- Singapore Oil Trading Giant On Verge Of Collapse After Banks Freeze Credit Lines
Singapore Oil Trading Giant On Verge Of Collapse After Banks Freeze Credit Lines
Back in the second half of 2015, shortly after Saudi Arabia unleashed the (first) OPEC disintegration by flooding the market with oil in hopes of killing US shale (so deja vu… only back then it took it about two years for it to realize its low production costs are no match for the US junk bond market) and when China’s economy briefly collapsed forcing Beijing to devalue its currency and trigger a violent plunge in commodity prices around the globe (so deja vu… only back then the Shanghai Accord of Jan 2016 restored order to the world), traders were looking for ways to short the chaos and one of the favorite trades was to bet on the collapse of commodity merchants such as Glencore, Vitol, Trafigura and Mercuria, whose fates were closely interwoven with the prices of the commodities they traded. As a result, Glencore’s stock price plunged and its CDS soared amid fears the commodity crash cascade would lead to a default wave among anyone with commodity exposure.
Fast forward 5 years when the biggest commodity crash in generations, one which has sent the price of oil tumbling to levels not seen since George H.W. Bush was invading Middle Eastern nations, and… nothing: while the Glencores of the world have indeed dropped, their valuations are nowhere near the late 2015 lows even as the prices of several key commodities have rarely been lower.
That might be changing, however, because the longer global economic activity fails to rebound and the longer commodity prices remain at their current depressed levels, the more the global liquidity crisis will transform into a solvency crisis, hitting some of the most prominent commodity traders in the world… such as Singapore’s iconic oil trader Hin Leong Trading, which according to Bloomberg has appointed advisers to help in talks with banks as some of them freeze credit lines to the firm.
Yesterday, Bloomberg first reported that at least two lenders won’t issue new letters of credit to Hin Leong amid concerns over its ability to repay debt; as a result, the firm appointed advisers this week to help negotiate with banks for more time to resolve its finances. Letters of credit are a critical financial backstop for commodity traders, used as way of financing critical short-term trade. A bank issues the so-called L/C on behalf of the buyer as a guarantee of payment to the seller. Once the goods have exchanged hands, the buyer repays the lender.
Hin Leong suddenly finds itself without providers of L/Cs – for reasons still not exactly known – without which it is effectively paralyzed as it needs to front cash for any transactions, something no modern commodity merchant can afford to do.
While it’s note exactly Trafigura, the privately-held company founded by legendary self-made Chinese tycoon Lim Oon Kuin could be the latest casualty of the crash in oil prices. Meanwhile, speculation over Hin Leong’s potentiall collapse has ricocheted around the tight-knit oil trading community in Singapore, one of the world’s most important oil markets and the biggest ship fueling hub. Think of Hin Leong as Singapore’s oil “Lehman”, because as Bloomberg notes, before crude’s spectacular crash, it would have been almost unthinkable that such a major player in the market could be in such a position.
Now, not so much.
Billionaire Lim Oon Kuin, 76, founded Hin Leong Trading in 1963 at age 20 with a single truck delivering diesel to fishermen and small rural power producers. Since then OK Lim, as the founder is known, has grown the company into one of Asia’s largest suppliers of ship fuel, or bunkers, and one of Singapore largest independent oil traders. OK Lim built the company from a one-man-one-truck oil dealer to a regional powerhouse with assets including 130 vessels, with businesses across oil trading, terminal and storage, bunker supply and lubricants manufacturing, according to its website.
Products traded by Hin Leong Group include: crude oil, feedstock, middle distillates, petrochemicals, biofuel, mogas, naphtha, fuel oil, LPG, asphalt, base oil and lubricants. Company’s trading revenue surpassed USD 14 billion in 2012.
Larges shipments of oil are sourced through well-established network of partners including oil majors and national oil companies generating significant economies in freight and resulting in cost savings for our buyers.
Integrated oil trading services comprising of trading, shipping, blending, storage and an extensive fleet of oil tankers add value and complement our trading activities. This integrated approach enhances our trading flexibility and efficiency in responding to a dynamic oil trading market.
The group’s shipping arm, Ocean Tankers, owns a fleet of more than 130 tankers and is run by son Evan. Lim also co-owns oil storage unit Universal Terminal with PetroChina. The company’s bunkering arm, Ocean Bunkering Services (Pte.) Ltd., was ranked the third-largest shipping fuel supplier in Singapore last year, according to the city-state’s Maritime and Port Authority.
Hin Leong’s situation arises amid a torrid period for the Asian commodity trading industry, including multi-million dollar losses by some high profile Chinese and Japanese traders, and the collapse of Noble Group, one of the biggest names in the industry.
According to Bloomberg, Hin Leong’s financial accounts couldn’t be found on the website of Singapore’s accounting regulator; its (slightly outdated) website said that the company’s revenue surpassed $14 billion… in 2012.
In a rare interview in 2018, OK Lim’s son said Ocean Bunkering Services aimed to raise its monthly bunker fuel sales to as much as 1 million tons from 650,000 tons in January that year. Singapore’s monthly bunkering sales averaged around 4 million tons in the past five years.
It is unclear what will happen to the Singapore commodity trading giant if it is unable to find banks that will backstop its operations. Should the firm become insolvent, the downstream cascade for companies in the Pacific Rim could be devastating.
Tyler Durden
Fri, 04/10/2020 – 23:50 - Is This America's Turning Point?
Is This America's Turning Point?
Authored by Robert Wright via The American Institute for Economic Research,
The phrase “to jump the shark” at first referenced the point at which a television program started to lose its moorings, and its audience.
Specifically, it referred to the episode of Happy Days (1974-84, ABC) when “the Fonz” (played by Henry Winkler, now better known for his role as an acting teacher on HBO’s Barry) jumped over a shark tank on water skis. Ratings for the show did stay up after the episode because there were only 3 or 4 channels available back then. Many fans, including this then eight-year-old, however, became mere viewers after that episode.
Today, though, the phrase has expanded to include any turning point eventually ending in disaster.
Lots of folks, from politicians to used car salesmen, are trying to calm fears associated with the COVID-19 pandemic by harkening back to America’s glorious past.
“We” can get through this, they say, because “we” successfully traversed worse travails. The problem with that analysis is the “we” has changed. Yes, America suffered invasion and the destruction of the national capital in 1814, a long, bloody Civil War, and so forth. But the Americans who preserved or prevailed then are all long gone, as are many of the nation’s most important institutions.
Yes, some people who lived through the Great Depression and World War II are still alive but they are hardly the same people they once were. And right now they should all be indoors wearing gloves and N95s, or those gas masks that we all bought after 9-11, a terrorist attack that most of those alive today survived. But did we really do a good job responding to 9-11? We lost a lot of civil liberties and treasure fighting unnecessary wars and still suffer through ridiculous rituals at airports that protect no one.
America’s currency and debt are in a similar position to post-shark Happy Days. Nobody really likes it anymore but decent alternatives hardly abound. Solid currencies like the Swiss franc are too small, leaving only the currencies of a deeply divided Europe or authoritarian China as serious competitors.
The level of the national debt in absolute, per capita, and percentage of GDP terms, which can be tracked here, frightens many. In round figures, the national debt is $24 trillion, or $72,000 per person (man, woman, child) or $192,000 per taxpayer. That is 110 percent of GDP, the highest since the World War II era. And that is just the money borrowed to fund operations. Other liabilities, like Social Security and Medicare, are estimated at $77 trillion.
But the real problem is the loss of what Bill White called America’s Fiscal Constitution, a set of borrowing and budget rules first developed by Alexander Hamilton, America’s first Treasury Secretary. The idea was that the federal government should keep a lot of “dry powder” so that it could borrow to fight wars, purchase territory, and respond to shocks. To do that, it had to run budget surpluses when peace, easy taxes, and a tolerable administration of justice, and hence prosperity, prevailed. But basically since World War II, America has remained at war, some shooting, some cold, some necessary, but many, like the “wars” on drugs and poverty, concocted and counterproductive. Chronic deficits resulted.
Instead of imbibing the lessons of Richard Salsman’s The Political Economy of Public Debt, America’s policymakers and pundits ignore the national debt, or dismiss it with facile, and long since exploded, myths like “we owe it to ourselves” or “we can’t default on it because we can always print money to pay it.”
Before the COVID-19 pandemic, many held that America might muddle along for decades more, unloved but the only serious TV show left on air. But the only thing more disappointing than the irrational response of many American governments to the pandemic has been the way that Americans have acquiesced to the suspension of their civil and economic liberties on very flimsy grounds.
At 40:30 of this video, leading epidemiologist Knut Wittkowski puts it clearly:
“I think, people in the United States … are more docile than they should be. People should talk with their politicians and ask them to explain” the rationale for business shutdowns, shelter-in-place orders, and other medieval responses to what he, and many other epidemiologists not on the government payroll, believe is just another annual “pandemic” that kills those with weak immune systems.
The government’s response is actually making matters worse by slowing herd immunity.
As I recently argued elsewhere, America’s educational system has not prepared us for the government power grab because it does not create enough Emersonian independent thinkers or, frankly, even adult thinkers. Due to the extreme Left bias of higher education, many of America’s college graduates remain intellectually infantilized to the point that they can do little more than Tweet ignorant hate at any idea that does not accord with Progressive mantras.
While some older Democrats, like the aforementioned Bill White, and Peter Schuck, author of Why Government Fails So Often, are rational beings worthy of the attention and respect of all thinking beings, many young progressives appear completely rigid between the ears.
They want less economic activity to “save the planet” but cannot cheer death or the pain that lockdowns inflict upon the poor. While fewer miles traveled by automobile must warm their hearts by presumably cooling the planet, the thought of all the extra hot water needed to wash hands a dozen times a day must sting a bit, along with the fact that plastic straws and grocery bags are far safer during pandemics than purportedly “green” alternatives.
Strangest of all have been progressive calls for their archenemy, President Trump, to behave in a more authoritarian manner!
The statist assumption that “only government can save us” is so deeply ingrained on the Left and Right that rational calls to vitiate the economic crisis with voluntarism have not gained traction.
And don’t even get me started on the Right’s economic nationalism. Pure lunacy, like calls for AUTARKY (no international flows, like pre-Perry Japan!), now attracts serious attention. And why not? Didn’t we all “learn” in college that some French and German philosophers were right about there being no truth, just power and rhetoric? Strangely, though, the descendants of the apostles of postmodernism have no trouble seeing the truth in destroying the economic lives of most Americans because some unrealistic models claimed between 10,000 and 100 million people would otherwise die.
Is America about to jump the shark? Maybe it already has.
Or maybe, unlike the Fonz, it won’t even clear the tank, the victim of the weight of its own inane policies. All that is clear is that somebody is going to have to pay for this fiasco, and that somebody is “us.”
Tyler Durden
Fri, 04/10/2020 – 23:45 - Confessions Of A Sado-Maso Sex Worker In A Time Of Coronavirus
Confessions Of A Sado-Maso Sex Worker In A Time Of Coronavirus
When we say the coronavirus impact to the economy is hitting everyone – we mean everyone. And we mean hitting.
It’s not just your local small business that has been crippled by everybody “staying the f*ck home” over the last month, but also your local sex worker.
One dominatrix, who has worked in New York for more than six years, recently shared her story with the New York Post.
Aviva Diamond, as she’s called, specializes in slave training, humiliation and foot fetishes. She’s learning that a pivot to online sessions as a result of the coronavirus lockdown is turning out to not quite be the same as in-person work.
She said that her clients started to get concerned in mid-March, questioning whether it would be safe to meet and whether their pre-planned business trips to New York were going to happen.
Since then, she has suffered from “thousands of dollars of cancellations” and has no physical sessions scheduled for the foreseeable future. This represents a large delta from the eight to 15 hours of in-person sessions she was taking in a week prior to the virus outbreak. Those in-person sessions made up 90% of her income, she told the Post.
Diamond confessed:
“It’s been a challenge for me to make this shift from mostly in-person sex work to exclusively operating online. I am producing more femdom videos, adding content to my online subscription platforms like Onlyfans, promoting and expanding on social media, and offering phone and Skype sessions.”
But she bemoans the fact that online sessions are sold at a fraction of the rate of her physical sessions, so she has to “hustle harder” to make less than she was making prior.
And then there’s the obvious: there’s no real substitute for physical contact when it comes to being a dominatrix.
“I’m concerned about the long-term economic effects this will have on me. Luxury experiences are one of the first things people stop paying for during a recession, so my work is likely to be jeopardized for many months,” Diamond concluded.
Tyler Durden
Fri, 04/10/2020 – 23:20 - "This Should Trouble Us Deeply" – Chilling Documentary Maps Out Likely Origin Of COVID-19
"This Should Trouble Us Deeply" – Chilling Documentary Maps Out Likely Origin Of COVID-19
Authored by Catherine Yang via The Epoch Times,
While The Epoch Times began publishing reports of the CCP (Chinese Communist Party) virus on Jan. 2, most outlets had yet to pick up on the story because of the CCP’s lockdown on information. Three months later, over 200 countries and territories have been infected and the CCP virus has caused over 85,000 deaths infecting at least 1.4 million, but information is murkier than ever.
“We’ve pretty much heard every rumor under the sun. We’ve heard every theory, every crazy rumor, we’ve heard all these different narratives,” said Joshua Philipp, award-winning investigative reporter and host of the show “Crossroads.”
The rumors aren’t by accident: The CCP has been actively engaging in a disinformation campaign, and media outlets around the world have parroted the propaganda. As a result, entire nations have been operating under false information as they try to battle the pandemic within their borders.
Screenshot of the documentary “Tracking Down the Origin of Wuhan Coronavirus.” (Courtesy Epoch Times)
Philipp and his colleages at The Epoch Times and NTD Television thought it their responsibility to sift through all the information available, verify it, and put it into one place. The result is the just-premiered documentary “Tracking Down the Origin of the Wuhan Coronavirus,” which is available to watch online. Less than two days after its premiere, the documentary has around 1.6 million views across different platforms.
The film “really tries to sift through all of the rumors, all of the truths, all of the falsehoods, and show people as accurate a picture as possible of what really happened and where this virus actually came from,” Philipp said.
In it, Philipp pieces together the development of the virus and includes interviews that shed light on the Chinese regime’s actions and intentions.
Lives at Stake
It should be very telling that the nine-person panel the CCP created to address the pandemic, once it finally acknowledged the virus in January, is filled with propaganda officials, said China affairs columnist Gordon Chang in the documentary.
Many countries have accepted or bought faulty equipment from China, for example, and “they’re getting duped,” Philipp said.
“And, of course, this is because they don’t understand the Chinese Communist Party, they don’t understand how [the CCP] works, and, even as we speak right now, the Chinese Communist Party is claiming it’s over in China when it’s not.”
China affairs columnist Gordon Chang. (Courtesy of Epoch Times)
“And what that means is, as they open things up and reopen flights, there’s a major risk to other countries,” Philipp said.
“If [these countries] don’t have accurate information, then what can they base their information on?”
As the documentary shows, the CCP’s delay in sharing information about the virus with other countries was not mere oversight. And beyond covering up the epidemic, China’s current actions and disinformation continues to endanger lives around the globe. The CCP has gone from denying the existence of the virus to spreading as many lies as it can to obscure the truth.
“This is an issue of human life,” Philipp said.
Why Would the CCP Lie?
From the beginning, the CCP has not been forthcoming.
“We don’t know what’s there, but the fact that the Communist Party is covering this up should trouble us deeply,” Chang said.
Those unfamiliar with the CCP will likely be shocked to discover the regime’s motives.
Philipp’s investigation of the CCP virus in this documentary goes back to the outbreak of SARS nearly two decades ago. The CCP tried to cover up the SARS outbreak as well, and The Epoch Times was one of the few media to expose this. There is precedent of the regime being untrustworthy in the event of an epidemic.
Philipp has been researching the CCP since 2008, and gave an example of its military approach to shed light on how the CCP can profit off this pandemic most consider a tragedy.
“One important thing to understand is they talk about war without morals. They talk about ‘unrestricted warfare’: war that does not take into account any concept of human rights, human dignity, human life. It is victory by any means. There is nothing they will not do, and we see the same thing in many parts of their system, including the medical system where altering the human genome is not a big deal to them,” Philipp said.
The documentary’s experts remind us: this is a nation that currently holds at least 1 million of its own people in concentration camps.
“They don’t care about human life when it comes to this regime—we’ve seen that in their human rights abuses,” Philipp said.
Epoch Times investigative journalist Joshua Philipp. (Courtesy of Epoch Times)
The documentary shows another link to SARS, and how one of China’s top virus experts’ study of SARS at the Wuhan Institute of Virology led to breakthroughs in creating a coronavirus to infect humans. But to what end?
“The Chinese Communist Party has been very open about its biological warfare ambitions, they don’t even try to hide it. And it’s been a huge injustice that people have not held them to stronger account than they should have, because the Chinese Communist Party is able to act with impunity and nobody criticizes what they do,” Philipp said.
The documentary is a comprehensive look at what the virus is and what has happened, and Philipp hopes it can allow nations to make better-informed decisions.
Dr. Sean Lin, former lab director of the viral disease branch at Walter Reed Army Institute of Research. (Courtesy of Epoch Times)
“At the very least, we can provide this as a package of information that will inform the entire world exactly where this virus came from, and exactly what needs to be done going forward,” he said.
“And at the very least, they will be more cautious when dealing with the Chinese Communist Party, especially at this time.”
“People’s lives are at stake and we find it very necessary to do this kind of work,” he said.
Talking Points
The information is perhaps more vital than ever, because while countries are turning to the World Health Organization for information, WHO is turning to the CCP.
General Robert Spalding, senior fellow at the Hudson Institute and former National Security Council senior strategy director, was in China when SARS broke out; he was evacuated, but he knows what a cover-up looks like. How the CCP handled the SARS cover-up is exactly how they have handled this one. He is among several experts who say the CCP clearly has no intention of ending the epidemic or curing the virus.
Senior investigative Epoch Times reporter Joshua Philipp in New York City. (Courtesy of Epoch Times)
“You can see that the WHO is essentially following the Chinese Communist Party’s guidelines,” Spalding said.
The WHO isn’t the only organization doing so; international organizations to individual academic institutions around the world are afraid to say something that may anger the CCP. In recent weeks, Philipp had reached out many well-known scientists who once suggested the virus causing this mysterious COVID-19 disease was created in a lab, but they no longer wanted to talk.
From the beginning, the CCP prevented organizations like the Centers for Disease Control and Prevention from studying the origin of COVID-19, Gordon Chang said.
The CCP’s actions speak to a problem deeper than the virus.
“Every country has diseases, but in China they become national emergencies and global emergencies, because the real disease here is communism,” Chang said.
* * *
Watch the complete documentary below:
Tyler Durden
Fri, 04/10/2020 – 22:55 - Mike Huckabee Sues Florida Sheriff For Threatening 'Social Distancing' Arrest On Private Beach
Mike Huckabee Sues Florida Sheriff For Threatening 'Social Distancing' Arrest On Private Beach
Former Arkansas Governor Mike Huckabee has filed a federal lawsuit challenging a county government ordinance which has temporarily shut down beaches where his multi-million dollar Florida home is located.
Huckabee filed it with his breachfront property neighbors against Walton County and its sheriff, saying the ordinance is unlawfully preventing them from “being able to use or even set foot in their own backyards”.
The lawsuit is stating violation of the community’s Fifth Amendment rights, specifically the “Takings Clause”, which states, “[N]or shall private property be taken for public use, without just compensation.”
Mike Huckabee’s beachfront home (in foreground) in the Florida panhandle. Image source: Arkansas Times It was filed Monday in the US District Court for the Northern District of Florida and says that local government is denying basic constitutional rights in taking ‘social distancing’ measures too far — to the point that police are infringing on property rights.
The complaint says that law enforcement officers “have been and are currently patrolling and occupying the private beachfront properties” without permission while threatening “arrest or fine Plaintiffs, their family members, or invitees on their private properties,” according to Lawandcrime.com.
“The Amended Ordinance is arbitrary and capricious. The Amended Ordinance purports to be designed to ‘prevent the spread of COVID-19’ yet it has the opposite effect,” Plaintiffs wrote.
“The Amended Ordinance prevents the Plaintiffs, many of whom own residences along the beach, from utilizing their own backyards to quarantine or stay safe at home,” the filing states further. “The chances of a family or landowner catching or spreading COVID-19 is far less in his or her own private backyard (where no one else should be less they be trespassing) than traveling to the grocery store or hardware store or other essential business.”
Mother Jones illustration; John Taggart/dpa/AP; Getty Previously described as the Republican former governor’s “dream house”, it’s a three-story, 10,000-square-foot mansion, with six bedrooms and even more bathrooms, a pool, and direct beach access.
Perhaps complicating matters is also the fact that Huckabee has for years been in a public legal dispute to claim the beachfront on which his house sits fully ‘private’ – for which he’s previously requested law enforcement help.
Image via NWF Daily News Mother Jones summarizes of that prior controversy and lengthy legal saga:
In 2012, Huckabee hired a lawyer and asked a judge to grant him ownership of the land stretching from the dune at the foot of his house down to the mean high-water line — essentially the wet sand and the Gulf of Mexico itself. No one appears to have protested the request, and the judge agreed, giving Huckabee the beach for a mere $400. Nearly two dozen of his neighbors have also quietly annexed the beach while escaping any additional taxes.
The result is a checkerboard of public and private space along the water’s edge for miles of Walton beachfront.
So it appears also at stake here is the complicated matter of whether the county itself is actually interpreting the stretch of beach as actually ‘private’ or ‘public’ property.
Tyler Durden
Fri, 04/10/2020 – 22:30 - Total Confirmed COVID-19 Cases Pass 500k As US Sees Biggest Single-Day Jump In Deaths Yet: Live Updates
Total Confirmed COVID-19 Cases Pass 500k As US Sees Biggest Single-Day Jump In Deaths Yet: Live Updates
Summary:
- Global new cases stabilize as deaths in US, UK continue to climb
- White House readying plan to start reopening the economy by May 1
- Global coronavirus deaths have topped 100k
- Feud between Taiwan and WHO intensifies as Dr. Tedros accuses Taiwanese gov’t of smear campaign
- Javits Center, UNSN Comfort mostly empty of patients as hospitalization rate drops
- England’s death toll tops 8k
- Iran accelerates sale of gov’t assets as pressure on regime intensifies
- Malaysia extends lockdown as cases in Southeastern Asia spike
- New York sees negative ICU admissions for first time
- Turkey death toll tops 1k
- Deaths in Spain continue to decline
- UK deaths see another record jump
- Italy reports drop in hospitalizations, ICU admissions, as new cases, deaths continue to decline
- Chicago mayor breaks up “underage drinking party” while personally enforcing social distancing
- Israel confirmed case total passes 10k
- LA launches task force to test deputies at home
* * *
Update (1015ET): “Good Friday” was actually pretty grim for front-line health-care workers battling the virus in the US.
As the case total in the country passed half a million, the daily death toll at last count had passed 2,000, leaving Friday’s count on track to be the largest single-day jump in deaths yet.
Here are a few other tidbits from the last couple of hours:
New York City reported 6,684 new cases of the virus and 651 new deaths, bringing the city-wide totals to 94,409 cases and 5,429 deaths.
Brazil becomes the first country in the southern hemisphere to report more than 1,000 deaths from coronavirus as the country reported 99 deaths and 1,462 new cases on Friday. Earlier in the week, a 15-year-old from the Yamomami Tribe, a people who live deep in the Amazon and are almost untouched by civilization, died of the virus.
As outbreaks in dozens of prisons managed by the federal BoP worsen, the new total for confirmed cases was 318 federal inmates and 163 employees have tested positive for coronavirus.
As the battle over oil production cuts continues, Mexico reportsed 403 new cases of the virus and 39 new deaths, for a total of 3,844 cases and 233 deaths.
* * *
Update (1320ET): The number of confirmed COVID-19-linked deaths around the world has surpassed 100k, according to Johns Hopkins University.
The milestone as reached shortly after JHU reported the number of confirmed cured cases had topped 300k.
While a spike in confirmed deaths in the US and UK have contributed significantly to the total in recent days, it looks like deaths reported in Italy, France and Ecuador (which reported 25 new deaths and 2,196 new cases, bringing its total to 7,161) Friday afternoon put the total over the top. France reported 987 new deaths, bringing its total to 13,197.
* * *
Update (1220ET): Angelo Borelli, the head of Italy’s Civil Protection Service, had some more good news to share with Italians during Friday’s press conference.
The trend of new cases and deaths continued to decline, he said, though the government was still moving ahead with extending the nationwide lockdown until May 3.
That total infections climbed by 3,951 over the last 24 hours, while deaths climbed by 570 to 18,849 as new fatalities continued to slow.
Across Italy, 30,455 patients have recovered from the virus, with nearly 2k of those having left the hospital over the last 24 hours. In Lombardy, ANSA reports, the number of deaths and ICU admissions have been dropping tandem, a sign that more patients leaving the ICU have recovered, instead of dying. As of Friday morning, the Civil Protection Agency said that there were only 98,273 sick patients hospitalized across Italy: the rest of the 147,577 confirmed cases have either recovered, or died.
While hospitalizations and ICU admissions fell, Italy’s rate of testing continued to climb.
In the UK, meanwhile, as Boris Johnson remains in “good spirits”, though still hospitalized, the UK reported the largest one-day jump in deaths yet, with fatalities recorded in the last 24 hours climbing by 980 to eclipse 8,958, according to Health Secretary Matt Hancock. The vast majority of those (roughly 8k) were recorded in England, as we noted earlier. The UK has seen its death toll continue to climb all week, while the number of new cases reported each day has plateaued. That means, for the second day in a row, deaths in the UK have exceeded deaths in Italy and Spain.
Given the holiday, the rest of the UK’s figures on new cases, hospitalizations, etc. won’t be published until later in the day, according to the Ministry of Health.
UPDATE on #COVIDー19 testing in the UK:
Today’s figures will be published later this afternoon.
We are working hard to provide you with the latest information and will tweet this out as soon as possible.
— Department of Health and Social Care (@DHSCgovuk) April 10, 2020
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Meanwhile, Turkey’s confirmed deaths topped 1k on Friday as the country reported another 90+ deaths, and 5k+ new cases, bringing its national total yo 47,029.
* * *
Update (1150ET): New York Gov. Andrew Cuomo said Friday that New York hospital’s recorded a decrease in the overall number of COVID-19 patients in the ICU over the last 24 hours for the first time.
This comes after the rate of new admissions dropped sharply over the past week.
Still, the drop in ICU patients isn’t so much a victory in health-care as a silver-lining as the state has recorded by far the largest death toll in the country. As deaths accelerate, more beds are going to open up – that’s only natural. The change in admissions for ICUs around the state was -17 yesterday, Cuomo said.
Fortunately, Cuomo is doing an expert job of painting this turd gold.
We are cautiously optimistic that we are slowing the spread.
The change in daily ICU admissions was a negative number for the first time (-17).
That means there were fewer people in ICU units statewide yesterday than there were on the previous day.
— Andrew Cuomo (@NYGovCuomo) April 10, 2020
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But, why is this happening? Did those patients get better?
777 people died in New York yesterday, more than died in Italy and Spain. It’s not a record jump, but it’s still pretty big compared to the numbers we’ve seen over the last couple of weeks.
Watch the rest of his press briefing live:
Holding a briefing with updates on #Coronavirus. WATCH LIVE: https://t.co/dhwp2hEUIk
— Andrew Cuomo (@NYGovCuomo) April 10, 2020
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And as millions of New Yorkers wait for those beefed up unemployment checks they’ve been promised, Cuomo said Friday that the state will provide $200 million in emergency food assistance to more than 700K low-income households enrolled in SNAP.
He also said he was working with NY’s Congressional delegation to lobby Congress to create a “COVID-19 Heroes Compensation Fund” to support frontline workers and their families.
After all, more people have died from COVID-19 in NYC than died during the collapse of the World Trade Center.
* * *
Update (1055ET): Passover has come and gone, but Israeli PM Benjamin Netanyahu is showing no signs of letting up on what has become one of the most restrictive lockdowns in the developed world. And not without reason: Despite the government’s best efforts, first undertaken at a relatively early date, to contain the virus, the number of confirmed cases in Israel has passed 10k as of Friday morning Eastern Time.
Meanwhile, Beijing continues to take umbrage at every suggestion that China should pay for the negligence that unleashed the novel coronavirus on the world.
Too timid. How much money you can collect if you just play such petty tricks in the US? You should call for direct robbery in China where there is huge amount of wealth. Dare you? Do you have the strength? Coward! pic.twitter.com/usD2BfMCSm
— Hu Xijin 胡锡进 (@HuXijin_GT) April 10, 2020
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In LA, as worries about front-line responders like cops and firefighters catching the virus grow thanks to the surge in cases among NYPD officers, the Sheriffs Office has launched a task force to deliver at-home testing kits to deputies who fear they might be infected, and are experiencing at least some of the symptoms, according to LA’s KTVU.
Finally, in the UK, the NHS England just confirmed another 866 deaths on Friday, taking the total death toll in England’s hospitals north of 8k to 8,114.
So far, the largest number of deaths has been recorded in London, where 249 people have died. The Midlands have recorded 229 deaths. The patients were all aged between 27 and 100 years old, and 56 of them had no underlying health conditions. As of Wednesday evening, the UK-wide death toll stood at 7,978. The figures for Thursday (typically, updates are released with a 24-hour lag) haven’t been released yet, but we know now that this number is out-dated after the latest jump in deaths.
* * *
The number of new coronavirus cases confirmed worldwide climbed at a rate of roughly 85k overnight yesterday, a rate that was roughly consistent with the prior two days. That would lead scientists to believe that the global outbreak might finally have “plateaued” – word that’s been thrown a lot lately.
Unfortunately, while the number of new cases remained stable, deaths in the US and UK continued to climb. But while thousands of families bid a distant farewell to their loved ones, the Fed’s latest intervention – couched as a lifeline for small business – has sent badly beaten junk bonds on their strongest daily rally since 2009 as spreads collapsed.
Now that the Fed has apparently extinguished credit risk from the market, ensuring that thousands of “zombie” firms will continue to borrow at extremely attractive rates, allowing them to lumber on through another day as ‘moral hazard’ is extinguished. What’s worse, almost, is that no one seems to care.
With markets around the world closed for Good Friday, and millions of Christians around the world observing the holiday while stuck inside their homes, the biggest story of the day is the fact that the global death toll will likely top 100k before midnight on the East Coast of the US. Roughly 17k – about 20% – of those deaths are from the US.
Then again, it’s extremely likely that the true number of deaths has already passed that number, as more reports are finding that Americans are almost certainly being left out of the counted dead, just like many Italians and Chinese probably were.
With Easter just two days away, the notion of reopening the American economy before the holiday now seems laughable. But with millions of Americans struggling to hang on without their jobs or the unemployment promised by states, Congress and the president, the administration appears to still be working diligently on its plan to start reopening the economy by the beginning of next month.
The news was met with the same hysterical warnings by health experts and anxious liberals insisting that a “premature” reopening would be disastrous because restrictions have barely had time to work. Of course, these sample people spent Thursday celebrating the wisdom of Dr. Anthony Fauci after he lowered his expectations for American fatalities by 75% from 240k to just 60k.
We’re not trying to criticize the good doctor, or assign blame; we’re merely trying to make the point that starting to plan out the eventual reopening of the economy is probably prudent, and by May 1, most of the US will have been shut down for almost 6 weeks. Even with money from the government, the $1,200 stimulus checks plus ramped up unemployment benefits still won’t be enough to save millions of Americans from the worst effects of the coming depression.
In New York, deaths have soared over the past week, but the unfortunate upside of that is that space in the city’s hospitals has opened up pretty rapidly. The Javits Center, which has been converted to a COVID-19 hospital, is almost empty, as is the USNS Comfort, the Navy ship docked at Manhattan’s Pier 90. While contract workers have been brought on the bury the dead victims on Hart Island, Cuomo says that the curve may already be starting to flatten – but, of course, that doesn’t mean we should let up on the social distancing measures.
Elsewhere, the feud between Taiwan and the WHO is getting so bitter as the NGO continues to ignore the amazing success Taiwan has had containing the outbreak. President Trump’s harsh words for the WHO have prompted many Taiwanese to praise Trump, even as American liberals – the same ones who purportedly supported the Hong Kong protesters – cringe. WHO Director General Tedros Adhanom Ghebreyesus has accused the Taiwanese government of trying to smear him.
Meanwhile, in the latest sign that the Trump administration’s heavy-handed approach to handling Iran is working, the regime said it plans to accelerate the privatization of certain state-run assets as the Trump administration moves to block $5 billion of IMF aid that it has asked for.
As Japan confronts a surprising resurgence in new cases, it’s looking like it’s not the only East Asian nation having trouble containing the outbreak as a ‘second wave’ looms over the Continent. Even as Abe struggles against the strictures of the Japanese Constitution, which protects individual liberty to an extremely high degree, a big data analysis shared by WaPo shows Tokyo’s state of emergency (a state of emergency has been declared by Abe in 7 prefectures, but most of the restrictions are voluntary) is having an impact on life in one of the world’s busiest cities. But it’s still far from having the kind of effect needed to curb the spread of the novel coronavirus.
Malaysia has once again extended its national lockdown for two weeks as the country tries to slow the rate of coronavirus infection. As a result of this second extension, the restrictions on daily life and business will run until April 28. At 4,346, Malaysia has the highest number of confirmed cases in southeast. Asia and counts 70 deaths. Indonesia, meanwhile, reported 219 new cases of coronavirus and 26 new deaths, bringing its confirmed-case total to 3,512 and 306 deaths. The Indonesian government has already publicly acknowledged lying about the outbreak, and it’s extremely likely that the virus is far more widepsread in the country of more than 200 million.
In Spain, figures released on Friday showed that 15,843 people have died so far after contracting coronavirus in the country, with 605 of them in the last 24 hours. That compares with a peak of 950 daily deaths just over a week ago and is the lowest death toll for over two weeks. But such figures are likely to undercount the number of mortalities, since they include only proven rather than probable cases of Covid-19, the illness caused by coronavirus.
Before we end, as Chicago’s Mayor Lori Lightfoot tries to convince residents of her hard-hit city to follow the ‘social distancing’ directives, she shared a story with one interviewer about personally breaking up what she described as “an underage drinking party” on the North Side of the city.
“We pulled by and I told the driver, ‘Back up,’ [and] rolled down the window,” she said, before telling the group: “Hey, you’re too close. Separate yourself. Social distancing!'”
Tyler Durden
Fri, 04/10/2020 – 22:23 - Whistleblower: How CDC Is Manipulating The COVID-19 Death-Toll
Whistleblower: How CDC Is Manipulating The COVID-19 Death-Toll
A Montana based physician has blown the whistle on how the Centers for Disease Control and Prevention (CDC) is exaggerating the COVID-19 death toll by manipulating Coronavirus death certificates. Dr. Annie Bukacek, MD, is a longtime Montana physician with over 30 years of experience practicing medicine. Signing death certificates is a routine part of her job.
Whistleblower (Dr. Annie Bukacek)
In a brief video presentation, Dr. Bukacek blows the whistle on the way the CDC is instructing physicians to exaggerate COVID 19 deaths on death certificates:
Few people know how much individual power and leeway is given to the physician, coroner, or medical examiner, signing the death certificate. How do I know this? I’ve been filling out death certificates for over 30 years.
More often than we want to admit, we don’t know with certainty the cause of death when we fill out death certificates. That is just life. We are doctors, not God. Autopsies are rarely performed and even when an autopsy is done the actual cause of death is not always clear. Physicians make their best guesstimate and fill out the form. Then that listed cause of death… is entered into a vital records data bank to use for statistical analysis, which then gives out inaccurate numbers, as you can imagine. Those inaccurate numbers then become accepted as factual information even though much of it is false.
So even before we heard of COVID-19, death certificates were based on assumptions and educated guesses that go unquestioned. When it comes to COVID-19 there is the additional data skewer, that is –get this— there is no universal definition of COVID-19 death. The Centers for Disease Control, updated from yesterday, April 4th, still states that mortality, quote unquote, data includes both confirmed and presumptive positive cases of COVID-19. That’s from their website.
Translation? The CDC counts both true COVID-19 cases and speculative guesses of COVID-19 the same. They call it death by COVID-19. They automatically overestimate the real death numbers, by their own admission. Prior to COVID-19, people were more likely to get an accurate cause of death written on their death certificate if they died in the hospital. Why more accurate when a patient dies in the hospital? Because hospital staff has physical examination findings labs, radiologic studies, et cetera, to make a good educated guess. It is estimated that 60 percent of people die in the hospital. But even [with] those in-hospital deaths, the cause of death is not always clear, especially in someone with multiple health conditions, each of which could cause the death.
Bukacek refers to a March 24 CDC memo from Steven Schwartz, director of the Division of Vital Statistics for the National Center for Health Statistics, titled “COVID-19 Alert No. 2.”
“The assumption of COVID-19 death,” she says, “can be made even without testing. Based on assumption alone the death can be reported to the public as another COVID-19 casualty.”
There is a question-and-answer section on the memo.
One question is, “Will COVID-19 be the underlying cause?”
The answer is:
“The underlying cause depends upon what and where conditions are reported on the death certificate. However, the rules for coding and selection of the underlying cause of death are expected to result in COVID-19 being the underlying cause more often than not.”
Another question is, “Should ‘COVID-19’ be reported on the death certificate only with a confirmed test?”
The answer is:
“COVID-19 should be reported on the death certificate for all decedents where the disease caused or is assumed to have caused or contributed to death.”
“You could see how these statistics have been made to look really scary when it is so easy to add false numbers to the official database,” Bukacek says. “Those false numbers are sanctioned by the CDC.”
“The real number of COVID-19 deaths are not what most people are told and what they then think,” she says.
“How many people have actually died from COVID-19 is anyone’s guess… but based on how death certificates are being filled out, you can be certain the number is substantially lower than what we are being told. Based on inaccurate, incomplete data people are being terrorized by fear-mongers into relinquishing cherished freedoms.”
The CDC’s role in the way it is handling the Coronavirus crisis has come under a lot of suspicion. Earlier the CDC was caught covering-up a contamination of its lab when Health officials who paid a flying visit were blocked entry into the lab. The matter is now under investigation.
Watch the full presentation below:
As GreatGameIndia reported earlier, currently the world finds itself in the state of a deadlock. Entire nations have been brought under lockdown with no exit strategy. Constant fear-mongering by the media and vested organisations ensure the lockdowns are extended as long as possible. This serves the interest of the vaccine lobby who want the lockdowns to continue until their vaccines have been developed.
Although, an emerging body of evidence suggest shutting down an entire nation may not be a good idea after all to combat such a virus. As Ariel Pablos-Mendez, M.D., MPH a professor of Medicine at Columbia University Medical Center, New York and former head of global health at the U.S. Agency for International Development (USAID) explains:
At the end of the day, super-spreader COVID-19 is likely to infect a majority of the population, no matter how far apart we stay from one another in the coming weeks. The good news is that once immune, most people can go back to work. Our containment efforts must focus on the most vulnerable: the elderly and patients with underlying cardiopulmonary diseases.
We need to flatten the curve for the elderly but accelerate herd immunity for the healthy so that we don’t kill the economy trying to outrun the pandemic in lockdown. While home isolation for one month might stop an outbreak, it merely sets the clock back as the virus may return if it is not globally defeated.
Tyler Durden
Fri, 04/10/2020 – 22:05 - Tokyo Olympics CEO Suggests 2021 Games Might Not Happen Either
Tokyo Olympics CEO Suggests 2021 Games Might Not Happen Either
The CEO of Tokyo’s Olympic Games said on Friday that he can’t guarantee that even the postponed Olympics will happen next year, even after the delay.
Toshiro Muto “I don’t think anyone would be able to say if it is going to be possible to get it under control by next July or not,” said Tokyo organizing committee CEO Toshiro Muto said via an interpreter at a remotely conducted news conference, adding “We’re certainly are not in a position to give you a clear answer.”
The games were postponed until July 23, 2021, with the Paralympics on August 24, according to AP.
Japanese Prime Minister Shinzo Abe has come under fire for being slow to act on coronavirus, with opposition leaders suggesting that he has downplayed its severity in order to prolong any decision on when the Olympics would be held. This week, however, he issued an emergency declaration to combat the virus – committing 20% of the country’s GDP towards an economic stimulus program and vowing to take “all steps” necessary to battle the economic fallout from the virus.
“We have made the decision to postpone the games by one year,” Muto added on Friday. “So this means that all we can do is work hard to prepare for the games. We sincerely hope that come next year mankind will manage to overcome the coronavirus crisis.”
When asked if there were alternative plans to 2021, he said “Rather than think about alternatives plans, we should put in all of our effort,” adding “Mankind should bring together all of its technology and wisdom to work hard so they can development treatments, medicines and vaccines.“
Japan has reported about 5,000 cases and 100 deaths. The country has the world’s oldest population, and COVID-19 can be especially serious for the elderly.
Muto was asked several times about the added costs of postponing, which has been estimated by Japanese media at between $2 billion-$6 billion. He said it was too soon to know the price tag and who would pay.
He also acknowledged that Tokyo Olympic organizers had taken out insurance.
“Tokyo 2020 has taken out several insurance policies,” he said. “But whether the postponement of the games qualifies as an event that is covered is not clear yet.”
He was also asked about the Olympic flame, which was taken off public display this week in Fukushima prefecture. Muto had an away-from-the-microphone talk with Tokyo spokesman Masa Takaya before talking about the flame. –AP
“After the Olympic torch relay was canceled, the Olympic flame was put under the management of Tokyo 2020,” said Muto. “Obviously in the future there is a possibility it might be put on display somewhere. However, for now it is under the management of Tokyo 2020 and I’m not going to make any further comment on the issue.”
Some within the International Olympic Committee (IOC) have suggested turning the Olympic flame into an international symbol of hope in the battle against the virus, though this would be impossible with current travel restrictions in place.
Tyler Durden
Fri, 04/10/2020 – 21:40 - FBI Admits "Central Evidence" To Spy On Trump For Russia Collusion… Was Russian Disinformation
FBI Admits "Central Evidence" To Spy On Trump For Russia Collusion… Was Russian Disinformation
Authored by Sara Carter via SaraACarter.com,
Partially declassified footnotes from Department of Justice Inspector General Michael Horowitz’s FBI report reveal that the most ‘central and essential’ evidence to justify surveillance of short term Trump campaign volunteer Carter Page was based on Russian disinformation, according to newly declassified footnotes.
In January, U.S. Sens. Ron Johnson, R-Wis., and Chuck Grassley, R-Iowa, sent a classified letter questioning the contradiction between the footnotes and what was made public by Horowitz’s team regarding the bureau’s Crossfire Hurricane investigation. The letter was first reported by SaraACarter.com. In January, the senator’s did not disclose what section of the December FISA report contradicts the footnotes in their findings.
The declassification came at the request Grassely and Johnson, whose committees have been dedicated to uncovering the truth regarding the FBI’s malfeasance during the bureau’s probe into President Donald Trump’s campaign and its now debunked theory that campaign officials colluded with Russia. Those footnotes deal directly with the evidence collected by the FBI from former MI6 agent Christopher Steele, whose salacious and debunked dossier was the bulk of information used to seek a warrant from the secretive Foreign Intelligence Surveillance Court (FISC) to spy on Page.
Johnson, who spoke to this reporter Friday said that the American people deserve the whole truth and that revelations in the partially declassified footnotes reveals that some members of the FBI’s top echelon “were total and complete snakes.” Johnson told this reporter Friday that he expects further declassification of the footnotes by early next week.
Johnson, chairman of the Senate Committee on Homeland Security and Governmental Affairs, credits his committee staffers with the extraordinary find after long hours of combing through every detail of Horowitz’s report. The Senator also published Opinion Editorial on Friday with the Wall Street Journal stating that “Chuck Grassley and I began pressing Attorney General William Barr, and eventually acting Director of National Intelligence Richard Grenell, for full declassification of these footnotes. That’s why they’re now public.”
Page, who filed a lawsuit in January against the Democratic National Committee (DNC) and law firm Perkins Coie over the unsubstantiated Steele dossier, questioned Friday why the details have never been disclosed before. The DNC and the Hillary Clinton campaign paid the now embattled research firm Fusion GPS to investigate Trump and any ties to Russia. The entities did so through the law firm as a cut-out.
“Why have all these details remained unnecessarily secret for so long? In our dual system of Justice, the Mueller Witch Hunt crew falsely misrepresented my own “historical contact with persons and entities suspected of being linked to RIS, when I was actually serving my country in support of the U.S. Intelligence Community,” Page told this reporter.
“The time has finally come for the Office of the Director of National Intelligence and related agencies to release the full facts about the Obama-Biden Administration’s election interference campaign against candidate Trump and the illicit coup attempt against our President.”
In the Fall of 2016 the FBI obtained a secret warrant to spy on Page, the warrant was renewed in April and in June of 2017, “raising questions about when exactly the FBI received and reviewed these new intelligence reports, and what it did with them,” stated a press release from Johnson and Grassley.
Citing the IG report, the FISA court ordered the FBI to explain how it will take corrective action on the FISA process. A subsequent IG audit of the FBI procedures to ensure accuracy of FISA applications found errors in 29 unrelated applications, prompting the court to order more information from the FBI.
According to Grassley and Johnson the footnotes, “reveal that, beginning early on and continuing throughout the FBI’s Russia investigation, FBI officials learned critical information streams that flowed to the dossier were likely tainted with Russian Intelligence disinformation.”
Despite the evidence showing Moscow’s spy network played a role in spreading deceptive and false information, the FBI none-the-less “aggressively advanced the probe anyway, ignoring internal oversight mechanisms and neglecting to flag the material credibility concerns for a secret court.” Moreover, the FBI officials involved in the probe against Trump continued to use the Russian disinformation to target Trump’s campaign and his administration after discovering it was based on patently false information and lies.
“It would eventually spill over into the years-long special counsel operation, costing taxpayers more than $30 million and increasing partisan divisions – all based on faulty evidence,” said Grassley and Johnson in a statement released Friday. “In the end, the special counsel concluded that the Trump campaign did not collude with Russia.”
The Senator’s added that “had FBI leadership heeded the numerous warnings of Russian disinformation, paid attention to the glaring contradictions in the pool of evidence and followed long-standing procedures to ensure accuracy, everyone would have been better off. Carter Page’s civil liberties wouldn’t have been shredded, taxpayer dollars wouldn’t have been wasted, the country wouldn’t be as divided and the FBI’s reputation wouldn’t be in shambles.”
“It’s ironic that the Russian collusion narrative was fatally flawed because of Russian disinformation,” the Senators stated.
“These footnotes confirm that there was a direct Russian disinformation campaign in 2016, and there were ties between Russian intelligence and a presidential campaign – the Clinton campaign, not Trump’s.”
From Grassley and Johnson’s Press Release Friday
The IG report detailed how the FBI’s application for a Foreign Intelligence Surveillance Act (FISA) warrant to spy on Page relied heavily on an unverified dossier compiled by former British spy Christopher Steele on behalf of Fusion GPS, which was conducting opposition research for the Clinton campaign and Democratic National Committee.
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According to Footnote 302, in October 2016, FBI investigators learned that one of Steele’s main sources was linked to the Russian Intelligence Service (RIS), and was rumored to be a former KGB/SVR officer. However, the FBI neglected to include this information in its application, which the FISA court approved that same month. Two months later, investigators learned that Glenn Simpson, the head of Fusion GPS, told a Justice Department attorney that he assessed the same source “was a RIS officer who was central in connecting Trump to Russia.” In January, the FISA warrant was renewed.
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Footnote 350 states that, in 2017, the FBI learned that intelligence reports “assessed that the referenced subset [of Steele’s reporting about the activities of Michael Cohen] was part of a Russian disinformation campaign to denigrate U.S. foreign relations.”
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That same footnote (footnote 350) states that a separate report, dated 2017, “contained information … that the public reporting about the details of Trump’s [REDACTED] activities in Moscow during a trip in 2013 were false, and that they were the product of RIS ‘infiltra[ing] a source into the network’ of a [REDACTED] who compiled a dossier of information on Trump’s activities.”
The surveillance warrant against Page was renewed two more times – in April and in June of 2017 – raising questions about when exactly the FBI received and reviewed these new intelligence reports, and what it did with them. Grassley and Johnson expect the footnotes to be further declassified in the coming days.
Citing the IG report, the FISA court ordered the FBI to explain how it will take corrective action on the FISA process. A subsequent IG audit of the FBI procedures to ensure accuracy of FISA applications found errors in 29 unrelated applications, prompting the court to order more information from the FBI.
The declassified footnotes were contained in an April 2, 2020, letter from the Justice Department responding to Grassley and Johnson’s January 28, 2020, inquiry.
Tyler Durden
Fri, 04/10/2020 – 21:15 -
- "Let Them Fail" – Billionaire Explains To Gobsmacked CNBC Host How Capitalism Is Supposed To Work
"Let Them Fail" – Billionaire Explains To Gobsmacked CNBC Host How Capitalism Is Supposed To Work
With millions of Americans sitting at home working on their laptops, the passive viewership of cable news channels like CNBC must be waaaay up this month, as finance nerds welcome normies to the strange and often hilarious world of live markets news.
In terms of drama, CNBC is usually pretty staid. But every once in a while, there’s a fight, or a contentious interview, that really grabs people’s attention. On Thursday, such a confrontation occurred during “the Halftime Report” as Scott “The Judge” Wapner interviewed early Facebook investor and uber-wealthy VC investor Chamath Palihapitiya.
Wapner brought up the question of the bailouts for main street and corporate America that the Trump Administration has packaged as part of its $2.2 trillion plan. Palihapitiya raised an issue with the program, arguing that the administration would be using taxpayer money to prop up “zombie companies.”
Then Wapner asked: “Are you arguing to let airlines fail?
Palihapitiya, who was speaking on the phone, responded with a very assertive “Yes.”
Wapner seemed blown away by this. Struggling to process the answer he had just been given, he followed-up, incredulously: “But how does that make sense in the broader scheme of the economy.”
Then Palihapitiya went off.
“This is a lie that’s been propagated by Wall Street. When a company fails, it does not fire its employees…it goes through a packaged bankruptcy…if anything, what happens is the employees end up owning more of the company. The people who get wiped out are the people who own the unsecured debt and the equity…but the employees don’t get wiped out and the pensions don’t get wiped out.”
[…]
“And if a bunch of hedge funds get wiped out – what’s the big deal? Let them fail. So they don’t get the summer in the Hamptons – who cares.”
Out in the real world, people say mean things about the rich all the time. But it doesn’t happen quite as often on CNBC. In fact, sometimes CNBC’s hosts seem downright confused when people don’t seem to care about asset prices above all else – like that time Rick Santelli said we should all just go get infected and let grandma die to save the stock market. What’s more, Wapner seemed almost personally insulted by Palihapitiya’s response.
As to why, well, we can’t be certain.
Because after all, airlines as an industry are especially prone to bankruptcy (the president once owned an airline that went bankrupt), even under completely normal circumstances.
Hell, even if such a vitally important company as the aerospace and defense giant Boeing went bankrupt, its factories in Washington State wouldn’t stop running.
Remember when the CEO of Boeing demanded a taxpayer-funded bailout, but said he wouldn’t accept the money if the federal government demanded a stake in Boeing in return (note: exchange money for equity is standard practice for…literally every investor in the world)?
How is Boeing able to so blithely bite the hand that feeds? Because it has alternatives should the bailout not come through. If Boeing really needs the money, it’s free to sell stock and raise cash – the opposite of what it did for decades when it bought up shares, shrinking its float and helping maintain a buoyant valuation.
Say this isn’t enough, and Boeing fails: The company could file a prepackaged Chapter 11 where the creditors take over all the equity and the company emerges from bankruptcy debt-free in one day. Without a dollar of debt, Boeing should be able to weather any disruption no matter how long, and once the economy normalizes it should be able to rehire all the workers that had been laid off. In reality, the company could probably manage to get through it without firing so many employees…or offering “voluntary buyouts”.
Which brings us to our next point. After Palihapitiya explained the bankruptcy process, Wapner responded with a question that’s probably asked on his channel at least half a dozen times a day: “What about the 401(k)s?”
“But you don’t think the employees of these companies own stocks, own the company’s stocks?”
To which Palihapitiya had another point ready.
“These things are owned by these huge amorphous organizations…ultimately downstream the employees own a few hundred dollars or a few thousand dollars of shares.”
That’s right: After the world saw what happened to Enron employees who invested their entire retirement savings in Enron stock, there probably isn’t a single American who keeps literally all of their money in the shares of their employer. Even employee pension plans are typically managed by third parties and don’t consist of a larger percentage of the company’s stock.
As Palihapitiya explained, while people absolutely need jobs to come back to, not every business will fail during this shut down. Many small businesses, like a small cafe or a restaurant, if they can’t pay the rent, it’s over. There really is not “business”, it’s just a lease and the restaurant setup. You can have partial owners, but if that restaurant goes under, it’ll likely shut down immediately, firing all of its staff. If a company like, say a large chain of newspapers that’s publicly traded, goes bankrupt, it will continue to operate.
While the rich certainly didn’t cause the coronavirus, they typically aren’t also responsible for the many unanticipated risks that can make an investment or a business go south.
But on Main Street, it’s a different story. There’s not as much nuance: People are panicking and scrambling to apply for government benefits because they don’t know how they’re going to keep a roof over their heads.
“On main street today, people are getting wiped out, and right now rich CEOs are not, boards that had horrible governance are not, hedge funds are not…6 million people just this week along said ‘holy mackerel, I don’t know how I’m going to pay my rent.'”
“And what we’ve done is protect CEOs and boards…when you have to wash these people out.”
Just last year, millions of investors were forced to face up to the fact that not every new enterprise, including companies who grow to the point that they can raise money in an IPO, is profitable. In fact, thanks to various levels of government intervention in the free market, many of these ‘zombie’ companies exist in countries around the world, to varying degrees.
More recently, many more persistently loss-making companies have managed to struggle on for years, even when it’s become clear the enterprise is essentially doomed, because of all the investment capital bouncing around places like Silicon Valley.
We also found this handy guide from Investopedia offering a moderately detailed explainer on how corporate bankruptcies work, the various chapters, etc.
But right at the top of that post, the writers make clear that even the investors don’t always get wiped out:
If a company you’ve invested in files for bankruptcy, good luck getting any money back, the pessimists say – or if you do, chances are, you’ll get back pennies on the dollar. But is that true?
Alas, there’s no one-size-fits-all answer.
So maybe Wapner’s plan to simply fork over billion-dollar bailouts to every company or airline who asks needs a rethink.
And it’s fitting that this heated exchange, which attracted so much attention that the producers over at CNBC made room during “the Closing Bell” lineup to have one of their reporters interview Wapner…about his interview with Chamath, happened today.
Because earlier, the Fed unveiled a lending program aimed at saving ‘small businesses’ that is, in reality, just the latest assertion of dominance over a market where genuine price discovery has been suppressed for more than a decade now.
To quote Bob Rodriguez, as we did during Thursday’s market wrap:
With the initiation of the Fed’s complete takeover and control of the US financial economy, there is now absolutely no accurate pricing discovery in the capital markets and we have entered a period of total manipulation. In light of this, the only markets I have an interest in are those where the heavy hand of government is not involved or only minimally involved. This leads me to rare commodities and collectibles. The public equity and debt markets are now nothing more than greater fool markets that are led by the greatest fools of all, the Fed and the Congress. US capital markets, RIP!
When all market risk is essentially socialized, a return vs risk evaluation is essentially meaningless.
Over a period of time which I cannot estimate yet, I will continue my preparation for a far different economic and financial environment.
Capital deployment strategies will likely have to change from what has been the norm in the post WW2 environment. We are in a New World Order.
* * *
Simply put, the global business environment is being transformed: Like AOC and George W Bush, we are all socialists now.And Wapner’s incredulity at being confronted by an investor who doesn’t accept bailouts as nothing short of a moral imperative just shows how badly the public has been brainwashed to simply accept this dynamic, where the wealthiest business owners are always given priority.
Watch a clip from the interview below:
The U.S. shouldn’t bail out billionaires and hedge funds during the coronavirus pandemic, Social Capital CEO Chamath Palihapitiya says. “Who cares? Let them get wiped out.” https://t.co/dIbizumtqG pic.twitter.com/u8BSVvr0B1
— CNBC (@CNBC) April 9, 2020
Tyler Durden
Fri, 04/10/2020 – 20:55 - World Faces "Devastating Health Consequences" As Global Condom Shortage Strikes
World Faces "Devastating Health Consequences" As Global Condom Shortage Strikes
With the global economy crashed, international borders closed, air travel restricted, and major cities under government-enforced public health lockdowns, a new warning from the United Nations Population Fund (UNFPA) specifies a global condom shortage is looming.
UNFPA says the disruption of complex supply chains and factory shutdowns have produced “devastating” consequences for manufacturers of contraceptives.
“The closure of borders and other restrictive measures have upset production and transport in a number of regions and countries,” a UNFPA spokesperson said.
The fund also warned of “disastrous consequences” for the health of women who could be faced with an unwanted pregnancy.
“A shortage of condoms and other contraceptives could lead to an increase in unwanted pregnancies, with disastrous consequences for the health and well-being of adolescents, women and their partners and families,” the spokesperson continued.
One region that has seen significant disruption is Malaysia, a top rubber producer and source of condoms, has been under lockdown for over a month as COVID-19 cases top 4,200 with 67 deaths on Thursday morning.
Malaysian contraceptive giant Karex, which produces 20% of all condoms in the world, recently reported that production is down by 200 million units for the mid-March to mid-April period.
Karex CEO Goh Miah Kiat said other condom producers are feeling the pinch as well, as sourcing and transportation networks have become significant bottlenecks to increase output.
“The world will surely be facing a shortage of condoms,” said Kiat. “This is a major problem since condoms are a first-line health product.”
“It’s challenging, but we are trying our best right now to do whatever we can. It is definitely a major concern — condom is an essential medical device.”
“While we are fighting the COVID-19 pandemic, there are also other serious issues that we need to look at,” he said, adding he was particularly worried about supplies of condoms to developing countries.
We noted last month that a condom shortage was developing in the world, and now with more than a billion people in lockdown with “safe sex” becoming a distant thing of the past, could this result in a surge in births in 2021?
Tyler Durden
Fri, 04/10/2020 – 20:50 - Daily Briefing – April 10, 2020
- Some People's Haircuts Are "Essential"
Some People's Haircuts Are "Essential"
Authored by Adam Dick via The Ron Paul Institute for Peace & Prosperity,
Politicians and the people charged with enforcing politicians’ directives really can be like the pigs in George Orwell’s book Animal Farm.
The pigs’ express commandment for governing became, over time, “all animals are equal but some animals are more equal to others.” The “more equal” animals were the pigs in charge for whom the rules they imposed on other animals did not necessarily apply.
For examples of this commandment in practice, we can consider haircuts during the government-mandated closing of “nonessential” businesses, including salons and barber shops, in the name of fighting coronavirus. No professional haircut is allowed for the regular person in many parts of America.
But, for politicians and cops, the rules may not apply.
A photograph of a hair stylist with Chicago Mayor Lori Lightfoot alerted people to the fact that the mayor had received a haircut from the stylist — something the state government is prohibiting for people in the sate. On top of that, Lightfoot had even publicly promoted the prohibition. Still, when confronted about the apparent hypocrisy, Lightfoot defended her haircut. Gregory Pratt reported Monday at the Chicago Tribune:
Asked about photos on social media showing her with a stylist, Lightfoot acknowledged getting a haircut, then said the public cares more about other issues.
…
A reporter asked the mayor about one of her “stay home, save lives” public service announcements where Lightfoot admonishes an off-screen person by saying, ‘Getting your roots done is not essential.’
Asked about that, a visibly annoyed Lightfoot said, ‘I’m the public face of this city. I’m on national media and I’m out in the public eye.’
‘I’m a person who, I take my personal hygiene very seriously. As I said, I felt like I needed to have a haircut,’ Lightfoot said. ‘I’m not able to do that myself, so I got a haircut. You want to talk more about that?’
Yeah, we get it: Some animals are more equal than others.
In at least one instance, the lower-level enforcers of government policy can also take part in the elitist haircuts exception to the coronavirus crackdown.
Robby Soave wrote Thursday at Reason that, while the Florida state government has required barber shops across the state to be closed because they are “nonessential” businesses, Police Chief Sergio Velazquez in Hialeah, Florida, has “arranged for one barber to continue to cut cops’ hair.”
The police chief’s justification? It sounds much like the one offered by the mayor of Chicago. Soave quotes this explanation from Velazquez:
“Particularly in these unprecedented times of a global health pandemic which has caused tension and anxiety and disruption in our community, it is imperative that our law enforcement Officers project an image of command and authority.”
So the argument is that it is OK for the law enforcers to break the law so they can “project an image of command and authority” while enforcing the law. Are you persuaded?
Tyler Durden
Fri, 04/10/2020 – 20:25 - 'Breadlines' Erupt Across America As Lockdowns Crush America's "Working Poor"
'Breadlines' Erupt Across America As Lockdowns Crush America's "Working Poor"
The economy has crashed into a depression, 16.78 million Americans have applied for unemployment benefits, and consumer sentiment crashed the most on record. This American horror story has taken only three weeks to play out, the fastest and most severe economic crash in the country’s history, and still, we don’t know the true extent of the damage until the second half of the year.
However, the one thing we do know is that food bank networks across the country have reported unprecedented demand as a hunger crisis unfolds. Here’s our reporting on the evolution of the virus pandemic, has morphed into a financial crash, and now social crisis:
- Supplies Are Starting To Get Really Tight Nationwide As Food Distribution Systems Break DownFood Banks Overwhelmed As America’s “Working Poor” Starve During Lockdown
- America’s New Breadlines Are Growing…
And how do we know food bank networks are becoming “overwhelmed” across the country? Well, citizen journalists have launched their Chinese DJI drones overhead food banks to figure out why there are miles-long traffic jams of hangry people. And it appears that these lines are America’s new breadlines, similar to what was seen nine decades ago in the Great Depression.
“Hundreds of cars” waiting in line at a food bank in Duquesne, Pennsylvania, on March 30.
Hundreds of cars wait to receive food from the Greater Community Food Bank in Duquesne. Collection begins at noon. @PghFoodBank @PittsburghPG pic.twitter.com/94YFaO7dqX
— Andrew Rush (@andrewrush) March 30, 2020
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Here’s footage from April 2, documenting long lines of cars trying to get into the Feeding South Florida food bank, located in Broward County.
On Thursday, the San Antonio Food Bank, located in San Antonio, Texas, aided about 10,000 households with food.
“It was a rough one today,” said Food Bank president and CEO Eric Cooper after the largest distribution day in the nonprofit’s 40-year history. “We have never executed on as large of demand as we are now.”
Helicopter footage, courtesy of KENS 5 San Antonio News, shows the shocking aerial view of thousands of cars lined up at the food bank, waiting to receive a care pack.
Also, on Thursday, the Los Angeles Regional Food Bank saw a “line of cars waiting for free groceries stretched about a mile,” reported Reuters. Hundreds of other people, many the working-class poor, lined the streets waiting for food:
Organizers of the food bank said 2,500 families were given a 36-pound box of rice, lentils, frozen chicken, oranges, and other food.
“I have six kids and it’s difficult to eat. My husband was working in construction but now we can’t pay the rent,” said Juana Gomez, 50, of North Hollywood, as she waited in line.
Hundreds queue in rain for free food in #LosAngeles as #coronavirus impact bites pic.twitter.com/yT9Tu2jGmL
— Press TV (@PressTV) April 10, 2020
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“This food saves me money because my little income goes to my rent,” said Daniel Jimenez, 40, an independent contractor for golf tournaments.
“I haven’t been working for three weeks. I have a little money saved but I’m paying rent, gas, and cellphone bills. I don’t even know when we’re going back to work,” Jimenez said.
“For a lot of people, they are new to the situation of needing help and not knowing where to turn,” said Michael Flood, president of LA Regional Food Bank, noting that many of these people had just been laid off and are waiting for government assistance.
“But that may take some time for them to get those benefits. We want to do what we can to get food in the hands of families, just so they can eat,” he said.
Here’s another long line of cars at a food bank in Pittsburgh from earlier in the week.
BACKED UP OVER A MILE: Hundreds of Pittsburgh residents waited in line for hours to receive boxes of food from the Greater #Pittsburgh Community Food Bank amid the Coronavirus pandemic. More: https://t.co/xoYb8iJQFn pic.twitter.com/X6z2ahTQvZ
— KDKA (@KDKA) April 6, 2020
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On Friday, a long line was developing at the San Diego Food Bank.
Another big food distribution by San Diego Food Bank, this involving South Bay: Southwestern College, 9 am, entrance off of H St, a thousand vehicles, many already here pic.twitter.com/Zrv6MTQfYE
— Ed Lenderman (@EdLendermanKUSI) April 10, 2020
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And another one in NYC…
Foodbank helps #NYC residents amid #coronavirus surge#COVID19 pic.twitter.com/c3aFp0n6Ep
— RT (@RT_com) April 10, 2020
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These are America’s new breadlines. As food banks become inundated with hangry Americans, what happens when these nonprofits run out of food to feed people? Could a hunger crisis lead to social unrest?
Tyler Durden
Fri, 04/10/2020 – 20:00 - Bailouts Destabilize The Economy And Over-Inflate Asset Prices
Bailouts Destabilize The Economy And Over-Inflate Asset Prices
President Trump recently signed a $2 trillion stimulus bill, ostensibly to support the economy through the coronavirus crisis. Pundits hailed it as a great bipartisan accomplishment that will help ease the pain of this economic slowdown. Of course, there will still be pain. And the government stimulus may actually cause more pain than it eases in the long run.
As with all politically motivated policies, Peter Schiff reminds readers that everybody will focus on what is seen – the immediate impacts of the stimulus. Airlines will be “saved.” Workers will get checks. But nobody will pay any attention to the unseen, and that’s where the pain comes in.
In an article originally published at the Mises Wire, economist William Anderson explains how bailouts destabilize the economy and create artificial asset bubbles – the exact problems that set the stage for the current economic meltdown. Keep in mind, it isn’t about the coronavirus. COVID-19 was just the pin that pricked the bubble.
The following article by William Anderson was originally published at the Mises Wire.
In the end, after all of the political posturing and all of the speeches and exhortations for Congress to “do something,” a $2 trillion “coronavirus stimulus” bill landed on the president’s desk for The Donald to sign. And sign he did, uttering all of the platitudes and everything else that comes with “historic” spending legislation that never should have seen the light of day. Although COVID-19 has helped expose vast weaknesses in public health systems in the USA, it also has shown that with much of corporate America, the emperor has no clothes.
Although tracking where the money goes is not an easy thing, we do know that the airlines will receive about $50 billion in cash and loans, while Boeing will receive a share of $17 billion earmarked for industries favored by Congress. Another $500 billion will go to cruise lines, hotels, and other firms that have lost business because of travel restrictions and the economic shutdowns.
Politicians of both parties heaped praise upon themselves for their “bipartisan” efforts, which in real life only can mean that Congress cleaned out what was left of the IOUs in the till. Rep. Thomas Massie, a Republican from Kentucky, drew attacks from all sides as he tried to force a roll call vote (as opposed to the voice vote that the members wanted) and announced his opposition to the bailout. President Trump called for his expulsion from the Republican Party while Democrats declared him to be an unsavory ideologue.
There is not much to do but to wait for the results, and they will unfold over time. However, much of this bill’s harm is invisible, the way that termites quietly but surely destroy a house when homeowners fail to detect them. The politicians and the pundits, along with corporate executives, are hailing this infusion of public funds to business as a lifeline to the economic system itself, when, in reality, it will weaken these firms in the long run.
This commentary deals mostly with the airlines, but what we say here applies to any firm receiving rescue funds and loan guarantees. While some of these essentially bankrupt firms gain some relief as taxpayers and consumers pony up to pay the companies’ bills, the temporary cash infusion allows them to kick the financial can down the road and not deal with the underlying problems that they are facing, at least for now.
In a recent New York Times op-ed piece, Tim Wu of Columbia University asks the following: “Are taxpayers rewarding a decade of bad behavior?” If he is asking specifically about US airline firms, the answer is a resounding yes. Wu notes that in recent years the airlines have been very profitable but that instead of building defenses against possible downturns that are not easily predicted (such as the coronavirus crisis), they have used much of their profitability to buy back their own stock.
Obviously, stock buybacks are controversial, and as long as stock prices rise, company officials look like financial geniuses. However, if the markets crash or if bears loom on the horizon, all of that value vanishes very quickly and the companies are left in worse shape than when they began. As a financial strategy, stock buybacks are inherently risky and tie up cash that could go toward capital development or even the “rainy day” fund for the inevitable market downturn. Writes Wu:
During the past decade, flush with cash, most of the companies in line to get taxpayer money did not prepare for a downturn. Instead, they spent enormous sums on stock buybacks, which reward shareholders and increase executive pay. For example, the airline industry, which is prone to booms and busts, collectively spent more than $45 billion on stock buybacks over the past eight years. As recently as March 3 of this year, with the crisis already beginning, the Hilton hotel chain put $2 billion into a stock buyback.
Such behavior is especially galling given that the airlines received a major bailout in the immediate wake of the 2001 September 11 attacks that severely damaged that industry. Likewise, Congress spread out the rescue money in 2008 and 2009 to deal with the infamous housing bubble that the government and the Federal Reserve System created. Yet here are the Usual Suspects once again gathering around Washington, collective hats in hand.
Airlines this time are promising (or at least say they are promising) not to use the newest amount of rescue money to engage in stock buybacks, but that hardly is reassuring. There is a larger problem, and it is not limited just to overvaluing their stock or their inability to learn any lessons from past disasters.
The greater problem of which we speak the Federal Reserve’s ongoing policy of pumping up the system the way that nineteenth-century cattle ranchers would “water” their herds shortly before sales by feeding them salt. The overly thirsty cattle would drink more water than usual, and when they would be weighed during a sale, would seem heavier—and fatter—than they really were.
While Fed pumping (and simultaneous suppression of interest rates) inflates the value of stock—providing a façade of an economy performing better than it really is—it also inflates the capital assets of companies, and airlines are no exception. Because of past bailouts, glorified money printing by the Fed, and corporate practices such as stock buybacks, the nominal values of these firms are substantially higher than they would be in a more free market.
It is not difficult to see the vast network of market misrepresentations that has come with these policies. Wu notes:
The past decade was also an “easy money” decade, thanks to federal monetary policy that favored liquidity and low interest rates. Many of the firms now asking for bailouts took advantage of low interest rates to borrow heavily. For their part, many creditors lent money at rates that did not fully reflect the risks to these industries. The debt loads have created their own fragilities during the economic downturn.
In other words, one set of policies to get around natural market constraints has led to one distortion after another. We now are at the point where airlines—and the banks that have been underwriting them—are hooked on cheap money, inflated stock prices, and overvalued capital assets. If Congress, Trump, and the Fed actually were to step back and let market forces work, the short-term results would be devastating—to current airline management. Yes, the airlines would be bankrupt, but in real terms, they have been bankrupt for a long time and the COVID-19 crisis now has exposed this industry for the financial fraud that it has been.
Given that the various players previously mentioned have decided to keep the fraudulence afloat, what does that mean for the future of the airline industry? One cannot necessarily predict future events and when they will happen, but one can say with utmost certainty that the airlines soon enough will bring a new generation of management to Washington bearing the same tin cups that their forebears carried.
There is no doubt that airlines, along with Boeing and almost certainly Airbus, will find themselves in a future crisis that keeps them at least partially grounded. It could be another pandemic, a terrorist attack, or just awful political leadership, but one can be sure that something will occur to significantly reduce airline ridership. Reduced ridership means reduced funds, and a similar scenario to what we see currently playing out is sure to follow. At some point, however, the financial damage will be so great that not even the Fed will be able to “water” airline stock anymore and the cold water of massive bankruptcies will follow, imperiling the entire financial system.
These bailouts don’t just reward irresponsible business behavior, but they also impose restrictions that will create future problems. Airline firms receiving federal funding are not permitted to cut worker pay or lay off workers until at least September 30, which means that the aid is a glorified welfare check to labor unions representing airline workers. (The bailout rules also forbid stock buybacks and freeze executive pay at 2019 levels.) Bloated union contracts also are part of the problem with airline financial policies, so, in the end, Congress and Trump have managed to reward most, if not all, of the bad actors in this sorry saga.
What is done is done, but at least we can take a look at what would have happened had Congress just said no to the airlines this time. Unlike the current situation, in which we will see the “good” effects first and the “bad” effects down the road, a “solve your own problems” approach to the airlines would result in immediate layoffs, bankruptcies, and at least some airlines would completely go out of business.
Although most politicians and airline executives want us to believe that airlines are an “essential” industry that is the equivalent of the “thin blue line” between prosperity and a depressed economy, the markets see things differently. First, and most important, with the current situation there is no way that airlines can meet their loan payments, issue stock dividends, or even pay all of their employees at current rates (including their executives). Faced with that situation, the healthier companies would most likely come to terms with their creditors and restructure their finances.
The unlucky firms, however, would go into Chapter 7 bankruptcy, with all assets sold to pay off their creditors. That means massive layoffs, fewer flights—and realistic valuation of their assets. If the economic need for airlines really were as great as airline executives and political pundits claim, then whoever has purchased those assets at bargain prices would be able to put them to use in no time. The industry will have had its necessary cold-water bath, and asset values, along with prices of airline tickets, would settle at true market values, not the bloated numbers that pollute current airline balance sheets.
Because the “bad effects” of allowing airlines to go under would result at first in massive layoffs, bankruptcies, and fewer passengers in the air, the media and political classes would be condemning those who voted down the federal largess. “Bad effects,” not surprisingly, are quite visible and the plight of the newly unemployed and of stranded travelers plays well on the news.
The “good effects,” however, are less visible. By the time airline assets were sold at bankruptcy auctions and new companies hit the airport runways with market-priced capital and market-paid employees, the media would be on another crusade and the resurrection of airlines would not receive the coverage it deserved.
By shoveling out cash to the airlines and more promises to the banks whose unsteady solvency always lurks in the background, Congress and Trump have perpetrated a financial fraud greater than much of the mess we saw on Wall Street more than a decade ago. Yes, they will receive praise in the media and votes from those grateful to have taxpayers pay their wages and salaries, but they have solved no problems and have created a generation of new ones.
Tyler Durden
Fri, 04/10/2020 – 19:35 - Car Sales In China Crash 40.8% YoY In March
Car Sales In China Crash 40.8% YoY In March
While China continues to fake its economic recovery, pretending to reopen businesses, only to figure out it’s facing a second coronavirus wave, new stats from China Passenger Car Association (CPCA) detailed some disturbing realities the country continues to face: crashing car sales in March.
CPCA data showed car sales in March plunged 40.8% from a year earlier to 1.08 million units as quarantines, limited travel, and business shutdowns still plague the second largest economy in the world.
China is the world’s biggest car market and has seen crashing sales in the last three months. However, CPCA notes during an online briefing on Thursday that sales could rebound in April.
China is hoping for a speedy recovery, but as we’ve noted over the last month, it’s happening at a much slower rate than anyone has anticipated. Leaving some to believe, any recovery is not the widely expected V-shaped or U-shaped, but rather a possible L-shaped recovery.
Tesla car sales in the country went against the grain last month, considering after several months of quarantine, the first thing a person does is buy a Model 3?
CPCA data showed the US-based electric car company recorded the highest ever monthly sales in China, coming in at 10,160 units in March, reported Reuters. The company sold around 3,900 units in February, up from 2,620 units in January.
With overall Chinese car sales continuing to print lower, recovery hopes for the second-largest economy, nevertheless, the world, are dim at this point. As per the latest reports from WTO and OECD on Wednesday, the global economy might already be in recession.
Tyler Durden
Fri, 04/10/2020 – 19:10 - This Curve Will Never Flatten Again: Fed Balance Sheet Hits $6.1 Trillion, Up $2 Trillion In 1 Month
This Curve Will Never Flatten Again: Fed Balance Sheet Hits $6.1 Trillion, Up $2 Trillion In 1 Month
Here is an example of a curve that everyone wants to flatten.
And here is an example of a curve that while some – namely the bears – also wants to see collapse, it will never do so as that would mean the end of western civilization – which is now entirely contingent on the level of the S&P500 – as we know it. We are talking of course, about the Fed balance sheet which is now well above $6 trillion to make sure stocks and bonds don’t crash.
With that in mind here is all you need to know about this particular “curve”:
Total Fed assets grew by $293Bn to $6.08 trillion as of close, April 8, with the increase primarily driven by $294bn of Treasury securities added to the SOMA portfolio. Through its credit facilities, the Fed also extended $680bn in temporary liquidity to various counterparties, a decline of $61bn from last week.
In the past month, the Fed balance sheet has increased by $2 trillion, more than all of QE3, when the balance sheet increased by $1.7 trillion over the span of a year. The balance sheet increase has also been faster on a weekly basis than anything observed during the financial crisis, increasing as follows:
- April 8: $$272BN
- April 1: $557BN
- March 25: $586BN
- March 17:$356BN
Since the Fed needs to monetize all debt issuance this year, and probably every other year now that the Treasury and Fed have merged and helicopter money has arrived, the pace of the current QE is like nothing ever observed before:
And since we know what the Fed’s POMO schedule is for next week: an increase of $225BN in TSYs and MBS…
.. we can calculate that by next Friday, April 17, the Fed’s assets will rise to at least $6.4 trillion, almost double where the balance sheet was in early September 2019, just before hedge funds needed to be bailed out and the Fed pretended like it was saving the repo market.
Some more details:
- The highest utilization among the Fed’s credit facilities was the central bank liquidity swap lines, which saw its balances increase by $10bn to $358bn.
- Temporary repo operations with primary dealers fell by $70bn to $193bn. The newly introduced repo facility for foreign central banks had a balance of only $1mm.
- Balances in the Money Market Mutual Fund Liquidity Facility (MMLF) and the Fed discount window were relatively unchanged from last week with $53bn and $43bn, respectively.
Then, to make sure the balance sheet goes even more exponential soon, on Thursday, the Fed announced a new facility for municipal bonds and details for a number of other programs, including the Main Street Business Lending Program (MSBLP) and the corporate facilities. The two corporate credit facilities will receive a combined $75bn, allowing for a market footprint up to $750bn. Fed purchases will also include “fallen angels” and portions of syndicated loans. In addition, a portion of its ETF purchases in the Secondary Market Corporate Credit Facility will be allocated to high-yield ETFs.
In terms of the other facilities, the MSBLP will receive $75 billion of equity, allowing for Fed purchases of up to $600bn in loans.
Meanwhile, the newly established Municipal Liquidity Facility will offer up to $500bn of lending to states and municipalities backed by $35bn in funding from the Treasury.
Here is a recap of all the Fed’s various credit and liquiidty programs:
And finally, a comparison of how much the various liquidity programs are being used now vs 2008/9.
* * *
TL/DR? Here is the summary:
Tyler Durden
Fri, 04/10/2020 – 18:55 - Why Mexico Fears Shutting Down Its Economy To Combat COVID-19
Why Mexico Fears Shutting Down Its Economy To Combat COVID-19
Authored by Ryan McMaken via The Mises Institute,
Mexico’s president Andrés Manuel López Obrador has been reluctant to impose mandatory “social distancing” orders on the Mexican population. According to USNews, López Obrador “has maintained a relaxed public attitude” toward COVID-19, and the Mexican government did not impose a ban on “nonessential” work until March 30, long after health officials in other countries insisted Mexico must do so.
According to Dr. Miguel Betancourt, president of the Mexican Society of Public Health, those measures are “too late” and “should have come weeks earlier.” But, even with legal measures in place, it’s hard to say how many Mexicans can afford to follow them. The Financial Times has described what is likely a common attitude in Mexico:
Salvador Almonte has been doing a roaring trade in antiviral citrus cocktails at his stall in Iztapalapa, a sprawling working-class district of Mexico City. He makes about $9 to $13 a day selling juices and sandwiches and—like his customers—cannot contemplate staying at home to slow the spread of Covid-19. “We live day to day,” he said. “If we don’t work, we don’t eat.”…
Cuauhtémoc Rivera, head of the Association of Small Businesses, warned that a quarter of a million corner shops could close, with the loss of 500,000 jobs….If this goes on for a long time, I don’t know how we’ll all survive,” said Enrique Rosas, who has a fleet of 20 taxis.
The Mexican government is right to be hesitant to shut down Mexican businesses. The distance between a “normal” economy and grinding poverty is a lot smaller in Mexico than in a wealthy country like the United States or Germany. While mandatory lockdowns in rich countries will cause mass impoverishment—complete with all the usual mental and physical health problems that accompany it—the stakes are even higher in a middle-income country like Mexico.
Moreover, many Mexicans are already suffering from the mandatory shutdowns in the US. In 2019, for example, Mexicans working in the United States sent more than $39 billion back to Mexico. This is a vital lifeline for many Mexicans, and these remittances are likely to be decimated by the government-forced shutdown.
The Financial Times continues:
Balancing the competing needs to keep citizens healthy without devastating the economy is particularly tricky in Mexico….almost 50 per cent of Mexicans live below the poverty line, another 30 per cent are vulnerable to sinking into poverty and 30m work in the informal sector, where they receive no social benefits.
What Mexico Learned from the H1N1 Panic
This isn’t the first time Mexicans have been commanded to lock down their economy to battle a disease.
During the H1N1 pandemic of 2009, Mexican officials closed schools for a week, locked down various businesses, canceled movies, concerts, soccer games, and “virtually forced the entire population to wear ineffective face masks.” Mexico experienced 390 deaths out of a population of 120 million.
This had devastating effects for Mexico’s economy, especially its tourist industry. According to the Atlantic Council:
The cost of the pandemic was estimated at 1 percent of Mexico’s GDP in 2008….The A(H1N1) outbreak particularly impacted tourism—an important component of the Mexican economy due to its magnitude and its importance as a source of foreign currency; the tourism industry lost an average of 80 percent of its sales. After the first weeks of the quarantine, 90 percent of the country’s hotel and transportation reservations were canceled, along with 290 cruise ship arrivals. It was estimated that in 2009, Mexico lost $3.4 billion from touristic activities due to the pandemic.
In the immediate aftermath, the Mexican government was praised and congratulated for its actions, but many later admitted the Mexican government had overreacted. According to Jorge Castañeda Gutman, former Mexican Secretary of Foreign Affairs,
One year later the WHO acknowledged it had exaggerated, and the Mexican government was moderately criticized for the type of measures it took….The government didn’t know, or didn’t acknowledge, that this response would prove to be undoubtedly more onerous for the country than the epidemic itself.
This disastrous impact on the Mexican economy informs the debate today in Mexico. According to Physician’s Weekly,
The lesson is not lost on the officials running Mexico’s response in 2020, many of whom were also involved in fighting the influenza epidemic. Mexico’s economy last year suffered its first recession since 2009. [Deputy Health Minister Hugo] Lopez-Gatell said on [March 17] countries around the world were repeating Mexico’s mistake in 2009, making decisions based on anxiety and social pressure rather than science….The lesson from the flu epidemic is that acting too soon is counterproductive, he said. “Acting responsibly, we can’t and should not take measures that exhaust our society. Let’s not use up all the interventions too soon. Let’s keep our calm.”
With the implementation of last week’s order, the business shutdowns have now begun. Unemployment will soon follow, but it’s unclear how many Mexicans can sit at home and wait things out. Many will be forced in the the informal economy to bring in at least a little income. Since far fewer Mexicans than Americans have jobs that lend themselves to “working at home,” keeping food on the table will require flouting demands that Mexicans practice “social distancing.”
This isn’t the say things are proceeding as normal. At least one study claims ridership on public transport in Mexico has fallen by 50 percent, and traffic congestion has fallen by even more. But even big declines in usually traffic-choked Mexico City hardly signal a situation in which streets are deserted.
How many will studiously avoid human contact outside the home? Mexican business and political culture suggests many will not. The number of annual hours worked per worker is higher in Mexico than any other country. Moreover, according to Castañeda, Mexicans react with “skepticism with regard to anything derived from government,” and this “individualistic, incredulous attitude” applies to public health orders as well.
It may be that many Mexicans will fear COVID-19 more than they feared H1N1. But in Mexico, many are also familiar with the hardships poverty brings, and fear of being destitute may trump fears about the disease. Although wealthy Americans with secure employment and luxurious lifestyles like Anthony Fauci continue to insist mass unemployment is merely “inconvenient,” few Mexicans have the luxury of such blasé thinking.
Tyler Durden
Fri, 04/10/2020 – 18:45 - NYC Resorts To Burying Dozens Of Coronavirus Victims In "Mass Grave" On Hart Island
NYC Resorts To Burying Dozens Of Coronavirus Victims In "Mass Grave" On Hart Island
Four and a half years ago, the New York Times published a feature about a man named George Bell, a Queens resident who died anonymously in his apartment, and whose body, after going unclaimed for several months, was eventually interred at the potter’s field on Hart Island, in the Bronx, where all of NYC’s unclaimed bodies are eventually buried.
They say more than 1 million bodies have been buried on the island since shortly before the Civil War, when the city started using it as a burial ground. And now, dozens of patients who succumbed to COVID-19 will likely be buried there too as the city accelerates its potter’s field burials as morgues and funeral homes fill up.
By now, Americans have probably seen photos of the makeshift morgues set up in ice trucks, and the hospital tents set up around the city as it battles the virus. The city has already buried some coronavirus victims on the island, and is planning more burials in the coming days. Though to be sure not all of those expected to be buried died of COVID-19.
“It is likely that people who have passed away from (coronavirus)…will be buried on the island in the coming days,” New York City Mayor Press Secretary Freddi Goldstein told CNN.
Instead of waiting two months to transfer an unclaimed body to the island, the city has sped up the amount of time it will hold a body to 2 weeks.
Usually, about 25 people are buried on the island every week. But since the virus landed, that pace has accelerated to 25 a day, the city said. NYC has also said it plans to bury some victims in local city parks, a plan that was widely mocked for its ghoulishness by New Yorkers.
Deaths across the state – but in the city especially – have been piling up in recent days, as Gov. Cuomo showed earlier.
A city spokesperson added that as long as contact with a family member has been made, a body will be kept, even if it’s just a verbal claim.
Tyler Durden
Fri, 04/10/2020 – 18:20
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