What else is there to talk about right now? We’re just playing the waiting game.

It’s time to start putting as many random thoughts and fragments onto e-paper as possible now. Days feel like weeks, weeks feel like months, etc. and this shit will be fucking fascinating to look back on later.

  • When will Alberta/Canada “flatten the curve” ? Hard to say, but a military shutdown of the country can’t more than two weeks away now. A provincial State of Emergency was finally announced yesterday. Most businesses are closing their doors. Employees who can work remotely started to do so late last week. Gatherings are now restricted to 50 ppl, and should hopefully be down to 5 by the end of the week. There are 97 confirmed cases in the province with only 20 confirmed in Edmonton.i There are 598 confirmed in Canada with 8 deaths.
  • Canada more broadly and Edmonton in particular will fare better than Italy and its cities. The advantages of our young population within sprawling suburban cities with “inefficient” density are made manifest in a pandemic like this where physical space is man’s best protection against nature. Frank Lloyd Wright knew what the fuck he was talking about when he proposed a full acre/man.
  • The US is a fucking powder keg. They aren’t even testing properly. From Coronavirus alone, we could see a million deaths in that country this year. The benchmark for a “bad” outcome is the 1918 Spanish Flu, which saw about 500`000 deaths, albeit with a smaller population and poorer medicines.
  • Most people are utterly lousy at exponential maffs. Admittedly, anything that quadruples/quintuples weekly is outside of the realm of almost every lived experience.
  • NN Taleb called it first back on Jan 26th. I believed him then, and the implications took me for a spin for almost a week, not least of all because my degrees and work experience in Immunology, Infection, and Public Health were compounded by my sixth sense for non-linearities, but I allowed my own “lived reality” to bring me back down. I don’t regret having been balanced-out at the time. Stocking emergency supplies even three weeks ago seems bloody prescient compared to the average response, which is just getting going now. And now I’m chill as a fucking cucumber, playing the waiting game.
  • That being said, my rage-o-meter and public pronouncements haven’t been this vocal since 2013/2014.
  • I’m telling everyone who will listen to get the fuck out of equities.
  • I’m telling everyone who will listen to self-isolate and socially distance.
  • Chamath Palihapitiya was and is also on the fucking money, as usual. His March 14th podcast is a must-listen for those interested in the higher-order and longer-term consequences of the pandemic, starting at minute 53.
  • I thought that Bitcoin was a safe haven asset until last Friday, March 13th, after its “value” was halved in a week. Over the weekend, I reset my possibility parameters to include a bottoming out in the hundreds of US Dollars. Is any safe haven asset really safe when there’s a MASSIVE deleveraging like this going on ? We’ll soon see.
  • That being said, the only way that governments are going to get out of this mess is to print TENS AND HUNDREDS OF TRILLIONS of useless paper. This is the systemic shock that will prove Bitcoin’s long-term value as an inflation hedge. The war we’d been preparing for is here at last, just as MP left the chat. Go figure.ii
  • This is our generation’s WW1 moment. The world will not be the same after this little episode.
  • I’m making sure to stay as connected as possible with neighbours. We’ll need each other’s support in the months and years to come and we genuinely have an incredible community that I want to bounce back as quickly as absolutely possible.
  • My new favourite caveat is “all things considered.”
  • I’m talking to family by phone and FaceTime more than ever before. It’s kinda nice.
  • There’s no doubt that China will be the primary beneficiary of this virus. They’ve handled it the best, showing the strength of their top-down, data-heavy model. They’ll set the precedent for how nation states operate in the 21st century. This pandemic is only adding jet fuel to China’s establishment as the new top dog.
  • That being said, on the other side of this, most countries will improve, or at least aim to improve, their self-reliance long-term. They won’t forget the time that China has them by the balls as they rebuilt their economies from the ashes with China’s assistance. Globalism will take a big hit from this. Localism will grow more powerful.
  • It will take 3-5 years to rebuild the economy to where it was at the end of 2019.
  • The rebuilt economy will not be the same economy, it will be much more digital. Zoom and Slack will prove to be immensely valuable pillars of most business operations, particularly for all the various types of consultants who otherwise spend way too much money on slick, more-signal-than-substance real estate.iii
  • Commercial real estate will take decades to recover from this blow.
  • I’m still not sure how the energy economy will look going forward, or how long it will take to recover.
  • Our live-out nanny opted to remain so and stay with her husband instead of us for the next 2-3 months. Can’t blame her. We laid her off today but will top-up her EI benefits so that she experiences no loss in income. She’s been with us for over four years and she’s been nothing short of incredible in that time. Truly, she’s a part of our family. But with neither The Girl nor I with much work to do over the next few months, we’ll have plenty of fun looking after the kiddos ourselves!
  • I’m feeling confident that I have sufficient resources to weather this storm, support those around me, and hopefully even pick up some deals, so will it all just feel like an extended holiday ? How long until I’m so bored, frustrated, cooped-up, or justifiably anxious that I want to crawl out of my skin and die ? Does that need to happen at all ? Or will I be one of the psychological/thought leaders throughout this thing and onto the other side ?
  • I have enough books in my library to last a lifetime, but will I finally crack some of the dustier spines, or will the lures of the web prove insurmountable ?
  • My order of panic was, thus far: parents –> family –> community –> personal business –> personal finances –> global finances –> global industries. I’m pretty happy with that outcome even though it was in no way planned. I think I’ve got my priorities mostly straight! Even thought it wasn’t “cheap” to have personal finances comes so low down on the list. I definitely took a whack, but at least I’m not alone, and misery sure does love company!

___ ___ ___

  1. To Alberta’s enduring credit, they’re testing like mad men. I can only assume that these are PCR tests rather than IgG tests, but 12`355 tests have been conducted as of March 17th and 12,258 have come back negative. So while other locales (ahem, US) may have 50x the actual number of infected individuals compared to confirmed cases, Alberta may be closer to Wuhan when they locked down, having only ~7x.
  2. Why it took MP an extra two years to finish his finishing will be left to better historians than yours truly.
  3. Not that there’s any replacement for physical proximity! See footnote ii.

6 thoughts on “What else is there to talk about right now? We’re just playing the waiting game.

  1. > Is any safe haven asset really safe when there’s a MASSIVE deleveraging like this going on ?

    IIRC every single time there was a wave of “paper BTC” liquidations from margin calls and other semi-automated “apocalypses”, there were folks lamenting “I thought it was safe…”

    What exactly do people imagine is a “safe asset” ? One that magically goes monotonically up in purchasing power until the heat death of the universe ?

    > It will take 3-5 years to rebuild the economy to where it was at the end of 2019

    What means “rebuild”? I.e. to reinflate all of the bubbles to their pre-plague dimensions?

    > how the energy economy will look going forward, or how long it will take to recover

    What exactly is now wrong with the “energy economy” as result of the plague? All the combustibles that aren’t being burned to transport office plankton to/from their padded cells every day, will be there later to be burned, AFAIK.

    > I have enough books in my library to last a lifetime

    Pretty confident that you’ll never find yourself having to do honest work?
    With the utmost respect — it’s typically smallholders like you who usually end up dekulakized. At least this was so in my native orcistan.

    > I’m telling everyone who will listen to get the fuck out of equities.

    2008 somehow didn’t teach the “civilized world” the basics of “what can be confiscated, will be, what can be inflated into nothingness, will be.” Hard to picture how this time will be any different. A new set of idiots will load up on discounted promisepaper, inflate new bubbles, for the next engineered panic to pop. While the panic-organizers — laugh all the way to the bank.

    • Pete D. says:

      What exactly do people imagine is a “safe asset” ?

      It’s usually understood to mean an asset that’s “uncorrelated” with S&P.

      What means “rebuild”? I.e. to reinflate all of the bubbles to their pre-plague dimensions?

      Yes. Unless you have a better definition.

      What exactly is now wrong with the “energy economy” as result of the plague?

      Simultaneous demand shock and supply shock. Russia will probably benefit most. Canada will get shit on even more.

      Pretty confident that you’ll never find yourself having to do honest work?

      Honest is as honest does. Have I ever cheated you, Stan ?

      it’s typically smallholders like you who usually end up dekulakized.

      Still worried about the kulak thing eh ? Can’t say we’re in the same boat there.

      2008 somehow didn’t teach the “civilized world” the basics of “what can be confiscated, will be, what can be inflated into nothingness, will be.”

      Not everyone has 100% of investible assets in BTC, news at 11 ? And the last financial crisis was just that, a financial crisis. This is going to be much bigger and more broadly felt.

      Hey how’s your rack service going ?

  2. > Yes. Unless you have a better definition.

    Say, in May ’45, there was actual rebuilding needed. Of wrecked cities.

    > Simultaneous demand shock and supply shock.

    Where’s the supply shock?

    > Honest is as honest does. Have I ever cheated you, Stan ?

    Term of art. In the sense contemplated, we both similarly “cheat”, i.e. work from desks pushing numbers between RAM cells, instead of sweating in front of lathes or drilling the earth, driving trains, etc.

    > Still worried about the kulak thing eh ? Can’t say we’re in the same boat there.

    I’m already in the “candidates for labour camp” boat instead, i.e. don’t have much to be dekulakized for.

    > Not everyone has 100% of investible assets in BTC, news at 11 ?

    The interesting revelation is just how few nominal BTC holders, “by mass”, actually held BTC (as in, the privkeys.)

    > And the last financial crisis was just that, a financial crisis. This is going to be much bigger and more broadly felt.

    So far the stampede appears to be far more damaging than the plague per se.

    > Hey how’s your rack service going ?

    Believe or not, going, and nearly all mains current capacity sold out. But RKs are available! Want one?

    • Pete D. says:

      Of wrecked cities.

      Cities are wrecked psychologically these days. The elusive force known only as “confidence” will be what takes longest to rebuild in the 2020’s.

      Where’s the supply shock?

      I’m standing on top of it. Western Canadian Select is starving for lack of port access. Alberta is gearing up to invade Crimea BC to secure its deep port, but you didn’t hear that from me. Also, many of the large American producers are highly leveraged based on insane prices, eg. $80/barrel, so defaults are en route.

      we both similarly “cheat”

      Welcome to the “civilised” world.

      The interesting revelation is just how few nominal BTC holders, “by mass”, actually held BTC (as in, the privkeys.)

      Mass and 5 bucks buys you coffee, as you know.

      So far the stampede appears to be far more damaging than the plague per se.

      It’s the straw that broke the leveraged, low-volatility camel’s back. Not that it’s wise to underestimate this plague or any other. I certainly don’t.

      RKs are available! Want one?

      I’m good for now but glad to hear they’re going strong.

  3. Aaron Rogier says:

    The locals down here are looking to lynch their known super-spreader. The locals are taking to the social distancing with enthusiasm, but with 79 confirmed cases it is already uncontainable here. Hopefully the panic bubble settles here sooner rather than later.

    At least pesos are cheap and China is still going to have a taste for beef if they don’t panic sell the herd.

    Supply chains are keeping the supermarkets far better stocked than what I’ve been hearing about in the US. It’s going to be interesting to see what sits on the other side of this stampede in October. China looks like they want to hang the US for it, and seeing how the US Government’s credibility is at an all time low…

    Cheers, enjoy the family time.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>