By David Glenn Cox
If I could play music right now it would be wipeout by the Safaris. Stock futures down the limit Monday morning. Across the globe stocks are getting hammered. Falling demand putting pressure on oil. The Saudis and the Russians held a meeting over the weekend to decide on production cuts. The Saudi’s are the big dog on the street. The Russians sell their oil primarily through pipelines to Europe. The Saudi’s sell everywhere and not only did they not reach an agreement with the Russians. Both sides left the meeting promising to let the pumps runs.
Fracking companies and oil sands need the market to be at least fifty dollars a barrel to make money. Currently oil is selling at around $32.00 a barrel. That industry is done, gone, history. Now suppose you’re in the oil industry. You filled all your storage tanks with a million or so gallons of fifty dollars a barrel oil that’s now worth $32.00 a barrel. Twenty-eight million dollars gone, done, history repeated infinitely. Maybe you’re in the futures market and you have a contract to purchase oil for delivery this month? You just paid over fifty dollars a barrel for oil now selling for $32.00.
Traditionally when stocks get shaky the money runs to bonds. Bonds can only hold so much of the market forcing returns to below one percent. Oh, how the mighty have fallen. One measly percent, how scared do you have to be to accept less than one percent return on their money. Farmers already hard pressed have watched commodity prices slide.
The Cheeto’s plan? The Cheeto grows quiet. Oh, how he loved to crow from the highest wire on the pole and now he has nothing to say. The Emperor is naked! Naked and powerless. There is nothing he can say and nothing he can do. The corona virus was the fuel, but the oil market is the spark. Billions and billions of dollars in fiat growth is or soon will be gone.
When FDR created the Tennessee Valley Authority the government invested millions of dollars into building 200 damns and hydro electric damns. The money was right there before your eyes. The money was in concrete and steel. The cheap hydro electric power made the cities of Atlanta, Nashville Memphis, Birmingham and Knoxville possible. Eighty years of growth and jobs, no crashes, no market stops or firewalls.
Instead we keep interest rates artificially low. Investors flock to the stock market and because there is no competition, the market rises on the influx of capital. It has nothing to do with concrete and steel it has to do with feelings and hints. Jeff Bezos’s has invented a nuclear nose picker. Amazon is selling exclusive Star Wars action figures! Microsoft has a new program that doesn’t need a patch! Spinning webs of sugary towers of Babble. Illusionary, it’s wonderful isn’t it? What’s it worth now?
Building projects will be cancelled, their funding gone. The oil industry is broken, the financial industry is broken and the Cheeto is broken. The administration sends out Larry Kudlow to calm the markets. Like sending Jeffery Dahmer out to discuss dietary restrictions. They have nothing to add other than, “You know, it might be a good time for more tax cuts!” All is well! Pay no attention to the smoke, the house isn’t on fire. The fire department is just watering the flowers…there’s no problem!
After a disastrous week for the stock market Monday morning stock futures make brokers long for the good old days of last week. The rout is on. What is Amazon stock worth during a worldwide pandemic? How’s Exxon Mobil doing during a price war? Trillions of fiat dollars wiped from the books.
Imagine you’ve spent a hundred million dollars creating the latest Hollywood blockbuster and now there is a worldwide pandemic. Premiers are being pushed back but the market is already gone.
The financial news channels are using adjectives like Armageddon and apocalyptic and even pray! They worry about funding banks and stimulus packages. Amazing isn’t it? Hardcore conservatives becoming FDR Democrats overnight.
Anyone telling you they know what will happen next are lying. They’re already talking circuit breakers to stop trading if losses drop below seven percent. We have a crisis of 1929 proportions and Donald Trump in charge. An artificial economy building private fortunes with little public benefit. Using our world and our lives without giving us anything in return. We will pay this price. We will suffer through this and yet our society derives little gain. Our children’s lives will be disrupted and yet those who caused this crisis will walk away unscathed.
“Gentleman, you have come sixty days too late. The depression is over.” – Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery (June 1930)
Yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.
True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.
The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.
Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men. – Franklin Delano Roosevelt