Our delta variant experiences, China, the supply chain, and inflation

I have not felt inclined to write for a while, as we’ve been dealing with a lot of crazy stuff over here.

Both of my fully vaccinated parents became very seriously ill with the delta variant. We had an incredible struggle trying to get them into a place where they could get monoclonal antibody treatments (Regeneron). They live in Colorado.

Colorado health authorities have a notice on their monoclonal antibody connector tool that they are tracking the race of everyone who seeks the treatments to ensure “equity” in the distribution of medicine. I am not sure if that translates to they now have racial quotas in the distribution treatments from their allotment to area hospitals, or what, but I would love to know how they are using that data in practice. I’d also like to know if this position is impacting other, non-covid areas of health care. Are they tracking this for cancer drugs, for example? And is this a federal matter since the Biden administration took control of monoclonal antibody treatments, or is this unique to Colorado?

The nurse practitioner at their regular doctor’s office then told them that there was a “lottery” for receiving the treatments that they had to apply for. A lottery for a treatment you have a short window to receive, what logistical genius.

As their condition was deteriorating, we were at the point of putting them in the car, driving across state lines to Amarillo, and taking them to an ER there. I cannot even begin to communicate how insane health care in metro Denver is right now.

Finally, we took them to an urgent treatment center where the doctor was some sort of bureaucratic Sherpa. He directed them to a hospital that I have gone back and forth on naming here, but have decided against naming because I do not want them to retaliate against my elderly parents in ways that might impact their future care.

Even being fully vaccinated, their experiences in the ER were pure, unadulterated hell. It’s still too soon, but I am eventually going to have a serious talk with my family about moving away from Colorado (where they have lived since the mid-1990s) and its now dysfunctional political hellscape. They said sitting for hours waiting in the ER was a physically grating experience, as they had a nurse there who would literally scream at any unvaccinated patients at the top of her lungs and try to publicly humiliate them in the waiting room. “It’s your fault you are here!” – knowing full well that there were many vaccinated patients right beside them. They wanted to get up and leave just out of moral repulsion, but it was their only option for a life-saving treatment in the area. (Had they of been here in Florida, I could have easily driven them to many treatment centers, and they would have been in and out with no drama. DeSantis is obsessed with monoclonal antibody treatments and runs these centers like a well-oiled machine.) Another nurse decided to pass the infusion period by explaining how “white people” caused covid. I am not kidding. Race permeated every aspect of their seeking treatment. You have people who are terribly ill and worried about their fate, and this is what they get to listen to. It’s sickening what our society has become.

Can you imagine going to this hospital and thinking you are going to be treated by people who legitimately do not care whether you live or die because they have internalized these radical political ideologies? And these are the types of people they have working in the emergency room – a place where the staff should be calm and professional because they are, by definition, dealing with urgent situations.

They did get Regeneron, and I can say with absolute confidence that without it they would have been hospitalized. I shudder to think what that may have involved in the current social environment, especially given that visitors are not allowed in many hospitals to observe the care their family members are receiving (or not receiving). I have gotten to the point where I am no sympathetic audience at all to vaccine cheerleaders. Given the scale and severity of breakthrough infections, it is absolutely bonkers to me that our government is forcing people out of their livelihoods (even to the detriment of essential services) and not permitting them to participate in normal society, over their decision not to get a vaccine that simply does not work. We are in some deranged version of The Emperor’s New Clothes, but we’ve been here for a while.

(It would seem that governments worldwide, according to their contracts with vaccine manufacturers, have covenanted not only to provide them with immunity against lawsuits for their safety – which, as a practical matter, means taxpayers will make the companies financially whole – but also to defend the pharmaceutical companies against any claims about their efficacy or safety. This means contractually, the federal government and its political subdivisions can do nothing besides say that the vaccines are safe and effective, no matter what the data actually says. It is thus not shocking that the CDC declined to track breakthrough infections and publish aggregate data. Really makes you think they knew months ago how the delta outbreak was going to play out – hence the “wear a mask even if you are vaccinated” and “we have to protect the vaccinated from the unvaccinated” drivel.)

Anyway, Regeneron is indeed the miracle drug people are making it out to be. If you know anyone who gets seriously ill, help them get these treatments ASAP. If you can’t get Regeneron, go for the GSK alternative – it’s not free like Regeneron, but it will help you. I have no idea why our country is not farming the heck out of antibodies for everything, instead of shilling for vaccines that are demonstrably doing nothing to stop the spread of infection or protecting people from serious illness. The rent-to-own immune response is definitely superior to this new vaccine paradigm. It’s like you get it, and you are feeling fine within days.

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As long-time followers know, I have a professional background in finance and economics and enjoy studying what I broadly call “the mechanics of how things break.” It comes with being a risk-management nerd. Right now, our supply chain is broken beyond anything seen since World War II, and we are seeing higher inflation than anything in recent memory. There is no shortage of ink spilled on how domestic policy (i.e., spending like there is no tomorrow, and a Federal Reserve that is engaging in record quantitative easing, apparently while some officials are front-running the central bank’s trading in their own portfolios). But China is going to be the real problem.

Bloomberg reported today that China – which is facing an acute energy crisis – has ordered its energy companies to hoard commodities (which are used in fuel generation) “at all costs.” What does this mean for us?

First of all, China hoarding commodities on this scale is simply going to drive up the costs of commodities worldwide. This means inflation not only in fuel, but in everything that is manufactured and distributed.

Second, this is probably going to put even more serious pressure on the global supply chain, which is outright failing in some regions already. As China redirects everything toward its energy sector, that makes for even fewer resources to be sent overseas. Our dependence on China for essential goods has been clearly revealed as a national security problem.

This is a good explanation of what is happening:

China is officially panicking.

Now that the global energy crisis has slammed China’s economy, leading to the first contractionary PMI since March 2020 as a result of widespread shutdowns of factory and manufacturing, not to mention hundreds of millions of Chinese residents suffering from periodic blackouts, Bloomberg reports that China’s central government officials “ordered the country’s top state-owned energy companies to secure supplies for this winter at all costs.”

Translation: Beijing is no longer willing to risk social anger and going forward China will be subsidizing coil and nat gas, which will lead to even higher prices, which will lead to even higher prices for other “substitute” commodities such as oil, which is why oil surged on the news.

The news follows a report on Wednesday that China will allow soaring coal prices to be passed on to factories in electricity prices. But prepare for a surge in PPI, which will likely not be allowed to be passed on to CPI due to ‘common prosperity’. Which logically means margin collapse, and shutting down – so even more structural shortages. Unless we get state subsidies of some sort, or differential pricing for the foreign and domestic market. There used to be a name for that kind of economy. Wall Street used to pretend it didn’t like it.

According to Bloomberg, the order came directly from Vice Premier Han Zheng, who supervises the nation’s energy sector and industrial production, and was delivered during an emergency meeting earlier this week with officials from Beijing’s state-owned assets regulator and economic planning agency. The bottom line, according to Bloomberg sources, is that “blackouts won’t be tolerated.”

Which simply means that the supply chain bottlenecks are about to get even worse since China will muscle in even more aggressively for what little coal and LNG supply there is. It is unclear if it also means that Beijing is about to give up on its laughable pursuit of decarbonization.

The emergency meeting underscores the critical situation in China. A severe energy shortage crisis has gripped the country, and several regions have had to curtail power to its industrial sector and some residential areas have even faced sudden blackouts. Ironically, as discussed yesterday, China’s electricity crisis is caused by an unprecedented coal shortage, so unless Beijing is willing to rollback on its carbon crackdown, expect Beijing’s panic to only lead to much higher prices while therma power output continues to soar, mocking China’s “green” virtue signaling.

Meanwhile, Bloomberg notes that in a sign of how worried Chinese officials are, “Premier Li Keqiang vowed overnight that every effort will be taken to maintain economic growth. China will ensure the needs of basic livelihoods are met and will keep industrial and supply chains stable, Li was cited as saying by China National radio during a meeting with foreign diplomats Thursday.”

The bottom line is that China finally hit the limit of how much slowdown it is willing to tolerate and Beijing is about to unleash a monetary and fiscal stimulus tsunami. It also means that commodity prices are about to absolutely insane this winter.

Here in the United States, the Federal Reserve has been telling everyone that they expect inflation to moderate early next year. I do not know anyone in finance or economics who actually agrees with this Pollyanna prediction – everyone thinks inflation is now a major and durable problem. But it is somewhat terrifying to think about what is happening with China and how unprepared the Federal Reserve might be for the second-order consequences over here.

This is, in many ways, a repeat of the dysfunction of 2020. The media and politicians were too busy obsessing over a ten-minute phone call Trump had with Ukrainian leaders to talk about covid. When people did start hearing more and more about it, panic ensued, and grocery stores in the US resembled the collapse of socialist Venezuela.

Here we are at the beginning of the colder months (for everyone who doesn’t live in South Florida, lol) and we may have another financial crisis on our hands – one that will directly impact the markets for food and fuel. And what are they talking about? Dumping another $3.5 trillion on mostly unnecessary and unjustified pork spending (which will also be inflationary), which will crowd out the possibility of any necessary spending that new problems may bring.

The UK is already having its own fuel crisis, again driven by policy dysfunction.

Our public policy right now can be neatly summarized by: What would you do, if your primary goal was drive ordinary life in this country off a cliff over and over and over again? I’m convinced that any ten random people off the street corner could do a better job at protecting the American people than the folks in DC. No matter how incompetent or clinically insane I think our leaders are, they continue to find new ways to surprise me.