- "Covid-19 Is An Exponential Threat" – Why Global Politicians & Business Leaders Must Act Now
“Covid-19 Is An Exponential Threat” – Why Global Politicians & Business Leaders Must Act Now
Authored by Tomas Pueyo via Medium.com,
With everything that’s happening about the Coronavirus, it might be very hard to make a decision of what to do today. Should you wait for more information? Do something today? What?
Here’s what I’m going to cover in this article, with lots of charts, data and models with plenty of sources:
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How many cases of coronavirus will there be in your area?
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What will happen when these cases materialize?
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What should you do?
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When?
When you’re done reading the article, this is what you’ll take away:
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The coronavirus is coming to you.
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It’s coming at an exponential speed: gradually, and then suddenly.
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It’s a matter of days. Maybe a week or two.
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When it does, your healthcare system will be overwhelmed.
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Your fellow citizens will be treated in the hallways.
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Exhausted healthcare workers will break down. Some will die.
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They will have to decide which patient gets the oxygen and which one dies.
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The only way to prevent this is social distancing today. Not tomorrow. Today.
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That means keeping as many people home as possible, starting now.
As a politician, community leader or business leader, you have the power and the responsibility to prevent this.
You might have fears today: What if I overreact? Will people laugh at me? Will they be angry at me? Will I look stupid? Won’t it be better to wait for others to take steps first? Will I hurt the economy too much?
But in 2–4 weeks, when the entire world is in lockdown, when the few precious days of social distancing you will have enabled will have saved lives, people won’t criticize you anymore: They will thank you for making the right decision.
Ok, let’s do this.
1. How Many Cases of Coronavirus Will There Be in Your Area?
Country Growth
The total number of cases grew exponentially until China contained it.
But then, it leaked outside, and now it’s a pandemic that nobody can stop.
As of today, this is mostly due to Italy, Iran and South Korea:
There are so many cases in South Korea, Italy and Iran that it’s hard to see the rest of the countries, but let’s zoom in on that corner at the bottom right.
There are dozens of countries with exponential growth rates. As of today, most of them are Western.
If you keep up with that type of growth rate for just a week, this is what you get:
If you want to understand what will happen, or how to prevent it, you need to look at the cases that have already gone through this: China, Eastern countries with SARS experience, and Italy.
China
Source: Tomas Pueyo analysis over chart from the Journal of the American Medical Association, based on raw case data from the Chinese Center for Disease Control and Prevention
This is one of the most important charts.
It shows in orange bars the daily official number of cases in the Hubei province: How many people were diagnosed that day.
The grey bars show the true daily coronavirus cases. The Chinese CDC found these by asking patients during the diagnostic when their symptoms started.
Crucially, these true cases weren’t known at the time. We can only figure them out looking backwards: The authorities don’t know that somebody just started having symptoms. They know when somebody goes to the doctor and gets diagnosed.
What this means is that the orange bars show you what authorities knew, and the grey ones what was really happening.
On January 21st, the number of new diagnosed cases (orange) is exploding: there are around 100 new cases. In reality, there were 1,500 new cases that day, growing exponentially. But the authorities didn’t know that. What they knew was that suddenly there were 100 new cases of this new illness.
Two days later, authorities shut down Wuhan. At that point, the number of diagnosed daily new cases was ~400. Note that number: they made a decision to close the city with just 400 new cases in a day. In reality, there were 2,500 new cases that day, but they didn’t know that.
The day after, another 15 cities in Hubei shut down.
Up until Jan 23rd, when Wuhan closes, you can look at the grey graph: it’s growing exponentially. True cases were exploding. As soon as Wuhan shuts down, cases slow down. On Jan 24th, when another 15 cities shut down, the number of true cases (again, grey) grinds to a halt. Two days later, the maximum number of true cases was reached, and it has gone down ever since.
Note that the orange (official) cases were still growing exponentially: For 12 more days, it looked like this thing was still exploding. But it wasn’t. It’s just that the cases were getting stronger symptoms and going to the doctor more, and the system to identify them was stronger.
This concept of official and true cases is important. Let’s keep it in mind for later.
The rest of regions in China were well coordinated by the central government, so they took immediate and drastic measures. This is the result:
Every flat line is a Chinese region with coronavirus cases. Each one had the potential to become exponential, but thanks to the measures happening just at the end of January, all of them stopped the virus before it could spread.
Meanwhile, South Korea, Italy and Iran had a full month to learn, but didn’t. They started the same exponential growth of Hubei and passed every other Chinese region before the end of February.
Eastern Countries
South Korea cases have exploded, but have you wondered why Japan, Taiwan, Singapore, Thailand or Hong Kong haven’t?
Taiwan didn’t even make it to this graph because it didn’t have the 50 cases threshold that I used.
All of them were hit by SARS in 2003, and all of them learned from it. They learned how viral and lethal it could be, so they knew to take it seriously. That’s why all of their graphs, despite starting to grow much earlier, still don’t look like exponentials.
So far, we have stories of coronavirus exploding, governments realizing the threat, and containing them. For the rest of the countries, however, it’s a completely different story.
Before I jump to them, a note about South Korea: The country is probably an outlier. The coronavirus was contained for the first 30 cases. Patient 31 was a super-spreader who passed it to thousands of other people. Because the virus spreads before people show symptoms, by the time the authorities realized the issue, the virus was out there. They’re now paying the consequences of that one instance. Their containment efforts show, however: Italy has already passed it in numbers of cases, and Iran will pass it tomorrow (3/10/2020).
Washington State
You’ve already seen the growth in Western countries, and how bad forecasts of just one week look like. Now imagine that containment doesn’t happen like in Wuhan or in other Eastern countries, and you get a colossal epidemic.
Let’s look at a few cases, such as Washington State, the San Francisco Bay Area, Paris and Madrid.
Washington State is the US’s Wuhan.The number of cases there is growing exponentially. It’s currently at 140.
But something interesting happened early on. The death rate was through the roof. At some point, the state had 3 cases and one death.
We know from other places that the death rate of the coronavirus is anything between 0.5% and 5% (more on that later). How could the death rate be 33%?
It turned out that the virus had been spreading undetected for weeks. It’s not like there were only 3 cases. It’s that authorities only knew about 3, and one of them was dead because the more serious the condition, the more likely somebody is to be tested.
This is a bit like the orange and grey bars in China: Here they only knew about the orange bars (official cases) and they looked good: just 3. But in reality, there were hundreds, maybe thousands of true cases.
This is an issue: You only know the official cases, not the true ones. But you need to know the true ones. How can you estimate the true ones? It turns out, there’s a couple of ways. And I have a model for both, so you can play with the numbers too (direct link to copy of the model).
First, through deaths. If you have deaths in your region, you can use that to guess the number of true current cases. We know approximately how long it takes for that person to go from catching the virus to dying on average (17.3 days). That means the person who died on 2/29 in Washington State probably got infected around 2/12.
Then, you know the mortality rate. For this scenario, I’m using 1% (we’ll discuss later the details). That means that, around 2/12, there were already around ~100 cases in the area (of which only one ended up in death 17.3 days later).
Now, use the average doubling time for the coronavirus (time it takes to double cases, on average). It’s 6.2. That means that, in the 17 days it took this person to die, the cases had to multiply by ~8 (=2^(17/6)). That means that, if you are not diagnosing all cases, one death today means 800 true cases today.
Washington state has today 22 deaths. With that quick calculation, you get ~16,000 true coronavirus cases today. As many as the official cases in Italy and Iran combined.
If we look into the detail, we realize that 19 of these deaths were from one cluster, which might not have spread the virus widely. So if we consider those 19 deaths as one, the total deaths in the state is four. Updating the model with that number, we still get ~3,000 cases today.
This approach from Trevor Bedford looks at the viruses themselves and their mutations to assess the current case count.
An update about what we’re able to infer about the Washington State #COVID19 outbreak from screening and viral sequencing by @UWVirology and @seattleflustudy. 1/12
— Trevor Bedford (@trvrb) March 10, 2020
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The conclusion is that there are likely ~1,100 cases in Washington state right now.
None of these approaches are perfect, but they all point to the same message: We don’t know the number of true cases, but it’s much higher than the official one. It’s not in the hundreds. It’s in the thousands, maybe more.
San Francisco Bay Area
Until 3/8, the Bay Area didn’t have any death. That made it hard to know how many true cases there were. Officially, there were 86 cases. But the US is vastly undertesting because it doesn’t have enough kits. The country decided to create their own test kit, which turned out not to work.
These were the number of tests carried out in different countries by March 3rd:
Turkey, with no cases of coronavirus, had 10 times the testing per inhabitant than the US. The situation is not much better today, with ~8,000 tests performed in the US, which means ~4,000 people have been tested.
Here, you can just use a share of official cases to true cases. How to decide which one? For the Bay Area, they were testing everybody who had traveled or was in contact with a traveler, which means that they knew most of the travel-related cases, but none of the community spread cases. By having a sense of community spread vs. travel spread, you can know how many true cases there are.
I looked at that ratio for South Korea, which has great data. By the time they had 86 cases, the % of them from community spread was 86% (86 and 86% are a coincidence).
With that number, you can calculate the number of true cases. If the Bay Area has 86 cases today, it is likely that the true number is ~600.
France and Paris
France claims 1,400 cases today and 30 deaths. Using the two methods above, you can have a range of cases: between 24,000 and 140,000.
The true number of coronavirus cases in France today is likely to be between 24,000 and 140,000.
Let me repeat that: the number of true cases in France is likely to be between one and two orders or magnitude higher than it is officially reported.
Don’t believe me? Let’s look at the Wuhan graph again.
Source: Tomas Pueyo analysis over chart and data from the Journal of the American Medical Association
If you stack up the orange bars until 1/22, you get 444 cases. Now add up all the grey bars. They add up to ~12,000 cases. So when Wuhan thought it had 444 cases, it had 27 times more. If France thinks it has 1,400 cases, it might well have tens of thousands
The same math applies to Paris. With ~30 cases inside the city, the true number of cases is likely to be in the hundreds, maybe thousands. With 300 cases in the Ile-de-France region, the total cases in the region might already exceed tens of thousands.
Spain and Madrid
Spain has very similar numbers as France (1,200 cases vs. 1,400, and both have 30 deaths). That means the same rules are valid: Spain has probably upwards of 20k true cases already.
In the Comunidad de Madrid region, with 600 official cases and 17 deaths, the true number of cases is likely between 10,000 and 60,000.
If you read these data and tell yourself: “Impossible, this can’t be true”, just think this: With this number of cases, Wuhan was already in lockdown.
With the number of cases we see today in countries like the US, Spain, France, Iran, Germany, Japan, Netherlands, Denmark, Sweden or Switzerland, Wuhan was already in lockdown.
And if you’re telling yourself: “Well, Hubei is just one region”, let me remind you that it has nearly 60 million people, bigger than Spain and about the size of France.
2. What Will Happen When These Coronavirus Cases Materialize?
So the coronavirus is already here. It’s hidden, and it’s growing exponentially.
What will happen in our countries when it hits? It’s easy to know, because we already have several places where it’s happening. The best examples are Hubei and Italy.
Fatality Rates
The World Health Organization (WHO) quotes 3.4% as the fatality rate (% people who contract the coronavirus and then die). This number is out of context so let me explain it.
It really depends on the country and the moment: between 0.6% in South Korea and 4.4% in Iran. So what is it? We can use a trick to figure it out.
The two ways you can calculate the fatality rate is Deaths/Total Cases and Death/Closed Cases. The first one is likely to be an underestimate, because lots of open cases can still end up in death. The second is an overestimate, because it’s likely that deaths are closed quicker than recoveries.
What I did was look at how both evolve over time. Both of these numbers will converge to the same result once all cases are closed, so if you project past trends to the future, you can make a guess on what the final fatality rate will be.
This is what you see in the data. China’s fatality rate is now between 3.6% and 6.1%. If you project that in the future, it looks like it converges towards ~3.8%-4%. This is double the current estimate, and 30 times worse than the flu.
It is made up of two completely different realities though: Hubei and the rest of China.
Hubei’s fatality rate will probably converge towards 4.8%. Meanwhile, for the rest of China, it will likely converge to ~0.9%:
I also charted the numbers for Iran, Italy and South Korea, the only countries with enough deaths to make this somewhat relevant.
Iran’s and Italy’s Deaths / Total Cases are both converging towards the 3%-4% range. My guess is their numbers will end up around that figure too.
South Korea is the most interesting example, because these 2 numbers are completely disconnected: deaths / total cases is only 0.6%, but deaths / closed cases is a whopping 48%. My take on it is that a few unique things are happening there. First, they’re testing everybody (with so many open cases, the death rate seems low), and leaving the cases open for longer (so they close cases quickly when the patient is dead). Second, they have a lot of hospital beds (see chart 17.b). There might also be other reasons we don’t know. What is relevant is that deaths/cases has hovered around 0.5% since the beginning, suggesting it will stay there, likely heavily influenced by the healthcare system and crisis management.
The last relevant example is the Diamond Princess cruise: with 706 cases, 6 deaths and 100 recoveries, the fatality rate will be between 1% and 6.5%.
Note that the age distribution in each country will also have an impact: Since mortality is much higher for older people, countries with an aging population like Japan will be harder hit on average than younger countries like Nigeria. There are also weather factors, especially humidity and temperature, but it’s still unclear how this will impact transmission and fatality rates.
This is what you can conclude:
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Excluding these, countries that are prepared will see a fatality rate of ~0.5% (South Korea) to 0.9% (rest of China).
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Countries that are overwhelmed will have a fatality rate between ~3%-5%
Put in another way: Countries that act fast can reduce the number of deaths by a factor of ten. And that’s just counting the fatality rate. Acting fast also drastically reduces the cases, making this even more of a no-brainer.
Countries that act fast reduce the number of deaths at least by 10x.
So what does a country need to be prepared?
What Will Be the Pressure on the System
Around 20% of cases require hospitalization, 5% of cases require the Intensive Care Unit (ICU), and around 2.5% require very intensive help, with items such as ventilators or ECMO (extra-corporeal oxygenation).
The problem is that items such as ventilators and ECMO can’t be produced or bought easily. A few years ago, the US had a total of 250 ECMO machines, for example.
So if you suddenly have 100,000 people infected, many of them will want to go get tested. Around 20,000 will require hospitalization, 5,000 will need the ICU, and 1,000 will need machines that we don’t have enough of today. And that’s just with 100,000 cases.
That is without taking into account issues such as masks. A country like the US has only 1% of the masks it needs to cover the needs of its healthcare workers (12M N95, 30M surgical vs. 3.5B needed). If a lot of cases appear at once, there will be masks for only 2 weeks.
Countries like Japan, South Korea, Hong Kong or Singapore, as well as Chinese regions outside of Hubei, have been prepared and given the care that patients need.
But the rest of Western countries are rather going in the direction of Hubei and Italy. So what is happening there?
What an Overwhelmed Healthcare System Looks Like
The stories that happened in Hubei and those in Italy are starting to become eerily similar. Hubei built two hospitals in ten days, but even then, it was completely overwhelmed.
Both complained that patients inundated their hospitals. They had to be taken care of anywhere: in hallways, in waiting rooms…
From a well respected friend and intensivist/A&E consultant who is currently in northern Italy:
1/ ‘I feel the pressure to give you a quick personal update about what is happening in Italy, and also give some quick direct advice about what you should do.— Jason Van Schoor (@jasonvanschoor) March 9, 2020
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I heavily recommend this short Twitter thread. It paints a pretty stark picture of Italy today
Healthcare workers spend hours in a single piece of protective gear, because there’s not enough of them. As a result, they can’t leave the infected areas for hours. When they do, they crumble, dehydrated and exhausted. Shifts don’t exist anymore. People are driven back from retirement to cover needs. People who have no idea about nursing are trained overnight to fulfill critical roles. Everybody is on call, always.
Francesca Mangiatordi, an Italian nurse that crumbled in the middle of the war with the Coronavirus
That is, until they become sick. Which happens a lot, because they’re in constant exposure to the virus, without enough protective gear. When that happens, they need to be in quarantine for 14 days, during which they can’t help. Best case scenario, 2 weeks are lost. Worst case, they’re dead.
The worst is in the ICUs, when patients need to share ventilators or ECMOs. These are in fact impossible to share, so the healthcare workers must determine what patient will use it. That really means, which one lives and which one dies.
“After a few days, we have to choose. […] Not everyone can be intubated. We decide based on age and state of health.” —Christian Salaroli, Italian MD.
Medical workers wear protective suits to attend to people sickened by the novel coronavirus, in the intensive care unit of a designated hospital in Wuhan, China, on Feb. 6. (China Daily/Reuters), via Washington Post
All of this is what drives a system to have a fatality rate of ~4% instead of ~0.5%. If you want your city or your country to be part of the 4%, don’t do anything today.
Satellite images show Behesht Masoumeh cemetery in the Iranian city of Qom. Photograph: ©2020 Maxar Technologies. Via The Guardian and the The New York Times.
3. What Should You Do?
Flatten the Curve
This is a pandemic now. It can’t be eliminated. But what we can do is reduce its impact.
Some countries have been exemplary at this. The best one is Taiwan, which is extremely connected with China and yet still has as of today fewer than 50 cases. This recent paper explain all the measures they took early on, which were focused on containment.
They have been able to contain it, but most countries lacked this expertise and didn’t. Now, they’re playing a different game: mitigation. They need to make this virus as inoffensive as possible.
If we reduce the infections as much as possible, our healthcare system will be able to handle cases much better, driving the fatality rate down. And, if we spread this over time, we will reach a point where the rest of society can be vaccinated, eliminating the risk altogether. So our goal is not to eliminate coronavirus contagions. It’s to postpone them.
The more we postpone cases, the better the healthcare system can function, the lower the mortality rate, and the higher the share of the population that will be vaccinated before it gets infected.
How do we flatten the curve?
Social Distancing
There is one very simple thing that we can do and that works: social distancing.
If you go back to the Wuhan graph, you will remember that as soon as there was a lockdown, cases went down. That’s because people didn’t interact with each other, and the virus didn’t spread.
The current scientific consensus is that this virus can be spread within 2 meters (6 feet) if somebody coughs. Otherwise, the droplets fall to the ground and don’t infect you.
The worst infection then becomes through surfaces: The virus survives for up to 9 days on different surfaces such as metal, ceramics and plastics. That means things like doorknobs, tables, or elevator buttons can be terrible infection vectors.
The only way to truly reduce that is with social distancing: Keeping people home as much as possible, for as long as possible until this recedes.
This has already been proven in the past. Namely, in the 1918 flu pandemic.
Learnings from the 1918 Flu Pandemic
You can see how Philadelphia didn’t act quickly, and had a massive peak in death rates. Compare that with St Louis, which did.
Then look at Denver, which enacted measures and then loosened them. They had a double peak, with the 2nd one higher than the first.
If you generalize, this is what you find:
This chart shows, for the 1918 flu in the US, how many more deaths there were per city depending on how fast measures were taken. For example, a city like St Louis took measures 6 days before Pittsburgh, and had less than half the deaths per citizen. On average, taking measures 20 days earlier halved the death rate.
Italy has finally figured this out. They first locked down Lombardy on Sunday, and one day later, on Monday, they realized their mistake and decided they had to lock down the entire country.
Hopefully, we will see results in the coming days. However, it will take one to two weeks to see. Remember the Wuhan graph: there was a delay of 12 days between the moment when the lockdown was announced and the moment when official cases (orange) started going down.
How Can Politicians Contribute to Social Distancing?
The question politicians are asking themselves today is not whether they should do something, but rather what’s the appropriate action to take.
There are several stages to control an epidemic, starting with anticipation and ending with eradication. But it’s too late for most options today. With this level of cases, the two only options politicians have in front of them are containment and mitigation.
Containment
Containment is making sure all the cases are identified, controlled, and isolated. It’s what Singapore, Hong Kong, Japan or Taiwan are doing so well: They very quickly limit people coming in, identify the sick, immediately isolate them, use heavy protective gear to protect their health workers, track all their contacts, quarantine them… This works extremely well when you’re prepared and you do it early on, and don’t need to grind your economy to a halt to make it happen.
I’ve already touted Taiwan’s approach. But China’s is good too. The lengths at which it went to contain the virus are mind-boggling. For example, they had up to 1,800 teams of 5 people each tracking every infected person, everybody they got interacted with, then everybody those people interacted with, and isolating the bunch. That’s how they were able to contain the virus across a billion-people country.
This is not what Western countries have done. And now it’s too late. The recent US announcement that most travel from Europe was banned is a containment measure for a country that has, as of today, 3 times the cases that Hubei had when it shut down, growing exponentially. How can we know if it’s enough? It turns out, we can know by looking at the Wuhan travel ban.
This chart shows the impact that the Wuhan travel ban had delaying the epidemic. The bubble sizes show the number of daily cases. The top line shows the cases if nothing is done. The two other lines show the impact if 40% and 90% of travel is eliminated. This is a model created by epidemiologists, because we can’t know for sure.
If you don’t see much difference, you’re right. It’s very hard to see any change in the development of the epidemic.
Researchers estimate that, all in all, the Wuhan travel ban only delayed the spread in China by 3–5 days.
Now what did researchers think the impact of reducing transmission would be?
The top bloc is the same as the one you’ve seen before. The two other blocks show decreasing transmission rates. If the transmission rate goes down by 25% (through Social Distancing), it flattens the curve and delays the peak by a whole 14 weeks. Lower the transition rate by 50%, and you can’t see the epidemic even starting within a quarter.
The US administration’s ban on European travel is good: It has probably bought us a few hours, maybe a day or two. But not more. It is not enough. It’s containment when what’s needed is mitigation.
Once there are hundreds or thousands of cases growing in the population, preventing more from coming, tracking the existing ones and isolating their contacts isn’t enough anymore. The next level is mitigation.
Mitigation
Mitigation requires heavy social distancing. People need to stop hanging out to drop the transmission rate (R), from the R=~2–3 that the virus follows without measures, to below 1, so that it eventually dies out.
These measures require closing companies, shops, mass transit, schools, enforcing lockdowns… The worse your situation, the worse the social distancing. The earlier you impose heavy measures, the less time you need to keep them, the easier it is to identify brewing cases, and the fewer people get infected.
This is what Wuhan had to do. This is what Italy was forced to accept. Because when the virus is rampant, the only measure is to lock down all the infected areas to stop spreading it at once.
With thousands of official cases — and tens of thousands of true ones — this is what countries like Iran, France, Spain, Germany, Switzerland or the US need to do.
But they’re not doing it.
Some business are working from home, which is fantastic.
Some mass events are being stopped.
Some affected areas are in quarantining themselves.All these measures will slow down the virus. They will lower the transmission rate from 2.5 to 2.2, maybe 2. But they aren’t enough to get us below 1 for a sustained period of time to stop the epidemic. And if we can’t do that, we need to get it as close to 1 for as long as possible, to flatten the curve.
So the question becomes: What are the tradeoffs we could be making to lower the R? This is the menu that Italy has put in front of all of us:
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Nobody can enter or exit lockdown areas, unless there are proven family or work reasons.
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Movement inside the areas is to be avoided, unless they are justified for urgent personal or work reasons and can’t be postponed.
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People with symptoms (respiratory infection and fever) are “highly recommended” to remain home.
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Standard time off for healthcare workers is suspended
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Closure of all educational establishments (schools, universities…), gyms, museums, ski stations, cultural and social centers, swimming pools, and theaters.
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Bars and restaurants have limited opening times from 6am to 6pm, with at least one meter (~3 feet) distance between people.
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All pubs and clubs must close.
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All commercial activity must keep a distance of one meter between customers. Those that can’t make it happen must close. Temples can remain open as long as they can guarantee this distance.
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Family and friends hospital visits are limited
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Work meetings must be postponed. Work from home must be encouraged.
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All sports events and competitions, public or private, are canceled. Important events can be held under closed doors.
Then two days later, they added: No, in fact, you need to close all businesses that aren’t crucial. So now we’re closing all commercial activities, offices, cafes and shops. Only transportation, pharmacies, groceries will remain open.”
One approach is to gradually increase measures. Unfortunately, that gives precious time for the virus to spread. If you want to be safe, do it Wuhan style. People might complain now, but they’ll thank you later.
How Can Business Leaders Contribute to Social Distancing?
If you’re a business leader and you want to know what you should do, the best resource for you is Staying Home Club.
It is a list of social distancing policies that have been enacted by US tech companies—so far, 328.
They range from allowed to required Work From Home, and restricted visits, travel, or events.
There are more things that every company must determine, such as what to do with hourly workers, whether to keep the office open or not, how to conduct interviews, what to do with the cafeterias… If you want to know how my company, Course Hero, handled some of these, along with a model announcement to your employees, here is the one my company used (view only version here).
4. When?
It is very possible that so far you’ve agreed with everything I’ve said, and were just wondering since the beginning when to make each decision. Put in another way, what triggers should we have for each measure.
It enables you to assess the likely number of cases in your area, the probability that your employees are already infected, how that evolves over time, and how that should tell you whether to remain open.
It tells us things like:
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If your company had 100 employees in the Washington state area, which had 11 coronavirus deaths on 3/8, there was a 25% chance at least one of your employees was infected, and you should have closed immediately.
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If your company had 250 employees mostly in the South Bay (San Mateo and Santa Clara counties, which together had 22 official cases on 3/8 and the true number was probably at least 54), by 3/9 you would have had ~2% chances to have at least one employee infected, and you should have closed your office too.
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[Updated as of 3/12] If your company is in Paris (intramuros), and it has 250 employees, today there’s a 95% chance that one of your employees has the coronavirus, and you should close your office by tomorrow.
The model uses labels such as “company” and “employee”, but the same model can be used for anything else: schools, mass transit… So if you have only 50 employees in Paris, but all of them are going to take the train, coming across thousands of other people, suddenly the likelihood that at least one of them will get infected is much higher and you should close your office immediately.
If you’re still hesitating because nobody is showing symptoms, just realize 26% of contagions happen before there are symptoms.
Are You Part of a Group of Leaders?
This math is selfish. It looks at every company’s risk individually, taking as much risk as we want until the inevitable hammer of the coronavirus closes our offices.
But if you’re part of a league of business leaders or politicians, your calculations are not for just one company, but for the whole. The math becomes: What’s the likelihood that any of our companies is infected? If you’re a group of 50 companies of 250 employees on average, in the SF Bay Area, there’s a 35% chance that at least one of the companies has an employee infected, and 97% chance that will be true next week. I added a tab in the model to play with that.
Conclusion: The Cost of Waiting
It might feel scary to make a decision today, but you shouldn’t think about it this way.
This theoretical model shows different communities: one doesn’t take social distancing measures, one takes them on Day n of an outbreak, the other one on Day n+1. All the numbers are completely fictitious (I chose them to resemble what happened in Hubei, with ~6k daily new cases at the worst). They’re just there to illustrate how important a single day can be in something that grows exponentially. You can see that the one-day delay peaks later and higher, but then daily cases converge to zero.
But what about cumulative cases?
In this theoretical model that resembles loosely Hubei, waiting one more day creates 40% more cases! So, maybe, if the Hubei authorities had declared the lockdown on 1/22 instead of 1/23, they might have reduced the number of cases by a staggering 20k.
And remember, these are just cases. Mortality would be much higher, because not only would there be directly 40% more deaths. There would also be a much higher collapse of the healthcare system, leading to a mortality rate up to 10x higher as we saw before. So a one-day difference in social distancing measures can end exploding the number of deaths in your community by multiplying more cases and higher fatality rate.
This is an exponential threat. Every day counts. When you’re delaying by a single day a decision, you’re not contributing to a few cases maybe. There are probably hundreds or thousands of cases in your community already. Every day that there isn’t social distancing, these cases grow exponentially.
Tyler Durden
Sat, 03/14/2020 – 00:05 -
- The State Of Freedom Worldwide
The State Of Freedom Worldwide
Democratic watchdog organization Freedom House has released its annual ranking of the world’s most free and the world’s most suppressed nations.
As Statista’s Niall McCarthy notes, for the 14th year in a row, global freedom has been found to have declined. 64 countries experienced a decline in freedom with only 37 making a move in the right direction. In a particularly worrying development, Freedom House found that 25 out of 41 “established democracies” have also experienced net losses in democracy since 2006.
You will find more infographics at Statista
The United States enjoyed similar levels of freedom to Switzerland and the United Kingdom a decade ago but it has experienced a decline and is now ranked behind Greece and Slovakia while it remains marginally ahead of Argentina and Croatia. Freedom House blamed the policies of the Trump administration for the slide, stating that it has failed to exhibit consistent commitment to a foreign policy based on the principles of democracy and human rights.
The highest-ranked countries this year are Finland, Norway and Sweden while the the Netherlands, Canada, Ireland, Australia and New Zealand were also among the top scorers.
In total, 49 countries fell into the “not free” category with Syria at the very bottom. Turkmenistan, Eritrea, North Korea, South Korea and Somalia are also among the worst-ranked countries.
Tyler Durden
Fri, 03/13/2020 – 23:45 - Psychologist: Big Tech Will Use "Subliminal Methods" To Shift 15 Million Votes On Election Day
Psychologist: Big Tech Will Use “Subliminal Methods” To Shift 15 Million Votes On Election Day
Authored by Paul Joseph Watson via Summit News,
Psychologist Robert Epstein says that Big Tech is planning to use “subliminal methods” in the upcoming election that could shift up to 15 million votes and cost Trump the presidency.
After the 2016 presidential election, Epstein surmised that search engine bias shifted 2-3 million votes in Hillary Clinton’s favor, and he warns that the number in 2020 could be five times that amount.
The author says that Google and other social media giants “can shift opinions and votes in numerous ways that people can’t detect” via “a wide variety of subliminal methods of persuasion that can, in minutes, shift the voting preferences of 20 percent or more of undecided voters without anyone having the slightest idea they’ve been manipulated.”
A leak of Google emails to the Wall Street Journal back in 2018 already exposed how Google engineers had sought to investigate how they could manipulate a user’s “ephemeral experiences” to change their mind on the Trump travel ban.
“Ephemeral experiences are those fleeting ones we have every day when we view online content that’s generated on-the-fly and isn’t stored anywhere: newsfeeds, search suggestions, search results, and so on,” writes Epstein.
“No authority can go back in time to see what search suggestions or search results you were shown, but dozens of randomized, controlled, double-blind experiments I’ve conducted show that such content can dramatically shift opinions and voting preferences. See the problem?”
Google, Twitter and Facebook have complete control over what is seen and what is allowed to go viral, Epstein emphasizes, making it completely pointless to produce political ads if you cannot prevent algorithmic manipulation.
“If our own tech companies all favor the same presidential candidate this year—and that seems likely—I calculate that they can easily shift 15 million votes to that candidate without people knowing and without leaving a paper trail,” warns Epstein.
He also notes how the the “technological elite” Eisenhower warned about in his 1961 farewell address is now in control, underscored by the fact that “95 percent of donations from tech companies and their employees go to Democrats.”
Epstein says the only way to prevent all this is aggressive monitoring of algorithmic manipulation.
“When bias is detected that has the potential to shift votes, it needs to be reported immediately to the media, the Federal Election Commission, members of Congress, and other authorities,” he writes.
“That will force the tech execs to back off; if they don’t, they’ll be risking humiliation, fines, and, quite possibly, criminal prosecution.”
Despite highlighting the issue for years, Republicans have done next to nothing to address social media censorship and algorithm manipulation. Numerous major boosters of President Trump during the 2016 election have also been completely banned on social media.
Pointing out that the margin of victory in many nationwide races is as little as 5 per cent, Epstein cautions, “Republicans, in general, are likely to lose.”
Epstein also emphasized that given his knowledge about what Big Tech are planning, he is “not suicidal.”
This is particularly noteworthy given that the psychologist previously suggested that his wife’s fatal car crash may not have been accidental.
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Tyler Durden
Fri, 03/13/2020 – 23:25 - "It's Terrible": NYC Restaurants Shocked With "Mass Event Cancellations" As Virus Fears Grow
“It’s Terrible”: NYC Restaurants Shocked With “Mass Event Cancellations” As Virus Fears Grow
We already wrote weeks ago about how the coronavirus was wreaking havoc among Chinese business owners in various cities across the U.S.
Since then, fear of the virus has been ramped up significantly, and so it should come as no surprise that people are starting to cancel events at NYC restaurants en masse, according to Eater.
Restaurants across NYC are reporting that parties are being cancelled and business is “seeing dips” since the first confirmed coronavirus case in NYC last week. And if we were willing to bet, those would not be “dips” you’d want to buy. It’ll likely get worse.
As of Monday, there were 19 confirmed cases in the city and many corporate offices are encouraging employees to work from home. Hotels and restaurants are getting hit the hardest. One restaurant owner, Tom Colicchio, says his revenue is down “as much as 70%”. The NYC Hospitality alliance says it’s seen a “big drop” in business.
Another restaurantuer, Michael Sinensky, founder of Simple Venue, a hospitality group that runs Sushi by Bae and Sushi by Bou, says sales have dropped off by as much as 25% and he’s expecting it to continue for “several weeks”.
Additionally, fewer companies are booking events for the spring. Colicchio said: “It’s terrible. It’s just an unknown here. You have no idea how long it’s going to last. It’s hard to get in front of … who knows when things will go back to normal?”
Restaurants that rely on large parties are also seeing declines in foot traffic. Xi’an Famous Foods’s CEO Jason Wang saw a 20% drop in his locations in Flushing and Chinatown last month. He also says customer foot traffic is lower.
Owner of East Village Korean restaurant Nowon, Jae Lee, said business started falling about three weeks ago, but has tapered since then. The restaurant group behind Japanese spots like Sobaya said that foot traffic is “visibly lower”.
And things aren’t looking optimistic. Not unlike the market itself, this is a dip that may not be getting better anytime soon. Ravi DeRossi — who owns 15 restaurants and bars, said: “Over the weekend, a quarter of reservations canceled day-of, with some saying they’re concerned about being in public places and others worried about not feeling well. This was the first weekend. My feeling is every weekend, it’s going to get worse and worse.”
Many restaurants are now dealing with extra precautions for hygiene. More things are getting disinfected, more frequently, according to Eater. One owner says the “unprecedented” situation has them training their staff on how to deal with “fear and panic”.
Colicchio’s restaurants are keeping less inventory on hand and holding off on larger purchases for the time being. The Sushi by Bae and Sushi by Bou restaurants are developing a delivery box to try and “balance the business we expect to lose due to the virus panic.”
DeRossi concluded: “I’ll be honest, I’m a little scared. I’m in the East Village. All it takes is one case. If one restaurant in the East Village says, ‘This person at this restaurant got that,’ and the entire East Village will shut down overnight. I honestly don’t know what to do, other than take every serious precaution that we can.”
“I think we’re in for a long period of uncertainty right now,” Colicchio added.
Tyler Durden
Fri, 03/13/2020 – 23:05 - Elon Musk Is Acting Like A Neo-Conquistador For South America's Lithium
Elon Musk Is Acting Like A Neo-Conquistador For South America’s Lithium
Authored by Vijay Prashad and Alejandro Bejarno via Counterpunch.org,
Elon Musk, the head of Tesla, wants to build an electric car factory in Brazil. He was supposed to meet Jair Bolsonaro, the president of Brazil, in Miami in early March, but he was too busy; instead, Musk will go to Brazil sometime this year. All eyes are on the southern Brazilian state of Santa Catarina, whose Secretary of International Affairs Derian Campos is in direct contact with Musk. Two automobile manufacturers – BMW and GM – already have factories in Santa Catarina. Marcos Pontes (Minister of Science, Technology, Innovation, and Communications) held a video conference with Anderson Ricardo Pacheco, a senior Tesla official. They were joined by Daniel Freitas, a congressman, and Claiton Pacheco Galdino, who is the business development director for Criciúma, a city in Santa Catarina. They are eager for Tesla to open a Gigafactory – Tesla’s name for a big factory – in South America’s largest economy.
It helps that Brazil has considerable lithium deposits – mostly in the southeastern states of Minas Gerais and Paraíba and in the northeastern states of Ceará and Rio Grande do Norte. The production of lithium is limited, largely having been used for ceramics and glass production.
The Bolsonaro government is interested in increasing the production of lithium, including as a key raw material for the lithium-ion batteries that power electric cars such as those made by Tesla. But Brazil’s lithium will not be sufficient. Tesla would need to import lithium from elsewhere.
The Lithium Triangle
Over 50 percent of the world’s known lithium deposits are in the “Lithium Triangle” – the lithium concentrated brine sources in Argentina, Bolivia, and Chile. Bolivia’s high mountain deserts – the Salar de Uyuni – have by far the largest known reserves of lithium.
In a bizarre tweet, the Bolivian entrepreneur Samuel Doria Medina wrote that since Elon Musk and Jair Bolsonaro will discuss the Tesla plant in Brazil, they should add to this initiative the following: “build a Gigafactory in the Salar de Uyuni to supply lithium batteries.” Doria Medina is not just an entrepreneur. He is the vice-presidential candidate alongside the “interim president” Jeanine Áñez for the May 3, 2020, Bolivian presidential elections. Áñez came to power only because of the coup d’état against Evo Morales in November 2019. Doria Medina’s welcome mat to Tesla should, therefore, be seen as having the full authority of the coup government behind it.
Morales’ government had been very cautious with these lithium reserves. It had made clear that these precious resources were not to be turned over to transnational corporations in deals favorable to the firms; what gains come from lithium, Morales had pointed out, must be properly shared with the Bolivian people. The point that Morales’ government made is that any deal must be done with Comibol – Bolivia’s national mining company – and Yacimientos de Litio Bolivianos – Bolivia’s national lithium company. The monetary gains from the mining would come into the Bolivian exchequer and then fund the social programs so necessary for the country. This sensible socialist policy was too much for three major transnational firms – Eramet (France), FMC (United States), and Posco (South Korea) – all three of whom turned tail and went to Argentina.
The Lithium Coup
It was Morales’ socialist policy toward Bolivia’s resources that doomed his government. The oligarchy, which was angry with Morales’ government and its socialism, used every mechanism to undermine the election of 2019. Forest fires in the northern and eastern regions of Bolivia provided the oligarchy’s media with the weaponry to suggest that Morales had abandoned his commitment to the environment and to Pachamama (Mother Earth), and that he was now working to benefit the cattle ranchers; it is important to point that this is not only ridiculous, but that as soon as the coup government of Áñez came into office, it passed legislation that allowed the ranchers to extend their lands into forested areas.
Morales’ opponent – Carlos Mesa – and other senior leaders of the oligarchy’s political parties openly said long before the election that Morales could only win by fraud. A self-proclaimed Council for the Defense of Democracy said that Morales was an illegitimate candidate because he had lost the 2016 constitutional referendum. The media – backed by these corporate and neofascist interests – banged the drum of fraud, while Carlos Mesa – on the night of the election – said that there was “monumental fraud” in the election. These provocations from Mesa, the neofascists, and the corporate elites resulted in street violence; in the midst of this, the police – sections of whom were angry with Morales for cracking down on police corruption – mutinied. The 36 Bolivians who died in the immediate post-election aftermath are victims of Mesa’s incendiary language. The Organization of American States (OAS), egged on by the U.S. government, came up with a “preliminary report” of fraud in the election; the hard conclusions in the report were not substantiated by the data in it. The OAS report played an important role in legitimizing the coup against Morales.
It is important to point out that there was no controversy about Morales’ election in 2014; in that election, Morales won 61 percent of the votes to defeat the entrepreneur Samuel Doria Medina, who won 24 percent (Doria Medina is the same person who is now running for vice president and welcomes Tesla to Bolivia’s lithium). Morales’ term, from the 2014 election, had not yet expired in November 2019; the removal of Morales then violated the mandate of 2014, a point that has received almost no discussion either inside Bolivia or abroad.
John Curiel and Jack Williams of the Election Data and Science Lab of the Massachusetts Institute of Technology (MIT) went over the Bolivian election data and found no fraud: “There is not any statistical evidence of fraud that we can find,” they wrote conclusively in the Washington Post. Curiel and Williams contacted the OAS, but they note, “We and other scholars within the field reached out to the OAS for comment; the OAS did not respond.” By their assessment, Morales won the election in November 2019 and should have been inaugurated this year to a new term.
Terrible pressure by the coup government against the party of Morales (the Movement for Socialism, or MAS) – as well as the presence of USAID monitors and a U.S.-backed head of the election commission, Salvador Romero – suggests that this election on May 3 is not going to be at all fair; it will likely favor the coup government, including the entrepreneur who wants to turn over Bolivia’s lithium to Elon Musk’s Tesla and Jair Bolsonaro’s Brazil.
A World of Lithium
In 2019, the benchmark Bloomberg New Energy Finance’s “Energy Storage Outlook 2019” report anticipated that by 2030, the price of the lithium-ion battery would drop dramatically, and that – as a consequence – renewable energy (solar and wind) plus storage of energy in batteries will expand exponentially. By 2040, there is an expectation that wind and solar will produce 40 percent of world energy consumption, rather than the 7 percent it now produces. For this, demand for energy storage will increase.
“The total demand for batteries from the stationary storage and electric transport sectors is forecast to be 4,584GWh (Gigawatt hours) by 2040,” write the Bloomberg analysts, “providing a major opportunity for battery makers and miners of component metals such as lithium, cobalt and nickel.” The current use is merely 9GW/17GWh.
The key point to emphasize here is that this will provide “a major opportunity” for “miners of component metals such as lithium, cobalt and nickel.” When Bloomberg’s analysts use a word like “miners,” they do not mean the Bolivian miners or the Congolese miners, but the transnational firms, such as Tesla and its chief, Elon Musk. As far as Bloomberg and Áñez are concerned, South America is no longer to follow the resource nationalist project of Evo Morales; this is Elon Musk’s South America, a place for the neo-conquistadors to make money and leave behind them social carnage.
Tyler Durden
Fri, 03/13/2020 – 22:45 - Federal Reserve Turns To Big Data To Monitor Business Cycle
Federal Reserve Turns To Big Data To Monitor Business Cycle
Federal Reserve officials are increasingly turning to big data to provide them with a more accurate snapshot of the economy, AP News reports.
The first evidence of this was during a government shutdown last year when officials turned to First Data, a payments firm that processes $2 trillion in transactions per year, for credit card data to gauge the health of the consumer, as it was evident the Fed was flying blind with most of its consumer datasets halted because of the shutdown.
“It was a big deal for the Fed in terms of having information about the economy when the retail sales data did not come out,” said Claudia Sahm, a former Fed analyst who compiled the First Data consumer data for officials during the shutdown. Officials were “extremely interested in what those readings were.”
The Fed is becoming aware that government data to assess the status of the business cycle is not as accurate as thought, and the 106-year old central bank must leap into the 21st century and embrace big data to stay relevant.
“We have been working with big data … with the purpose of better understanding the current position of the economy,” Chairman Jerome Powell recently said. “It’s an area of real interest for us.”
Billions of financial transactions are digitized and compiled by private firms and could be a solution for the Fed to monitor more accurately the business cycle for future policy adjustments.
The deployment of artificial intelligence, monitoring private data financial transactions, searching for anomalies, could be a new tool for the Fed to pre-emptively fight downturns.
“These data are becoming of increasing practical importance for figuring out the state of the economy for policymaking,” Matthew Shapiro, an economist at the University of Michigan who studies economic data, said at a conference last year. “The quality of official statistics is going to deteriorate without help from big data.”
Most government datasets are a long lag and rely on surveys, not helpful when trying to gauge current conditions of the business cycle, and maybe explains why the Fed is sometimes late to the game in terms of policy action.
Big data could allow the Fed to view the economy through a looking glass that is more real-time, as opposed to outdated surveys, which could also give the Fed tools to drop precise stimulus where it is needed the most, in terms of geographical region or a specific industry, a move that could thwart contagion.
Economists have pressured the Fed to adopt big data and private datasets as part of tools to monitor business conditions. It would make the Fed more accurate in policy deployment, considering they’ve been flying blind since December 23, 1913.
“Consumers shop online, summon cars for hire with an app, watch ‘TV’ without television stations or TVs, and ‘bank’ without cash or checks,” Shapiro wrote in a paper last spring. “Data could, in principle, be available with a very short lag.”
The rise of alternative data has allowed hedge funds to place bets on the economy more accurately. For example, Yelp takes its customer data, packages it up, and sells it to hedge funds for a costly premium. Those hedge funds use artificial intelligence to find trends in Yelp’s consumer data, which then allows them to trade on it.
In other examples of using alternative data to guage real-time economic conditions, we showed readers the collapse of China’s economy weeks before official data printed:
- China Has Ground To A Halt: “On The Ground” Indicators Confirm Worst-Case Scenario
- China Is Disintegrating: Steel Demand, Property Sales, Traffic All Approaching Zero
- Terrifying Charts Show China’s Economy Remains Completely Paralyzed
The Fed got a taste of big data last year during the government shutdown, it remains to be seen if the Fed will continue adopting alternative data as part of its monitoring toolkit.
Tyler Durden
Fri, 03/13/2020 – 22:25 - Panic & The Pandemic: Is There A Better Approach?
Panic & The Pandemic: Is There A Better Approach?
Our society is now transitioning into panic about the coronavirus.
Universities and schools are being shuttered, sports activities and public gatherings are being cancelled, individuals are hoarding toilet paper and supplies, travel is being severely constrained, the stock market has crashed, and business activity is nose-diving. Major businesses are forcing their employees to work at home.
This blog will try to summarize the coronavirus threat, suggest that some of the panic-driven actions may not be well-founded, and that there may be a far better, more effective approach to deal with the virus.
Before I begin, let me note two things. I am not a medical doctor, epidemiologist, or viral expert. But I am a scientist with some facility with statistics and data, and my specialty, weather prediction, is all about helping people react appropriately to estimates of risk. And I have talked to a number of doctors about this issue. But don’t read any more if my background bothers you.
How Bad is the Situation Today?
If one steps back and looks at the actual numbers, particularly against other threats we face, the situation is far less apocalyptic than some are suggesting. As of today, the Centers for Disease Control and Prevention (CDC) notes 1215 cases and 36 deaths in the U.S. since January 1. This is a very, very small percentage of the U.S. population of 331 million. The number of U.S. cases no longer appears to be going up rapidly, as noted by the latest CDC graphic (see below). Note the drop after the peak in early March.
In China, where the problem started, the number of cases is rapidly declining (see below).
According to Washington State’s Department of Health, the state has had 457 coronavirus cases and 31 deaths. Most (23) of the death’s in Washington have been limited to one nursing facility in Kirkland with a large number of elderly, chronically ill patients. In fact, according to the NY Times, this facility would typically lose 5 patients a month.
This facility also represents about 50 of the coronavirus cases in Washington, since several first responders and staff were sickened (with no fatalities) due to exposure at this site. In many ways, the Kirkland facility represented an unfortunate random event–the random exposure of a group of extremely vulnerable patients. If this random exposure had not happened, Washington State would probably not be getting headlines as a center for this virus outbreak.
An extremely important element of this coronavirus outbreak is that it hardly sickens young people, and healthy individuals of middle age or younger generally do not face a life-threatening illness. To illustrate, here is the age distribution of cases in King County. Few folks under 40 are sickened and none of them died. The problem is with the sick and elderly. This age distribution is going to be very, very important. Similar statistics are found in China.
There are undoubtedly many, many cases of coronavirus infection in the younger, healthier members of society, many of which are not aware of their infection. But without testing, we don’t really know other than by indirect statistical approaches. Thus, the “death rates” are clearly far too high, and highly deceptive.
Comparison to the Flu
It is important to note that the coronavirus numbers are extraordinarily smaller than those of the flu.
Below is a flu graphic I got from CDC and added the coronavirus cases (see the gray dot). In fact, the gray dot should be much smaller. For example, we had 36 coronavirus deaths nationally so far compared to 61,000 flu deaths in 2017-2018. 45 million cases that year compared to 1200 coronavirus cases so far this year. In WA state, 75 have died of flu through the end of February and several years have brought 200- 300 deaths from influenza.
Coronavirus is not even in the same league as flu, which also kills the youngest among us. We did not close down universities, businesses, and more for flu.
Interestingly, many who are panicking about the coronavirus today, refused to get a flu shot in past years, or to practice reasonable hygiene when flu is around (e.g., washing hands carefully). Coronavirus is also not in the same league as auto accidents, which kill 1.25 millions a year (3287 deaths a day), with 25-50 million injured or disabled for the worldwide statistics, while about 38,000 die in the U.S. each year from auto wrecks.
Are our political leaders shutting down society for the flu or stopping auto travel because of deaths on the roadway? The answer is no. So why are they willing to close down society to deal with the coronavirus, which has represented only a small smaller risk to the general population? Life is full of risks that must be considered, mitigated, and dealt with. But society must continue to function.
Poor Response and Lack of Testing
As the virus began to spread in China, the U.S. needed to develop a coherent plan for understanding and dealing with the crisis. This did not happen. President Trump probably made the right call about cutting off travel to China, but the lack of coherent planning beyond that is apparent. The lack of testing is a major failure of his administration and others.
A key capability is to develop sufficient testing resources to determine the progression of the disease in the U.S. This was sorely lacking, and the flawed testing developed by the CDC was one example of it. Other countries have tested vastly greater numbers of individuals. Importantly, the U.S. has not begun randomly test the general population to determine the extent of spread among U.S. residents.
The Extreme Cost of the Current “Social Distancing” Approach
Currently, the “social distancing” approach is being stressed by politicians and others. The idea is that by canceling schools and large public gatherings, coupled with workers working online from home, there will be a reduction of coronavirus community spread, reducing the peak in the number of cases and put less stress on the limited resources of the medical community. This is illustrated by the figures below. You notice the number of cases doesn’t change (the area under the curve). And it has another issue: it greatly extends the period in which society is affected by the disease.
The cost of social distancing is immense, something many politicians do not seem to have thought through. The stock market is in free fall, the economy is tanking, colleges are poorly educating their students through questionable online learning, K-12 students aren’t being taught, business is contracting, and workers are losing salaries and being laid off. The lowest income folks are hurt worst, making “social distancing” highly regressive. I have read estimates that that the world economy could lose trillions of dollars and that recession is now becoming more likely in the U.S.
Social distancing may be attractive for a short period to slow the virus, but in the end it is not sustainable. It is also inefficient. In an attempt to prevent the virus from getting to elderly people with health problems, a huge population that does not have the disease or unlikely to get very sick from it is restrained from normal activity. Something more effective is needed, something I would call “smart quarantine.” More on that later.
A number of the local politicians and others have been motivated to try massive social distancing based on a modeling study completed by several local researchers, suggesting only extreme social distancing can prevent a massive increase in cases and up to 400 deaths in our region. This is a relatively simple model approach, which from my reading does not consider the variation of death rate with age, or the varying social interactions with age. It assumes a uniform death rate of 1.6 %. I think it would be useful to test an alternative strategy, based mainly on testing those that are not ill, and removing those people from social interaction.
Media, Politicians, and the Web: How and why they can promote panic
The tendency for stampeding the population into panic and promoting actions that are in the end counterproductive is a real risk of the current political and media landscape.
For politicians, there is the potential for endless attention, with opportunities to give sober pronouncements and promote increasingly harsh measures. Resources become freely available from a worried citizenry. And the situation provides fuel to attack political foes, as is apparent with the attacks on Trump for virtually every action he takes (and some have been reasonable, like the China ban). That said, President Trump is certainly guilty of underplaying the seriousness of the situation and providing inaccurate information. The lack of testing is a massive failure. There is, however, plenty of bipartisan blame to go around for ineffective responses.
For the media, the situation is a bonanza, with huge increases in attention, which promotes more “clicks” and revenue. An increasingly isolated and home-bound populace is glued to the constant media barrage, promoting fear and anxiety.
A highly connected population, unlike any population before, is unable to escape the incessant coronavirus coverage that is constantly featuring the latest death and shut-down.
Another Way
So it there another way to deal with the coronavirus epidemic that could be more effective and far less cost to society? I suspect there is. This approach would take advantage of several unique and new aspects of the current situation:
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The fact that young and healthy people, the bulwark of our nation’s productive capacity, are only minimally affected by the coronavirus.
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That most of the mortality is among the sick and elderly.
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That the technology to test millions of individuals quickly is available.
Perhaps these facts allow us to deal with the situation in a dramatically new way. If a rational actor was running the response, perhaps they would:
1. Protect the most vulnerable with all available resources. All nursing facilities, retirement homes, and the like would be essentially quarantined, with all patients and staff tested for the virus, with those testing positive isolated from the remainder. All visitors would have to be tested. All individuals who are over 60 and possessing serious health problems would be asked to self-quarantine, with food and other assistance provided to allow them to reduce contact with the outside community.
2. Extensive random testing of the general population would be initiated, with millions of tests available for this purpose. Such general testing would allow a determination of the extent of COVID-19 spread and the isolation of affected individuals and their close associates. This is what I call “smart quarantine”– the use of massive testing to identify the carriers and currently sick and to take them out of circulation.
3. A fund to provide salaries for quarantined individuals would be initiated. This would encourage all individuals to be tested and encourage financially marginal individuals to isolate themselves.
4. Social distancing would end and all schools reopened within a month.. It is poor public policy to cripple education and the productive capacity of individuals that are the bulwark of the U.S. economy, particularly since most of them are not at risk for serious impacts of the coronavirus. Sustained social distancing is not a long term solution.
5. Federal grants will be initiated to support additional hospital costs, the acquisition of additional medical supplies and equipment, and the huge testing program.
This measures would help pull the nation back from the brink of economic disaster, effectively restrain the crisis, and restore normal life to most individuals.
The American people have a long history of panicking when they are threatened, at enormous financial and human cost. After 9/11, the American people agreed to loss of privacy and civil liberties, and allowed a tragic invasion of Iraq. And after the attack on Pearl Harbor, fears of a third column led to the internment and loss of liberty of over 100,000 Japanese Americans. Hopefully, fears of coronavirus won’t lead to the unnecessary destruction of our economy and the undermining of the prospects of many Americans. A creative solution to this crisis may be possible, acting as bridge to the situation a year from now when hopefully a vaccine will be available.
Tyler Durden
Fri, 03/13/2020 – 22:05 -
- Americans Split Over Whether Movie Theaters Should Close Amid Outbreak
Americans Split Over Whether Movie Theaters Should Close Amid Outbreak
As the virus containment window has likely expired for many large US metropolitan areas, it would suggest confirmed Covid-19 cases and deaths are expected to rise in the days, if not weeks ahead.
With the flood of virus announcements developing in King County, Washington; Santa Clara, California; Los Angeles; and the Tri-state area, Americans are still not taking the pandemic seriously.
Americans are perplexed by the severity of the virus outbreak, which was seen in the most recent Hollywood Reporter/Morning Consult poll, suggesting that many were split on whether movie theaters should shut down to prevent further transmission of the virus.
The poll found 38% of US adults believe shuttering movie theaters to contain the virus outbreak is a good idea, and shockingly, 44% opposed the containment measures. The survey was conducted from March 5-7 among 2,200 adults across the country.
Earlier this week, we noted the virus could stay airborne for 30 minutes and travel up to 14 feet, implying that movie theaters are significant breeding grounds, sort of like cruise ships.
The reason Americans feel indifferent about virus prevention measures is that the government and mainstream media downplayed the severity of Covid-19 for months, calling it no worse than the flu, which, by the way, ended on Wednesday, when Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID), said the fast-spreading virus is “10 times more lethal than the seasonal flu.”
So now, major cities have community spreading and are past the point of implementing containment measures to control the outbreak, such as closing down 41,000-plus movie screens across the country.
What’s astonishing is that the rate of US containment measures is happening at such a slow speed compared to China earlier this year, who immediately shut down 70,000 movie theaters as confirmed cases in the country started to rise.
Despite the US government and corporations acting at snail-speed to protect their citizens, all because it would crash the economy and stock market, people are starting to recognize that maybe Covid-19 is more than just the flu. Theater stocks, such as AMC, Imax, and Regal owner Cineworld, have plunged in recent weeks on fears that consumers will stay home. About 46% of respondents in the study said they support the future “postponing all upcoming movie premieres.”
Some 40% of respondents said theater chains should do more to help in the fight to combat the virus. And in our view, that means theaters should be closed for the next two months, similar to what Carnival Corp. announced on Thursday morning by suspending its Princess Cruises Line. But again, in America, profits over human safety – so we’ll see if shutdowns actually come, or maybe people will follow the Centers for Disease Control and Prevention’s (CDC) guidelines of “social distancing.”
Roughly 43% of respondents said they agreed with the decision to postpone the new James Bond flick No Time to Die. We noted earlier this week that movie premiers and filming productions are being delayed or canceled across the world for the first half of the year.
There’s some evidence that the virus outbreak could greatly benefit online streaming platforms, such as Netflix and Hulu. About 21% of respondents in the new THR/Morning Consult survey signed up for streaming services since the virus crisis began, and 43% said they would be watching more movies at home during the pandemic.
Tyler Durden
Fri, 03/13/2020 – 21:45 - Your 12-Point 'Great Depression II' Survival Guide
Your 12-Point ‘Great Depression II’ Survival Guide
Authored by MN Gordon via EconomicPrism.com,
Bull Market RIP
And just like that – after a magnificent 11 year run – the bull market in U.S. stocks is dead. From its peak close of 29,551 on February 12 through yesterday’s [Thursday] close of 21,200, the Dow Jones Industrial Average (DJIA) has dropped over 28 percent – in just 30 days! RIP.
Death may mark the end. The completion of the circle of life. But it also marks the beginning of something new.
The death of the bull market, for example, marks the birth of a new bear market. By our estimation, the DJIA must fall an additional 30 percent – approximately – before the bear market dies and a new bull market is born.
Between now and then, the central planners in command at the Federal Reserve and the U.S. Treasury will do anything and everything to jumpstart the old bull market back to life. On Thursday, Fed Chair Powell grabbed Hank Paulson’s bazooka and fired off a cumulative $4 trillion repo bailout. But, alas, Powell’s bazooka was loaded with blanks.
After a brief paring back of losses, the DJIA resumed its downward trajectory, closing the day down 2,353 – or nearly 10 percent. The stock market, you see, knows something that Powell doesn’t know. That is, the damage being done to businesses, in an effort to control the spread of coronavirus, is destroying the economy.
Layoffs. Shuttered doors. Empty ports. Quiet railroads. Suspended sports and entertainment venues. No Disneyland. Oil price collapse. No March Madness. More layoffs. Tom Hanks. Bankruptcies. Empty shelves. Panic. Sovereign debt crisis. And soon to be empty bellies…
The ultimate impact, in terms of GDP contraction, will tailspin the economy into a depression…perhaps, The Great Depression II. The stock market, regardless of what Powell wants, is pricing this reality accordingly.
There’s no escaping it…
Can’t Run, Can’t Hide
You can’t run. You can’t hide. Remember, no one here gets out alive. Though you aren’t totally helpless…
You can tempt fate. You can rage against the forces of destiny. By this, you can place bets that are at odds with the madness of crowds. Of course, this must be done before the inflection point; before the herd runs off the cliff…not after.
For example, during periods of economic chaos, physical gold and silver and arable land are proven vehicles for wealth preservation. No doubt, those with the means and fortitude to do so have already diversified some of their savings into these established crisis hedges.
Those who haven’t can only blame themselves. There have been ample warning signs over the last year – or more – that financial markets were ripe for a crisis. It didn’t take half a brain to clue in on this.
And it didn’t take much in the way of resources to place a bet or two that something ‘might could’ go wrong. Even the lowly working stiff, with a small inkling of what was coming, could have taken a pass on shares of Apple and traded a small wad of paper bucks for a junk silver bag or two.
With a little luck, these proven wealth preservation vehicles will safely traverse the valley of the shadow of death to whatever economic order emerges when the crisis abates. At that point, we suspect paper dollars will trade at par with fire kindling, whereas silver and gold will retain their stored value.
Indeed, gold and silver have gotten shellacked this week. But, as night follows day, once this panic liquidation episode subsides, and the implications of fiscal and monetary currency debasement are realized, gold and silver will take off. You can count on it.
In the interim, escaping to a country house or a mountain cabin is an appealing option to ride out the depression – assuming you have one to escape to. If not, the months ahead may validate the wisdom of having freeze dried food storage and a productive vegetable garden. Assuming you’re prepared with a little food storage and gold, you can calmly hunker down and avoid large crowds.
Other than that, the best thing to do is to try and stay out of the way as the traveling circus blows through town. Hence, what follows are several proven, practical ideas, including a 12-Point Great Depression II Survival Guide, that anyone can follow to avoid taking this crisis square on the chin…
Your 12-Point Great Depression II Survival Guide
On November 21, 2008, when the sky was falling, and following many reader inquiries, we attempted to offer – from the heart – practical, discretionary advice on what to do to survive the economic crisis. At the time, it served our readers well.
For your benefit today, and by reader request, we’ll revisit it…with some minor touch ups. We recommend printing this out, and tacking it to your office corkboard, so you can refer to it during the darkest of days, which are headed our way.
Your 12-Point Great Depression II Survival Guide:
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Always take what’s yours…plus a little bit more. You’ll undoubtedly need it with Donald J. Trump running riot during an election year.
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Never shake hands with your right hand, without first crossing the fingers of your left hand securely behind your back. You never know when you’ll need a do-over.
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Always look out for No. 1, save stepping in No. 2.
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Never give a beggar your pocket change, except when to do so is to buy them a drink.
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Know the difference between honesty with yourself and honesty with others. The former must be rigorous; the later must be flexible…especially when applying for insurance.
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Never kick a man when he is down; so too, never hasten to help him up.
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Never stiff your barber. He’ll be your last resort for relief via bloodletting and fire cupping, should things get bad enough.
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Never con widows and orphans; all others are fair game.
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Do not worry about money; what you don’t have should be of little concern.
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Never forget that there’s a fool on every corner and a sucker born every minute. Avoid being one of them when at all possible; for it is both demoralizing and expensive.
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Do not take it personal when you lose your job. This economy’s circling the toilet bowl; before this is over a lot of other good people will lose their job too.
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Remember, always, that this too shall pass; though never fast enough. So keep your head up. For even during a depression the birds still sing, the flowers still bloom, and those of sound mind and body get through it a little wiser…if not a lot slimmer.
Tyler Durden
Fri, 03/13/2020 – 21:25 -
- After 79% Sales Crash In February, China Automakers Beg Government For Bailout
After 79% Sales Crash In February, China Automakers Beg Government For Bailout
We had been reporting China’s February auto sales numbers on a week by week basis, so Zero Hedge readers knew they were going to be ugly for the month. They just didn’t know how ugly.
Industry wide, sales fell 79% in February, marking the biggest ever monthly plunge on record, according to Reuters.
And the industry is starting to panic. Automakers are now asking the government for relief after the industry’s collapse, which occurred in the midst of an already-in-progress global recession for automakers. Specifically, they are asking for cuts on the purchase tax for smaller vehicles and support for sales in rural markets, in addition to the easing of emission requirements.
Sales for February fell to just 310,000 vehicles from a year earlier, marking the 20th straight month of declines.
Chen Shihua, a senior CAAM official said: “China’s auto sales for February returned to levels not seen since 2005.”
And the once silver lining of EV sales is no longer. New energy vehicles contracted for an 8th month in a row as the CAAM pleaded the government for more subsidies on NEVs.
Yale Zhang, head of Shanghai-based consultancy AutoForesight, said: “The government will consider these proposals but it is unlikely they will launch so many policies. Measures like cuts to the purchase tax, support for rural markets and easing purchase restrictions on new energy vehicles are reasonable and would have an immediate impact.”
Auto makers are also asking the CAAM for improved logistics and the support of a resumption of production in Hubei province, where the coronavirus outbreak began. In Hubei, production for China’s automakers had resumed to about 40% of normal output levels, according to a CAAM survey.
The CAAM predicts sales numbers will “definitely” rebound in March. A CAAM official said last month that sales are likely to plunge 10% for the first half of 2020. Containing the coronavirus outbreak is going to be key in whether or not the industry rebounds, and by how much.
And remember, as production comes back online in China, demand globally will likely be falling off a cliff as other major countries deal with their “Wuhan moments”.
Tyler Durden
Fri, 03/13/2020 – 21:05 - Why 'Price Gouging' Actually Helps During a Crisis
Why ‘Price Gouging’ Actually Helps During a Crisis
Authored by Bradley Thomas via The Libertarian Institute,
As the coronavirus panic heightens, the price of items like hand sanitizer and medical face masks – to the extent they are still available – are skyrocketing.
CBS News reported last week that “Online, sales of virus protection products have skyrocketed, up 817% in the last two months. Two large bottles of Purell hand sanitizer were on sale for $299 on Amazon. That size normally sells for about $9 a bottle. Another listing, for four boxes of masks, is usually about $20 — it was being sold for more than $1,000.”
In response, some state governments have already vowed to punish “price gouging.”
“California’s attorney general told businesses that if they violated price gouging laws, ‘You’d better be prepared to pay the price for your lawbreaking.’ New York City is issuing $500 fines to any stores found price gouging, starting this week,” CBS reported.
Indeed, even the Department of Justice issued a warning that they “stand(s) ready to make sure that bad actors do not take advantage of emergency response efforts, healthcare providers, or the American people during this crucial time.”
The trade group The Consumer Brands Association praised the DOJ’s response, saying “We appreciate the Department of Justice’s swift response to Consumer Brands’ request to combat price gouging and ensure American consumers have access to critical products at affordable prices.”
But does preventing ‘price gouging’ during times of distress actually help ensure that critical products will remain available at affordable prices? Basic economics tells us no.
Price controls in times of emergency have negative consequences, just as they do during normal times. When prices aren’t allowed to move in response to changing economic conditions, those who most urgently need these critical items will likely find the shelves empty.
In the current situation, fear of the spread of the coronavirus has caused demand for virus protection items to skyrocket. But if the sellers of these items are not allowed to raise their prices out of fear of government punishment, the result will be that the first wave of customers will clear out all the available supplies.
During times of distress like this, people’s demand curves shift. They are now willing to buy more of a good (like hand sanitizer) at any given price. Without a higher price, the first buyers will stock up, leaving no supplies for others in need. There is no incentive to economize; in fact there is incentive for those first in line to buy up more than they actually need to potentially take advantage of shortages and make a profit by selling to those willing to pay a higher price in the black market.
If prices are allowed to rise to reflect the greater urgency of demand, however, consumers will limit their purchases to just what they truly need. Those first in line will be far less likely to clean out the shelves, but rather buy the minimum amount needed to ride out the virus scare.
I’m w/ Prosecutor @JakeHudnut + JCPD issuing tickets for price gouging. We won’t accept people taking advantage of residents. Tissues, Clorox, cleaning items, all doubling +. Rubbing alcohol went from $2.99 to $6.99. People sometimes can be terrible in how they treat eachother.. pic.twitter.com/GarSAkAW35
— Steven Fulop (@StevenFulop) March 12, 2020
https://platform.twitter.com/widgets.js
As a result, more people will be able to acquire at least some of the highly-valued products, and supplies are more likely to be available to those who most urgently need the product. As Robert Wenzel at EconomicPolicyJournal.com wrote:
“If someone wants to buy a mask to travel by subway to go to a movie and the mask is $200, the consumer might think twice and not buy the mask, thus leaving it for someone else. At the same time, a heart surgeon may want to buy a mask to travel the same subway to perform heart surgeries. He might be very willing to pay $200 for a mask.”
Moreover, freely adjusting prices send important signals to producers about the intensity of demand, providing incentive to suppliers to devote more resources to the production and distribution of the critical items in such high demand.
Manufacturers of masks and hand sanitizer will be willing to outbid manufactures of other products for the inputs they need to produce the finished product. They may also be willing to invest in more speedy delivery mechanisms to more quickly acquire their needed inputs so that they can increase supplies in a shorter time frame.
Allowing for prices to freely adjust to market conditions sends vital signals both to consumers to economize and producers to marshal resources to increase supply. Shortages will be avoided and the most urgent needs will be met.
Emotions are running high during the current panic. Part of the emotional response is directed at sellers of critical items like hand sanitizer and medical masks, who are seen as exploiting the desperation of the situation. But government price controls will create shortages, causing those who most urgently need such products, like medical personnel, to do without.
As usual, when the government interferes in the market, they can only make a bad situation worse.
Tyler Durden
Fri, 03/13/2020 – 20:45 - Nomura: "The Market Has Only Just Begun Staring Into The Abyss"
Nomura: “The Market Has Only Just Begun Staring Into The Abyss”
While many post-mortems will be written on what, despite Friday’s torrid 9% rebound, has been a historic, unforgettable week which saw the US stock market plunge the most since the worst days of the global financial crisis, one of the more detailed and impactful was that of Nomura’s quant Masanari Takada who put the week’s events in simple, easy to understand context: “In little more than the blink of an eye, the situation has come to look like the 2008 Lehman Brothers crisis all over again.”
Below we repost some of the key points from his note as we brace for another historic week, especially since something tells us – perhaps the Fed’s failure to normalize the funding situation – that the events from next week will be even more memorable.
The plunge in US equities yesterday (12 March) pushed weekly returns down to 7.7 standard deviations below the norm. In statistical science, the odds of a greater-than seven-sigma event of this kind are astronomical to the point of being comical (about one such event every 160 billion years).
Setting aside legitimate quibbles over the statistical significance of this, we can say with confidence that we are witnessing a history-making market disaster in real-time.
Looking back at the performance of the DJIA since 1900, market shocks have exceeded the current rout in magnitude on only three occasions: in 1914 (when a growing financial crisis caused trading in US equities to be halted), in 1929 (the historic market crash that led to the Great Depression), and in 1987 (the Black Monday event).
US stock market sentiment has also seen a jarringly swift collapse, as equity sentiment has now gone beyond the low point marked during the 2015 renminbi shock. In little more than the blink of an eye, the situation has come to look like the 2008 Lehman Brothers crisis all over again.
The Fed has resumed its QE-in-all-but-name in response to the financial market meltdown. Many observers have questioned how effective the aid will actually be, given that there seems to be no way to put a conclusive stop to COVID-19. Expanded QE did help lift sentiment in 2015-2016, and therefore think that the Fed can at least help limit the risk of an extreme credit crunch. However, the paralysis in the international circulation of people and goods already being observed will almost inevitably undermine the market.
DM equities worldwide are in bear markets now. Going by our own data analysis, the pace of the present sell-off has broken all norms. When a downshift in the market is characterized by unusually steep declines, the usual driver is an outflow from longer-term investments.
The present market rout is unconventional in that major hedge funds (global macro hedge funds, CTAs) appear to be behind the curve in their selling [ZH: just as Goldman warned this week]. If anything, we see a risk that short-term players may mount an attack on the downside, ramping up their selling in an attempt to push the market down further.
For example, global macro hedge funds’ net exposure to DM equities (estimated from 30- day rolling beta) is still currently flat or even slightly long. It may be that these investors had been unable to fully imagine a pandemic-driven recession scenario, having no experience in that vein to draw upon. Global macro hedge funds may have taken this week’s abnormal market movements as their cue to simply offload their long positions in DM equities in their entirety.
There is a growing risk that global macro hedge funds, after liquidating their long positions, will proceed to aggressively build up short positions. Global macro hedge funds tend not to make spur-of-the-moment trades, but they do tend to stake out positions that are consistent with the macroeconomic outlook.
In that respect, the S&P 500 dividend yield appears to already reflect market expectations for a slowdown in the US economy. If the ISM Purchasing Managers Index (average of the readings for manufacturers and non-manufacturers) were to drop to the level recorded around July 2009—as the dividend yield seems to imply—there is a high likelihood that global macro hedge funds would then (with some confidence) start expanding their short positions in pursuit of the market downside.
Similarly, CTAs appear to have failed to fully keep up with the drop in share prices in major countries. CTAs have of course been selling futures to unwind their long positions during this downward move in share prices. But when share prices shift downward abruptly, the short-term surge in volatility can often hinder trend-followers’ ability to participate in short-selling. This is because systematic trend-following strategies tend to build positions that balance: (1) the strength or weakness of trends; and (2) the level of volatility. This means that CTAs often wind up following one step behind when trends shift suddenly.
CTAs have turned short on DJIA futures. Because of the rapid pace of the Dow’s drop, CTAs have been able to build sufficient short positions. As they had already preferred short positions with the DJIA below 28,000, CTAs look likely to build short positions rapidly at current share price levels.
It may be, then, that the market has only just begun staring into the abyss.
Tyler Durden
Fri, 03/13/2020 – 20:31 - Democrats Want To Reverse Trump's Travel Bans Despite Coronavirus Spread
Democrats Want To Reverse Trump’s Travel Bans Despite Coronavirus Spread
Authored by Steve Watson via Summit News,
House Democrats have introduced legislation that would undo President Trump’s travel bans from coronavirus stricken areas, despite the fact that the director of the National Institute of Allergy and Infectious Diseases (NIAID) has said that the impact of the crisis would be much worse had the travel bans on China and Iran not been in place.
Democrats want to strip the President of the authority to implement the bans, introducing a bill titled the “No Ban Act,” which would allow travellers from Wuhan and other infected areas to keep arriving in the US unimpeded.
“This bill imposes limitations on the President’s authority to suspend or restrict aliens from entering the United States and terminates certain presidential actions implementing such restrictions,” the bill summary reads.
The legislation vaguely says that Trump should only be able to “issue a restriction when required to address a compelling government interest.”
The bill further declares that before any travel ban is imposed, the President would be mandated to “consult with Congress.”
Democratic Presidential contender Bernie Sanders also said this week that he would not impose any travel bans during the coronavirus crisis.
The action flies in the face of advice from Dr. Anthony Fauci, director of the NIAID, who told lawmakers during a House Oversight and Reform Committee hearing Wednesday that “I believe we would be in a worse position,” had such travel bans not been imposed by Trump.
Fauci’s comments come at the 1:00:39 mark
“Whenever you look at the history of outbreaks, what you see now in an uncontained way and although we are containing it in some respects, we keep getting people coming into the country that are travel-related, we’ve seen that in many of the states that are now involved.” Fauci said.
“We will see more cases and things will get worse than they are right now. How much worse they get will depend on our ability to do two things: To contain the influx of people who are infected coming from the outside and the ability to contain and mitigate within our own country. Bottom line, it’s going to get worse.” he added.
Fauci’s comments regarding travel restrictions have been echoed by The New England Journal of Medicine, which recently reported: “At least on a temporary basis, such restrictions may have helped slow the spread of the virus.”
Trump extended the travel ban Wednesday night to most of Europe (but not the UK) for at least 30 days.
— Donald J. Trump (@realDonaldTrump) March 12, 2020
“The European Union failed to take the same precautions and restrict travel from China and other hot spots,” the president said, adding “As a result, a large number of new clusters in the United States were seeded by travelers from Europe”.
Trump’s words, and the announcement of the travel restriction drew anger from some European officials, who reportedly described it as “unbelievable” and “very strange.”
Taking an emergency such as the #Coronavirus epidemic as another opportunity to wage his personal war against #China and the #EU … that says everything!
— Alessandro Motta (@MottaIT) March 12, 2020
Any attempt to contain the #CoronaOutbreak is welcome, but the decision of @realDonaldTrump to exclude the UK from a European travel ban is nothing short of irresponsible. Viruses do not recognise borders. Decisions should be based on facts, not politics.
— Alexander Stubb (@alexstubb) March 12, 2020
The European Commission and Council issued a joint statement declaring that “The European Union disapproves of the fact that the US decision to impose a travel ban was taken unilaterally and without consultation.”
“The Coronavirus is a global crisis, not limited to any continent and it requires cooperation rather than unilateral action.” the statement continued.
Trump was unwavering in his belief that his administration can mitigate the spread of the virus:
I am fully prepared to use the full power of the Federal Government to deal with our current challenge of the CoronaVirus!
— Donald J. Trump (@realDonaldTrump) March 11, 2020
….Together we are putting into policy a plan to prevent, detect, treat and create a vaccine against CoronaVirus to save lives in America and the world. America will get it done!
— Donald J. Trump (@realDonaldTrump) March 11, 2020
Someone needs to tell the Democrats in Congress that CoronaVirus doesn’t care what party you are in. We need to protect ALL Americans!
— Donald J. Trump (@realDonaldTrump) March 11, 2020
The Media should view this as a time of unity and strength. We have a common enemy, actually, an enemy of the World, the CoronaVirus. We must beat it as quickly and safely as possible. There is nothing more important to me than the life & safety of the United States!
— Donald J. Trump (@realDonaldTrump) March 11, 2020
Tyler Durden
Fri, 03/13/2020 – 20:05 - Mapping How The World Is Responding To Covid-19
Mapping How The World Is Responding To Covid-19
As Covid-19 steamrolls across the world, widespread social, political, and economic disruptions have developed. Each country affected by the fast-spreading virus has followed a similar blueprint of implementing containment measures to control spreading.
Here’s a summary of virus prevention measures on a country by country basis:
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China – With 80,932 cases and 3,169 deaths, strict quarantines in the last several months could be working, that is if you trust government data. For anyone entering the country, 14-day quarantines are mandatory. The government has asked citizens to obey strict social distancing rules and ramped up mass surveillance to monitor the public.
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South Korea – With 7,869 cases and 66 deaths, government officials have enforced social distancing rules, companies have allowed employees to work at home, and the military has been disinfecting public areas.
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Japan – With 639 cases and nine deaths, the government has passed strict border control measures, halted all travel from China and South Korea, and has enforced mandatory quarantines for recent China and South Korean arrivals.
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Iran – With 10,075 cases and 429 deaths, public gatherings and prayer sessions have been canceled, education and school systems are closed, all forms of public transportation have been disinfectant, and 70,000 prisoners have been released.
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Italy – With 12,462 cases and 827 deaths, all public gatherings and sporting events have been canceled. Schools and universities have been closed as strict travel restrictions within the country have been implemented to contain virus spreading. Closure of public services and curfews have been seen in some regions.
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France – With 2,284 cases and 48 deaths, mass gatherings have been banned, sporting events canceled, and schools remain closed in some areas.
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Spain – With 2,277 cases and 48 deaths, schools and universities are closed, flights to Italy restricted, sporting events postponed, and working hours have been reduced to limit the virus spread.
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United Kingdom – With 596 cases and 10 deaths, schools will remain open, events and social gatherings are still allowed, and the government has advised anyone who feels sick to stay home.
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Belgium – With 314 cases and 3 deaths, mass gatherings have been banned, school trips canceled, and social distancing measures are required to be followed by all citizens.
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Ireland – With 43 cases and 1 death, mass gatherings have been canceled, schools and colleges closed, along with the expectation that public facilities will be shuttered in the near term.
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United States – Mass gatherings restricted in California, National Guard deployed in New York, education systems in some states closed, CDC has asked citizens to follow social distancing rules, and travel from mainland Europe canceled.
The US has been the slowest to implement virus prevention measures, likely missing the containment window by weeks if not a month for many large cities, as community spreading has been reported. Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, was quoted by Reuters on Friday morning as saying, “the next few weeks, for most Americans, what you’re going to see is an acceleration of cases.” And with that being said, is America about to transform into Italy or South Korea?
Tyler Durden
Fri, 03/13/2020 – 19:45 -
- China Quietly Filling U.S. Vacuum In The Philippines
China Quietly Filling U.S. Vacuum In The Philippines
Authored by Jason Cataneda via The Asia Times,
President Rodrigo Duterte’s cancellation of key strategic pact with US has opened the way for Chinese infiltration
As President Rodrigo Duterte moves to boot US troops from Philippine soil through the cancellation of a key defense pact, China’s People’s Liberation Army (PLA) is quietly moving in to take their place.
Duterte’s recent decision to abrogate the Visiting Forces Agreement (VFA), which allowed the US to rotate troops and position equipment in the country, is opening the way for China to solidify its competing strategic position in the country.
That’s at least according to early findings of investigations into China’s undercover and illicit activities, ranging reputedly from espionage to surveillance to money laundering, now being spearheaded by Philippine Senator Richard Gordon.
Those probes have included scrutiny of the hundreds of thousands of Chinese citizens now employed in the burgeoning online casino sector, known locally as Philippine Offshore Gaming Operations (POGOs), many of which are clustered close to key military camps and strategic bases in Manila, the national capital.
Gordon has claimed that the POGOS have been infiltrated by PLA soldiers for intelligence gathering and other activities. Those claims were validated when two card-carrying PLA members attached to a POGO were were arrested in a shooting incident in Manila late last month.
Anti-China protesters during a demonstration in front of the consular office of China, Manila, April 9, 2019. Photo: AFP/Ted Aljibe
The Senate investigations have revealed a tangled web of official corruption and conspiracy which has allowed countless Chinese citizens, including allegedly between 2,000-3,000 PLA soldiers, to illegally and secretly reside in the country.
Under the so-called “pastillas” scheme, exposed by whistleblower Allison “Alex” Chiong of the Philippine Bureau of Immigration (BI), Chinese nationals pay roughly 10,000 pesos (US$200) as a “service fee” for special treatment and ease of entry into the country.
While around $40 of that fee goes to immigration officers, the rest is allegedly spread among senior officials and other allies of the president who oversee the alleged syndicate run out of Manila’s Ninoy Aquino International Airport.
The money, according to the whistleblower, is rolled inside a sheet of bond paper, similar to how the Philippine milk candy delicacy “pastillas” is packed. That, the investigations claim, has paved the way for so-called Chinese “immersion missions” by PLA members.
Public anger against the POGOs has recently spiked, fueled by the Duterte government’s belated imposition of a travel ban on Chinese citizens amid the coronavirus outbreak that started its deadly global spread in late January.
Many believe that wayward officials who benefit from the POGOs and import of illegal Chinese workers played an outsized role in the decision to allow thousands of Chinese citizens, including from Wuhan, the outbreak’s epicenter, to enter the country even after Beijing quarantined all of Hubei province.
Senator Panfilo Lacson, chairman of the committee on national defense and security and a former police chief, said that he has recently received information from security agencies claiming that thousands of undercover PLA members are engaged in “immersion missions” in the country, with Chinese spies operating under the guise of POGO workers.
“The intelligence community should exert extra effort to gather information in this regard,” Lacson recently said.
Chinese-run gambling operations in the Philippines are under growing scrutiny as potential spy havens. Image: Facebook
Lacson, Gordon and Senate Minority Leader Franklin Drilon have all recently warned that China aims to take advantage of the new and growing security vacuum caused by Duterte’s recent abrogation of the VFA with the US, a move that has undermined the legal status of the two sides’ 1951 Mutual Defense Treaty (MDT).
The US and Philippines stage thousands of bilateral military activities and exercises each year, including war games that include mock invasions of islands that aim to send a strong signal to China in the South China Sea.
“That may confirm a yet unvalidated report that a good number of PLA members are on ‘immersion mission’ in several parts of the country, although the reason for it is still unclear,” Lascon said.
“The police as well as the intelligence community should lose no time in exerting serious efforts to authenticate the discovered PLA using sources independent of the Chinese government, for obvious reasons,” warned the senator.
Lascon has also claimed that 47 Chinese individuals recently smuggled US$446 million into the Philippines over a recent five month span, whereby the Chinese money launderers paid and made connections with bent Philippine officials.
Senator Gordon, long seen as a Duterte ally, has warned of large-scale money laundering going hand-in-hand with a potential “fifth column” infiltration of Chinese security forces.
“There is tolerance. I don’t know where it is coming from,” said Gordon, implying the Beijing-friendly president is partly responsible for the threat, according to media reports.
“The shenanigans of what we see here, all happened because of the policy decision to allow overseas gaming operations in our country,” said Drilon in directly blaming the Duterte administration.
“What is happening in our country is apparently rooted in the very presence of POGOs run by the Chinese. If there were no POGOs, all of these nefarious activities would have no purpose,” he added.
An aerial photo depicting the location of Chinese-run POGOs and the Philippine military’s headquarters. Source: Defense Forum
Fears of systematic Chinese espionage activities were sparked last year when netizens shared images showing the suspicious proximity of Chinese-run POGOs to security and law enforcement agencies in Manila.
Those include POGOs situated near the Philippine Air Force and Navy headquarters, Philippine National Police headquarters at Camp Crame, and Camp Aguinaldo which hosts the Philippine Army and National Defense Department offices.
“When you already see many people [at the POGOs], who are always there…it’s very easy for all these [Chinese] people to perhaps shift their activities to spying,” Philippine Defense Secretary Delfin Lorenzana said last year. “They are near [military facilities].”
Philippine National Security Adviser Hermogenes Esperon, meanwhile, raised alarms last year over the entry of thousands of undocumented Chinese as a potential security “threat”, including through possible PLA surveillance and espionage.
“You’d also start getting worried when a whole building, condominium, tower is occupied by only one nationality where you would not be able to guard all their activities,” the national security adviser said. “Some unwelcome activities could transpire there so we need to prevent those.”
It’s not clear yet that Duterte’s pro-China administration will undertake any concrete measures to address these concerns and reputed threats.
“He [Duterte] told me…We really need the funds from those [POGO] operations,” presidential spokesperson Salvador Panelo said amid an escalating call for their closures. “Because the money we get from whatever [Chinese] sources is for the government, so the government can use that in any undertaking.”
Tyler Durden
Fri, 03/13/2020 – 19:25 - "The Market Is Broken" – Why Nobody Is Trading Any More
“The Market Is Broken” – Why Nobody Is Trading Any More
On the first day of this week, which would soon mutate into the worst week for capital markets since the 2008 financial crisis, we warned that markets are about to go full tilt for the simple reason that “there is no liquidity“, something we first highlighted at the start of the month when we pointed out “Two More Problems For The Bulls: Market Liquidity And Short Interest Are At All Time Lows.“
Why our constant focus on liquidity? Because as Goldman explained on Thursday, “liquidity and volatility are interconnected, creating a self-reinforcing loop, and as a result liquidity conditions have been an important contributor to the velocity of recent S&P 500 moves.” Yet while liquidity had dipped in the past on numerous stressed occasions, what we saw in recent days has been borderline biblical as top-of-book depth for SPX E-mini futures, typically the conventional metric of liquidity representing the dollar-amount of SPX E-mini futures available to trade electronically on the typically 25-cent wide market, has – as Goldman put it – “started to lose meaning as fewer and fewer market participants are quoting one-tick-wide markets for the futures at all.”
As Goldman further explained, as volatility spiked, electronic futures liquidity has fallen to the point where there has been a median of just 10 contracts, representing $1.5mm notional, on the bid and ask of E-mini futures screens over the past week (compared with a median of 120 contracts, representing $18mm notional, in 2019).
The implication of this small number of contracts quoted was that very few market makers are quoting 25 cent wide markets at all. At the same time the frequency of E-mini futures showing wider-than-one tick markets has risen sharply; and according to Goldman’s estimates, during Monday’s severe sell-off, E-mini futures had 50 cent wide markets more than 25% of the time, more than double the frequency seen on 24-Dec-2018. The key takeaway of diminished liquidity, however measured, is that individual trades can move markets more than they otherwise would have, leading to higher volatility.
A key reason for the latest drop in liquidity has, curiously, been the concurrent drop in trading volumes: SPX future and option volumes were materially lower over the past week than they had been in the initial days of this market downturn (although they were still high relative to normal periods).
One surprising contributor to lighter-than-expected volumes over the past week has been slowing trading needs from the SPX option market, for two reasons:
1. Option volumes have slowed, particularly soon-to-expire options. As shown below, SPX option activity has been slower over the past week than it was earlier in the drawdown, resulting in less delta-hedging flow.
Activity in soon-to-expire SPX options with less than 24 hours to expiration has also trended downward over the past few days despite high volatility. Stated simply, Goldman sees the extreme level of option prices as a barrier to entry for many market participants.
2. Most 20-Mar options have strikes much higher than current spot. Goldman goes on to note that many of its clients have mentioned the large activity in 20-Mar expiration SPX options, dating back to August, as a reason for concern about gamma impact. While the 20-Mar expiration is currently one of the largest-ever, by open interest, rivaling the always-large December expirations, most of its $1.7 trillion of open interest is at strikes well higher than the current SPX level, and was created in the last three months.
As a result, this expiration no longer has any relevant gamma profile at the current spot range.
Yet while this may explain much of the collapsing equity market liquidity, an even more ominous development is the cratering liquidity across all asset classes, as we discussed on Monday, and which we attributed to the ongoing systemic shock that is rapidly draining dollar funding from the system and which the Fed, as of late Friday afternoon, has been unable to resolve despite trillions in repo and QE backstops announced over the past 48 hours.
And so, after we first lamented the collapse in bond market liquidity at the start of the week, Bloomberg is there at the end of it, to confirm that not only has the situation not gotten better, it has in fact gotten worse, to wit: “The deepest bond market in the world is struggling with a lack of liquidity to a degree that veteran asset managers say they’ve never seen before.”
The $17 trillion U.S. Treasury market is creaking as it feels the full force of trader panic over the coronavirus and its effect on the global economy. Thirty-year yields jumped as much as 35 basis points Friday before paring most of that increase. The Treasury’s longest maturity has moved in a double-digit range every day this week. Trading in off-the-run Treasuries, which are the older cousins of benchmark issues, has been particularly difficult.
And so, one day after we first reported that according to BofA the US Treasury market, the world’s largest and most liquid, is no longer functioning properly.
Indeed, the staggering moves in the bond market itself have been the best indicator of just how illiquid it has become: on Monday, 30-year yields posted the biggest intraday decline since at least October 1998, followed by a bizarre last hour crash even as stocks continued to sell. And while a massive injection of cash from the Federal Reserve, President Donald Trump’s plan to declare a national emergency and hopes for fiscal support lifted stocks Friday, analysts and investors say the U.S. government-debt market is still not functioning properly.
“Liquidity is still atrocious,” said Mark Holman, chief executive officer at TwentyFour Asset Management. Mark here laments something we said earlier: while some traders may have found trades in the insane rollercoaster market we observed in the past few days, they were unable to take put the trades on as there simply was not enough – or any – liquidity:
“We were just trying on Monday to trim a long position in the 30-year Treasury because it had moved so far in our favor, and were unable to get bids from several major dealers. We’ve never seen that before.“
“I understand that dealers don’t have the risk appetite and budget they normally have,” said Holman, who unlike most active “traders” today has in fact seen a bear market in his career which stretches back to 1989. “But I’ve never seen that before, the inability to trade a U.S. Treasury.”
Meanwhile, confirming our Friday observations that liquidity is not only cataclysmic but getting worse, Goldman points out that a pair of block trades in Treasury futures printed well below market levels on Friday in a sign that conditions remain volatile. Traders also reported a shortage of prices on screens, while futures on U.S. ultra bonds hit circuit breakers repeatedly during Friday morning trading in Europe.
““We heard there were some issues in off-the-run Treasuries,” Treasury Secretary Steven Mnuchin said on CNBC Friday morning. “We are working on that”… but apparently not enough, and the result was the biggest VaR shock of all time as risk parity funds launched a crushing deleveraging which has crippled conventional correlations, and left traders speechless at the bid or offerless Treasury markets.
And as risk parity funds were caught in a liquidation cascade, both the equity and Treasury markets became unstable to the point of being untradeable. After starting the week off below 1%, 30-year yields soared to 1.79% amid the margin call liquidation rout, with bid-offer spreads surging to the highest level in years.
It wasn’t just the US: German Bunds also saw yields surge after Germany finally caved and said the country would spend billions to cushion the economy.
The forced selling by certain funds meant that dealers were flying blind, and as a result many refused to make orderly markets, only adding to the market paralysis. “Very few dealers are willing to commit to firm prices on screens, said Zoeb Sachee, head of European government-bond trading at Citigroup Inc.
“There has been an abrupt deterioration in liquidity in the last week or so and it seems to get worse by the day.”
Just as we warned two weeks ago.
Finally, adding insult to injury, volatility – both for stocks and bonds – continues to surge. The Bank of America Merrill Lynch MOVE Index, which measures price swings in Treasuries, and the VIX both jumped to the highest levels since the financial crisis.
“We have seen such aggressive moves in the market that everyone is having to rebalance, address losses, or de-risk,” Richard Kelly, head of global strategy at TD Bank, although he was clearly ignoring the shorts for whom the current market shock has been the gift they had all been waiting for for the past decade.
“We are at the stage where central banks need to provide exceptional liquidity into the market to make sure that basic markets can function.”
But the real question is whether central banks can even do that: after a catastrophic ECB press conference which led to the biggest European market crash in history, and two days of unprecedented Fed interventions, stocks barely noticed, and it wasn’t until Trump made some vague promises on Friday afternoon that risk finally found a bid. This backdrop means that Fed policy makers when they meet next week have to not only cut rates but take additional action to shore up liquidity in the financial system, said Alex Li, head of U.S. rates strategy at Credit Agricole. That could include a special liquidity program, such as efforts undertaken during the financial crisis, he said, echoing Credit Suisse’s Zoltan Pozsar who now expects the Fed effectively launch every liquidity bailout operation possible, save for purchasing stocks outrght.
“The Fed just cutting rates again at this stage is really not the right medicine,” Li said.”‘The Treasury market is broken — with it being very illiquid. There’s very wide spreads between on- and off-the-run spreads,” and other signs of dislocation.
Let’s just hope Jerome Powell, who first diagnosed the real problem with the US capital markets back in 2012, knows how to fix them.
Tyler Durden
Fri, 03/13/2020 – 19:05 - US Equity Market Crashes Below 2007 Highs Despite Massive Surge On Trump Stimulus Plan
US Equity Market Crashes Below 2007 Highs Despite Massive Surge On Trump Stimulus Plan
Today saw the biggest spike in US equities since October 2008 after an avalanche of intervention in the last 24 hours across the world and extended by 1600 Dow points as Trump unveiled his stimulus/testing plan…
The last time the market rallied this much was 10/28/2008 – the day TARP was announced…
However, the S&P fell 35% further after that TARP bounce…
But, overall, the market just suffered its fastest, most aggressive collapse into a bear market… ever…
But even more ominously, the broadest measure of the US equity market – The NYSE Composite Index – has collapsed below the 2007 highs (despite trillions in added liquidity)…
Ray Dalio nailed the top…
We’re sorry but no clip better serves as an analogy for this Minsky Moment than this one…
US equity markets ended the week on a stronger note, big gains overnight (limit up in futures), a plunge at the cash open, only to rebound when rumors hit that the President would declare a National Emergency (implicitly some fiscal largesse) and when he announced his plans, the market went vertical… this was the best day for stocks since 10/28/08…
This was the market’s worst week since Oct 2008, but Small Caps’ 20% crash this week is the worst since 1987 (Small Caps’ 3-week plunge of 30% is the worst ever)
European stocks were hit hard this week too (Italy down over 23% on the week – worst week in history)…
Source: Bloomberg
And even Chinese stocks sold off with ChiNext hit hardest…
Source: Bloomberg
Direct-Virus-impacted sectors were monkeyhammered this week…
Source: Bloomberg
Banks were battered (but bounced today)…
Source: Bloomberg
VIX surged higher this week at an unprecedented pace, closing near record highs…
The VIX term structure collapsed to its most inverted since Lehman this week…
Source: Bloomberg
Investment Grade credit crashed this week – by our record this is the biggest weekly spread decompression in history…
Source: Bloomberg
HY credit risk also exploded this week – again the biggest weekly decompression in our datasets…
Source: Bloomberg
Stocks and bonds were dumped unceremoniously this week…
Source: Bloomberg
As Risk-Parity Funds saw the biggest deleveraging losses in history…
Bonds suffered a total bloodbath this week – despite the collapse in stocks, with the end of day seeing a melt-up in rates…
Source: Bloomberg
30Y yields exploded higher this week after Sunday night’s crash to record lows. Today saw 30Y spike to 1.79% intraday before tumbling back to 1.39% on the Fed’s emergency QE today…
Source: Bloomberg
After collapsing to 69bps on Sunday night/Monday morning, this week’s blowout on yields is the biggest ever…
Source: Bloomberg
But most worryingly, the Bond ETF world really started to break as massive, unprecedented discounts occurred in Treasury, Muni, and HY Credit ETFs exposing the illiquidity of the underlying assets…
Source: Bloomberg
In Munis, the SEC restricted short-sales in the ETF to try and maintain some order – it failed.
Source: Bloomberg
Before we leave bond land, we note that CMBX crashed back towards its lows as virus anxiety impacting malls and the credit collapse combine to benefit Carl Icahn’s short…
Source: Bloomberg
And the market is now demanding practically 1 full percentage point cut in rates next week by The Fed…
Source: Bloomberg
The Dollar was massively bid this week as it appears key safe-haven flows – and liquidity demands – sparked a ‘sell-everything-else’ trade worldwide… (3 days this week were the biggest daily gains in the dollar since Nov 2016)
Source: Bloomberg
This was the biggest weekly gain for the dollar since Oct 2008 (Lehman)…
Source: Bloomberg
Japanese Yen had its worst week since Nov 2016…
Source: Bloomberg
This was the worst week for cryptos since April 2013 – a total bloodbath (yes, Bitcoin Cash is down over 50% this week)…
Source: Bloomberg
With Bitcoin crashing below $4,000 intraday
Source: Bloomberg
The surge in the dollar this week did not help but commodities were clubbed like baby seals as it seemed someone was mass liquidating everything in a scramble for cash…
Source: Bloomberg
This was WTI’s worst week since Dec 2008 (and biggest 3-week drop ever)…
Gold suffered its worst week since Sept 2011, smashed back below $1600…
Silver also saw its worst week since Sept 2011…
And perhaps the most stunning moves were in precious metals among all this chaos as gold slumped into the red for the year and high-flying palladium was destroyed…
Source: Bloomberg
Finally, this was the worst weekly loss for a ‘diversified’ book of bonds and stocks since Lehman…
Source: Bloomberg
And, if you’re wondering where this ends, it’s simple – below 2,000 for the S&P 500… as the last five years of equity market gains have been total delusion…
Source: Bloomberg
And if you thought The Fed’s Trillion-dollar-plus care-package helped… it didn’t! FRA-OIS spreads continued to blow out, strongly suggesting massive dollar shortages and/or fear of systemic bank credit risks…
Source: Bloomberg
Tyler Durden
Fri, 03/13/2020 – 19:02 - FBI's Russia Collusion Case Fell Apart In First Month Of Trump Presidency, Memos Show
FBI’s Russia Collusion Case Fell Apart In First Month Of Trump Presidency, Memos Show
Authored by John Solomon via JustTheNews.com,
The piecemeal release of FBI files in the Russia collusion investigation has masked an essential fact: James Comey’s G-men had substantially debunked the theory that Donald Trump’s campaign conspired with Moscow by the time the 45th president was settling into the Oval Office, according to declassified memos, court filings and interviews.
And that means a nascent presidency and an entire nation were put through two more years of lacerating debate over an issue that was mostly resolved in January 2017 inside the bureau’s own evidence files.
The proof is now sitting in plain view.
In rapid fire sequence in January 2017, U.S. officials:
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received multiple warnings about the credibility of informant Christopher Steele and his dossier;
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affirmed key targets of the FBI counterintelligence investigation made exculpatory statements denying collusion to undercover sources;
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concluded retired Lt. Gen. Mike Flynn, Trump’s first national security adviser, was not engaged in collusion with the Russians.
The latter revelation has mostly escaped much notice, contained in a single sentence in a once-sealed court motion filed by Flynn defense attorney Sidney Powell that requested what is known as Brady material, or evidence of innocence.
That motion dated Sept. 11, 2019 requested access to “an internal DOJ document dated January 30, 2017, in which the FBI exonerated Mr. Flynn of being ‘an agent of Russia.’”
Flynn’s motion is confirmed by a 2018 letter obtained by Just the News between Special Counsel Robert Mueller’s office and defense lawyers. It shows the DOJ exoneration memo was written after Flynn had been interviewed by FBI agents in January 2017 and after the government learned the former Defense Intelligence Agency chief had kept his old agency briefed on his contacts with Russia, something that weighed heavily against the notion he was aiding Moscow.
“According to an internal DOJ memo dated January 30, 2017, after the Jan. 24 interview, the FBI advised that based on the interview the FBI did not believe Flynn was acting as an agent of Russia,” Mueller’s team wrote in the letter.
U.S. District Judge Emmett Sullivan so far has concluded that the exoneration of Flynn on the Russia collusion charge wasn’t relevant to his conviction since he pled guilty to a different crime, making a false statement to the FBI.
But for the American public, such a revelation is momentous.
Less than two weeks into Trump’s presidency the FBI had concluded his national security adviser had not been working as an agent of Russia. While that was the view of federal law enforcement, the false storyline of Flynn as a Russian stooge was broadcasted across the nation, with leaks of his conversations with a Russian ambassador and other tales, for many more months.
In an interview with Just the News and its John Solomon Reports podcast, Powell confirmed she was provided by letter three sentences from the DOJ memo but has been unable to get the full document.
“It’s just horrible,” Powell said. “They gave us a little three lines summary of it and the letter and told us it existed but have refused to give us the actual document, which I know means there’s a lot of other information in it that would be helpful to us.”
Powell also confirmed that Mueller was fully aware of a letter sent in early January 2017 to Flynn from Britain’s national security adviser raising concerns about Steele’s credibility.
The British government “hand-delivered” a letter to Flynn’s team that “totally disavowed any credibility of Christopher Steele, and would have completely destroyed the Russia collusion narrative,” Powell said.
Flynn himself has no memory of receiving the communique, but people around him at the time do and confirmed the existence of the document, Powell explained. Flynn was questioned about it during his debriefings by Mueller’s team, she added.
“I was told that a copy of the document would have been given to [then-National Security Adviser] Susan Rice as well,” she added. “So the Obama administration knew full well that the entire Russia collusion mess was a farce.”
Instead of responding to the British government’s warning by abandoning the Russia collusion narrative and sparing her client the years-long ordeal of being targeted for investigation, top U.S. intelligence officials hid the communication, Powell said.
Her account confirms information that Rep. Mark Meadows (R-N.C.) provided for a May 2019 article for The Hill.
Other significant red flags also emerged in January 2017 that the Russia collusion theory used by the FBI to open a Trump campaign-focused probe in July 2016 was simply wrong. So too was the evidence the FBI submitted to secure an October 2016 FISA warrant targeting Trump campaign adviser Carter Page.
According to information made public by Justice Department Inspector General Michael Horowitz and the Foreign Intelligence Surveillance Court, the FBI interviewed Steele’s primary sub-source around Jan. 7, 2017. That source disavowed much of the Russia collusion evidence attributed to him in the dossier, a fact the bureau hid from the court.
A recent order by FISC Chief Judge James Boasberg lays bare how devastating the revelation from Steele’s source was to the entire Russia collusion theory.
“Steele obtained this information from a primary sub-source, who had, in tum, obtained the information from his/her own source network,” the judge wrote.
“The FBI did not, however, advise DOJ or the Court of inconsistencies between sections of Steele’s reporting that had been used in the applications and statements Steele’s primary sub-source had made to the FBI about the accuracy of information attributed to ‘Person 1,’ who the FBI assessed had been the source of the information in Reports 95 and 102. The government also did not disclose that Steele himself had undercut the reliability of Person 1, telling the FBI that Person 1 was a ‘boaster’ and an ‘egoist’ and ‘may engage in some embellishment.'”
An FBI spreadsheet similarly found that nearly all of Steele’s information in the dossier was either false, could not be proved, or amounted to Internet-based rumor, making it mostly worthless as actionable intelligence.
Further eroding by January 2017 the FBI’s “mosaic” (former FBI Director James Comey’s term) of evidence cited for suspicions of collusion, the bureau had collected exculpatory statements in fall 2016 in which two central targets of the investigation — former Trump advisers Carter Page and George Papadopoulos — told undercover informants they were not colluding with Russia.
Boasberg’s ruling also slammed the FBI for hiding these statements from his court, saying they substantially undercut the FBI’s predicate for the investigation, including the now-disproven allegation that Page had altered the RNC platform at the 2016 nominating convention to help Putin.
“The government also omitted Page’s statements to a confidential human source that he intentionally had ‘stayed clear’ of efforts to change the Republican platform, as well as evidence tending to show that two other Trump campaign officials were responsible for the change,” the judge wrote. “Both pieces of information were inconsistent with the government’s suggestion that, at the behest of the Russian government, Page may have facilitated a change to the Republican platform regarding Russia ‘s annexation of part of Ukraine.”
The Horowitz report confirms the court’s finding in much greater detail.
Flynn was cleared of being a Russian agent in January 2017. That same month Steele’s dossier was both discredited by the British government and repudiated by his own confidential sources. And the FBI had evidence its two main Trump targets were innocent. All as President Trump was starting his first two weeks in office.
Congressional investigators are now looking at whether Comey’s approach to Trump at a Feb. 14, 2017 dinner at the White House may have been part of an effort to pivot away from the bogus Russia collusion investigation and lay a predicate for a new investigation focused on possible obstruction of justice. Those same investigators also are inquiring as to why Mueller’s final report did not more clearly spell out how the FBI’s collusion case fell apart in January 2017.
Wherever that congressional inquiry lands, there is now clear and convincing evidence that the country, the president and the courts were kept in the dark about an historic turnaround in the evidence in January 2017, even as defendants were being pressured to plead guilty to crimes unrelated to the collusion allegation. Time will tell whether those who kept this secret for two more years will be held to account.
Tyler Durden
Fri, 03/13/2020 – 18:45 -
- DARPA's Pandemic Prevention Platform Could Develop Therapeutic "Shield" To Fight Covid-19 By Summer
DARPA’s Pandemic Prevention Platform Could Develop Therapeutic “Shield” To Fight Covid-19 By Summer
The Pentagon’s most secretive military research department is developing a therapeutic “shield” that could provide a new way to boost American’s immunity to Covid-19, reported DefenseOne.
The Defense Advanced Research Projects Agency’s (DARPA) Pandemic Prevention Platform (PPP) is not in search of a vaccine against the fast-spreading virus that is now considered a pandemic, but rather is developing an advanced therapy that seeks to boost the immune system of people until an actual vaccine is developed. The result could prevent hospitals from being overwhelmed by sick people.
DARPA scientists working on PPP have been sequencing the B cells of a Covid-19 patient who has recovered. B cells, also known as B lymphocytes, are a type of white blood cell that produces antibodies that aid the immune system in its fight to fend off an invading microorganism.
“We are able to take a patient that has recovered from this pathogen [Covid-19], for example, and we are able to sequence many of their B cells. So those cells that make those antibodies that help protect you against those pathogens? We are now able to sequence all of those because of next-generation sequencing approaches,” Dr. Amy Jenkins, manager of PPP, told DefenseOne.
If scientists can successfully sequence the B cells, they could create a new therapy with a “manufacturing timeline” in a little over three months, Jenkins said. It would buy some time, considering a proven vaccine is 12-18 months away.
Tyler Durden
Fri, 03/13/2020 – 18:25
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