Today’s News 21st January 2022

• Totalitarian Paranoia Run Amok: Pandemics, Lockdowns, & Martial Law
  Totalitarian Paranoia Run Amok: Pandemics, Lockdowns, & Martial Law

  Authored by John W. Whitehead & Nisha Whitehead via The Rutherford Institute,

  “Totalitarian paranoia runs deep in American society, and it now inhabits the highest levels of government.”

  – Professor Henry Giroux

  Once upon a time, there was a government so paranoid about its hold on power that it treated everyone and everything as a threat and a reason to expand its powers. Unfortunately, the citizens of this nation believed everything they were told by their government, and they suffered for it.

  

  When terrorists attacked the country, and the government passed massive laws aimed at paving the way for a surveillance state, the people believed it was done merely to keep them safe. The few who disagreed were labeled traitors.

  When the government waged costly preemptive wars on foreign countries, insisting it was necessary to protect the nation, the citizens believed it. And when the government brought the weapons and tactics of war home to use against the populace, claiming it was just a way to recycle old equipment, the people believed that too. The few who disagreed were labeled unpatriotic.

  When the government spied on its own citizens, claiming they were looking for terrorists hiding among them, the people believed it. And when the government began tracking the citizenry’s movements, monitoring their spending, snooping on their social media, and surveying them about their habits—supposedly in an effort to make their lives more efficient—the people believed that, too. The few who disagreed were labeled paranoid.

  When the government allowed private companies to take over the prison industry and agreed to keep the jails full, justifying it as a cost-saving measure, the people believed them. And when the government started arresting and jailing people for minor infractions, claiming the only way to keep communities safe was to be tough on crime, the people believed that too. The few who disagreed were labeled soft on crime.

  When the government hired crisis actors to take part in disaster drills, never alerting the public to which “disasters” were staged, the people genuinely believed they were under attack. And when the government insisted it needed greater powers to prevent such attacks from happening again, the people believed that too. The few who disagreed were told to shut up or leave the country.

  When the government started carrying out covert military drills around the country, insisting it was necessary to train the troops for foreign combat, most of the people believed them. The few who disagreed, fearing that perhaps all was not what it seemed, were shouted down as conspiracy theorists and quacks.

  When government leaders locked down the nation, claiming it was the only way to prevent an unknown virus from sickening the populace, the people believed them and complied with the mandates and quarantines. The few who resisted or voiced skepticism about the government’s edicts were denounced as selfish and dangerous and silenced on social media.

  When the government expanded its war on terrorism to include domestic terrorists, the people believed that only violent extremists would be targeted. Little did they know that anyone who criticizes the government can be considered an extremist.

  By the time the government began using nationalized police and the military to routinely lockdown the nation, the citizenry had become so acclimated to such states of emergency that they barely even noticed the prison walls that had grown up around them.

  Now every fable has a moral, and the moral of this story is to beware of anyone who urges you to ignore your better instincts and blindly trust that the government has your best interests at heart.

  In other words, if it looks like trouble and it smells like trouble, you can bet there’s trouble afoot.

  Unfortunately, the government has fully succeeded in recalibrating our general distaste for anything that smacks too overtly of tyranny.

  After all, like the proverbial boiling frogs, the government has been gradually acclimating us to the specter of a police state for years now: Militarized police. Riot squads. Camouflage gear. Black uniforms. Armored vehicles. Mass arrests. Pepper spray. Tear gas. Batons. Strip searches. Surveillance cameras. Kevlar vests. Drones. Lethal weapons. Less-than-lethal weapons unleashed with deadly force. Rubber bullets. Water cannons. Stun grenades. Arrests of journalists. Crowd control tactics. Intimidation tactics. Brutality.

  This is how you prepare a populace to accept a police state willingly, even gratefully.

  

  You don’t scare them by making dramatic changes. Rather, you acclimate them slowly to their prison walls. Persuade the citizenry that their prison walls are merely intended to keep them safe and danger out. Desensitize them to violence, acclimate them to a military presence in their communities, and persuade them that only a militarized government can alter the seemingly hopeless trajectory of the nation.

  It’s happening already.

  The sight of police clad in body armor and gas masks, wielding semiautomatic rifles and escorting an armored vehicle through a crowded street, a scene likened to “a military patrol through a hostile city,” no longer causes alarm among the general populace.

  We’ve allowed ourselves to be acclimated to the occasional lockdown of government buildings, military drills in small towns so that special operations forces can get “realistic military training” in “hostile” territory, and  Live Active Shooter Drill training exercises, carried out at schools, in shopping malls, and on public transit, which can and do fool law enforcement officials, students, teachers and bystanders into thinking it’s a real crisis.

  Still, you can’t say we weren’t warned.

  Back in 2008, an Army War College report revealed that “widespread civil violence inside the United States would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security.” The 44-page report went on to warn that potential causes for such civil unrest could include another terrorist attack, “unforeseen economic collapse, loss of functioning political and legal order, purposeful domestic resistance or insurgency, pervasive public health emergencies, and catastrophic natural and human disasters.”

  In 2009, reports by the Department of Homeland Security surfaced that called on the government to subject right-wing and left-wing activists and military veterans to full-fledged, pre-crime surveillance.

  Meanwhile, the government has been amassing an arsenal of military weapons, including hollow point bullets, for use domestically and equipping and training their “troops” for war. Even government agencies with largely administrative functions such as the Food and Drug Administration, Department of Veterans Affairs, and the Smithsonian have been acquiring body armor, riot helmets and shields, cannon launchers and police firearms and ammunition. In fact, there are now at least 120,000 armed federal agents carrying such weapons who possess the power to arrest.

  Rounding out this profit-driven campaign to turn American citizens into enemy combatants (and America into a battlefield) is a technology sector that has been colluding with the government to create a Big Brother that is all-knowing, all-seeing and inescapable. It’s not just the drones, fusion centers, license plate readers, stingray devices and the NSA that you have to worry about. You’re also being tracked by the black boxes in your cars, your cell phone, smart devices in your home, grocery loyalty cards, social media accounts, credit cards, streaming services such as Netflix, Amazon, and e-book reader accounts.

  And then there are the military drills that have been taking place on American soil in recent years.

  In the latest “unconventional warfare exercise,” dubbed “Robin Sage,” special forces soldiers will battle seasoned “freedom fighters” in a “realistic” guerrilla war across two dozen North Carolina counties.

  Robin Sage follows on the heels of other such military drills, including Jade Helm, which involved U.S. Army Special Operations Command, the Navy Seals, Air Force Special Operations, Marine Special Operations Command, Marine Expeditionary Units, the 82nd Airborne Division, and other interagency partners.

  According to the government, these planned military exercises are supposed to test and practice unconventional warfare including, but not limited to, guerrilla warfare, subversion, sabotage, intelligence activities, and unconventional assisted recovery.

  The training, known as Realistic Military Training (RMT) because it will be conducted outside of federal property, are carried out on both public and private land, with locations marked as “hostile territory,” permissive, uncertain (leaning friendly), or uncertain (leaning hostile).

  This is psychological warfare at its most sophisticated.

  Add these military exercises onto the list of other troubling developments that have taken place over the past 30 years or more, and suddenly, the overall picture seems that much more sinister: the expansion of the military industrial complex and its influence in Washington DC, the rampant surveillance, the corporate-funded elections and revolving door between lobbyists and elected officials, the militarized police, the loss of our freedoms, the injustice of the courts, the privatized prisons, the school lockdowns, the roadside strip searches, the military drills on domestic soil, the fusion centers and the simultaneous fusing of every branch of law enforcement (federal, state and local), the stockpiling of ammunition by various government agencies, the active shooter drills that are indistinguishable from actual crises, the economy flirting with near collapse, the growing social unrest, the socio-psychological experiments being carried out by government agencies, etc.

  And then you have the government’s Machiavellian schemes for unleashing all manner of dangers on an unsuspecting populace, then demanding additional powers in order to protect “we the people” from the threats. Almost every national security threat that the government has claimed greater powers in order to fight—all the while undermining the liberties of the American citizenry—has been manufactured in one way or another by the government.

  What we’ve seen play out before us is more than mere totalitarian paranoia run amok.

  What has unfolded over the past few years has been a test to see how well “we the people” have assimilated the government’s lessons in compliance, fear and police state tactics; a test to see how quickly “we the people” will march in lockstep with the government’s dictates, no questions asked; and a test to see how little resistance “we the people” will offer up to the government’s power grabs when made in the name of national security.

  Most critically of all, this has been a test to see whether the Constitution—and our commitment to the principles enshrined in the Bill of Rights—could survive a national crisis and true state of emergency.

  We have failed the test abysmally.

  We have also made it way too easy for a government that has been working hard to destabilize to lockdown the nation.

  Mark my words, there’s trouble brewing.

  Better yet, take a look at “Megacities: Urban Future, the Emerging Complexity,” a Pentagon training video created by the Army for U.S. Special Operations Command.

  The training video is only five minutes long, but it says a lot about the government’s mindset, the way its views the citizenry, and the so-called “problems” that the government must be prepared to address in the near future through the use of martial law.

  Even more troubling, however, is what this military video doesn’t say about the Constitution, about the rights of the citizenry, and about the dangers of locking down the nation and using the military to address political and social problems.

  The training video anticipates that all hell will break loose by 2030—that’s barely eight short years away—but we’re already witnessing a breakdown of society on virtually every front.

  The danger signs are screaming out a message

  The government is anticipating trouble (read: civil unrest), which is code for anything that challenges the government’s authority, wealth and power.

  According to the Pentagon training video created by the Army for U.S. Special Operations Command, the U.S. government is grooming its armed forces to solve future domestic political and social problems.

  What they’re really talking about is martial law, packaged as a well-meaning and overriding concern for the nation’s security.

  The chilling five-minute training video, obtained by The Intercept through a FOIA request and made available online, paints an ominous picture of the future—a future the military is preparing for—bedeviled by “criminal networks,” “substandard infrastructure,” “religious and ethnic tensions,” “impoverishment, slums,” “open landfills, over-burdened sewers,” a “growing mass of unemployed,” and an urban landscape in which the prosperous economic elite must be protected from the impoverishment of the have nots.

  And then comes the kicker. Three-and-a-half minutes into the Pentagon’s dystopian vision of “a world of Robert Kaplan-esque urban hellscapes—brutal and anarchic supercities filled with gangs of youth-gone-wild, a restive underclass, criminal syndicates, and bands of malicious hackers,” the ominous voice of the narrator speaks of a need to “drain the swamps.”

  The government wants to use the military to drain the swamps of futuristic urban American cities of “noncombatants and engage the remaining adversaries in high intensity conflict within.” And who are these noncombatants, a military term that refers to civilians who are not engaged in fighting? They are, according to the Pentagon, “adversaries.” They are “threats.”

  They are the “enemy.”

  They are people who don’t support the government, people who live in fast-growing urban communities, people who may be less well-off economically than the government and corporate elite, people who engage in protests, people who are unemployed, people who engage in crime (in keeping with the government’s fast-growing, overly broad definition of what constitutes a crime).

  In other words, in the eyes of the U.S. military, noncombatants are American citizens a.k.a. domestic extremists a.k.a. enemy combatants who must be identified, targeted, detained, contained and, if necessary, eliminated.

  In the future imagined by the Pentagon, any walls and prisons that are built will be used to protect the societal elite—the haves—from the have-nots.

  If you haven’t figured it out already, we the people are the have-nots.

  Suddenly, the events of recent years begin to make sense: the invasive surveillance, the extremism reports, the civil unrest, the protests, the shootings, the bombings, the military exercises and active shooter drills, the color-coded alerts and threat assessments, the fusion centers, the transformation of local police into extensions of the military, the distribution of military equipment and weapons to local police forces, the government databases containing the names of dissidents and potential troublemakers.

  The government is systematically locking down the nation and shifting us into martial law.

  This is how you prepare a populace to accept a police state willingly, even gratefully.

  As Nazi Field Marshal Hermann Goering remarked during the Nuremberg trials:

  It is always a simple matter to drag people along whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. This is easy. All you have to do is tell them they are being attacked, and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same in every country.

  It does indeed work the same in every country.

  It’s time to wake up and stop being deceived by government propaganda.

  Mind you, by “government,” I’m not referring to the highly partisan, two-party bureaucracy of the Republicans and Democrats.

  As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, I’m referring to “government” with a capital “G,” the entrenched Deep State that is unaffected by elections, unaltered by populist movements, and has set itself beyond the reach of the law. I’m referring to the corporatized, militarized, entrenched bureaucracy that is fully operational and staffed by unelected officials who are, in essence, running the country and calling the shots in Washington DC, no matter who sits in the White House.

  Be warned: in the future envisioned by the government, we will not be viewed as Republicans or Democrats. Rather, “we the people” will all be enemies of the state.

  Tyler Durden
  Thu, 01/20/2022 – 23:50

• NASA's Curiosity Rover Finds 'Tantalizing' Carbon Signs Of Possible Ancient Life On Mars
  NASA’s Curiosity Rover Finds ‘Tantalizing’ Carbon Signs Of Possible Ancient Life On Mars

  NASA’s Curiosity rover has spent a decade hunting for ancient signs of life on Mars. The rover has collected sedimentary rock samples rich in a type of carbon associated with life on Earth. 

  NASA touted a new study published this week in the Proceedings of the National Academy of Sciences journal that says sediment samples found by Curiosity suggest “unusual carbon signals” that may support one working theory of the possible existence of ancient life. 

  

  “We’re finding things on Mars that are tantalizingly interesting, but we would really need more evidence to say we’ve identified life,” said Paul Mahaffy, who served as the principal investigator of the Sample Analysis at Mars chemistry lab aboard Curiosity until retiring from NASA’s Goddard Space Flight Center in Greenbelt, Maryland, in December. 

  “So we’re looking at what else could have caused the carbon signature we’re seeing, if not life,” Mahaffy said. 

  Curiosity landed in Gale Crater on Mars in August 2012 and explored a large hole that likely once held a lake. The crater has exposed ancient rock that the rover has been able to drill into and analyze with an onboard laboratory and beam data back to Earth for scientists to study. 

  Some sediment samples were depleted in carbon, while others were highly enriched. Carbon has two stable isotopes, either carbon 12 or 13. 

  Researchers found half of the samples collected by Curiosity over the decade contained carbon 12. Back on Earth, carbon 12 is used by organisms for metabolic processes and can be interpreted as a possible sign of ancient life. 

  However, carbon cycles on Mars aren’t entirely understood to make that assumption, researchers said. 

  “On Earth, processes that would produce the carbon signal we’re detecting on Mars are biological,” Christopher H. House, lead study author and professor of geosciences at Pennsylvania State University said. “We have to understand whether the same explanation works for Mars, or if there are other explanations, because Mars is very different.”

  Researchers developed three scenarios to explain the carbon 12 findings. 

  “Three possible explanations are the photolysis of biological methane released from the subsurface, photoreduction of atmospheric CO2, and deposition of cosmic dust during passage through a galactic molecular cloud. All three of these scenarios are unconventional, unlike processes common on Earth.” 

  The rover is set to collect more sediment samples next month and will give researchers another shot to analyze sediment. 

  “This research accomplished a long-standing goal for Mars exploration,” House said. “To measure different carbon isotopes — one of the most important geology tools — from sediment on another habitable world, and it does so by looking at nine years of exploration.”

  If the samples collected are signs of ancient life on Mars. This is good news for Elon Musk, who is trying to build space ships to shuttle thousands of people between Earth and Mars to colonize the planet in the coming decades. 

  Tyler Durden
  Thu, 01/20/2022 – 23:30

• Energy Limits Are Likely To Push The World Economy Into Recession In 2022
  Energy Limits Are Likely To Push The World Economy Into Recession In 2022

  Authored by Gail Tverberg via OurFiniteWorld.com,

  In my view, there are three ways a growing economy can be sustained:

  1. With a growing supply of cheap-to-produce energy products, matched to the economy’s energy needs.

  2. With growing debt and other indirect promises of future goods and services, such as rising asset prices.

  3. With growing complexity, such as greater mechanization of processes and supply lines that extend around the world.

  All three of these approaches are reaching limits. The empty shelves some of us have been seeing recently are testimony to the fact that complexity is reaching a limit. And the growth in debt looks increasingly like a bubble that can easily be popped, perhaps by rising interest rates.

  In my view, the first item listed is critical at this time: Is the supply of cheap-to-produce energy products growing fast enough to keep the world economy operating and the debt bubble inflated? My analysis suggests that it is not. There are two parts to this problem:

  [a] The cost of producing fossil fuels and delivering them to where they are needed is rising rapidly because of the effects of depletion. This higher cost cannot be passed on to customers, without causing recession. Politicians will act to keep prices low for the benefit of consumers. Ultimately, these low prices will lead to falling production because of inadequate reinvestment to offset depletion.

  [b] Non-fossil fuel energy products are not living up to the expectations of their developers. They are not available when they are needed, where they are needed, at a low enough cost for customers. Electricity prices don’t rise high enough to cover their true cost of production. Subsidies for wind and solar tend to drive nuclear electricity out of business, leaving an electricity situation that is worse, rather than better. Rolling blackouts can be expected to become an increasing problem.

  In this post, I will explore the energy-related issues that are contributing to the recessionary trends that the world economy is facing, starting later in 2022.

  [1] World oil supplies are unlikely to rise very rapidly in 2022 because of depletion and inadequate reinvestment. Even if oil prices rise higher in the first part of 2022, this action cannot offset years of underinvestment.

  

  Figure 1. Crude oil and liquids production quantities through 2020 based on EIA data. “IEA Estimate” adds IEA indicated increases in 2021 and 2022 to historical EIA liquids estimates. Tverberg Estimate relate to crude oil production.

  The IEA, in its Oil Market Report, December 2021, forecasts a 6.4-million-barrel increase in world oil production in 2022 over 2021. Indications through September of 2021 strongly suggest that there was only a small rebound (about 1 million bpd) in the world’s oil production in 2021 compared to 2020. In my view, IEA’s view that liquids production will increase by a huge 6.4 million barrels a day between 2021 and 2022 defies common sense.

  The basic reason why oil production is low is because oil prices have been too low for producers since about 2012. Companies have had to cut back on developing new fields in higher cost areas because oil prices have not been high enough to justify such investments. For example, producers from shale formations could add new wells outside the rapidly depleting “core” regions if the oil price were much higher, perhaps $120 to $150 per barrel. But US WTI oil prices averaged only $57 per barrel in 2019, $39 per barrel in 2020, and $68 per barrel in 2021, so this new investment has not been started.

  Recently, oil prices have been over $80 per barrel, but even this is considered too high by politicians. For example, countries are releasing oil from their strategic oil reserves to try to force oil prices down. The reason why politicians are interested in low oil prices is because if the price of oil rises, both the price of food and the cost of commuting are likely to rise, since oil is used in farming and in commuting. Inflation is likely to become a problem, making citizens unhappy. Wages will go less far, and politicians who allow high oil prices will be voted out of office.

  [2] Natural gas production can be expected to rise by 1.6% in 2022, but this small increase will not be enough to meet the needs of the world economy.

  

  Figure 2. Natural gas production though 2020 based on data from BP’s 2021 Statistical Review of World Energy. For 2020 and 2021, Tverberg estimates reflect increases similar to IEA indications, so only one indication is shown.

  With natural gas production growing at a little less than 2% per year, a major issue is that there is not enough natural gas to “go around.” Natural gas is the smallest of the fossil fuels in quantity. We are depending on its growth to solve many problems, simultaneously:

  • To increase natural gas imports for countries whose own production is declining
  • To provide quick relief from inadequate production by wind turbines and solar panels, whenever such relief is needed
  • To offset declining coal consumption related to a combination of issues (depletion, high pollution, climate change concerns)
  • To help increase world electricity supply, as transportation and other processes are gradually electrified

  Furthermore, the rate at which natural gas supply increases cannot easily be speeded up because (a) the development of new fields, (b) the development of transportation structures (pipeline or Liquefied Natural Gas (LNG) ships), and (c) the development of storage facilities all require major upfront expenditures. All of these must be planned years in advance. They require huge amounts of resources of many kinds. The selling price of natural gas must be high enough to cover all of the resource and labor costs. For those familiar with the concept of Energy Returned on Energy Invested (EROEI), the basic problem is that the delivered EROEI falls too low when all of the many parts of the system are considered.

  Storage is extremely important for natural gas because fluctuations tend to occur in the quantity of natural gas the overall system requires. For example, if stored natural gas is available, it can be used when wind turbines are not producing enough electricity. Also, a huge amount of energy is needed in winter to keep homes warm and to keep the lights on. If sufficient natural gas can be stored for months at a time, it can help provide this additional energy.

  As a gas, natural gas is difficult to store. In practice, underground caverns are used for storage, assuming caverns of the right type are available. Trying to build storage, if such caverns are not available, is almost certainly an expensive undertaking. In theory, importing natural gas by pipeline or LNG can transfer the storage problem to LNG producers. This is not a satisfactory solution, however. Without adequate storage available to sellers, this means that natural gas can be extracted for only part of the year and LNG ships can only be used for part of the year. As a result, return on investment is likely to be poor.

  Now, in 2022, we are hitting the issue of very slowly rising natural gas production head-on in many parts of the world. Countries that import natural gas without long-term contracts are facing spiking prices. Countries in Europe and Asia are especially affected. The United States has mostly been isolated from the spiking prices thanks to producing its own natural gas. Also, only a small portion of the natural gas produced by the US is exported (9% in 2020).

  The reason for the small export percentage is because shipping natural gas as LNG tends to be very expensive. Long-distance LNG shipping only makes economic sense if there is a several dollar (or more) price differential between the buyer’s price and the seller’s costs that can be used to cover the high transport costs.

  We now seem to be reaching a period of spiking natural gas prices, especially for counties importing natural gas without long-term contracts. If natural gas prices rise, this will tend to make electricity prices rise because natural gas is often burned to produce electricity. Products made with high-priced electricity will be less competitive in a world market. Individual citizens will become unhappy with their high cost of heat and light.

  High natural gas prices can have very adverse consequences. In areas with high prices, products made using natural gas as a raw material will tend to be squeezed out. One such product is urea, used as a nitrogen fertilizer. With less nitrogen fertilizer available, food production is likely to fall. If food prices rise in response to short supply, consumers will tend to reduce discretionary spending to ensure that there are sufficient funds for food. A reduction in discretionary spending is one way recession starts.

  Inadequate growth in world natural gas production can be expected to hit poor countries especially hard. For example, a recent article mentions LNG suppliers backing out of planned deliveries of LNG to Pakistan, given the high prices available elsewhere. Another article indicates that Kosovo, a poor country in Europe, is experiencing rolling blackouts. Eventually, if natural gas available for export remains limited in supply, electricity blackouts can be expected to spread more widely, to less poor parts of Europe and around the world.

  [3] World coal production can be expected to decline, further pushing the world economy toward recession.

  Figure 3 shows my estimate for world coal production, next to a recent IEA forecast.

  

  Figure 3. Coal production through 2020 based on data from BP’s 2021 Statistical Review of World Energy. “IEA Estimate” adds IEA indicated increases to historical BP coal quantities. Tverberg Estimate provides lower estimates for 2021 and 2022, considering depletion issues.

  Figure 3 shows that world coal consumption has not been rising for about a decade.

  Coal seems to be having the same problem with rising costs as oil. The cost of producing the coal is rising because of depletion, but citizens cannot afford to pay more for end products made with coal, such as electricity, steel and solar panels. Coal producers need higher prices to cover their higher costs, but it becomes increasingly difficult to pass these higher costs on to consumers. This is because politicians want to keep electricity prices low to keep their citizens and businesses happy.

  If the cost of electricity rises, the cost of goods made with high-priced electricity will tend to rise. Businesses will find their sales falling in response to higher prices. In turn, they will tend to lay off workers. This is a recipe for recession, but a slightly different one than the ones mentioned earlier. It also is a good way for politicians not to get re-elected. As a result, politicians will try to hide rising coal costs from customers. For example, laws may be enacted capping electricity prices that can be charged to customers. Because of this, some electricity companies may be forced out of business.

  The decrease in coal production I am showing for 2022 is only 1%, but when this small reduction is combined with the growth problems shown for coal and oil and the rising world population, it means that world coal supplies will be stretched.

  China is the world’s largest coal producer and consumer. A major concern is that the country has serious coal depletion problems. It has experienced rolling blackouts since the fall of 2020. It has tried to encourage its own production by limiting coal imports, thus keeping wholesale coal prices high for local producers. It also limits the extent to which high coal costs can be passed on to electricity customers. As a result, the 2021 profits of electricity companies are expected to be reduced.

  [4] The US may have some untapped coal resources that could be tapped, if there is a plan to ship more natural gas to Europe and other areas in need of the fuel.

  The possibility of additional US coal production occurs because coal production in the US seems to have occurred because of competition from incredibly inexpensive natural gas (Figure 4). To some extent, this low natural gas price results from laws prohibiting oil and gas companies from “flaring” (burning off) natural gas that is too expensive to produce relative to the price it can be sold for. Prohibitions against flaring are a type of mandated subsidy of natural gas production by the oil-producing portion of “Oil & Gas” companies. This required subsidy leads to part of the need for high oil prices, especially for companies drilling in shale formations.

  

  Figure 4. US coal production amounts through 2020 are from BP’s 2021 Statistical Review of World Energy. Amounts for 2021 and 2022 are estimated based on forecasts from EIA’s Short Term Energy Outlook. Natural gas prices are average annual Henry Hub spot prices per million Btus, based on EIA data.

  A major reason why US coal extraction started to decline about 2009 is because a very large amount of shale gas production started becoming available then as a byproduct of oil production from shale. Oil producers were primarily interested in extracting oil because it (hopefully) sold for a high price. Natural gas was a byproduct whose collection was barely economic, given its low selling price. Also, the economy didn’t have uses, such as trucks powered by natural gas, for all of this extra natural gas production. Figure 4 suggests that wholesale natural gas prices dropped by close to half, in response to this extra supply.

  With these low natural gas prices, as well as coal pollution concerns, a significant amount of US electricity production was switched from coal to natural gas. It is my view that this change left coal in the ground, potentially for later use. Thus, if natural gas prices rise again, US coal production could perhaps rise again. The catch, of course, is that many coal-fired electricity-generating plants in the US have been taken out of service. In addition, coal mines have been closed. Any increase in future coal production would likely take place very slowly because of the need for many simultaneous changes.

  [5] On a combined basis, using Tverberg Estimates for 2021 and 2022, fossil fuel production in total takes a step down in 2020 and doesn’t rise much in 2021 and 2022.

  

  Figure 5. Sum of Tverberg Estimates related to oil, coal, and natural gas. Oil includes natural gas liquids but not biofuels. Historical amounts are from BP’s 2021 Statistical Review of World Energy.

  Figure 5 shows that on a combined basis, the overall energy being provided by fossil fuels is likely to remain lower in 2021 and 2022 than it was in 2018 and 2019. This is concerning, because the economy cannot go back to its 2019 level of “openness” and optional travel for sightseers, without a big step up in energy supply, especially for oil.

  This same figure shows that the production of the three fossil fuels is somewhat similar in quantity: Oil is the highest, coal is second, and natural gas comes in third. However, oil shows a step down in 2020’s production from which it has not recovered. Coal shows a smoother pattern of rise and eventual fall. So far, natural gas has mostly been rising, but not very steeply in recent years.

  [6] Alternatives to fossil fuels are not living up to early expectations. Electricity from wind turbines and solar panels is not available when it is needed, requiring a great deal of back-up electricity generated by fossil fuels or nuclear. The total quantity of non-fossil fuel electricity is far too low. A transition now will simply lead to electricity blackouts and recession.

  Figure 6 shows a summary of non-fossil fuel energy production for the years 2000 through 2020, without a projection to 2022. For clarification, wind and solar are part of the electrical renewables category.

  

  Figure 6. World energy production for various categories, based on data from BP’s 2021 Statistical Review of World Energy.

  Figure 6 shows that nuclear electricity production has been declining at the same time that the production of electrical renewables has been increasing. In fact, a significant decrease in nuclear electricity is planned in Europe in 2022. This reduction in nuclear electricity is part of what is causing the concern about electricity supply for Europe for 2022.

  The addition of wind and solar to an electrical grid seems to encourage the closure of nuclear electricity plants, even if they have many years of safe production still ahead of them. This happens because wind and solar are given the subsidy of “going first,” if they happen to have electricity available. Wind and solar may also be subsidized in other ways.

  The net result of this arrangement is that wholesale electricity prices set through competitive markets quite frequently fall too low for other electricity producers (apart from wind and solar). For example, wind and solar electricity that is produced during weekends may be unneeded because many businesses are closed. Electricity produced by wind and solar in the spring and fall may be unneeded because heating and cooling needs tend to be low at these times of the year. Wind and solar electricity providers are not asked to cut back supply because their production is unneeded; instead, low (or negative) prices encourage other electricity producers to cut back supply.

  Nuclear electricity producers are particularly adversely affected by this pricing arrangement because they cannot save money by cutting back their output when wind and solar are over-producing electricity, relative to demand. This strange pricing arrangement leads to unacceptably low profits for many nuclear electricity providers. They may voluntarily choose to be closed. Local governments find that if they want to keep their nuclear electricity producers, they need to subsidize them.

  Wind and solar, with their subsidies, tend to look more profitable to investors, even though they cannot support the economy without a substantial amount of supplementary electricity production from other electricity providers, which, perversely, they are driving out of business through their subsidized pricing structure.

  The fact that wind and solar cannot be depended upon has become increasingly obvious in recent months, as coal, natural gas and electricity prices have spiked in Europe because of low wind production. In theory, coal and natural gas imports should make up the shortfall, at a reasonable price. But total volumes available for import have not been increasing in the quantities that consumers need them to increase. And, as mentioned above, nuclear electricity production is increasingly unavailable as well.

  [7] The total quantity of non-fossil fuel energy supplies is not very large, relative to the quantity of fossil fuel energy. Even if these non-fossil fuel energy supplies increase at a trend rate similar to that in the recent past, they do not make up for the projected fossil fuel production deficit.

  

  Figure 7. Total energy production, based on the fossil fuel estimates in Figure 5 together with non-fossil fuels in Figure 6.

  With respect to anticipated future non-fossil fuel electricity generation, one issue is how much nuclear is being shut off. I would imagine these current closure schedules could change, if countries become aware that they may be facing rolling blackouts without nuclear.

  A second issue is the growing awareness that renewables don’t really work as intended. Why add more if they don’t really work?

  A third issue is new studies suggesting that prices being paid for locally generated electricity may be too generous. Based on such an analysis, California is proposing a major reduction to its payments for renewable-generated electricity, starting July 1, 2022. This type of change could reduce new installations of solar panels on homes in California. Other locations may decide to make similar changes.

  I have shown two estimates of future non-fossil fuel energy supply in Figure 7. The high estimate reflects a 4.5% annual increase in the total supply, in line with recent past increases for the group in total. The lower one assumes that 2021 production is similar to that in 2020 (because of more nuclear being closed, for example). Production for 2022 represents a 5% decrease from 2021’s production.

  Regardless of which assumption is made, growth in non-fossil fuel electricity supply is not very important in the overall total. The world economy is still mostly powered by fossil fuels. The share of non-fossil fuels relative to total energy ranges from 16% to 18% in 2020, based on my low and high estimates.

  [8] The energy narrative we are being told is mostly the narrative that politicians would like us to believe, rather than the narrative that historians and physicists would develop.

  Politicians would like us to believe that we live in a world of everlasting economic growth and that the only thing we should fear is climate change. They base their analyses on models by economists who seem to think that an “invisible hand” will fix all problems. The economy can always grow; enough fossil fuels and other resources will always be available. Governments seem to be able to print money; somehow, this money will be transformed into physical goods and services. With these assumptions, the only problems are distant ones that central banks and carbon taxes can handle.

  The realists are historians and physicists. They tell us that a huge number of past economies have collapsed when their populations attempted to grow at the same time that their resource bases were depleting. These realists tell us that there is a high probability that our current economy will eventually collapse, as well.

  

  Figure 8. The Seneca Cliff by Ugo Bardi

  The general shape that economic growth is likely to take is that of a “Seneca Curve” or “Seneca Cliff.” In the words of Lucius Annaeus Seneca in the first century CE, “Increases are of sluggish growth, but the way to ruin is rapid.” If we think of the amount graphed as the total quantity of goods and services received by citizens, the amount tends to rise slowly, gradually plateaus and then falls.

  We now seem to be encountering lower energy supply while population continues to rise. It takes energy for any activity that we think of as contributing to GDP to occur. We should not be surprised if we are at the edge of a recession. If we cannot get our energy problems solved, the downturn could be very long-lasting.

  Tyler Durden
  Thu, 01/20/2022 – 23:10

• Iran, Russia, China To Hold Joint Naval Drills After Key Putin-Raisi Summit
  Iran, Russia, China To Hold Joint Naval Drills After Key Putin-Raisi Summit

  Russia and Iran have unveiled plans to hold maritime joint naval exercises with China on Friday. The somewhat rare naval drills will take place in the northern Indian Ocean, and is part of a pattern of clearly deepening cooperation between the unlikely allies at a moment each is facing intense pressure from Washington, including US sanctions.

  It’s the third time such drills have taken place between the three powers, with the last taking place Feb.2021. Iran’s semi-official ISNA news agency cited a military commander who said the drills are to “strengthen security and its foundations in the region.” Further Iran as called it part of ongoing “anti–piracy operations” and toward ensuring “safe navigation”. 

  Dubbed the 2022 Marine Security Belt, it comes after Iranian President Ebrahim Raisi met Vladimir Putin in Moscow to discuss deepened security, economic, and strategic cooperation.

  

  Commenting on Wednesday’s meeting, regional sources emphasized Raisi’s statements as focused on expelling American influence and interference from the Mideast region:

  Raisi, at the beginning of the meeting, made it clear that there will be no limits to “expanding and developing relations with friendly Russia,” noting that “relations with Russia will develop into strategic ones.” 

  He said, “In light of the policy of the United States and the West, our relations must be stronger,” adding, “We have been confronting the United States with Russia for 40 years.”

  The Iranian president hopes that Iran’s efforts to lift the sanctions off Iran will succeed. 

  “We have presented to our Russian friends a draft of our vision on the strategic agreement between both countries,” he said, explaining that Iran has documents on strategic cooperation that can determine the horizon of this cooperation over a 20-year period.” 

  The deepening ties are sure to rile hawks in Washington – given also in recent years a number of ship seizures in the vital Strait of Hormuz have been cause of soaring tensions in the key oil shipping lane. Russia and China have also stood by Tehran as it negotiations the dropping of US sanctions as part of ongoing JCPOA talks in Vienna.

  Iran’s President has given us an interview – his first with foreign media.

  Ebrahim Raisi told me of big plans with Russia/China, and how any nation that seeks true independence is targeted and demonized by the US.

  Trump’s killing of Suleimani, cyberattacks and more in full intv pic.twitter.com/2cg1nZHm1x

  — Murad Gazdiev (@MuradGazdiev) January 20, 2022

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  Few details of what’s expected in the drills have been given, with US publications describing, “The Iranian military spokesman said both navies from Iran’s armed forces and Islamic Revolutionary Guards Corps (IRGC) will take part in the upcoming drills with Russia and China.”

  The report further said “The maneuvers are to include tactical exercises such as rescuing a burning vessel, releasing a hijacked vessel, and shooting at air targets at night.”

  Tyler Durden
  Thu, 01/20/2022 – 22:50

• Taibbi: Thomas Friedman Roars Back To Form
  Taibbi: Thomas Friedman Roars Back To Form

  Authored by Matt Taibbi via TK News,

  

  Esteemed Yale professor Samuel Moyn tweeted this yesterday, cruelly tagging me and forcing a look at New York Times columnist Thomas Friedman’s latest:

  Count of metaphors in one column: a whopping thirteen, *none of which have anything to do with each other*. Putin ends up an amputated ex-boyfriend peasant thug eating Ukraine in a tree, killing cows and threatening marriage between bites. @mtaibbi https://t.co/OxQ9wVL0uT

  — Samuel Moyn 🔭 (@samuelmoyn) January 19, 2022

  https://platform.twitter.com/widgets.js

  I met Friedman once, and he was really nice. Moreover he’s clearly tried to rein in (that’s horse imagery) his use of metaphors over the years. However, he slips sometimes. As Professor Moyn notes, “Putin to Ukraine, ‘Marry Me or I’ll Kill You’” is a bad slip, like Ray Milland’s Lost Weekend bad:

  Why is Vladimir Putin threatening to take another bite out of Ukraine, after devouring Crimea in 2014? That is not an easy question to answer because Putin is a one-man psychodrama, with a giant inferiority complex toward America that leaves him always stalking the world with a chip on his shoulder so big it’s amazing he can fit through any door.

  Let’s see: Putin is a modern-day Peter the Great out to restore the glory of Mother Russia. He’s a retired K.G.B. agent who simply refuses to come in from the cold and still sees the C.I.A. under every rock and behind every opponent. He’s America’s ex-boyfriend-from-hell, who refuses to let us ignore him and date other countries, like China — because he always measures his status in the world in relation to us.

  In paragraph one Putin is a biting giant, or giant biter, who stalks the world with a chip on his shoulder so big he only just fits through the huge doors that apparently separate nations (I thought of Richard E. Grant’s talking shoulder-boil in How to Get Ahead in Advertising). In paragraph two Putin starts off as Peter the Great, but a sentence later is Richard Burton (that’s two British actors now), only one who didn’t come in from the cold and “sees the C.I.A. under every rock” (I think the word he’s looking for is “imagines” — see asterisk below).

  Friedman is just getting started: biting-giant, chip-on-his-shouldered, Emperor-Burton-in-a-doorway-Putin is also America’s “ex-boyfriend from hell,” who refuses to let us “date other countries, like China” (we want to date China?) because “he always measures his status in the world in relation to us.”

  This passage made me stop, mentally dropping the images. Friedman seems to be saying Putin is in a perpetual dick-measuring contest with us, but is also our ex-boyfriend, which of course is more than possible (it’s 2022, folks), but did Friedman intend it that way? The guess is he wasn’t going for the wang imagery, in which case he probably wanted to stay away from the word “measure” in the context of a dude with an inferiority complex. On the other hand, the image of a scorned gay giant with micro-wiener dressed as Peter the Great and trapped in a doorway talking to his shoulder-boil is pretty dynamic stuff. I was going with it, heading into this passage:

  If I were a cynic, I’d just tell him to go ahead and take Kyiv because it would become his Kabul, his Afghanistan — but the human costs would be intolerable. Short of that, I’d be very clear: If he wants to come down from the tree in which he’s lodged himself, he’s going to have to jump or build his own ladder. He has completely contrived this crisis, so there should be no give on our part. China is watching — and Taiwan is sweating — everything we do in reaction to Vlad right now.

  Which brings us back to the central question: Vlad, why are you in that tree?

  Not many writers would have the guts to spend multiple opening paragraphs constructing an elaborate image of a giant insecure biting ex-boyfriend who wants to date China, then suddenly introduce the idea that this creature is also stuck in a tree. Worse, Friedman tells him that if he wants to get down, he’s either going to have to jump or “build his own ladder.”

  As to the first point: Putin just a few paragraphs before physically ate Crimea and was “stalking the world with a chip on his shoulder so big it’s amazing he can fit through any door,” so is this a really big tree he’d be jumping out of, or did he shrink? That’s some Alice in Wonderland stuff.

  As to the second point, the “build his own ladder” line almost feels like taunting. Does Putin have tools in the tree? Does he have a saw? If he has a saw, I’m not sure he’d need a ladder to get down, although the logistics of that aren’t obvious, at least not to me. In fact, I’ll send a Bob Ross “Happy Trees University” T-Shirt to the reader who sends in the best diagram or plan for how to get out of a tree with a full set of tools. Just tweet to #FriedmanTreePlan:

  

  Why stop there? I’ll add a Bob Ross Master Paint Set and a Bob Ross Happy Little Trees Ring Toss party game to the person who best sketches or paints the entire Friedman image depicted in this column (tweet to #FriedmanImage). If you’re cocky and thinking that’s no problem, remember we’re only halfway through the piece. Complications lay ahead!

  

  Back to the article: Friedman moves on from the ladder to tell us Taiwan is sweating, before saying, “Which brings us back to the central question: Vlad, why are you in that tree?”

  This is the first time we’re learning the “central” question of the piece is, “Vlad, why are you in that tree?” It’d be a weird transition either way, but a lot less so if he’d just removed the phrase “brings us back,” since we can’t come back to a place we’ve never been. Still, this is classic Friedman, who loves the abrupt switcheroo. I’m reminded of the “Long Bomb” column from ages ago, whose operating metaphor throughout was Bush’s Iraq policy as Hail Mary pass, only to end with it as a “beautifully carved mahogany table” with one leg.

  Speaking of which:

  For Putin, losing Ukraine “is like an amputation,” remarked political scientist Ivan Krastev, chairman of the Center for Liberal Strategies in Sofia, Bulgaria. “Putin looks at Ukraine and Belarus as part of Russia’s civilizational and cultural space. He thinks the Ukrainian state is totally artificial and that Ukrainian nationalism is not authentic.”

  The reason Putin has accelerated his Ukraine threat — which I would call “marry me or I will kill you” — is that he knows that under Ukraine’s current president, Volodymyr Zelensky, the process of Ukrainization has accelerated and the Russian language is being pushed out of schools and Russian television out of the media space.

  We’ve now got a giant amputee who’s yelling down at Ukraine from a tree, “Marry me or I’ll kill you!” If he’s using Richard Burton’s voice to shout from up there, I recommend borrowing the commanding tone from the “Hear me for the sake of your soul, which is in the gravest danger!” scene in Becket, which actually is a little like the British version of “We’ll whack them even in the outhouse.” Is it nitpicking to point out the “Marry or die!” command comes just a few paragraphs after he was supposed to be hung up romantically on the United States? Probably. Continuing:

  I don’t weep for Putin. He is the human embodiment of one of the oldest Russian fables: A Russian peasant pleads to God for aid after he sees that his better-off neighbor has just obtained a cow. When God asks the peasant how he can help, the peasant says, “Kill my neighbor’s cow.”

  The last thing that Putin wants is a thriving Ukraine that joins the European Union and develops its people and economy beyond Putin’s underperforming, autocratic Russia. He wants Ukraine to fail, the E.U. to fracture and America to have Donald Trump as president for life so we’ll be in permanent chaos.

  Putin would rather see our cow die than do what it takes to raise a healthy cow of his own. He’s always looking for dignity in all the wrong places. He’s rather pathetic — but also armed and dangerous.

  I always heard a different, funnier version of that fable, in which a typical Soviet person rubs a lamp, producing a genie who offers him a deal: “I’ll grant you any wish, only your neighbor will receive it twice over.” To which the sovok answers, “Pluck out one of my eyes.” But whatever, stipulating this version, Friedman still just called Ukraine “our cow,” a perhaps unintentionally succinct description of the problem from the Slavic point of view. However that, as Friedman would say, is a whole different ball of beans. More importantly: now that Ukraine’s a cow, does he still want to marry it? If so, would he be standing on one leg or two to consummate the union?

  The Johnny Lee reference at the end is totally superfluous and I’m all for it, although it doesn’t exactly roll off the tongue. (Wait, does Putin have a tongue in this column? If he does, how big is it? I can’t remember). Vladimir Putin, amputee cow-killer in a tree, always lookink for deeg-nity in all the wrong places. Get out of that tree, Vlad! Grow your own cow!

  Friedman still has it, man. Genius doesn’t age. In any case, please send your contest submissions today. Results TK.

  *It’s not a big deal — I’ve written things like, “He sees the face of Jesus in every tree stump” — but you can’t see “under” every rock, unless you have X-ray vision, or you’re picking up all those rocks. However, in that case, you’d see the C.I.A. wasn’t actually there, when Friedman’s point seems to be they aren’t. That’s why you’d probably want a word like “pictures” or “imagines” here. Even “sees” works if you’re using it in the sense of “envisions,” but I doubt that’s what Friedman was thinking. Again, this is small thing, but the man’s instinct for the wrong word is almost superhuman. Noted with awe.

  *  *  *

  Subscribe to TK News by Matt Taibbi

  Tyler Durden
  Thu, 01/20/2022 – 22:30

• Sewage Surveillance Reveals Omicron Arrived In US Even Earlier Than Believed (And Is Disappearing Fast)
  Sewage Surveillance Reveals Omicron Arrived In US Even Earlier Than Believed (And Is Disappearing Fast)

  Shortly after the start of the COVID pandemic, scientists at Yale University started testing wastewater collected from the sewers of New Haven for any insights it might convey about the spread of COVID among the local population. It didn’t take long for researchers in other parts of the country (and the world) to follow suit by testing their own wastewater.

  

  More than a year later, wastewater testing has caught the attention the of the national media, as scientists and journalists search for more comprehensive ways to measure the prevalence of COVID infection within a population now that the emergence of home testing has made it more difficult for the authorities to track the number of positive tests.

  But even before that, we assumed that the number of infections would always outpace the official numbers, since plenty of people with asymptomatic infections never get tested.

  Earlier this month, data out of Boston suggested that the prevalence of COVID was actually much higher than the official numbers reflected.

  

  Now, data gleaned from wastewater is being used by the CDC to help determine when the omicron variant may have arrived in the US. As Bloomberg reports, evidence of omicron appeared in US sewage samples collected as early as Nov. 21, according to data collected by state and local health officials from California, Colorado, Houston and NYC. That data was later shared with the CDC.

  The first infection of omicron in a US-based patient wasn’t confirmed until Dec. 1 (the patient was located in California).

  “The findings give strong early evidence that the omicron variant was likely present or more widely distributed in these communities than originally indicated by clinical testing alone,” the authors said in CDC’s Morbidity and Mortality Weekly Report. The four health authorities were the first to find signs of the variant in their wastewater, according to the study.

  In its report on the findings, BBG added that “analyzing wastewater containing human feces can be an important way to look for warning signs of new mutations, as well as track those already spreading to determine how long existing surges will last.”

  Wastewater can also provide advanced warning of a COVID surge. Dutch researchers reported in March 2020 that they were able to find genetic material from the virus in wastewater before COVID cases were reported in the population.

  Like one BBG source said: “everybody poops”.

  The technique “gives you a heads-up because people may not want to pick up the phone for surveys, but everybody poops,” said Gigi Gronvall, an immunologist at the John Hopkins Center for Health Security. “And it’s so unbiased because everybody uses the same sewer system.”

  The CDC now funds 43 health departments that participate in the National Wastewater Surveillance System, which provides data on COVID’s presence and trends in water systems.

  The great news is that the last week or so has seen the Boston wastewater RNA data plunge…

  

  Source

  The end of omicron is imminent… because everybody poops.

  Tyler Durden
  Thu, 01/20/2022 – 22:10

• Biden Admin Decrees All "Essential" Workers Traveling To US Must Be Fully Vaccinated
  Biden Admin Decrees All “Essential” Workers Traveling To US Must Be Fully Vaccinated

  It’s the latest example of “vaccines for thee, but not for me…”

  Despite the fact that the Supreme Court has blocked OSHA from enforcing the Biden Administration’s corporate vaccination mandate for most US workers, the administration has decided to require travelers visiting the US for “essential” reasons – ie to fill “essential” jobs like serving as a hospital nurse treating COVID patients – to be fully vaccinated.

  

  Travelers arriving in the US by plane have already been required to prove their vaccination status for months now. But the new restrictions, which take effect at the beginning of next week, will expand the requirement to cover foreigners entering the US via port, land or ferry terminals along the US-Mexico and US-Canada borders (though, fortunately for them, a negative COVID test isn’t required for entry at these locations).

  The requirement will also apply to “non-essential” travelers, meaning that people seeking to visit the US must be from one of the countries fortunate enough to have broad access to vaccines.

  In a statement, DHS Secretary Alejandro Mayorkas said he was moving to protect public health while “safely facilitating the cross-border trade and travel that is critical to our economy.”

  “Starting on January 22, 2022, the Department of Homeland Security will require that non-U.S. individuals entering the United States via land ports of entry or ferry terminals along our Northern and Southern borders be fully vaccinated against COVID-19 and be prepared to show related proof of vaccination,” said Secretary Alejandro N. Mayorkas. ”These updated travel requirements reflect the Biden-Harris Administration’s commitment to protecting public health while safely facilitating the cross-border trade and travel that is critical to our economy.”

  Regardless of whether they’re “essential” or “non-essential”, they must do the following:

  • Verbally attest to their COVID-19 vaccination status

  • Provide proof of a CDC-approved COVID-19 vaccination, as outlined on the CDC website

  • Present a valid Western Hemisphere Travel Initiative (WHTI)-compliant document, such as a valid passport, Trusted Traveler Program card, or Enhanced Tribal Card

  • Be prepared to present any other relevant documents requested by a U.S. Customs and Border Protection (CBP) officer during a border inspection

  Of course, this doesn’t bode well for the labor market, especially for hospitals desperate for front-line nurses and other “essential” workers, since health-care workers outside the US are typically even more reluctant to get the vaccine than health-care workers inside the US.

  Economic data, including, most notably, the Fed’s Beige Book (a collection of economic observations) has suggested as of late that the worker shortage in the US has started to ease.

  

  But the Biden Administration’s decision certainly won’t help hospitals and other health-care providers paying traveling nurses 3x what they pay their staff due to the demand.

  Tyler Durden
  Thu, 01/20/2022 – 21:50

• JPMorgan Spots A Crack In The Market One Day Ahead Of $3 Trillion OpEx
  JPMorgan Spots A Crack In The Market One Day Ahead Of $3 Trillion OpEx

  Earlier today we quoted a JPMorgan trader who was wondering if after yesterday’s mid-day swoon, the result of systematic, vol-targeting and CTA strategies unleashing a barrage of sell orders, if today’s action would be similar, to wit: “Let’s see if we can hold pre-market gains throughout the session as yesterday afternoon felt like systematic selling. If 1.90% was a buy-level in bonds, then we may have a relief rally being initiated led by Tech.”

  A few hours later we found out the answer, and it was a resounding no, because just around the time European market closed, the selling resumed, and boy was it glorious:

  

  So what happened? Well, clearly there were more sellers than buyers (yes, contrary to the ridiculous response that sellers and buyers are always the same, sellers can certainly be more than buyers, and it is the change in price that reflects relative selling or buying pressure and preference).

  But there was something more, because as as JPMorgan’s QDS strategist Peng Cheng observed, after weeks of relentless buying the dip by retail traders, on Thursday retail investors net sold $53mm, with $400mm coming in the last 2 hours. This, as JPM puts it, “is notable as it is the first time retail investors have net sold since December 6th. Since December 6th, the retail investor had been net buying, on average, more than $800mm per day.”

  But whereas JPM notes that the above is “great color” it does not get to the why of the sell-off.

  And while the answer includes some combination of technicals, deal gamma, and systematic activity, JPM’s Andrew Tyler writes that the “overarching story is how the Fed is changing investor behavior.” As he notes, the combination of ending QE, beginning QT, and rate hike liftoff has left Equity investors with significant uncertainty, one which is manifesting itself in a “sell all rallies” mentality with regards to the Tech sector.

  What is curious, is that according to JPMorgan’s Positioning Intelligence team, the selling is led by non-Hedge Funds (one wonders just how much of the recent markets tumble is due to deleveraging by risk-parity whales such as Bridgewater). Here is an excerpt from their weekly wrap:

  Tech – Still selling expensive stocks, but buying others: In the US, Expensive Software (JP1BXSFT) continues to underperform and HF flows have remained negative MTD. Additionally, expensive stocks in general (JP1QVLS) saw very strong selling over the past 5 days (>2z) with particularly strong selling on Thurs; it’s worth noting that periods of large selling in the past year have actually been followed by underperformance among these stocks. Despite the selling of expensive stocks and underperformance, Info Tech was actually the most net bought sector in N. Am. (just under +2z) and gross was added (>1z) for the week. Semis were the main driver, although most of TMT saw net buy skews for the week in aggregate.

  As the bank concludes, among the reasons for the market scare is that with the Fed meeting next week, what should be a non-event now has investors questioning (i) will the Fed end QE next week; (ii) is next week a live meeting or does liftoff begin in March; and, (iii)is the first rate hike 25bps, 50bps, or more. Incidentally, JPM’s answer to all is no (and 25bps).

  But before we get there, and get a powerful relief rally as Powell reaffirms that for all of Biden’s hollow rhetoric, the Fed will not cause a market crash just to tame inflation (the same inflation the Fed though was transitory as recently as October) and save Biden’s approval rating…

  

  … there is another issue to consider: tomorrow’s option expiration of $3.1 trillion in notional, including some $1.3 trillion in single-stocks.

  

  As Goldman’s Rocky Fishman writes in his latest Vol Vitals note, “the January expiration is always a focus for single stock option markets, because January options are listed years in advance and can build up high open interest“, a topic we discussed extensively earlier this week in “All You Need To Know About Friday’s “Deep” Option Expiration.“

  Going back to tomorrow’s critical market event, in its post-mortem from Thursday, SpotGamma writes that as expected, “a negative gamma position in all the indices made for volatile trade, today. The high gamma $4,600.00 SPX strike held as resistance; real-money sellers, alongside the hedging of negative delta options trades, bid volatility, and pressured indices.”

  In other words, stock liquidation played into the large negative gamma position which accelerated selling into the close, SpotGamma writes, adding that so long as the SPX trades below its Volatility Trigger – around 4,630 –  SpotGamma sees heightened volatility, and adds that trades with respect to Friday’s monthly OPEX will only compound the instability.

  In short, tomorrow could unleash sheer chaos in early trading, but once trillions in notional expire, taking away with them a substantial chunk of the negative gamma that dealers are currently trapped under, it is quite likely that following an initial burst lower, the market will finally bottom out for the near-term.

  Before we dig a little deeper into what to expect tomorrow, here is some context for today’s waterfall rout, courtesy of SpotGamma:

  Stocks continued to sell, Thursday, pressured by increased jobless claims, the prospects of more aggressive tightening of monetary policy, and poor responses to earnings.

  Growth and rate-sensitive names like Amazon and Peloton (which happened to halt production due to slowing demand), as well as Netflix (which fell after-hours on slower subscriber growth), are just some of the names leading to the downside. There were rumors of forced liquidations, which seemed to sync with with the afternoons indiscriminate selling.

  

  And despite a reduction in gamma levels ahead of today’s regular trade (9:30 AM – 4:00 PM ET),  SpotGamma observes that the move lower in markets, overall, comes with an increased concentration of put-heavy gamma tied to Friday’s monthly options expiration.

  To preface, delta denotes an options exposure to the underlying direction. Gamma, on the other hand, is the potential delta-hedging of options positions. 

  • When a position’s delta rises (falls) with stock or index price rises (falls), the underlying is in a positive-gamma environment.
  • When a position’s delta falls (rises) with stock or index price rises (falls), the underlying is in a negative-gamma environment.

  In the latter case, as the risk of out-of-the-money customer protection developing intrinsic value increases (given an increase in implied volatility or move lower in price), dealers are long more delta, and therefore the addition of hedges (short stock/futures) introduces negative flows (i.e., the addition of short delta hedges to long delta positions) that pressures markets.

  This negative gamma regime, which we experienced today, is affecting both single-stocks and the index products. Below, the selling of calls and buying of puts in Tesla, for instance, is a negative delta trade dealers hedge by selling stock, thus exacerbating weakness.

  To note, the reduction in the positive delta in names like Tesla, which, heading into this week, had nearly 107% of its deltas set to expire (as a percentage of average daily volume), is one dynamic further pressuring markets.

  

  This activity is feeding into products like the Nasdaq which is seeing a lot of put buying. A shift higher in the VIX term structure (below) denotes demand for index protection, especially in shorter-dated options that are more sensitive to changes in direction and implied volatility.

  

  If volatility continues to rise, positive exposure to delta rises. This solicits even more selling.

  

  Why does this matter and why is all of the above potentially bullish? Because many stocks are to have their largest “put-heavy” gamma positions expire soon. We are taking trillions in put notional. These positions are, at present, compounding weakness as dealers sell aggressively against very short-dated, increasingly sensitive negative gamma positions.

  The removal of this exposure post-OPEX and the approaching FOMC event will leave dealers with less positive delta exposure to sell against. That’s why, SpotGamma sees the market soon entering into a window of strength, to which we will only add that once $3+ trillion in options expire Friday and much of the dealer negative gamma overhang disappears, the selling which we predicted would dominate this week ahead of Friday’s Op-Ex, will have exhausted itself and the bandwagon of shorts that piggybacked on the rout in stocks is about to be painfully squeezed higher.

  Still, while the next move is higher, as long as bears successfully maintain S&P prices below the $4,630.00 SPX Volatility Trigger, there is increased potential for instability as dealer hedging flows continue to take from market liquidity (sell weakness and buy strength), further exacerbating underlying movement.

  

  Tyler Durden
  Thu, 01/20/2022 – 21:30

• Bitcoin, Ethereum Tumble Below Key Levels After Russian Crypto Ban, US Tech Wreck
  Bitcoin, Ethereum Tumble Below Key Levels After Russian Crypto Ban, US Tech Wreck

  As we detailed earlier, the Central Bank of Russia issued a report today calling for a blanket ban on domestic cryptocurrency trading and mining.

  The report titled “Cryptocurrencies: Trends, risks, measures” compares cryptocurrencies to a Ponzi scheme and calls for a complete ban on their use throughout Russia. The authors claim that cryptocurrencies are highly volatile in nature and are being used as a tool for illegal activities. The report also warned that crypto could pose a risk to financial sovereignty and could aid people in taking money out of the national economy. The report read:

  “Potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including Russia.” 

  The Russian central bank demanded a complete ban on over-the-counter (OTC) trading desks, crypto exchanges as well as peer-to-peer exchanges. 

  

  At first, cryptos seemed to shrug off the ban, rallying into and beyond the US equity market open but once US tech stocks started to take a beating, cryptos began to weaken and have accelerated as Asian markets open this evening…

  

  This downswing took Bitcoin back below the $40,000 Maginot Line…

  

  And Ethereum back below $3,000…

  

  Notably, Bitcoin’s correlation with tech stocks is soaring once again…

  

  Interestingly, as Russia moves to ban crypto, Bloomberg’s Vincent Cignarella points out that the Biden administration’s threat to block Russian banks’ access to dollars might have carried weight in the past, but in these days of alternative cryptocurrencies, it’s unlikely to work.

  Dollar sanctions may prove all but moot – and Bitcoin could rally significantly – if U.S. officials were to follow through with their dollar threat, as the token offers Russia payment options not available in the past.

  Cignarella notes that bitcoin appears to be in the process of forming a similar pattern seen last June. In completing a third dominant wave, one should expect a small bounce, wave 4 and then a reversion lower, wave 5, to complete — which would signal the end of the current selloff.

  

  It took about a month from last May to June for this to happen. Once complete, Bitcoin entered wave A, the first wave of a reversal. In this case it was a reversal higher, which many mistake as only a minor correction to the previous trend. If the pattern follows last summer, inspired by Russia looking for alternative methods of payments, the rally that could follow would potentially take Bitcoin above previous record highs north of $70,000. All a bit of a what-if scenario no doubt, but a what, and an if, that are a reasonable outcome.

  On the other side of the ledger, CoinTelegraph reports that even though Bitcoin is said to be correlated to traditional markets, BTC derivatives traders were not expecting sub-$44,000 prices, according to the Jan. 21 options expiry. Friday’s $590 million open interest will allow bears to score up to $82 million if BTC trades below $41,000 during the expiry.

  

  Here are the four most likely scenarios for Jan. 21’s $590 million options expiry. The imbalance favoring each side represents the theoretical profit. In other words, depending on the expiry price, the active quantity of call (buy) and put (sell) contracts varies:

  • Between $40,000 and $41,000: 30 calls vs. 3,320 puts. The net result is $132 million favoring the put (bear) options.

  • Between $41,000 and $42,000: 170 calls vs. 2,180 puts. The net result is $82 million favoring the put (bear) instruments.

  • Between $42,000 and $44,000: 1,480 calls vs. 1,130 puts. The net result is balanced between call and put options.

  • Between $44,000 and $45,000: 2,980 calls vs. 630 puts. The net result favors call (bull) instruments by $103 million.

  This crude estimate considers put options being used in bearish bets and call options exclusively in neutral-to-bullish trades. However, this oversimplification disregards more complex investment strategies.

  Bulls need $44,000 to bag a $103 million profit.

  Finally, data released by crypto platform Voyager Digital indicates that nearly two out of three Americans are bullish on crypto, believing it will gain value in 2022.

  Tyler Durden
  Thu, 01/20/2022 – 21:15

• "Bizarro World": Researcher Calls Out Censorship After Journal Pulls COVID-19 Vaccine Adverse Events Analysis
  “Bizarro World”: Researcher Calls Out Censorship After Journal Pulls COVID-19 Vaccine Adverse Events Analysis

  Authored by Petr Svab via The Epoch Times (emphasis ours),

  Jessica Rose didn’t ask for any of this. She started to analyze data on adverse reactions after COVID-19 vaccines simply as an exercise to master a new piece of software. But she couldn’t ignore what she saw and decided to publish the results of her analysis. The next thing she knew, she was in a “bizzarro world,” she told The Epoch Times.

  

  A paper she co-authored based on her analysis was withdrawn by the academic journal Elsevier under circumstances that raised eyebrows among her colleagues. The journal declined to comment on the matter.

  Rose received her PhD in computational biology from the Bar-Ilan University in Israel. After finishing her post-doctoral studies on molecular dynamics of certain proteins, she was looking for a new challenge. Switching to a new statistical computing software, she was looking for an interesting data set to sharpen her skills on. She picked the Vaccine Adverse Event Reporting System (VAERS), a database of reports of health problems that have occurred after a vaccination and may or may not have been caused by it.

  

  She said she wasn’t looking for anything in particular in the data.

  “I don’t go in with questions,” she said.

  What she found, however, was disturbing to her.

  VAERS has been in place since 1990 to provide an early warning signal that there might be a problem with a vaccine. Anybody can submit the reports, which are then checked for duplicates. They are largely filed by health care personnel, based on previous research. Usually, there would be around 40,000 reports a year, including several hundred deaths.

  But with the introduction of the COVID-19 vaccines, VAERS reports went through the roof. By Jan. 7, there were over a million reports, including more than 21,000 deaths. Other notable issues include over 11,000 heart attacks, nearly 13,000 cases of Bell’s palsy, and over 25,000 cases of myocarditis or pericarditis.

  Rose found the data alarming, only to realize authorities and even some experts were generally dismissing it.

  “Clearly, there’s no concern [among these authorities and experts] for people who are suffering adverse events,” she said.

  The usual arguments against the VAERS data have been that it’s unverified and unreliable.

  Rose, however, sees such arguments as irrelevant—VAERS was never meant to provide definitive answers, it’s meant to give early warning and, as she sees it, it’s doing just that.

  “It’s emitting so many safety signals and they’re being ignored,” she said.

  

  She teamed up with Peter McCullough, an internist, cardiologist, and epidemiologist, to write a paper on VAERS reports of myocarditis in youth—an issue already acknowledged as a side effect of the vaccination, though usually described as rare.

  As of July 9, they found 559 VAERS reports of myocarditis, 97 among children ages 12–15. Some of them may have been related to COVID itself, which can also cause heart problems, but there were too many cases to dismiss the likelihood the vaccines were involved, according to the authors.

  “Within 8 weeks of the public offering of COVID-19 products to the 12–15-year-old age group, we found 19 times the expected number of myocarditis cases in the vaccination volunteers over background myocarditis rates for this age group,” the paper said.

  After two weeks, on Oct. 15, the paper disappeared from the Elsevier website, replaced by a notice of “Temporary Removal.” Not only weren’t the authors told why, they weren’t informed at all, according to Rose.

  “It’s unprecedented in the eyes of all of my colleagues,” she said.

  When they brought up the issue with the journal, they were first told the paper was pulled because it wasn’t “invited,” Rose said. That was shot down as irrelevant by McCullough, who threatened to sue for breach of contract. The journal then turned to its terms of use, saying it has the right to refuse any paper for any reason.

  It’s still not clear why the paper was pulled.

  “I do apologise, but Elsevier cannot comment on this enquiry,” said Jonathan Davis, the journal’s communications officer, in an email to The Epoch Times.

  In late November, the paper was replaced by a notice that the “article has been withdrawn at the request of the author(s) and/or editor.”

  “It just feels like weird censorship that isn’t really justified,” Rose said.

  The paper’s conclusions are not necessarily controversial. A recent Danish study concluded, for example, an elevated risk of myocarditis for young people following the Moderna COVID vaccine.

  It’s common, however, even for papers that examine potential issues with the vaccines to frame their results in a way that still endorses vaccination.

  “That’s what you have to say to get your work published these days,” Rose said.

  Her paper did no such thing.

  “As part of any risk/benefit analysis which must be completed in the context of experimental products, the points herein must be considered before a decision can be made pertaining to agreeing to 2-dose injections of these experimental COVID-19 products, especially into children and by no means, should parental consent be waived under any circumstances to avoid children volunteering for injections with products that do not have proven safety or efficacy,” the paper said.

  The paper also called the vaccines “injectable biological products”—a reference to the fact that they are distinct from all other traditional vaccines.

  A traditional vaccine uses “whole live or attenuated pathogens” while the COVID vaccines use “mRNA in lipid nanoparticles,” Rose explained via email. She said the lipid nanoparticles include “cationic lipids which are highly toxic.” Pfizer, the manufacturer of the most popular COVID-19 vaccine in many countries, addressed the issue by saying the dose is sufficiently low to ensure “an acceptable safety margin,” according to the European drug authority, the Committee for Medicinal Products for Human Use (pdf).

  Rose also noted that the COVID-19 vaccines haven’t gone “through the 10-15 years of safety testing that vaccines have always had to go through … for obvious reasons.”

  By this point, Rose is no longer a dispassionate observer. Reading through countless VAERS reports gave her a window into the hardships of those who believe they’ve been harmed by the vaccines.

  “I speak for all of those people,” she said.

  

  In the past, 50 reports of deaths in VAERS would prompt authorities to hit the brakes and investigate, Rose said. In her view, that should have happened with the COVID-19 vaccines a year ago.

  Not only has that not happened, but it isn’t even clear what would be enough to convince the authorities to do so.

  “What’s the cut-off number for the number of deaths?” Rose asked.

  The counterargument is that the vaccines save more lives than they cost. But in Rose’s view, this logic is flawed since the vaccines haven’t been around long enough and studied thoroughly enough to tell how many lives they may cost.

  It is known, however, that VAERS understates adverse events following vaccination—by a factor of anywhere between 5 and as much as 100, based on some estimates.

  Submitting a VAERS report takes about 30 minutes and many medical practitioners simply don’t have the time, Rose said. Some may feel that filing the report may get them labeled as “anti-vaxxers.” Some may simply not associate whatever health issue they’re facing with the vaccination. Some may not even be aware VAERS exists.

  It’s unlikely that any significant number of the reports would be fraudulent, she suggested, noting it’s a federal offense to submit a false report.

  Rose has now joined the ranks of dissident doctors and researchers skeptical of the official line on the vaccines and the pandemic in general. She described it as something she’s compelled to do despite the disincentives involved.

  “We don’t want to be doing this. But it is our duty. Doctors swore an oath to do no harm. And researchers with integrity cannot look away from this,” she said via email.

  Tyler Durden
  Thu, 01/20/2022 – 21:10

• Peloton Stock Bounces After CEO Disputes Report Of Layoffs, Production Halts
  Peloton Stock Bounces After CEO Disputes Report Of Layoffs, Production Halts

  Update (2057ET): Shares in Peloton bounced after hours following a statement from CEO John Foley, who refuted reports of a complete production halt and layoffs, CNBC reports.

  “This week, we’ve experienced leaks containing confidential information that have led to a flurry of speculative articles in the press,” wrote Foley in a letter sent to “the Peloton Team” and posted publicly. “The information the media has obtained is incomplete, out of context, and not reflective of Peloton’s strategy.”

  Foley added that they company had “identified a leaker, and we are moving forward with the appropriate legal action.”

  He called reports that the company had halted the production of stationary bicycle and treadmills “false,” adding that layoffs were not a sure thing at this point.

  

  “We are still in the process of considering all options as part of our efforts to make our business more flexible,” wrote Foley, who said that the company is “resetting our production levels for sustainable growth.”

  

  Read the full letter below:

  Team,

  We have always done our best to share news with you all first, before sharing with the public. This week, we’ve experienced leaks containing confidential information that have led to a flurry of speculative articles in the press. The information the media has obtained is incomplete, out of context, and not reflective of Peloton’s strategy. It has saddened me to know you read these things without the clarity and context that you deserve.

  Before I go on, I want all of you to know that we have identified a leaker, and we are moving forward with the appropriate legal action.

  But moving forward, I want to take a moment to talk about some of the changes with you directly.

  As a public company that is in a pre-earnings “Quiet Period” we are limited in what information we can share. However, we issued a pre-earnings press release earlier this evening about our preliminary Q2 results, in order to offer an initial and more accurate picture of our business performance.

  As you have heard me and other leaders say over the past few months, we are continuing to invest in our growth, but we also need to review our cost structure to ensure we set ourselves up for continued success, while never losing sight of the important role we play in helping our 6.2+ million Members lead healthier, happier lives.

  What this means for our team right now

  In the past, we’ve said layoffs would be the absolute last lever we would ever hope to pull. However, we now need to evaluate our organization structure and size of our team, with the utmost care and compassion. And we are still in the process of considering all options as part of our efforts to make our business more flexible.

  This team is made up of some of the smartest, most passionate, hard-working and KIND people I have ever met. You have each painted your masterpiece at Peloton in your own way, and your contributions matter. They always have, and they always will.

  I am SO proud of everything we have accomplished together, and it pains me we are faced with these tough decisions. | know this is difficult, and I want to thank you for your patience as we work through these times together.

  Rumors that we are halting all production of bikes and Treads are false

  Notably, we’ve found ourselves in the middle of a once-in-a-hundred-year event with the COVID-19 pandemic, and what we anticipated would happen over the course of three years happened in months during 2020, and into 2021.

  We worked quickly and diligently to meet the demand head-on at a time when the world really needed us, in large part thanks to how hard you worked every day. We feel good about right-sizing our production, and, as we evolve to more seasonal demand curves, we are resetting our production levels for sustainable growth.

  Connected Fitness is here to stay

  This past quarter, our churn rate was 0.79%. This means that our Members are sticking with us, again thanks to your brilliance and continued innovation. Connected fitness provides the convenience people need to stay active and centered and will continue to be a key part of the future of fitness. In fact, just a few days ago, we recorded our highest ever number of daily workouts — over 2.9M workouts.

  I want to acknowledge that this does not answer all of the questions I am sure many of you have right now. But, I did want to share what we could at this time. I know there is a lot of noise and anxiety in our environment right now, which is why I wanted to take this moment to provide some additional context for you all as we navigate the next few weeks together.

  *  *  *

  Update (1830ET): After a catastrophic collapse in the company’s share price today – back below its IPO price – it appears Peloton is attempting to kitchen-sink things as it has just pre-announced revenue (miss), subs (miss), and EBITDA (beat but still a huge loss):

  • Prelim revenue about $1.14 billion, estimate $1.16 billion 

  • Prelim connected fitness subscribers about 2.77 million, estimate 2.81 million

  • Prelim adjusted Ebitda loss $260 million to $270 million, estimate loss $332.6 million 

  John Foley, co-founder and CEO, whose net worth slipped to just $350 million today – well off the billionaires ranks, confirmed the actions that CNBC had reported earlier in the day…

  “As we discussed last quarter, we are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company.

  This includes gross margin improvements, moving to a more variable cost structure, and identifying reductions in our operating expenses as we build a more focused Peloton moving forward.  

  This work is still underway and we expect to have more details to share when we report earnings on February 8, 2022.”

  For a brief moment, PTON shares jumped on this release, but it did not last…

  

  *  *  *

  As we detailed earlier, Peloton Interactive, Inc. shares crashed more than 24% after CNBC reported internal documents from the company that said production of its bikes and treadmills would be temporarily halted due to souring demand. Shares have been halted and reopened several times…

  

  …and now trade at a significant discount versus the IPO price of $29…

  

  We suspect the chaps at Viking Global are a little saddle-sore this morning…

  

  In a confidential presentation dated Jan. 10, the company (known for slapping an iPad on a stationary bike and charging thousands of dollars) said demand for its bikes and treadmill had faced a “significant reduction” worldwide.

  CNBC explains more about Peloton’s upcoming production halts: 

  Peloton plans to pause Bike production for two months, from February to March, the documents show. It already halted production of its more expensive Bike+ in December and will do so until June. It won’t manufacture its Tread treadmill machine for six weeks, beginning next month. And it doesn’t anticipate producing any Tread+ machines in fiscal 2022, according to the documents. Peloton had previously halted Tread+ production after a safety recall last year.

  Peloton has completely misjudged demand as it’s stuck with thousands of cycles and treadmills sitting in warehouses across the country. 

  We’ve been reporting on the Peloton story for the last week, citing multiple reports of storm clouds gathering over the company. The first was a notice from the company, informing new customers it would charge hundreds of dollars in fees for delivery and setup of bikes and treadmills. The second piece of news is the company working with management consulting group McKinsey & Co. to analyze cost structure and potentially slash jobs. 

  Meanwhile, Peloton executives and insiders unloaded hundreds of millions of dollars in shares in prearranged 10b5-1 plans with an average cost basis well over $100. Insider selling stopped after a terrible earnings release in November. 

  

  Insiders knew all long this was an unsustainable business (hence why they dumped into gullible retail). 

  The recent release of the new Peloton Bike+ has yet to save the company. Maybe because the bike costs a whopping $2,500. 

  As we’ve noted before, the company needs to quickly expand into the metaverse and engineer a short squeeze by saying it’s coming out with a VR cycling product.

  … or maybe this. 

  Peloton needs to quickly pivot to powering bitcoin miners

  — zerohedge (@zerohedge) January 20, 2022

  https://platform.twitter.com/widgets.js

  Tyler Durden
  Thu, 01/20/2022 – 20:58

• Pelosi's Top Pick For Transportation Committee Caught On Video "Repeatedly" Crashing Her Car While Attempting To Park
  Pelosi’s Top Pick For Transportation Committee Caught On Video “Repeatedly” Crashing Her Car While Attempting To Park

  In another stunning display of total liberal competence, Nancy Pelosi’s top pick to chair the Transportation Committee was caught on video this week grinding her vehicle into parked cars while attempting the difficult task of parking. 

  Video shows 84-year-old Eleanor Holmes Norton grinding up against a nearby vehicle while pulling awkwardly into a parking spot.

  She was caught red handed not even leaving a note before leaving the scene. The octogenarian represents the District of Columbia as a Democrat.

  .@SpeakerPelosi is seriously considering this person to serve as the chairwoman of the Transportation Committee. pic.twitter.com/Gh5698ZeYU

  — Thomas Massie (@RepThomasMassie) January 17, 2022

  https://platform.twitter.com/widgets.js

  As the video shows, Norton pulls into a diagonally aligned parking spot at a perpendicular angle, likely pulling in from the wrong direction, putting her car at a terrible angle among the other parked cars. 

  She then locks the car using her keyfob and casually walks away.

  Congressman Thomas Massie put the video up on his Twitter account this week, and it immediately went viral. 

  “Speaker Pelosi is seriously considering this person to serve as the chairwoman of the Transportation Committee,” Massie wrote. “Folks, I’m not making this up.”

  

  Tyler Durden
  Thu, 01/20/2022 – 20:50

• This Is Your Last Chance, Part 1
  This Is Your Last Chance, Part 1

  Authored by Robert Gore via Straight Line Logic blog,

  The indictment is long and strong.

  A cabal of politicians, governments, courts, medical authorities, pharmaceutical companies, multinational agencies, the mainstream media, academics, and foundations, particularly the World Economic Forum, have concocted responses to a virus and its variants that have robbed the people of rightful liberties, are a mechanism for the imposition of global totalitarianism, and have amplified rather than reduced the virus’s dangers, inflicting severe injury and death that will last years, perhaps decades, and afflict millions, if not billions, of victims (See “The Means Are The End,” Robert Gore, SLL, November 13, 2021).

  This is their last chance.

  

  They can reverse course and pray to whatever demonic deity they pray to that it’s enough to prevent the retribution they deserve, or they can perish in the destruction they’ve created. They will reap what they have sown, their time is up.

  This is it, the last gasp of the psychopaths who express their contempt and hatred for humanity by trying to rule it. Compulsion, not voluntary and natural cooperation. Power, pull, and politics, not incentives, competition, honest production, and value-for-value trade. From each according to his virtue to each according to his depravity.

  “The Last Gasp,” Robert Gore, SLL, March 24, 2020

  Their time is up.

  This assertion may appear as recklessly foolish as Luke Skywalker’s ultimatum – “Jabba, this is your last chance, free us or die!” – did to Jabba the Hut at the Sarlacc Pit.

  It’s not, but to understand why requires an understanding of slow moving (on human time scale) but enormously powerful forces. Most history studies the wrong things and most predictions are straight line projections of the present and recent past.

  The linchpin of history is innovation, not governments and rulers. We don’t know who ruled whom when humanity lived in caves, but we do know that someone tamed fire, someone planted seeds and cultivated them for food, and someone invented the wheel. With such steps humanity emerged from the caves and began building civilization. Even at this early stage one thing was clear: innovation creates new capabilities and opportunities and serves as the basis for further innovation.

  Government is the acquisition of resources that enables those who govern to exercise control over those whom they govern. This presupposes resources, which presupposes production. Government is always subsidiary to production, yet most history focuses on the former and treats the latter as a secondary matter. This is looking down the telescope from the wrong end. Before a government can take someone must make.

  History as studied is a dreary succession of violent takers: their kingdoms and empires, their exactions from the populace, their wars, their depredations, their monuments, and so on. Most of this is trivial compared to the innovation that gets short shrift.

  Who ruled which nations in 1440 and what effect does whatever they did have on us today? There’s not one person in ten million who can knowledgeably answer those questions. Ask instead if the moveable-type printing press that Johannes Gutenberg invented that year has had an effect on their lives and most will acknowledge its inescapable importance.

  The few rulers who have ruled wisely are largely forgotten. Wise rule is maintaining the conditions that allow the people themselves to create, innovate, and produce, what’s been called the night watchman state. Protecting them and their property from invasion, violence, theft, and fraud are the important but minimalist assignments for such governments. Crucially, such protection of the people extends to protection from the government itself. This type of government offers would-be rulers no opportunity for the larceny, self-aggrandizement, and power they crave, which is why they’ve been so rare.

  The perfect night watchman state has never been achieved. There have only been a few that have come close. Conditions of relatively greater freedom, however, have coincided with the explosions of innovation and productivity that have bequeathed to humanity most of its progress.

  The United States’ explosion was the Industrial Revolution, which launched virtually every important industry we have today and took the nation from its agrarian roots to industrial preeminence. With the exception of Theodore Roosevelt, an outlier in many unfortunate ways, the presidents who presided during the Industrial Revolution (1865-1913) have passed into obscurity, always a desirable fate for presidents. (See “The Magnificent Eleven,” Robert Gore, SLL, May 3, 2017. For a fictional treatment of the period, see The Golden Pinnacle, Robert Gore, 2013.)

  Nineteenth-century fecundity set the table for twentieth-century insanity, giving psychopathic rulers the resources for two world wars and innumerable smaller ones, history’s most totalitarian governments, genocides, and the perpetration of myriad other miseries and horrors. The twentieth century is easily history’s most tyrannical and bloody . . . so far. Emblematic of the century is its “greatest” invention, nuclear weaponry, which can destroy all life on earth.

  In the United States, establishment of the central bank and imposition of income taxes in 1913 allowed the government to expropriate a far higher share of the nation’s incomes and wealth than it had. Shortly thereafter, ignoring George Washington’s sage advice to avoid foreign entanglements, the U.S. entered World War I. The Industrial Revolution and its comparative freedom were over, the accretion of state power that continues to this day was underway.

  Government resurfaced as the dominant institution, as it has been for most of history, not just in the U.S. but around the globe. Intellectual fashion followed the political trend. Money and power—heady prospects for many intellectuals—were to be had promoting the growth of the state and toadying to its functionaries. A few brave souls spoke out against the trend and championed freedom, but they were ignored and shunned. Today, champions of freedom are consigned to obscure corners of the Internet.

  You would think that living off the Industrial Revolution’s productive legacy, with first call on incomes and accumulated wealth, rulers would command more than ample resources to do whatever they desired. Such is not the case. Their schemes and rapacity are unlimited while even in the most productive and wealthy societies, resources are not. Governments and their central banks have created a debt explosion that leaves the world in the deepest financial hole it’s ever been.

  The explosion has accelerated the past few years, leaving rulers at the outer limits of what they can expropriate or borrow. Whatever growth in GDPs they now hail, the unmentioned growth in debt is greater—the hole gets deeper. This state of affairs illustrates history’s central truism: governments can’t produce. Their stock in trade, coercion and violence, only destroys. Making producers tax and debt slaves to those who produce nothing destroys both production and integrity.

  The death knell sounded in 1971 when the United States government repudiated the last vestige of its promise to redeem its dollars for gold. Debt would be the coin of the realm. The bland term “financialization” hides the moral obscenity. Each year the nation’s debt has grown. Production, when netted against that debt, has shrunk, and an increasingly large portion of what remains is diverted to those who don’t produce. Washington decides who gets what, but it can’t command the what. That shrinks as productive virtue is penalized and theft, fraud, and violence are rewarded.

  This increasingly precarious state of affairs has lasted for fifty years. It won’t last much longer. Only moral and intellectual bankruptcy greater than current financial bankruptcy could call this abject failure a failure of capitalism.

  Capitalism is the economics of political freedom. The strangulation of both in the U.S. officially commenced in 1913. They are the antithesis of what we now have, state-directed collectivism. Capitalism and freedom didn’t fail the people, the people failed capitalism and freedom. If people can’t handle individual freedom—as collectivists like to argue—they certainly can’t handle collectivist power, as the twentieth and twenty-first centuries have amply demonstrated. It’s like the one brat in a room full of self-directed, happily interacting children seizing control of the room.

  Part 2 coming soon…

  Tyler Durden
  Thu, 01/20/2022 – 20:30

• Texas Joins West Virginia In Boycotting BlackRock Over 'Decarbonization' Push
  Texas Joins West Virginia In Boycotting BlackRock Over ‘Decarbonization’ Push

  Typically, letters to investors don’t elicit this kind of backlash. But given BlackRock’s outsize influence on the US (and the global) economy, perhaps it’s not surprising that a handful of US states with thriving energy industries are expressing their frustration with BlackRock CEO Larry Fink and his latest essay about the importance of “stakeholder capitalism”.

  As we reported yesterday, West Virginia’s state treasurer has announced that the state would end use of BlackRock funds for all state investments in retaliation for the firm’s antagonistic stance toward the oil and gas industry.

  Now, Texas Lieutenant Governor Dan Patrick has joined the fray, issuing a letter of his own late Wednesday urging his own state’s comptroller, Glenn Hegar, to place BlackRock on a list of companies that have cut ties with the Texas oil and gas industry.

  “If Wall Street turns their back on Texas and our thriving oil and gas industry, then Texas will not do business with Wall Street,” Patrick wrote.

  Unlike his previous letter to investors from 2021, when Fink announced BlackRock’s commitment to achieving “net zero” emissions while pressuring energy companies to make climate protection more of a priority, Fink said in his latest letter that companies must balance the interests of many different stakeholders. In a sense, Fink was walking back BlackRock’s hostile stance toward fossil fuel companies.

  

  BlackRock clarified in a statement that it “does not boycott energy companies,” according to Bloomberg.

  The firm “does not boycott energy companies,” New York-based BlackRock said in an emailed statement. “We do not pursue divestment from oil and gas companies as a policy. We will continue to invest in these companies and work with them to maximize long-term value for our clients. Our primary concern with the law is the potential negative consequences it could have on current and future Texas pensioners.”

  In his letter to Hegar, Lt. Gov. Patrick referenced the “Oil & Gas Investment Protection Act”, a Texas law that was passed and signed into law by Gov. Greg Abbott last year. The law stipulates that the Texas government shouldn’t contract with or invest in companies that boycott the energy industry. As part of the law, the state comptroller is tasked with preparing an “official list” of firms that are attacking the state’s most important industry. Lt. Gov. Patrick is asking that BlackRock be placed “at the top” of that list.

  Patrick explained that BlackRock’s commitment to “net zero” emissions and decarbonization directly contradicts the firm’s assurances that it is “committed to Texas and Texas’s vast energy footprint.”

  “Just yesterday, BlackRock Chairman and CEO, Larry Fink, issued his annual 2022 letter to CEOs indicating that BlackRock’s goal is to transition to a “net zero” world, including decarbonizing the energy sector. Needless to say, it is highly inconsistent to claim support for Texas’ oil and gas energy industry while leading a “net zero” policy effort that will destroy the oil and gas industry and destabilize the economy worldwide.”

  Now that Texas has joined W.Va. in slamming BlackRock and Larry Fink over their (largely fanciful) commitments to “net zero” and promises to divest from oil and gas firms, we’re certainly curious to see if any more states with vibrant energy industries (Oklahoma, perhaps?) add their voices to the chorus of criticism directed at the world’s largest asset manager.

  Readers can find Lt. Gov Patrick’s complete letter below:

  Dear Comptroller Hegar,

  Thank you for your ongoing efforts to implement Senate Bill (SB) 13 (87th Regular Session), the Oil & Gas Investment Protection Act, by Sen. Brian Birdwell, R-Granbury. As you know, this law says Texas should not contract with or invest in companies that boycott energy companies. Because I strongly believe we need to prioritize and protect our state’s and nation’s energy independence, I made the passage of SB 13 a high priority.

  As you prepare the official list of companies that boycott energy companies, I ask that you include BlackRock, and any company like them, that choose to hurt Texas oil and gas energy companies by boycotting them in violation of Senate Bill 13. As I have stated before, if Wall Street turns their back on Texas and our thriving oil and gas industry, then Texas will not do business with Wall Street.

  Please know, BlackRock only recently met with my office after you sent BlackRock and others a letter threatening to take action against entities that boycott energy companies. At the meeting with my staff, Blackrock said it was committed to Texas and Texas’s vast energy footprint, but I have grave concerns that BlackRock’s public statements and actions do not reflect its sentiments presented to my office.

  Just yesterday, BlackRock Chairman and CEO, Larry Fink, issued his annual 2022 letter to CEOs indicating that BlackRock’s goal is to transition to a “net zero” world, including decarbonizing the energy sector. Needless to say, it is highly inconsistent to claim support for Texas’ oil and gas energy industry while leading a “net zero” policy effort that will destroy the oil and gas industry and destabilize the economy worldwide.

  This is nothing new for Mr. Fink. In his 2020 letter to CEOs, he stated that Blackrock would be “exiting investments that present a high sustainability-related risk.”

  He expanded on this initiative further in his letter to BlackRock’s clients:

  “Where we do not see progress in [transitioning to “net zero”], and in particular where we see a lack of alignment combined with a lack of engagement, we will not only use our vote against management for our index portfolio-held shares, we will also flag these holdings for potential exit in our discretionary active portfolios[.]”

  According to Bloomberg on January 12, 2022, when addressing their new Climate Action Multi-Asset Fund and Climate Action Equity Fund, BlackRock said that it intends to incorporate a year-on-year decarbonization rate and identify companies that appear to be “long-term, disruptive structural winners” in driving down greenhouse gas emissions.

  These statements indicate that BlackRock is capriciously discriminating against the oil and gas industry by exiting investments solely because companies do not subscribe to a “net zero” policy beyond what is required by law.

  According to SB 13, a company is considered to be boycotting an energy company if it limits relations with an entity involved in the fossil fuel-based energy sector if the entity “does not commit or pledge to meet environmental standards beyond applicable federal and state law[.]” Committing to a “net zero” carbon strategy is beyond applicable environmental standards in federal and state law. Therefore, BlackRock is boycotting energy companies by basing investment decisions on whether a company pledges to meet BlackRock’s “net zero” goals.

  Furthermore, BlackRock’s discrimination goes well beyond just its investment decisions. In a recent Wall Street Journal article, it was noted that “BlackRock made waves last spring when it voted to replace three Exxon Mobil Corp. directors over the oil giant’s reluctance to quickly transition to cleaner energy sources.” It is not appropriate for Mr. Fink and BlackRock, or any other company, to arbitrarily strong-arm the energy sector to commit to exceed federal and state environmental laws.

  As you prepare the list of those that boycott Texas energy companies, I ask that BlackRock be at the top of the list, and any company like them that discriminates against Texas energy. I am committed to keeping Texas the number one oil and gas state in the country. Texas will not do business with those that boycott fossil fuels.

  Thank you for all you do for Texas.

  Tyler Durden
  Thu, 01/20/2022 – 20:10

• New Emails Expose Fauci's Role In Shaping Highly Influential Paper That Established COVID "Natural Origin" Narrative
  New Emails Expose Fauci’s Role In Shaping Highly Influential Paper That Established COVID “Natural Origin” Narrative

  Authored by Jeff Carlson and Hans Mahncke via The Epoch Times,

  New evidence has emerged that suggests that Dr. Anthony Fauci not only initiated efforts to cover up evidence pointing to a lab origin of SARS-CoV-2 but actively shaped a highly influential academic paper that excluded the possibility of a lab leak.

  

  Fauci’s involvement with the paper wasn’t acknowledged by the authors, as it should have been under prevailing academic standards. Neither was it acknowledged by Fauci himself, who denied having communicated with the authors when asked directly while testifying before Congress last week.

  The article, Proximal Origin, was co-authored by five virologists, four of whom participated in a Feb. 1, 2020, teleconference that was hastily convened by Fauci, who serves as director of the National Institute of Allergy and Infectious Diseases (NIAID), and Jeremy Farrar, who heads the UK-based Wellcome Trust, after public reporting of a potential link between the Wuhan Institute of Virology in China and the COVID-19 outbreak.

  The initial draft of Proximal Origin was completed on the same day the teleconference, which wasn’t made public, took place. Notably, at least three authors of the paper were privately telling Fauci’s teleconference group both during the call and in subsequent emails that they were 60 to 80 percent sure that COVID-19 had come out of a lab.

  Until now, it wasn’t known what role, if any, Fauci played in shaping the contents of the article, which formed the primary basis for government officials and media organizations to claim the “natural origin” theory for the virus. While the contents of emails previously released under the Freedom of Information Act (FOIA) show the Proximal Origin paper clearly conflicts with the authors’ private views on the virus’ origin, it was unclear if the authors had preemptively reshaped their views to please Fauci or if Fauci himself had an active role in shaping the article.

  As the head of NIAID, Fauci controls a large portion of the world’s research funds for virologists. At least three virologists involved in the drafting of Proximal Origin have seen substantial increases in funding from the agency since the paper was first published. Any interference by Fauci in the paper’s narrative would present a serious conflict of interest.

  Emails Show That Fauci, Collins Exerted Influence

  Newly released notes taken by House Republican staffers from emails that still remain largely redacted clearly point to Fauci having been actively engaged in shaping the article and its conclusion. The GOP lawmakers gained limited access to the emails after a months-long battle with Fauci’s parent body, the Department of Health and Human Services.

  The new emails reveal that on Feb. 4, 2020, one of the article’s co-authors, virologist Edward Holmes, shared a draft of Proximal Origin with Farrar. Like Fauci, Farrar controls the disbursement of vast amounts of funding for virology research.

  Holmes prefaced his email to Farrar with the note that the authors “did not mention other anomalies as this will make us look like loons.” It isn’t known what other anomalies Holmes was referring to, but his statement indicates that Proximal Origin may have omitted certain anomalies of the SARS-CoV-2 virus, suggesting that the paper may have been narrative-driven from the start.

  

  Dr. Anthony Fauci (R), director of the National Institute of Allergy and Infectious Diseases, speaks while U.S. President Donald Trump (C) and Vice President Mike Pence listen during a briefing on the coronavirus pandemic, in the press briefing room of the White House on March 24, 2020. (Drew Angerer/Getty Images)

  During Fauci’s teleconference, participants had discussed at least two anomalies specific to the virus—the virus’s furin cleavage site, which has never been observed in naturally occurring SARS coronaviruses, and the pathogen’s unusual backbone, which fails to match any known virus backbone.

  Farrar almost immediately shared Holmes’s draft with Fauci and Collins via email, while excluding other participants of the teleconference. The ensuing email thread containing discussion among the three suggests that the reason for the secretiveness may have been that they were shaping the content of the paper itself, something that has never been publicly acknowledged.

  It’s notable that the email thread included only the three senior members of the teleconference. Using Farrar as a conduit to communicate with the authors may have been seen by Fauci and Collins as adding a layer of deniability.

  Fauci, Collins Express Concern Over ‘Serial Passage’

  During a Feb. 4, 2020, email exchange among the men, Collins pointed out that Proximal Origin argued against an engineered virus but that serial passage was “still an option” in the draft. Fauci appeared to share Collins’s concerns, noting in a one-line response: “?? Serial passage in ACE2-transgenic mice.”

  Serial passage is a process whereby a virus is manipulated in a lab by repeatedly passing it through human-like tissue such as genetically modified mice, which mimic human lung tissue. This is notable given that during the Feb. 1 teleconference, at least three of Proximal Origin’s authors had advised Collins and Fauci that the virus may have been manipulated in a lab through serial passage or by genetic insertion of certain features.

  

  Then-National Institutes of Health Director Dr. Francis Collins stands in Bethesda, Md., on Jan. 26, 2021. Collins stepped down in December 2021. (Brendan Smialowski/AFP via Getty Images)

  One day after Fauci and Collins shared their comments, on Feb. 5, 2020, Farrar emailed Fauci and Collins stating that “[t]he team will update the draft today and I will forward immediately—they will add further comments on the glycans.”

  The reference to glycans is notable as they are carbohydrate-based polymers produced by humans. The push by Fauci, Collins, and Farrar to have the paper’s authors expand on the issue of glycans appears to confirm that they were exerting direct influence on the content of Proximal Origin.

  According to Rossana Segreto, a microbiologist and member of the virus origins search group DRASTIC, emphasizing the presence of glycans in SARS-CoV-2 might suggest that Fauci and his group were looking to add arguments against serial passage in the lab. A study later found that Proximal Origin’s prediction on the presence of the O-linked glycans wasn’t valid.

  The newly released emails don’t reveal what additional discussions may have taken place among Fauci, Collins, and Farrar in the ensuing days. Perhaps that’s partly because Farrar had noted on another email thread addressed to Fauci’s teleconference group that scientific discussions should be taken offline.

  Online Version Appears to Incorporate Fauci, Collins Suggestions

  Eleven days later, on Feb. 16, 2020, Proximal Origin was published online. The paper argued aggressively for a natural origin of SARS-CoV-2.

  An immediate observation from an examination of the Feb. 16 version of Proximal Origin is that “glycans,” the term that Farrar, Fauci and Collins wanted to emphasize, is cited 12 times. We don’t know to what extent glycans were discussed in the Feb. 4 draft as it remains concealed by National Institute of Health (NIH) officials.

  An item of particular significance is that the Feb. 16 version omits any mention of the ACE2-transgenic mice that Fauci had initially flagged in his Feb. 4 email to Collins and Farrar. While the Feb. 16 version of Proximal Origin acknowledges that a furin cleavage site could have been generated through serial passage using animals with ACE2 receptors, the cited animals in the Feb. 16 version were ferrets—not transgenic mice.

  

  The P4 laboratory on the campus of the Wuhan Institute of Virology in Wuhan, Hubei Province, China, on May 13, 2020. (Hector Retamal/AFP via Getty Images)

  The authors’ use of ferrets is peculiar not only because the term “transgenic mice” was almost certainly used in the Feb. 4 version but also because it was known at the time that the Wuhan Institute of Virology was conducting serial passage experiments on coronaviruses using ACE2 transgenic mice.

  Even more conspicuously, the reference to ferrets was removed entirely from a March 17 updated version of the paper. In its place, a passage was added that stated “such work [serial passage experiments with ACE2 animals] has also not previously been described,” in academic literature—despite the fact that the Wuhan Institute’s work with ACE2 transgenic mice has been extensively described in academic papers.

  Published Version of Proximal Origin Was Altered

  Following the online publication of Proximal Origin on Feb. 16, 2020, the article was published in the prominent science journal Nature on March 17. In addition to the changes surrounding the transgenic mice, a number of other notable edits were made to strengthen the natural origin narrative.

  On March 6, 2020, the paper’s lead author, Kristian Andersen, appeared to acknowledge the inputs from Collins, Farrar, and Fauci, when he emailed the three to say, “Thank you again for your advice and leadership as we have been working through the SARS-CoV-2 ‘origins’ paper.”

  Perhaps most strikingly, the most often publicly cited passage from the March 17 version of the paper, “we do not believe that any type of laboratory-based scenario is plausible,” doesn’t appear in the Feb. 16 version. Additionally, while the Feb. 16 version states that “genomic evidence does not support the idea that SARS-CoV-2 is a laboratory construct” the March 17 version was altered to state that “the evidence shows that SARS-CoV-2 is not a purposefully manipulated virus.”

  Similar changes in language are evident in various parts of the March 17 version. For example, a section that stated “analysis provides evidence that SARS-CoV-2 is not a laboratory construct” was amended to read “analyses clearly show that SARS-CoV-2 is not a laboratory construct.”

  

  A medical staff member gestures inside an isolation ward at Red Cross Hospital in Wuhan in China’s Hubei Province on March 10, 2020. (STR/AFP via Getty Images)

  The March 17 version also omits an entire section from the Feb. 16 version that centered around an amino acid called phenylalanine. According to Segreto, a similarly situated amino acid in the original SARS virus had “mutated into phenylalanine as result of cell passage in human airway epithelium.” Segreto surmises that the Proximal Origin authors might have deleted this section so as not to highlight that the phenylalanine in SARS-CoV-2 might have resulted from serial passage in a lab.

  Segreto’s analysis is backed up by the fact that another section in the Feb. 16 version which states that “experiments with [the original] SARS-CoV have shown that engineering such a site at the S1/S2 junction enhances cell–cell fusion,” was reworded in the March 17 version to leave out the word “engineering.” Indeed, while the Feb. 16 version merely downplayed the possibility of the virus having been engineered in a lab, in the March 17 version, the word “engineered” was expunged from the paper altogether.

  Another sentence omitted from the March 17 version noted that “[i]nterestingly, 200 residents of Wuhan did not show coronavirus seroreactivity.” Had the sentence remained, it would have suggested that, unlike other regions in China, no SARS-related viruses were circulating in Wuhan in the years leading up to the pandemic. That makes natural spillover less likely. The director of the Wuhan Institute of Virology, Shi Zhengli, herself admitted that she never expected a SARS-related virus to emerge in Wuhan. When viruses emerged naturally in the past, they emerged in southern China.

  Shi’s credibility already was coming under fire for failing to disclose that she had the closest known relative of SARS-CoV-2 in her possession for seven years—a point noted early on by Segreto. Additionally, the Wuhan Institute took its entire database of viral sequences offline on Sept. 12, 2019. Despite the Wuhan Institute’s documented deletion and concealment of data, Proximal Origin’s central argument is that SARS-CoV-2 had to be natural since its backbone didn’t match any known backbones.

  However, even before the March 17 version was published, Segreto had stated publicly that Proximal Origin’s central backbone argument was inherently flawed, precisely because there was no way of knowing whether the Chinese lab had published the relevant viral sequences.

  Fauci, Collins, Farrar Roles Improperly Concealed

  The email exchange among Fauci, Farrar, and Collins presents clear evidence that the three men took an active role in shaping the narrative of Proximal Origin. Indeed, a careful comparison of the Feb. 16 and March 17 versions show that the changes made fail to reflect any fundamental change in scientific analysis.

  Instead, the authors employed linguistic changes and wholesale deletions that appear to have been designed to reinforce the natural origin narrative.

  Close scrutiny of the email discussions by the three scientists also suggests that there was no legal justification for redacting any of the newly released information in the first place.

  

  Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, talks to members of the press prior to an event at the State Dining Room of the White House on Jan. 21, 2021. (Alex Wong/Getty Images)

  Science journals require that contributions to scientific papers need to be acknowledged. According to Nature’s publishing guidelines, “[c]ontributors who do not meet all criteria for authorship should be listed in the Acknowledgements section.” The newly revealed sections of the still-redacted emails appear to confirm that Fauci, Farrar, and Collins met the criteria for acknowledgement but their names have never appeared on any published version of Proximal Origin, suggesting that the three didn’t want their involvement in the paper’s creation to be known.

  Collins Asked Fauci ‘to Help Put Down’ Fox News Story

  A final email released by the House Republicans shows that Collins wrote Fauci several months later on April 16, 2020, telling him that he had hoped that Proximal Origin would have “settled” the origin debate, but it apparently hadn’t since Bret Baier of Fox News was reporting that sources were confident the virus had come out of a lab.

  Collins asked Fauci whether the NIH could do something “to help put down this very destructive conspiracy” that seemed to be “growing momentum.” Collins also suggested that he and Fauci ask the National Academy of Sciences, Engineering, and Medicine (NASEM) to weigh in. As was revealed in previous emails released under FOIA, Fauci’s group had pushed NASEM in early Feb. 2020 to promote the natural origin narrative.

  Fauci told Collins that the lab leak theory was a “shiny object” that would go away in time. However, the next day, Fauci took responsive action when he categorically dismissed the possibility of a lab origin of COVID-19 during on April 17, 2020, White House press conference. In doing so, Fauci cited the Proximal Origin paper as corroboration of his claims. Notably, Fauci feigned independence, telling reporters that he couldn’t recall the names of the authors. Unbeknownst to reporters and the public at the time, four out of the five authors had participated in Fauci’s Feb. 1, 2020, teleconference.

  Now, we know that Fauci had involvement in shaping the very article that he cited.

  Fauci’s intervention at the April 17 White House briefing was effective, since media interest in the lab leak theory quickly waned. It didn’t resurface until May 2021, when former New York Times science writer Nicholas Wade published an article discussing the likelihood of a lab leak. Wade noted that “[a] virologist keen to continue his career would be very attentive to Fauci’s and Farrar’s wishes.”

  Notably, Segreto had raised a similar concern after Proximal Origin was first published in February 2020, asking whether certain virologists were scared that if the truth came out, their research activities would be curtailed.

  Tyler Durden
  Thu, 01/20/2022 – 19:50

• Biden Authorizes Rush Deliveries Of US Weapons To Ukraine Via Baltic Allies
  Biden Authorizes Rush Deliveries Of US Weapons To Ukraine Via Baltic Allies

  The Biden administration is pulling the trigger on sending anti-tank weapons and air defense systems into Ukraine in order assist in repelling any potential Russian invasion. Further the White House has “notified Congress it intends to send five Mi-17 Transport Helicopters to Ukraine, officials Say,” according to The Wall Street Journal.

  But this weapons transfer will not be done directly, instead, it will be facilitated through third party allies – namely Estonia, Lithuania, and Latvia. The proposed plan for some further limited military assistance to Ukraine was revealed earlier this week, but as of Thursday afternoon the administration has authorized it. 

  

  CBS News is also reporting that “U.S. officials confirmed to CBS News that the Biden administration had given permission to several NATO allies to send emergency shipments of U.S.-made weapons — including anti-tank missiles — to Ukraine to reinforce the country’s defenses.”

  The report details, coming just a day after Biden said it was his “guess” that Putin is preparing to “move in” to Ukraine, that—

  State Department sources said allies including Estonia, Latvia, Lithuania and the U.K. were cleared to make “Third Party Transfers” of U.S.-made and supplied equipment to Ukraine, which one official described as part of a race “to get as much gear to the Ukrainians as quickly as possible.”

  Up to this point it’s remained unclear the degree to which the administration might authorize any level of a military response. For years the US has already supplied Ukraine’s army with military equipment, and has even had limited numbers of special forces in the country training Ukrainian counterpart forces. 

  Earlier this week UK’s Defence Secretary Ben Wallace announced a arms shipments for Ukraine, which have been reported ongoing over a period of a last three days on a series of military flights to Kiev…

  Here’s a time-lapse of all of the United Kingdom to #Ukraine weapons airlift flights from the morning of the 17th of January to this very minute on the 19th of January 2022. The UK has no intention of letting Ukraine fall. pic.twitter.com/p4DcNv25mt

  — George Allison (@geoallison) January 19, 2022

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  With Biden now giving the green light on Baltic allies to also begin pouring more weapons into the simmering Donbass conflict, pushing tensions between Moscow and NATO further to the brink, Europe could be closer to seeing the outbreak of all-out war on its periphery. Russia will certainly see this new arms build-up on the Ukrainian side of the border a major provocation, possibly violating its “red lines” regarding NATO presence in Ukraine. 

  Tyler Durden
  Thu, 01/20/2022 – 19:30

• Netflix Craters On Subscribers Miss, Catastrophic Guidance
  Netflix Craters On Subscribers Miss, Catastrophic Guidance

  Recent earnings reports from streaming giant Netflix have been a mixed bag: the stock tumbled one year ago when the company reported a huge miss in both EPS and new subs, which at 2.2 million was tied for the worst quarter in the past five years, while also reporting a worse than expected outlook for the current quarter. This reversed four quarters ago when Netflix reported a blowout subscriber beat and projected it would soon be cash flow positive, sending its stock soaring to an all time high – if only briefly before again reversing and then tumbling three quarters ago when Netflix again disappointed when it reported a huge subscriber miss and giving dismal guidance, leading to the second quarter when Netflix slumped again after the company missed estimates and guided lower. This again reversed last quarter when Netflix soared after it blew away expectations and guided to a whopper Q4.

  

  Which brings us to today, when after hitting an all time high around $700 in November, the stock slumped to the middle of its range for much of the past two years, with investors on edge to find out not whether the company would confirm its impressive guidance and continue its torrid growth pace. Said otherwise, how many new subscribers did Netflix add in the third quarter… and will Netflix’s “monster quarter for content” translate into outsize subscriber gains? That’s the question Wells Fargo analyst Steven Cahall asked in a research note Wednesday.

  Unfortunately for NFLX bulls, the answer was a resounding no, because despite beating modestly on revenue and EPS, NFLX missed on Q4 streaming adds, but more importantly, its Q1 subs forecast was an absolute disaster, and at just 2.50 million it was nearly 4 million below the street’s estimate of 6.26 million.

  Here is what NFLX just reported for Q4.

  • EPS $1.33, beating est. 81c
  • Rev. $7.71B, matching est. $7.71B
  • Operating margin 8.2% vs. 14.4% y/y, beating the estimate 6.96%
  • Operating income $631.8 million, down 34% y/y, but also beating the estimate $559.0 million
  • Negative free cash flow $569 million vs. negative $284.0 million y/y, missing the estimate of negative $516.8 million

  So far so good, or at least not terrible. But this is where the wheels comes off, because while the company had previously forecast 8.5 million Q4 paid subs, it achieved just 8.28 million (which still was just above the Wall Street’s downward revised  estimate of 8.13 million), down 2.7% Y/Y…

  

  This is how the company explained this miss:

  We slightly over-forecasted paid net adds in Q4 (8.3m actual compared to the 8.5m paid net adds in both the year ago quarter and our beginning of quarter projection). For the full year 2021, paid net adds totaled 18m vs 37m in 2020. Our service continues to grow globally, with more than 90% of our paid net adds in 2021 coming from outside the UCAN region.

  The Q4 subscriber miss was broken down as follows:

  • UCAN streaming paid net change +1.19 million, +38% y/y, beating the estimate +596,839
  • EMEA streaming paid net change +3.54 million, -21% y/y, beating the estimate +3.45 million
  • LATAM streaming paid net change +970,000, -20% y/y, missing  the estimate +1.23 million
  • APAC streaming paid net change +2.58 million, +30% y/y, missing the estimate +2.91 million

  The punchline: in the US, subscribers had a small gain in the U.S. and Canada — from 74 million in 3Q to 75.2 million in 4Q. Netflix saw bigger growth in EMEA than in North America: from 70.5 million subscribers in 3Q to 74 million in 4Q. And some more context: more than 90% of Netflix’s net adds in 2021 came from outside the U.S. and Canada.

  

  But the real gut punch was the company’s Q1 2022 guidance, where the company not only saw revenue of $7.9 billion, far below the $8.12 billion estimate, and EPS of 2.86 which was also below consensus of $3.37, but the worst of all is that the company now expects just 2.50 million streaming paid subs this quarter, some two-thirds below the consensus of 6.26 million, bringing the company’s total subs to just over 224 million. This would be the worst start to a year since at least 2017!

  

  Bloomberg Intelligence says Netflix’s underwhelming 4Q subscriber additions and weak guidance for 2.5 million gains in 1Q (vs. consensus’ 6.3 million) cast doubts on the long-term growth trajectory and fuel concerns that the service may have reached saturation in many markets. “Flattish operating-margin guidance for 2022 may compound negative sentiment despite a return to breakeven free cash flow.”

  Netflix blamed this lower-than-expected Q1 forecast on new programming, such as “Bridgerton” season two, not coming until March. Subscriber growth hasn’t returned to pre-pandemic levels, partly due to a “Covid overhang” and partly due to economic hardship, particularly in Latin America, the company said.

  And here is the carnage in table format:

  

  This, as Stanphyl Capital notes, explains why NFLX just announced a big price increase – the growth is gone, so it has to start maximizing revenues in more conventional ways.

  Now you know why $NFLX just announced a big price increase…

  It’s got to start milking the subs it’s got, as it can’t grow enough any more by getting new ones.

  — Stanphyl Capital (@StanphylCap) January 20, 2022

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  Looking at the slump in the streaming part of Netflix business, Bloomberg writes that investors likely want to hear something more concrete and “much more transformative” on the gaming front, particularly after Microsoft’s planned acquisition of Activision Blizzard and the Take-Two-Zynga deal. Netflix has made some moves, including the purchase of Night School Studio, “but I’m not sure that’s going to move the needle for them.”

  To be sure, it wasn’t all dismal news: Netflix reported its series accounted for six out of the 10 most searched shows globally. Those included ‘Squid Game,’ ‘Bridgerton,’ ‘Cobra Kai,’ ‘Sweet Tooth,’ ‘Lupin,’ and ‘Ginny and Georgia.’

  In another ominous twist, instead of focusing on the potential market share, Netflix was surprisingly honest when addressing the competitive landscape saying that “consumers have always had many choices when it comes to their entertainment time – competition that has only intensified over the last 24 months as entertainment companies all around the world develop their own streaming offering.” And then there’s this clear admission that competition is starting to hammer NFLX: “While this added competition may be affecting our marginal growth some, we continue to grow in every country and region in which these new streaming alternatives have launched.” At this point the narrative fell back to the familiar “growth” chatter: “This reinforces our view that the greatest opportunity in entertainment is the transition from linear to streaming and that with under 10% of total TV screen time in the US, our biggest market, Netflix has tremendous room for growth if we can continue to improve our service.”

  But wait, there was more bad news news, as the company projected that for 2022, it is currently targeting an operating margin of just 19%-20%, explaining that its operating margin outlook is driven by two main factors.

  • First, as seen in the chart below, we delivered above the three percentage point annual linear progression over the past two years (average of four percentage points per year).
  • Second, NFLX said that the US dollar “has strengthened meaningfully against most other currencies. With ~60% of our revenue outside of the US due to our international success, we estimate that the US dollar’s appreciation over the past six months has cost us roughly $1 billion in expected 2022 revenue (as a reminder, we don’t hedge).” Well… maybe it’s time to hedge!?  And so with the vast majority of our expenses in US dollars, this translates into an estimated two percentage point negative impact on our 2022 operating margin.

  

  In hopes of easing investor fears, the company said that as it has written in the past, “over the medium term we believe we can adjust our pricing and cost structure for a stronger US dollar world. In the near term, we want to continue to invest appropriately in our business and don’t want to over-react to F/X fluctuations to the detriment of our long term growth. There is no change to our goal of steadily growing our operating margin at an average increase of three percentage points per year over any few year period”

  As usual, the company’s cash burn was topical, as NFLX burned another $569 million in the quarter. This is what it disclosed in the letter:

  Net cash generated by operating activities in Q4 was -$403 million vs. -$138 million in the prior year period. Free cash flow (FCF) for the quarter was -$569 million vs. -$284 million in Q4‘20. For the full year 3 2021, FCF amounted to -$159 million, in-line with our expectation for “approximately break-even.

  We anticipate being free cash flow positive for the full year 2022 and beyond. As a reminder, we prioritize our cash to reinvest in our core business and to fund new growth opportunities like gaming, followed by selective acquisitions. We’re also targeting $10-$15 billion of gross debt. We finished Q4 with gross debt of $15.5 billion and we’ll pay down $700 million of our senior notes due in Q1’22. After satisfying those uses of cash, excess cash above our minimum cash levels will be returned to shareholders via stock repurchases.

  Blah blah blah: here is the bottom line – the only time Netflix has been cash flow positive in its entire history was when covid shut down the world. And now, covid is over and the company has pulled forward some 5 years of demand. Good luck.

  

  And sure enough the market seems to agree – in light of all these dismal developments, led by the catastrophic subscriber guidance, which is payback for years of pulled forward demand thanks to stimmies and omicron, the stock is cratering after hours tumbling over $100 or a whopping 20% after hours to $411. Putting this in context, the stock was at $700 on November 17, barely two months ago.

  

  Today’s drop means NFLX is down the most since its Oct. 2014 earnings plunge, and has wiped out two years of gains.

  If bulls were hoping for some cheerful pep talk, they’ll be disappointed by the following quote from Miller Tabak’s Matt Maley: “NFLX had already declined 26% before they reported earnings. A lot of people hoped that the earnings report would be the catalyst for a rally in this stock — the first FAANG stock to report earnings. Instead, it’s falling even further, so that’s going to take even more confidence away from investors.”

  And while NFLX just lost 20% of its market cap, at least its (poorer) shareholders get some forceful ESG statements:

  

  What was the saying, “get woke, go broke”?

  Tyler Durden
  Thu, 01/20/2022 – 19:13

• Lacy Hunt: Negative Real Rates Are A Strong Recession Warning
  Lacy Hunt: Negative Real Rates Are A Strong Recession Warning

  Authored by Mike Shedlock via MishTalk.com,

  In his 4th Quarter Review and Outlook, Lacy provides some interesting charts on negative real rates and recessions.

  

  Please consider the Hoisington Management Quarterly Review and Outlook Fourth Quarter 2021. Emphasis Mine

  Real Treasury Bond Yields

  Real Treasury bond yields fell into deeply negative territory in 2021. In elementary economic models, this event, taken in isolation, would qualify as a plus for economic growth in 2022 and would be consistent with the strength indicated by fourth quarter 2021 tracking models.

  Lacy a different view however. His analysis shows that negative real yields are associated with recessions. 

  Debt overhang and demographics make the matter worse.

  

  History

  Since 1870, the starting point of reliable data, only 24 full yearly averages were negative, or just 16% of the 152 readings over this time span.

  Detailed parsing of the series reveals that 12 of those occurrences fell in the spans from 1914 to 1920 and 1939 to 1953, both of which were dominated by major military engagements and their subsequent demobilization – World Wars I and II and the Korean War.

  Excluding the 1914-20 and the 1939-53 periods from the post 1870 sample still leaves a robust sample of 130 readings. During this lengthy span, cyclical and secular economic conditions resulted in a negative yearly average for real Treasury bond yields twelve times, or just 8% of the time. In the eleven cases prior to 2021, nine of the negative real yield periods coincided with recessions – 1902-03, 1907, 1910, 1912, 1937, 1974-75, and 1980.

  Real long maturity yields were negative in 1934, which while not a recession year, happened during the horrific conditions of the Great Depression (1929-1939). In only one case, 1979, does the negative real yield happen during an economic expansion when the economy is not in a highly depressed state.

  Debt Overhangs and Real Interest Rates

  The level of indebtedness of the economy is another of the critical moving parts in assessing future economic growth. Based on empirical evidence, theory and peer reviewed scholarly research, the massive secular increase in debt levels relative to economic activity has undermined economic growth, which has in turn, served to force real long-term Treasury yields lower. This pattern has been evident in both the United States and the more heavily indebted Japanese and European economies.

  Real 10-Year Government Bond Yields 

  

  Economic research provides additional insight and evidence as to why interest rates fall to low levels and then remain in an extended state of depression in times of extreme over-indebtedness of the government sector. While differing in purpose and scope, research has documented that extremely high levels of governmental indebtedness suppress real per capita GDP. In the distant past, debt financed government spending may have been preceded by stronger sustained economic performance, but that is no longer the case.

  When governments accelerate debt over a certain level to improve faltering economic conditions, it actually slows economic activity. While governmental action may be required for political reasons, governments would be better off to admit that traditional tools would only serve to compound existing problems. For a restless constituency calling for quick answers to economic distress and where inaction would be likened to an uncaring and insensitive attitude, this is a virtually impossible task.

  Carmen Reinhart, Vincent Reinhart and Kenneth Rogoff (which will be referred to as RR&R), in the Summer 2012 issue of the Journal of Economic Perspectives linked extreme sustained over indebtedness with the level of interest rates. In this publication of the American Economic Association, they identify 26 historical major public debt overhang episodes in 22 advanced economies, characterized by gross public debt/GDP ratios exceeding 90% for at least five years, a requirement that eliminates purely cyclical increases in debt as well as debt caused by wars. They found that the economic growth rate is reduced by slightly more than a third, compared when the debt metric is not met.

  Persistent Global Weakness

  Advanced Economies (AD)

  In 2021, the Japanese, Euro Area and Chinese economies, in comparative terms, underperformed the U.S. economy. This pattern should continue this year. Due to more massive debt overhangs and poorer demographics, real GDP in Japan and the Euro Area in the third quarter of 2021 was still below the pre-pandemic level of 2019. The U.S. in this time period managed to eke out a small gain. The dispersion between the U.S., on the one hand, and China and Japan, on the other hand, may be even greater. Scholarly forensic evaluations have found substantial over-reporting of GDP growth in China and now, similar problems have been revealed in Japan.

  Prime Minister Fumio Kishida said on December 15, 2021, that overstated construction orders had the effect of inflating the country’s economic growth figures for years. Consequently, the marginal revenue product of debt is even lower than reported therefore so is the velocity of money for both Japan and China. Interestingly, Bloomberg syndicated columnist and veteran Wall Street research director Richard Cookson makes a strong case that “China looks a lot like Japan did in the 1980s.”

  Emerging Market Economies (EM)

  The sharp surge in inflation in 2021 has resulted in far greater damage to the EM economies than the U.S. for three reasons. First, a much higher proportion of household budgets are allocated to necessities than in the United States since real per capita income levels are much lower than in the U.S. Second, numerous EM central banks increased interest rates in 2021.

  Another problem emerges as most of the EM debt is denominated in dollars. When EM currencies slump as in 2021, the external costs of servicing and amortizing debt add an additional burden on their borrowers.

  Growth Obstacles

  In 2022, several headwinds will weigh on the U.S. economy. These include negative real interest rates combined with a massive debt overhang, poor domestic and global demographics, and a foreign sector that will drain growth from the domestic economy. The EM and AD economies will both serve to be a restraint on U.S. growth this year and perhaps significantly longer. The negative real interest rates signal that capital is being destroyed and with it the incentive to plough funds into physical investment.

  Demographics continue to stagnate in the United States and throughout the world. U.S. population growth increased a mere 0.1% in the 12 months ended July 1, 2021. This was the slimmest rise since our nation was founded in the 18th century, along with two other firsts: (1) the natural increase in population was less than the net immigration, and (2) the increase in population was less than one million, the first time since 1937. The birth rate also dropped again.

  Inflation

  Inflation has been one of the most widely reported and discussed economic factors in the past year. Surging energy, rents, building materials, automotive, food and supply disruptions have boosted the year-over-year rise in the inflation rate to the fastest pace in decades. While some see this increase as a good economic sign, its increase actually had the effect of reducing real earnings by 2%. Even though unemployment fell in 2021, consumers became more alarmed by the drop in real wages according to surveys.

  With money growth likely to slow even more sharply in response to tapering by the FOMC, the velocity of money in a major downward trend, coupled with increased global over-indebtedness, poor demographics and other headwinds at work, the faster observed inflation of last year should unwind noticeably in 2022.

  Due to poor economic conditions in major overseas economies, 10- and 30-year government bond yields in Japan, Germany, France, and many other European countries are much lower than in the United States. Foreign investors will continue to be attracted to long-term U.S. Treasury bond yields. Investment in Treasury bonds should also have further appeal to domestic investors, as economic growth disappoints and inflation recedes in 2022.

  Thanks to Lacy Hunt 

  Thanks again to Lacy Hunt for another excellent Hoisington quarterly review. The above snips are just a small portion of the full article. 

  As of this writing, the article is not yet posted for public viewing but should be available at the top link soon.

  When Does the Sizzling Economy Hit a Recession Brick Wall?

  I addressed many of the same points on January 17 in When Does the Sizzling Economy Hit a Recession Brick Wall?

  I discuss productivity, demographics, and unproductive debt.

  Something Happened

  “Something has happened in the last 30 years, which is different from the past,” says Minneapolis Fed president Neel Kashkari.

  Yes it has and the Fed is clueless as to what it is.

  The answer is unproductive debt is a huge drag on the economy. And the Fed needs to keep interest rates low to support that debt. 

  When Does Recession Hit?

  If the Fed does get in three rate hikes in 2022, then 2023 or 2024. And it may not even take three hikes.

  Also, please see China’ Central Bank Cuts Interest Rates As Consumer Spending Dives

  Few believe China GDP statistics.

  China posts a GDP target and generally hits it despite questionable economic reports, electrical use, etc., and with a property sector implosion.

  Slowing Global Economy

  China did not decoupled from the global economy in 2007 and the US won’t in 2022.

  For discussion, please see US GDP Forecasts Stumble Then Take a Dive After Retail Sales Data.

  Finally, please see The Fed Expects 6 Rate Hikes By End of 2023 – I Don’t and You Shouldn’t Either

  *  *  *

  Like these reports? If so, please Subscribe to MishTalk Email Alerts.

  Tyler Durden
  Thu, 01/20/2022 – 19:10

• Target CEO Says Consumers To Shop Less, Stay Home Amid Inflationary Storm
  Target CEO Says Consumers To Shop Less, Stay Home Amid Inflationary Storm

  Consumer prices soared the most in 40 years in December, a stunning 7% from a year earlier that is crushing real wage gains and sending President Biden’s polling numbers to a new record low. The Federal Reserve is expected to embark on an inflation-crushing mission with the first-rate hike expected in March to tame inflation.

  According to Target’s top executive, high inflation eating into wage gains is expected to directly impact US consumers who will be forced to drive less, eat at home, and reduce their shopping habits. 

  Chief Executive Officer Brian Cornell told attendees at a National Retail Federation event in New York on Sunday that high inflation will derail consumer spending patterns. Many will resort to cheaper generic-brand goods to save money. 

  “Some of the historical ways consumers react to inflation will play out again in 2022,” Cornell said.

  He noted consumers would “drive fewer miles, and you’ll consolidate the number of times and locations where you shop. You’ll probably spend a little more eating at home versus your favorite restaurant, and you might make some trade-offs between a national brand and an own brand.”

  Compared to the last two years of stimulus-fueled retail spending, Cornell expects spending patterns to change. He said a lot about the consumer would be understood in the next “60, 90, 120 days” in adapting to the high inflation environment. 

  As part of the rapid recovery, fueled by trillions of dollars in monetary and fiscal aid, prices for cars, gas, food, and furniture rose sharply in 2021. As consumers increased spending, supply chains became snarled, and prices increased further. 

  In the new year, US inflation pressures show very little easing, and some economists predict the peak could be nearing. The high inflation problem has led rate markets to price in 4 rate hikes by December, with the first live meeting expected in March. 

  Many consumers have never seen anything like this because they weren’t around in the 1970s and early 1980s of high inflation. It only took then-Fed Chair Paul Volcker to increase interest rates to double digits to tame inflation which sent the economy into a deep recession. 

  High inflation has put Biden on the spot ahead of midterms. The latest polling data shows the president’s popularity sunk to a new low this week. 

  

  Consumers feel the pinch around them, from the supermarket to the gas station. Cornell’s outlook for the consumer is gloomy, suggesting they might go in hibernation mode to weather the inflationary storm. 

  Tyler Durden
  Thu, 01/20/2022 – 18:50

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