By Denny Gulino
WASHINGTON (MaceNews) – It’s the night of the living dead in Houston, where the unthinkable happened, oil became worthless.
In fact, oil became even worse than worthless. It was a day so bad that you had to pay people to take it. If you were a trader who never took delivery, only bought and sold futures contracts, the specter of tanker trucks on your doorstep was ample enough incentive to give away your holdings.
Wait, checking the screens, West Texas Intermediate, the land-locked pipe-line-dependent U.S. benchmark, is tremendously improved at this writing, up 101%. That’s not a typo. And that brings a barrel of crude up to – let’s get the calculator – 55 cents. You can’t buy an empty barrel for 55 cents. Yet, that’s a lot better than minus $37 or so a few hours earlier.
At the evening’s Corona Virus Task Force briefing, President Trump dismissed the worst day in oil industry history as a “financial squeeze.” Oil for delivery beyond Tuesday, in June, was still priced more reasonably, like the good old days last week.
Really? A flotilla of oil tankers full of cheap Saudi oil is on the way, and when it arrives in a few days the June futures contract could meet the fate of its May predecessor. Sure, it all sets the stage for a rebound someday, when thousands of jobs, hundreds of country club memberships and that Lamborghini will be distant memories. At least no one can blame this one on Amazon.
The evening’s Task Force briefing featured some actual Task Force members this time as the president shared the podium with more than the vice president, unlike Sunday night. Now that testing materials, processing facilities and even trained contact tracers seem to be on the way, not in the unspecified future but in the next few days, the focus of virus news is shifting.
Meanwhile Connecticut had its worst daily death toll. The total for the nation climbed toward 41,000. The president mocked the governor of Maryland for thinking he had to get test kits from South Korea. No reporters were injured or even fiercely attacked for a change. All was as expected and very light on newsy news.
Again, the collapse of U.S. oil prices reminded that the virus story does not necessarily have to have a nice sitcom-worthy happy ending. Even if a vaccine is proven to be effective in the next year, all the problems the nation faced before its arrival will still be there, only worse. Unless … but let’s not skip ahead.
If you have a strong stomach, let’s take a look at worst-case scenarios for a change, appreciating the fact that molecular biologists and virologists are not guaranteed miracle workers.
To do that we turn to our time machine and class, let’s open our history books – pardon, our holographic telencephalon displays to see what happened in, what year was that? Oh yes, 2020 and the years that followed:
Here goes. The reality of a death toll that didn’t stop rising brought into focus other realities back then early in the 21st century, an awakening of civic fundamentalism at odds with what the country had become, an ailing giant that looked less and less to the future.
The Covid-19 purge of the most vulnerable helped spark heroism and the renewal of community spirit. The test administered by the relentless spread of the virus also laid bare the illusions that had clouded the national consciousness.
A net debtor country, with a substandard and outrageously expensive health-care system, found itself unprepared and without the mechanisms to get sufficiently prepared as the pandemic hit and grew more intense.
Follow-up waves of virus attacks sapped morale and incrementally tightened government restrictions on activity as furious efforts to formulate an effective vaccine failed again and again.
Within a few weeks there were long lines at food pantries. Government eventually took over the food supply. The crisis cut much deeper as time went on. The federal government had greatly accelerated the accumulation of debt and America early on became by far the deadliest place on the planet.
An erratic leader, fomenting dissension at home and alternately demonizing and flattering allies and trade competitors, pushed for successive reopenings of what became a smaller and smaller economy.
State and local budgets were devastated and regional compacts widened. Business owners saw the work of their lifetimes jeopardized and then mostly extinguished. The gaps between society’s winners and everyone else widened into chasms, reflected in much more than incomes.
A humbling experience? Not by a long shot. Americans under such stress still felt entitled to punish other countries with tariffs though on dwindling trade. The foundation of American exceptionalism eroded, dreams of a base on the moon and Mars succumbed to fiscal realities and the ability to field the world’s greatest military seemed circumscribed by inevitable creeping impoverishment.
Even before the virus, the nation’s debt load had been unsustainable, its health care system a huge fiscal drain, much more expensive and less successful than in most other developed nations.
The country’s national legislature was mostly paralyzed after decades of gridlock interrupted by spasms of panic.
As its bridges, highways and airports rotted, the nation occupied itself trying to determine national priorities through the distorted prism of shifting culture wars. Instead of “out of many, one” the guiding precept had long turned into “out of many, mine.”
The country’s educational system had fallen behind that of many other trading competitors. Its productivity growth, the font of prosperity, sputtered at low rates with no national program to improve it or even any widespread recognition of the growing depletion.
Bolstered by its long history of a sturdy rule of law that protected foreign investment, the nation’s currency remained the envy of the world. The country was shielded from its mistakes by its unique ability to trade without any forced translation into anyone else’s currency. That beneficent curse hid the truth from the populace which had never known a true currency crisis, making it hard to recognize in advance.
At the same time the second-largest economy, China, enjoyed ample sovereign reserves as did Russia, its former chief adversary. The United States, though, was forced to borrow in greater and greater amounts.
The country’s university system kept fostering innovation while under increasing financial stress as American society as a whole began valuing higher education less and less. In some quarters expertise became another word for oppressive elitism. Fractures along racial, economic and inequality fault lines had gone mostly unattended.
The bracing effects of a crisis did not immediately ignite a new national unity as had world wars. The president kept using wedge issues to keep the country off balance, its orientation to the future misdirected into a misty nostalgia for a largely misunderstood past.
The country’s financial crisis (2008-2009) had been a warning that was largely papered over with insubstantial structural reforms and ultimately went unheeded.
The virus kept moving in for the kill.
However, that was not the end of the story. The personal heroism of the nation’s medical warriors, including many out of retirement, bravely provided an example to the nation that swept away old notions of privilege, for those who enjoyed that luxury.
Their example could not be ignored of how to overcome differences in a selfless pursuit of societal survival and in valuing the importance of protecting the most vulnerable. As measures to counteract economic collapse ultimately fell short, their example spawned new sources of civic strength.
Financialization and unproductive intermediation fell away, displaced by a return to transactional conservatism. Sweeping public projects utilizing armies of idled labor led to an eruption of new national priorities – and less patience with pointless diatribe.
Eventually the nation was reborn, having lived through a searing and unbounded march through fire. But it had been a rough three decades.
(See America Reborn in Latter Half of the 21st Century.)
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Why look at one of the worst possible scenarios? Because it deepens appreciation for all the rest of the scenarios. Chances are a vaccine will be developed sooner rather than later. Perhaps President Trump’s three “Liberate” tweets were not the most ill-considered of his presidency, encouraging people to trade cabin fever for a real fever.
Maybe the U.S. dollar maintains its relative dominance as the rest of the world economy deteriorates even more. Nevertheless, the fundamental problems that burdened America’s future before the virus will have become only more distinct with its onslaught, many bills still coming due.
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Contact this reporter: denny@macenews.com.
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