% month-over-month.)
  • UK Foreign Secretary (and acting Prime Minister) Dominic Raab announced today that lockdown measures would continue in the UK "for at least the next three weeks," reasoning that premature relaxation would lead to a resurgence of the virus as seen worldwide in 1918.
  • FiveThirtyEight explains why Covid-19 has caused so much more disruption than Ebola, SARS-1, and swine flu.
  • Talking Points Memo takes a deeper look at the hidden mortality of Covid-19.
  • Brian Dennehy has died at 81.
  • Chicago could get 75 mm of snow tonight. In April. The middle of Spring. FFS.

But we also got some neutral-to-good news today:

I pitched the Goat-2-Meeting to my chorus board for our next meeting, and unfortunately got told we don't donate to other NPCs. I guess we're not a bleating-heart organization.

We may be flattening a bit

Illinois' doubling time for Covid-19 cases has increased from 2.1 days to 7.9 days, as of yesterday.

In other news:

And finally, I'll leave you with this touching performance of Tears for Fears' "Mad World" by its composer, Curt Smith, and his daughter Diva:

How does this end?

Writing for Vox, Ezra Klein looks at three major plans for re-starting the economy, and how difficult they would actually be to implement:

There’s one from the right-leaning American Enterprise Institute, the left-leaning Center for American Progress, Harvard University’s Safra Center for Ethics, and Nobel Prize-winning economist Paul Romer.

In different ways, all these plans say the same thing: Even if you can imagine the herculean political, social, and economic changes necessary to manage our way through this crisis effectively, there is no normal for the foreseeable future. Until there’s a vaccine, the US either needs economically ruinous levels of social distancing, a digital surveillance state of shocking size and scope, or a mass testing apparatus of even more shocking size and intrusiveness.

All of them then imagine a phase two, which relaxes — but does not end — social distancing while implementing testing and surveillance on a mass scale. This is where you must begin imagining the almost unimaginable.

The CAP and Harvard plans both foresee a digital pandemic surveillance state in which virtually every American downloads an app to their phone that geotracks their movements, so if they come into contact with anyone who later is found to have Covid-19, they can be alerted and a period of social quarantine can begin.

The AEI proposal is the closest thing to a middle path between these plans. It’s more testing, but nothing approaching Romer’s hopes. It’s more contact tracing, but it doesn’t envision an IT-driven panopticon. But precisely for that reason, what it’s really describing is a yo-yo between extreme lockdown and lighter forms of social distancing, continuing until a vaccine is reached.

This, too, requires some imagination. Will governors who’ve finally, at great effort, reopened parts of their economies really keep throwing them back into lockdown every time ICUs begin to fill? Will Trump have the stomach to push the country back into quarantine after he’s lifted social distancing guidelines? What if unemployment is 17 percent, and his approval rating is at 38 percent?

For the time being, we'll stay in our homes and away from other people as much as we can. But wow, even for me, an introvert with a dedicated home office, it's very trying.

And how long will it go on? A while. National Geographic says a vaccine may take a lot longer than a year.

Is it July yet?

An Andy Borowitz bit from last year is making the rounds again: "Trump Comes Out Strongly Against Intelligence." More evidence of why that's true after these two videos. First, the Ohio Department of Health demonstrates social distancing:

Second, the Lincoln Project, a Republican organization headed by George Conway, has put out this ad:

And now the roundup of horror promised above:

Finally, 50 years ago today, Paul McCartney announced the Beatles had broken up.

Oh wait: here's another cool video.

17 million unemployment claims in 3 weeks

Unemployment claims jumped another 6.6 million in the US last week bringing the total reported unemployed to 16.8 million, the largest number of unemployment claims since the 1930s. Illinois saw 200,000 new claims, an all-time record, affecting 1 in 12 Illinois workers. And that's just one headline today:

After all of that, why don't you watch this adorable video of skunks chattering away as they investigate a cyclist?