Sunday Cartoon Blogging – April 26, 2020

From the WaPo: (brackets by Wrongo)

“President Trump on Friday threatened to block an emergency loan to shore up the U.S. Postal Service unless it dramatically raised shipping prices on online retailers…“The Postal Service is a joke,” Trump told reporters in the Oval Office. [In order] To obtain a $10 billion line of credit Congress approved this month, “The post office should raise the price of a package by approximately four times…”

The USPS is enshrined in the US Constitution. BTW, killing it might accomplish a few things for Trump:

  • It obstructs any Congressional effort to mandate mail-in voting.
  • It rewards private sector delivery carriers like FedEx and UPS that compete with the USPS. Many of them have donated both to Trump and Republican candidates.

The USPS is entirely self-funded. If you buy stamps, you’ve funded the Post Office. Its operations are profitable. It loses money on paper because of Congress’s unique requirement for the USPS to pre-pay all future pension liabilities, something no other American corporation or institution is required to do. That was imposed by Republicans in 2006 in the Postal Accountability and Enhancement Act.

He’s trying to make the Postal Service unprofitable. And when it’s a shell of its former self, sell it to UPS or FedEx who would be delighted to have one of their biggest competitors destroyed. On to cartoons.

Our grim future:

MAGA-ites drink the healing Kool aid:

Your lockdown inconveniences my freedumb:

Georgia takes aim at the lockdown:

Nursing homes account for 25% of US COVID-19 deaths. Remember the elderly and infirm:

The oil glut has forced the oil companies into the suburbs:

 

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Trump’s A Germophobe

The Daily Escape:

Mt. Adams, WA viewed from Rockford, OR – 2020 photo by eugene_captures

UPDATE:
Yesterday Wrongo said the price war in the crude oil markets would cause significant damage to the US fracking industry.  And on cue, shares of US shale oil drillers collapsed by 25%-50%. Their bonds also got hammered. Here are a few of the victims:

  • Occidental Petroleum, which is heavily involved in US shale oil and gas, saw its shares collapse by 53%. OXY’s bonds also collapsed, down by 34%.
  • Chesapeake Energy, a former shale oil-and-gas giant focused on natural gas, plunged 28%.
  • Shares of Whiting Petroleum, a shining star in shale-oil as recently as mid-2018, collapsed by 40%.

The Saudi-Russia price-war strategy looks as if it will be successful in wiping out investors in US shale-oil.

On to today’s issue:

Trump is a germophobe of long standing. A casual friend knew him quite well in the 1980’s when Trump was a young real estate entrepreneur trying to become a member of a fancy Westchester, NY country club. My friend’s husband was in the real estate business, and Trump’s father Fred prevailed on him to get the Donald into their club.

That led to multiple weekends where Trump would take a limo to Westchester to play golf with my friend’s husband and several buddies, all of whom were club members.

It turned out that Trump was a good golfer, so the men folk were ok with playing with him, except for the obvious cheating on the course. After each round, the group would adjourn to one of the members’ homes for a potluck, and it was there that Trump’s germophobe flag would fly. He wouldn’t shake hands, and he washed his hands often. He clearly preferred going through the buffet line first, to the extent that he otherwise wouldn’t eat.

There’s more to that story, maybe for another day. But Wrongo has often wondered how Trump became a politician, what with all of the casual hand-shaking. Vanity Fair has a story connecting Trump’s germophobia to the Coronavirus: (emphasis by Wrongo)

 “Stories about Trump’s coronavirus fears have spread through the White House. Last week Trump told aides he’s afraid journalists will try to purposefully contract coronavirus to give it to him on Air Force One, a person close to the administration told me. The source also said Trump has asked the Secret Service to set up a screening program and bar anyone who has a cough from the White House grounds. ‘He’s definitely melting down over this,’ the source said.”

Trump admitted to James Comey that he was a germophobe in a discussion with the former FBI director about the so-called “Russian pee tape”. The New York Post reports:

“During a call on Jan. 11, 2017, Comey says, Trump launched into an explanation about how he hadn’t even stayed overnight in Moscow on the date in question.

‘Another reason you know this isn’t true: I’m a germophobe. There’s no way I would let people pee on each other around me, no way,’ he quotes Trump as saying.”

Ok, Wrongo’s convinced.

In a 2019 article, Politico says Trump:

“…asks visitors if they’d like to wash their hands in a bathroom near the Oval Office. He’ll send a military doctor to help an aide caught coughing on Air Force One. And the first thing he often tells his body man upon entering the Beast [the name for the Trump mobile] after shaking countless hands at campaign events: ‘Give me the stuff’— an immediate squirt of Purell.”

Politico also quotes Anthony Scaramucci:

“If you’re standing by him, and you’re going to look at something on his desk, and you lick your index finger to open the thing to try to catch an edge on the paper, he’ll smack your hand and be like ‘What are you, disgusting?’”

Now some of Trump’s actions, washing hands, and using Purell  are completely sensible, even for all of the non-germophobes out there.

But, dealing with the Coronavirus by minimizing its seriousness, and being paranoid about a reporter purposely infecting him seems to be more of his debilitating germophobia.

Is Karma a bitch or what?

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The Health Crisis Now Coincides With a Financial Crisis

The Daily Escape:

Sunrise, St. Augustine Beach, FL – March 2020 photo by Carl Gill

The WaPo reported that a Coronavirus-sparked oil war sent crude prices down on Sunday by 32.3%. That triggered a forced temporary halt of stock trading on Monday, when the S&P 500 index sank 7% shortly after the market’s opening.

This occurred on the 11thanniversary of the current bull market. But, as Greg McBride, chief financial analyst at Bankrate.com, wrote:

“The uncertain economic impact of coronavirus continues to grip markets, with stocks, commodities and interest rates all dropping sharply. Markets hate uncertainty and there is a ton of it currently in play.”

There is no question that there will be more angry Americans now that a health crisis coincides with a financial crisis. Who they focus their anger on remains to be seen. Trump took credit for each rise in the stock market, so will he take ownership now that it’s tanking?

He’s not a broadly popular president, and this will make him less popular, so fewer people will believe him when he tries to lay the blame on others.

The oil price plunge was triggered when Russia announced on Friday that it would no longer stay within the OPEC+ quotas after April 1st. Saudi Arabia then said it would slash prices for its customers in April. In addition, they hinted at increasing production from the current level of 9.7 million barrels per day to 10 million barrels per day.

This is the start of an oil price war between Saudi Arabia and Russia over market share. But the real target for both may just be the US shale oil sector. US banks and other investors have been fueling the shale oil sector’s growth with hundreds of billions of dollars of loans over the years. And the shale oil producers keep ramping up production, despite it being largely unprofitable. They continue to burn through cash.

Brian Sullivan at CNBC warns us: The US oil industry valued its oil reserves, as collateral for its loans, at $60 a barrel. Today’s price is now about $30/barrel.

By sending some of these shale-oil companies into bankruptcy, Saudi Arabia and Russia are hoping that new money will refuse to support the US shale oil sector. Then production in the US will decline and take some oversupply out of the oil market.

Their timing is impeccable. Oil demand is down due in part to the Coronavirus. Chinese manufacturers are producing less and airlines in particular have less need for jet fuel. If OPEC and Russia increase production, and assuming US production still increases while demand globally is in steep decline, then global markets will be awash in oil.

And what does an oil glut do for Iran, already fighting a severe Coronavirus outbreak, and needing higher oil prices for their own economy?

But no worries! We can count on the competent leadership in the White House. And if that doesn’t make you comfortable, you might ask yourself, “Is this 1929 all over again?”

Maybe not, but if it is, who will be our FDR? In the 1930s and 1940s, FDR spent money on America’s democratic infrastructure. That money gave jobs to people. He created a social safety net, and allowed industry to again flourish.

But in the past 30 years, all the money has gone to our industrial infrastructure and to the rich, through tax cuts and subsidies. The easy money party has helped to pump up both stock prices and asset prices, giving us an ever-growing income and wealth gap.

What happens to the health of the people and to the health of economy between now and November is going to be a huge political concern. There’s always a tension between the best health policy, and the best economic policy.

Trump wants economic policy to win out, but the primary beneficiary of that is industry and the rich.

We should remember that when leaders are seen to be incompetent and/or ARE truly incompetent, they try to divert the voters’ attention. What Trump attempts to do in order to divert our attention, is worthy of discussion.

As of today, the fuse is lit. It’s an election year, and we know that Trump won’t go away quietly.

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Cheaper Oil Prices: Who Wins?

When OPEC announced on Thanksgiving Day that it would maintain oil production at 30 million barrels per day, a volume above the world’s current supply/demand equilibrium, the global price of oil dropped precipitously. Today, you can pay more for a gallon of milk than a gallon of gas.

After the meetings ended, the Saudi oil minister was smiling victoriously, while representatives of several other OPEC nations were steaming. That group included Venezuela, Algeria, and Iran. From Reuters:

Saudi Arabia’s oil minister told fellow OPEC members they must combat the US shale oil boom, arguing against cutting crude output in order to depress prices and undermine the profitability of North American producers. Ali al-Naimi won the argument at Thursday’s meeting, against the wishes of ministers from OPEC’s poorer members such as Venezuela, Iran and Algeria which had wanted to cut production to reverse a rapid fall in oil prices.

The question before the house is who gets hurt by lower priced oil?

• Iran, Venezuela, Algeria, Mexico, Iraq, Nigeria, and Ecuador have built their domestic budgets based on oil prices that exceed $100/barrel of oil. But, yesterday’s price was $70.54. Venezuela already borrowed $4 Billion from the Chinese, and then spent $1 Billion in a week to cover domestic needs.
• Russia’s break-even budget price of oil is over $100/barrel.
• Canada has managed to increase its production of oil by a million barrels a day over the last decade. But almost all of that increase has come from oil sands that are unprofitable at today’s price.
• Mexico’s oil was selling for $63.72/ barrel on Monday, its lowest point since July 2009. Mexico cannot survive for long at this price, especially considering that oil revenues account for roughly one-third of government finances.
• Keystone Pipeline: The Fiscal Times reports today that it may never be completed. Lower oil prices may make Canadian oil sands output (it is supposed to travel via Keystone to Louisiana) too costly to ship. Also, Saudi is taking aim at Canada, since the Saudi crude competes directly with Canada’s tar sands oil, which is the highest cost oil being produced today.
• The Koch Brothers may now have to produce oil at a loss from their vast holdings of tar sands. But, their party is the Saudis’ best friend, so in a way, this may cause some Republicans to recalibrate their love of Saudi Arabia.

We should be happy with lower oil prices, right?

• Gas prices at the pump are down dramatically. Lower gas prices are an increase in take-home pay for Americans who drive.
• Iran’s foreign policy is very expensive, since it supports Syria, Hamas and Iraq. They may soon have to make difficult choices that entail scaling back their regional commitments. They may have trouble maintaining those commitments and their nuclear program.
• Russia’s currency has fallen steeply along with the price of oil, meaning that it may have to restrict imports of key goods. Russia imports a lot of basic products, including beef, cheese, shoes, TV’s, cosmetics and pharmaceuticals. According to Bloomberg, Finance Minister Anton Siluanov estimates that Russia would also lose about $100 billion in revenue next year because of falling oil prices.

We live in a complex world:

1. Our major ally, the Dark Ages Kingdom of Saudi Arabia, perhaps the world’s largest funder of terrorism in the ME, is attempting to prevent our move towards energy independence. As long as the Saudis control much of our energy supply, we will remain involved in these ME wars. Many people think that our State Dept. may have encouraged the Saudis in order to punish Russia for blocking our takeover in the Ukraine.
2. Oil is not used to generate much electricity in the US. Cheaper oil does nothing to effect the economic viability of solar or wind, whose main competitors are coal and natural gas. The primary effect here in the US is twofold:

• Reduce the economic attractiveness of fracking (a good percentage of fracking is for natural gas, and will not be effected by cheaper oil).
• Reduce the demand for electric cars to the extent that their sales are a function of lower gas prices.

Low oil prices over a long enough period will burst the US fracking bubble. We could react to cheap oil by ending fracking and never starting it up again. We could plug the wells, clean the soil, repair the damage from earthquakes, pay the medical bills of the innocent folks forced to live near these sites. And, in a time of water scarcity, save the billions of gallons of water that are used to frack today.

Finally, the economic pressure lower priced oil puts on our so-called “enemies” brings with it the real cost of confirming the neo-con view that the US can still muscle its way around in the world. So, will our relations with Iran, Syria, and Russia will remain intractable? Or, can it lead to a nuclear deal with Iran and a political accommodation with Russia? That has to be the underlying bet by Saudi Arabia and the US.

The “oil weapon” was used in 1973 against the US. We hated OPEC’s war on our economy back then. We of course, used that very same old oil weapon when we embargoed oil sales by Saddam Hussein’s Iraq. Skip ahead a couple of decades, and it is now smart policy, it’s effective, and it’s now the American way.

Oil, as always, remains the centerpiece of our Middle East strategy.

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