So what does this mean to us everyday people? Every article I read says the same... horrible... first time in history.... never seen anything like it. Very nice Captain Obvious! But how does this affect every day life... until things get back to the "near normal". I know, I hate that term too! Seeking some insight from the smart ones on this page.
NEW YORK (AP) — Oil prices plunged below zero on Monday, the latest never-before-seen number to come out of the economic coma caused by the coronavirus pandemic. A barrel of benchmark U.S. oil for May delivery fell to negative $37.60 per barrel as traders sought to avoid owning crude oil with nowhere to store it. Prices for other oil contracts also plummeted as storage facilities for crude approach their limits. The S&P 500 fell 1.8%, giving up some of the big gains from its first back-to-back weekly gain since February.
My post of having certain industries return to the US was not some naive expression of hope. It is an expression of hope, but here’s the deal. The question facing every candidate for President, Senate and House this Fall should be this - how has the US government allowed our country’s access to prescription drugs, medical PPE, and critical care medical equipment become subject to the whims of foreign governments, upon whom your constituents can clearly not depend? Do we depend on China or India to build our fighter jets, our tanks, our missiles? Of course not - those are critical equipment that the US must make for itself (okay, we do allow some NATO countries to build some of that as well). BUT, now we have discovered that defense materials aren’t the only products upon which America (your voting constituents) depend. There are multiple ways that the government can shape this debate and policy, but shape it they must.
I understand, Steve. My question is how does the government compel private businesses to take on the responsibility to produce those critical supplies. A mandate? Incentives? Do those companies have requirements as to their workers? Do consumers foot the bill for higher prices? Are there limitations on management bonuses? Stock buy backs? Left to their own devises, US companies will continue to prioritize share holder profits/dividends, management compensation and seek the lowest possible costs for production. Does the federal government simply take over production of those essential supplies? It's a fraught debate especially for free market types.
Well, I”m a free market type, but we are reaching a critical point where national interests may take precedent. For instance, Congress could pass a law requiring the FDA to require that any patent owner of a new drug seeking FDA approval must demonstrate both a capacity to manufacture in the US (and perhaps a NATO or NAFTA country) and a requirement that some limits imports to the US from China or India. I would like to attend a Town Hall for any Senator or Congressman who chooses not to vote for such a bill.
the medical supplies could be more problematic. My solution would be to have the federal government purchase, in the open market, with a preference for US manufactured items, a true “federal stockpile” of such goods. As we have seen, the “federal stockpile” was no where sufficient for a pandemic.
The last resort would be the Defense Production Act, but that is also a viable tool to hang onto.
The large price drop that everyone is seeing is for the may contract which expires on Wednesday 4/21. The futures price for July contracts are over $26 bbl and June contracts are over $21. The situation today is indicative of some entities having to cover their positions and the volatility of this drop shows there are some hedge funds, banks or companies in very precarious financial positions.
Your “free market types” gladly allowed and encouraged the current set up, and were constantly rewarded with donations and votes. This was a process accelerated back when it was deemed: Morning in America. The last big send off was when our forty third president acceded to the demands of “free market type” pharmaceuticals and did away with the manufacture of our medicines in the US Commonwealth of Puerto Rico, eradicating tax advantage in PR so big pharma could go to cheaper labor. The PR tax advantage was planned away when 43’s daddy was VP, back when Morning in America dawned. When a country has the largest load of debt in the world’s history and a crumbling infrastructure coupled with a service economy, “free market types” are arriving a little tardy to the inventory of federal stockpiles and DPA. Manufacturing cannot arrive in a massive service/ consumer economy within a generation.
It appears time to put aside the notion that the federal government should not engage in certain actions traditionally left to the free market. I don't have a problem with that and think we as a country have painted ourselves into a corner with the thought that government is "the problem". And that a smaller federal government bureaucracy with limited reach is a priority for a capitalist economy. It never was and, in the end, government is what we choose it to be. I believe that certain societal needs such as healthcare, national security including pandemic planning, education and a basic safety net for all citizens should be priorities of the federal government. The question is, where do you draw the line? And, how do you keep a larger federal government from becoming "big brother"?
Well said. Also, the days of having 800 military bases around the world with a defense budget larger than the next ten nations while having a pandemic response akin to a shambolic excrement show will end. Priorities need a once over.