The Covid-19 shutdown has driven people to buy mass-produced spirits instead of good spirits. The good guys are losing:
The coronavirus recession has left no industry unaffected, but the one-two punch of shuttered bars and mass unemployment has hit craft distilling particularly hard. In a survey of its members by the American Craft Spirits Association, more than two-thirds say they may have to close permanently in the next few months.
The crisis isn’t just threatening to decimate the industry; it is also reshaping its future. How can a sector that relies so heavily on bars, tasting rooms and face-to-face sales — not to mention customers willing to pay a premium for its products — move forward in an economy defined by social distancing and thinner wallets?
“There’s going to be a lot of dead distilleries coming out of this,” said Paul Hletko, the founder and distiller of FEW Spirits, in Evanston, Ill. “Even if you survive, the new normal is going to be punishing for small brands.”
“Starting a distillery is really hard. It takes a lot of capital up front — you’re in the hole for a long time,” said Maggie Campbell, the president of Privateer, an eight-year-old rum distillery in Ipswich, Mass. “If we were three years old, this would be a very scary time.”
This blossoming industry was therefore uniquely vulnerable to the ravages of the coronavirus crisis. To make things worse, the market for craft spirits is centered in large cities and among millennial and younger consumers — all of which have been especially hurt by the sudden economic downturn.
“We were poised for this awesome surge,” said Nicholas Jessett, a founder of MKT Distillery in Katy, Texas. “And now we can’t go anywhere. We’re stuck.” His distillery sold most of its products through its tasting room, and Mr. Jessett was in negotiations with a distributor to get MKT’s whiskey and gin into nearby Houston and other parts of Texas. But after the state shut down nonessential businesses, the distributor pulled out.
I have at least two open bottles of FEW spirits in my house at any point, and I'm also trying to pick up other local products, like CH and 28 Mile, when I can. But this could easily turn into the dystopian 1990s when the only spirits for sale came from giant companies and had no character.
The President of the United States, a man who literally has the power to kill billions of people in an hour, made a suggestion at his press briefing yesterday:
(NBC's report on the incident includes the line "He didn't specify the kind of disinfectant." Also, retired General Wesley Clark actually predicted it would come to this.)
In a statement Friday, White House Press Secretary Kayleigh McEnany noted that Trump had said Americans should consult with their doctors about treatment. U.S. Surgeon General Jerome Adams released a statement reiterating that on Friday morning.
McEnany accused the media of taking Trump’s words out of context.
“President Trump has repeatedly said that Americans should consult with medical doctors regarding coronavirus treatment, a point that he emphasized again during yesterday’s briefing," she said.
Trump’s eyebrow-raising query came immediately after William N. Bryan, the acting undersecretary for science and technology at the Department of Homeland Security, gave a presentation on the potential impact of summer heat and humidity, which also included references to tests that showed the effectiveness of different types of disinfectants. He recounted data from recent tests that showed how bleach, alcohol and sunlight could kill the coronavirus on surfaces.
Well, the video above gives you about 75 full seconds of context, so you can make up your own mind on what he meant.
Fine, whatever. In real news:
Finally, Bill Gates lays out what we'll need to open up the economy again.
Two pieces caught my eye this week, one telling us that things will get better, and the other...well...
First, a letter from New Yorker London correspondent Mollie Panter-Downes—sent 14 September 1940, the 14th day of the London Blitz:
In getting about, one first learns that a bomb has fallen near at hand by coming upon barriers across roads and encountering policemen who point to yellow tin signs which read simply “Diversion,” as though the blockage had been caused by workmen peacefully taking up drains ahead. The “diversion” in Regent Street, where a bomb fell just outside the Café Royal and did not explode for hours, cut off the surrounding streets and made the neighborhood as quiet as a hamlet. Crowds collected behind the ropes to gaze respectfully at the experts, who stood looking down into the crater and chatting as nonchalantly as plumbers discussing the best way of fixing a leaking tap. Police went around getting occupants out of the buildings in the vicinity and warning them to leave their windows open, but even with this precaution, when the bomb finally went off that evening there were not many panes of glass left.
The scene next morning was quite extraordinarily eerie. The great sweep of Regent Street, deserted by everyone except police and salvage workers, stared gauntly like a thoroughfare in a dead city. It would have been no surprise to see grass growing up out of the pavements, which were covered instead with a fine, frosty glitter of powdered glass. The noise of glass being hammered out of upper windows, swept into piles at street corners, and shovelled into municipal dust vans made a curious grinding tinkle which went on most of the day. The happiest people there were two little boys who had discovered a sweet shop where most of the window display had been blown into the gutter, and who were doing a fine looting job among the debris.
Londoners kept the British end up, and got through it, though it took the UK 18 years before post-war debt fell below 100% of GDP.
The second, from Washington Post columnist Paul Waldman, reminds us that the Republican Party doesn't believe in the legitimacy of a Democratic government. So we should expect GOP intransigence and sabotage throughout the Biden administration:
We’ve been here before, and not that long ago. After the 2008 election but before Barack Obama took office, Time magazine put him on its cover photoshopped as FDR, under the headline “The New New Deal.” But while he did pass a string of significant legislation utilizing government power early in his presidency — a large stimulus bill, Wall Street reform, saving the auto industry, ending bank profiteering on student loans, the Affordable Care Act — two years later Republicans took back the House and ground it all to a halt.
You can bet that Republicans will be holding strategy meetings and fielding polls and writing reports to determine not just how to stop Americans from becoming more open to expansive government action, but how to turn this crisis into anger at government itself....
America’s response to this pandemic was so awful not just because Trump is incompetent, but because conservative you’re-all-on-your-own philosophy was put into practice in ways that left us all vulnerable. In so many ways what we’re suffering through now, both in public health and economically, is a failure of conservatism.
Republicans know that the public might arrive at that conclusion — and they’re working to make sure it doesn’t happen. Democrats need to work just as hard to make sure it does.
This is what I wrote about this morning. Remember: The Democratic Party wants to govern, the Republican Party wants to rule.
I suspended the Brews & Choos Project after March 7th as the state closed restaurants and bars to slow the spread of SARS-COV-2. I had planned to continue the project as soon as things opened up again, knowing the economic pause would certainly change the roster. Sadly, it already has, with the permanent closure of Argus Brewing on the city's south side on March 28th:
Since launching in 2009 in a former Schlitz horse stable — a relic of when beer was delivered by hooves — Argus always hovered at the edge of the beer drinking consciousness, a curiosity few Chicagoans ever saw, tasted or even discussed.
While other breweries of its era grew into Chicago icons — Metropolitan, Half Acre, Revolution — Argus sat quietly at the city’s far south end, miles from both its competitors and the city’s best-known beer bars.
Argus founder Bob Jensen acknowledged that his brewery had long been teetering at the edge of collapse. It was never profitable, and in December, reduced head count from 16 to 11 employees. Jensen considered pulling the plug for months. The COVID-19 pandemic made him pull it.
Earlier this month, the Brewers Association said coronavirus may be catastrophic for the nation’s small breweries. Nearly 60% of surveyed breweries predicted they couldn’t survive three months of social distancing.
For Argus, the decision was made in less than two weeks. About three-quarters of its business was draft, an arena that dried up literally overnight after bars and restaurants closed March 16 to stem the spread of the new coronavirus.
But Argus’ demise was rooted in years of not being able to turn a corner, even as a $29 billion craft beer industry grew around it. Argus grappled with its far-flung location in the Roseland neighborhood, questionable commitment from its distributors, growing competition, failure to open a taproom, buy-in from bars and stores and, most important, making quality beer.
On March 1st I went down to Flossmoor Station on the Metra Electric line, but didn't stop at Argus because they didn't have tours on Sundays. I had planned to go down there in warmer weather so that I could not only see their operation and taste their beer, but also so I could walk around the Pullman Historic District nearby.
I really hope brewpubs and taprooms can reopen soon.
Another 4.4 million people filed unemployment claims last week, bringing the total unemployed in the US to 26 million and the unemployment rate to around 20%. This is the fifth straight week of record weekly unemployment filings, but the third straight week of declining filings, which is about the only silver lining in economic data today.
For comparison, according to the National Bureau of Economic Research (NBER), it took three years for unemployment to go from 4.7% to over 20% in the Great Depression. (It peaked in 1933 at around 25%.)
It would help if the Trump Administration and the Republicans in Congress would work towards a sensible response to the pandemic, but alas, they can't get past their ideologies or basic stupidity. Political appointees at the Dept of Health and Human Services sidelined Biomedical Advanced Research and Development Authority director Dr Rick Bright, a physician who has studied immunology and molecular pathogenesis for most of his career, because he refused to endorse President Trump's quackery. Bright joins a number of other scientists and experts canned for not following the party line over the past two months, including the head of the director of the National Center for Immunization and Respiratory Diseases. The Centers for Disease Control hasn't had a press conference since March 9th "in part out of a desire not to provoke the president," according to the Washington Post.
Senate Majority Leader Mitch McConnell has taken the opportunity to push his ideology of small government (i.e., everyone for himself) one step further by suggesting states like Illinois could simply go bankrupt rather than get Federal aid to help their governments through the crisis. Note that the reason states like Illinois have a crisis right now looks a lot like the reason the whole world has a crisis right now, but McConnell, who hates government as much as Trump hates women, thinks screwing millions of retirees out of their pension benefits sounds like a great thing to do in a pandemic.
One should note that Illinois ranks 43rd on the list of how much Federal aid goes to the states. Kentucky ranks 8th. In fact, there seems to be a correlation between the percentage of votes for Republican candidates and a reliance on Federal aid. This makes perfect sense, of course: these states vote against their own taxes but they still have to keep their poorest citizens from dying, so they go hat-in-hand to the Federal government. Also, the New Jersey plan makes sure that small, rural states have disproportionate power in Congress, further guaranteeing that these places will suck money from larger, urban states even while crying about the size and scope of national programs.
My fervent hope in the next 194 days is that people understand how much we need effective government, and how the disastrous response of our current government comes directly from the administration's and the Republican Party's twin desires to increase wealth inequality through decreasing government effectiveness in general.
Either I spent all day coding and therefore didn't have time to read these things, or I just didn't want to read these things. Let's start with the big questions:
You should have the same answer to all these questions ("yes"), though you might want to extend your answer to the first one after reading the article. (I vote "electric.")
When the economy went into its current medically-induced coma, cash movements slowed almost to a halt in some sectors. If you had cash four weeks ago, you have probably held onto it; if you held debt four weeks ago, you probably haven't gotten all the cash flows you expected.
As yesterday's brief collapse of oil futures contracts demonstrated, the game of musical chairs almost became frighteningly real for traders:
When you read a news article or hear an economist mention the price of oil, it typically refers not to a physical barrel filled with viscous liquid but to the price of a futures contract that trades on the Chicago Mercantile Exchange. By convention, the “price of oil” is the going per-barrel price reflected in a futures contract for the ensuing month.
In the case of the most widely followed contract in the United States, that would be West Texas Intermediate crude, which you would need to physically obtain from storage facilities in Cushing, Okla., where major pipelines intersect.
Plenty of major entities trade such futures without ever thinking too much about those physical details — and certainly without getting any oil on their expensive suits. Speculators speculate, companies hedge their risks of price swings, and transactions take place at the level of abstraction on a computer screen.
But as each contract’s settlement date approaches, the financial speculators sell their contracts to “real” buyers of oil, like refineries. This can cause problems for traders who may be in over their heads. Chris Arnade, a trader-turned-author, said on Twitter on Monday that he once found himself in that position: “I ended up almost taking physical delivery of lots of oil.”
It gets worse:
All of that points to a deflationary collapse — a glut of supply of goods and services, and consequently falling prices — that surpasses anything seen in most people’s lifetimes.
Oil isn’t the only commodity with a plunging price. Corn futures have fallen 19 percent since early February. The price of inflation-protected government bonds suggests inflation will be only 0.56 percent a year over the coming five years, and the Consumer Price Index fell 0.4 percent in March.
In other words, the suckage has barely started for a lot of people.
So, instead of worrying about the end of the world as we know it, enjoy Chicago Public Rado's drone footage of a quiet city:
Welcome to day 31 of the Illinois shelter-in-place regime, which also turns out to be day 36 of my own working-from-home regime (or day 43 if you ignore that I had to go into the office on March 16th). So what's new?
Finally, via Bruce Schneier, the Dutch intelligence service had an unintentional back door into several other countries' communications. (Scheier says, "It seems to be clever cryptanalysis rather than a backdoor.")
Demand for petroleum has crashed so hard and so fast that North American oil producers have run out of space to store the excess. This morning the price of US crude collapsed, falling 105 500% to $-2 $-37.63 per barrel; Canadian oil prices also dropped negative. That's right, if you want to take a million or so barrels off their hands, they'll pay you to do so. (This only affects delivery by month's end; for delivery in May, oil still costs $20 a barrel.)
Meanwhile, in other horrific news:
Finally, the Covid-19 emergency has led to mass layoffs of architects, one of the hardest-hit professions in any recession. I'm currently reading Robert Caro's The Power Broker, his biography of Robert Moses, and just at the point where he mentions that in 1934, 5 out of 6 architects had lost their jobs. Everything old is new again.
Julie Nolke is a Canadian actor, comedian, and writer: