- The Geopolitics Of Biological Weapons, Part 2: Efficiency & Deployment
The Geopolitics Of Biological Weapons, Part 2: Efficiency & Deployment
Authored by Larry Romanoff via GlobalResearch.ca,
It should be apparent that the launching of bio-warfare, as with conventional warfare, is considerably eased by locating military bases, offensive weapons and delivery systems as physically close as possible to one’s potential enemies. This is one reason the US has established its nearly 1,000 foreign military bases – to ensure the capability of putting an enemy under attack within 30 minutes anywhere in the world. Clearly, the same strategy applies to biological warfare, the US military having created scores of these labs euphemistically defined as “health-security infrastructure” in foreign countries.
It is frightening to learn that many of these foreign bio-installations are classified as so “Top-Secret” they are outside the knowledge and control of even the local governments in the nations where they are built. It is also frightening to learn that the Ebola outbreaks all occurred in close proximity to several of these well-known (and top-secret) US bio-weapons labs in Africa.
There were great fears a few years ago when American scientists recreated the Spanish flu virus that killed around 50 million people in 1918. They spent nine years on this effort before succeeding, and now large quantities of this virus are stored in a high-security government laboratory in Atlanta, Georgia. More recently, scientists have created a mutated super-strain of the deadly H5N1 bird flu virus that is directly transmissible among humans and would have at least a 50% kill rate, spawning fears in 2005 of a global pandemic that might kill hundreds of millions.
In late 2013, more than 50 of the world’s most eminent scientists severely criticised the research Ron Fouchier and colleagues at the Erasmus Medical Centre in Rotterdam, who have been developing mutant varieties of the H5N1 bird-flu virus that are far more dangerous to humans. The scientists wrote that the research was designed to make the virus fully transmissible between humans, and clearly had a dual civil-military function. This engineered flu could kill half the world’s population, and not by accident. The US military funded this research with more than $400 million.
The Korean War
During and after the Korean War, China produced considerable evidence that the US military was employing biological pathogens against both the Chinese and the North Koreans. More than 25 US POWs supported Chinese claims – and provided further, and very detailed, corroborating evidence of anthrax, various insects such as mosquitoes and fleas carrying Yellow Fever, and even propaganda leaflets infected with cholera, over the entire North-East of China and virtually all of North Korea. The US government immediately filed charges of sedition against the soldiers who told their stories of these illegal activities, applying enormous pressure to silence them, even threatening defending lawyers with unspecified retribution. As a final desperate attempt to silence these former POWs, the US military relied on the CIA to subject them to extensive treatments with a newly-discovered and dangerous drug called Metrazol, in attempts to totally erase all memories of their activities in Korea, apparently destroying the mens’ minds in the process.
Global Research published an article on September 07, 2015 by David Swanson which provided some detail on American attempts to flood North Korea with the Bubonic Plague, beginning with the statement, “This happened some 63 years ago, but as the U.S. government has never stopped lying about it, and it’s generally known only outside the United States, I’m going to treat it as news.”
Correct on all counts. Curtis LeMay not only conducted his sincere attempts to exterminate the entire civilian population of North Korea by bombing virtually every house in the country, but there is now a huge and still emerging volume of indisputable evidence the Americans dropped on both North Korea and China insects and materials carrying anthrax, cholera, encephalitis, and bubonic plague.
Then on September 10, 2012, the Los Angeles Times ran an article discussing the topic of doctors “still trying to diagnose mysteries of the Hantavirus” more than 20 years after this deadly pathogen was first identified in the US in 1993. In this case, the virus appeared to attack only native Indians – the infections concentrated in a four-state area – who developed sudden respiratory problems and were often dead within hours. Most victims reported “not feeling well” one day, and were dead the next, from what appeared as a very mysterious pathogen with an undeterminable source. But then, “a lucky clue” arose from a television viewer, a physician who stated this illness seemed very similar to that caused by a virus he had observed the US military using in Korea in the 1950s. And sure enough, tests proved the illness to be caused by a variation of the same Hantavirus that attacked troops in Korea.
The virus attracted attention because some American troops were accidentally exposed to it in Korea, most of whom died very suddenly. Two facts that were eliminated from the public reports of the time: (1) the virus attacked North Koreans and Chinese in greater numbers, and (2) this Hantavirus was one item in the treasure trove of biological weapons the Americans inherited from Dr. Ishii and his Unit 731. The Japanese were light-years ahead of the Americans and the Western Allies in virus research and had isolated the lethal Hantavirus by the late 1930s, with much evidence it was used against China by the Japanese and later against both China and North Korea by the Americans. It seems that some of this weaponised material escaped containment and exposed American and South Korean soldiers to their own handiwork.
US Biowarfare on Cuba
One of the commonly-known (outside the US) biological warfare programs conducted by the US, remarkable for its longevity, is the decades-long offensive attack on Cuba. The US military and CIA conducted so many of these biological assaults that there is a museum in Havana that provides substantial evidence of the many years of biological warfare against this small country. Jeffrey St. Clair noted in an article a few of these events, as follows:
“In 1971 the first documented cases of swine fever in the western hemisphere showed up in Cuba, resulting in the deaths of more than 500,000 hogs. Cuba accused the US of importing that virus into the country, and a CIA agent later admitted that he delivered the virus to Cuban exiles in Panama, who carried the virus into Cuba. The news was public, but the US media ignored it. In 1981, Fidel Castro blamed an outbreak of dengue fever in Cuba on the CIA. The fever killed 188 people, including 88 children. In 1988, a Cuban exile leader named Eduardo Arocena admitted bringing some germs into Cuba in 1980. Another occasion involved an outbreak of thrips palmi, an insect that kills potato crops, palm trees and other vegetation. Thrips first showed up in Cuba on December 12, 1996, following low-level flights over the island by US government spray planes. The US was able to quash a United Nations investigation of the incident.”
This was only a small part of America’s biological aggression against Cuba. In 1979, the Washington Post published reports on a long-standing American bio-warfare program against Cuban agriculture that had existed at least since 1962, by the CIA’s biological warfare section. And in 1980, the US believed it had discovered a biological agent that would target ethnic Russians, and sent a ship from Florida to Cuba on a mission to “carry some germs to Cuba to be used against the Soviets”. And as recently as 1996 and 1997, the Cuban government was again accusing the US of engaging in biological warfare by spraying Cuban crops with biological pathogens during illegal “reconnaissance flights”. It was also definitively reported that during the Cuban missile crisis, large numbers of chemical and biological weapons were loaded on American military aircraft in preparation for use on Cuba.
American bio-warfare efforts have also been launched on at least several other nations in Central and South America, involving a number of viral pathogens, cancers and chemicals. In his article, St. Clair referred to an epidemic of dengue fever that erupted in Managua, Nicaragua, where about 50,000 people became seriously ill and many died. The attack occurred during the CIA’s war against the Sandinista government, where the outbreak immediately followed a series of low-level so-called “reconnaissance flights” conducted by the Americans over Managua.
It has also been reliably reported by several sources that the US military has used Haiti as a kind of “open season” biological lab, exposing the local population to almost everything imaginable, with the US media keeping a very tight lid on information leakage. Even more reprehensible was the treatment awarded to those Haitians who made the serious mistake of becoming “boat people”, i.e. escaping their American pathology lab by emigrating in small boats to the US. The US government deported most to Puerto Rico to be used as guinea pigs and lab rats, where they would be out of view of Congress and the media and, according to reports, having contained them in concentration camps to inflict upon them whatever ‘scientific tests’ they avoided at home. In one case as recently as 1980, hundreds of Haitian men in these detention camps developed full-size female breasts after being injected repeatedly with unknown hormones by US military physicians. The historical record tells us the same was done to the same people in a publicly off-limits military base in Florida.
Along with Cuba, there is the strange case of the more or less simultaneous occurrence of cancers among the leaders of South American countries, coincidentally in each case, the infection of a national leader the US despised and had tried to remove by several other means. We had Hugo Chávez, the President of Venezuela, Argentina’s president Cristina Fernández de Kirchner, Brazil’s president, Dilma Rousseff, Paraguay’s Fernando Lugo, and the former Brazilian President, Luiz Inácio Lula da Silva. A former Brazilian President, speaking of these cancers, said in an interview,
“It is very hard to explain, even with the law of probabilities, what has been happening to some leaders in Latin America. It’s at the very least strange, very strange.”
The Secret WW II US-Japan Bio-Partnership
When Japanese troops invaded North-East China in 1932, Dr. Shiro Ishii began his notorious biological warfare experimentation program in a sector near Harbin disguised as a water-purification unit, then known as Unit 731. He began with various poisonous gases including mustard gas, then used aircraft to distribute cotton and rice husks contaminated with the bubonic plague, in various parts of Central China. His unit collected Chinese resisting the Japanese occupation, using them for unlimited medical atrocities including live vivisection. The New York Times reported one instance of a Japanese physician describing his experience there:
“I cut him open from the chest to the stomach and he screamed terribly and his face was all twisted in agony. He made this unimaginable sound, he was screaming so horribly. But then finally he stopped. This was all in a day’s work for the surgeons, but it really left an impression on me because it was my first time.”
Ishii would first have his teams infect the victims with anthrax, cholera, typhoid, tetanus, dysentery, syphilis, the bubonic plague and other pathogens, then dissect them while still alive to examine the results, followed by cremation of the evidence. The US military’s Surgeon-General’s Department estimated that 580,000 Chinese were killed in this manner, with atrocities committed by some of Japan’s most distinguished physicians.
At the end of the war when it became clear Japan was losing and would have to evacuate China, Ishii ordered all the remaining Chinese in custody to be killed and their bodies burned, then destroyed with explosives the entire Unit 731 compound to hide all traces of his experiments. General Douglas MacArthur, then Commander of the Allied Powers in Japan, made a secret deal with Ishii and the entire staff of Unit 731 to transfer to the US military all records of the biowarfare and vivisections for US military study, in exchange for a complete cover-up of all evidence of the existence of these activities, and a promise of immunity from war-crimes prosecution.
Ishii turned over to the US military on one occasion alone more than 10,000 pages of his “research findings”, after which the Americans re-wrote Japan’s history books, which is why neither the Japanese nor the world know of the massive atrocities committed in China, and which is where the American military gained much of its expertise and know-how in chemical and biological weapons and the methods of human experimentation it would later apply so freely in Korea and Vietnam and to American citizens.
On 6 May 1947, MacArthur wrote to Washington that “additional data, possibly some statements from Ishii probably can be obtained by informing Japanese involved that information will be retained in intelligence channels and will not be employed as ‘War Crimes’ evidence.” Some Japanese were arrested by Soviet forces for their biological crimes against Russians, and tried at the Khabarovsk War Crime Trials in 1949 but, to cover their own tracks, the Americans dismissed all surviving victim testimony and Russia’s war-crimes trials of Japanese as “communist propaganda”.
Not only did the US government and military provide Dr. Ishii and his staff total immunity from prosecution, they imported the entire group to the US, all secretly stationed on US military bases and on the US Army payroll. Ishii was for years a frequent guest lecturer at the US military’s bio-warfare school at Fort Detrick, and given a lucrative post as full professor and supervisor of biological research at the University of Maryland until he died decades later. It was only in 1995 that the US military finally admitted it had offered immunity, secret identities, and good jobs with high salaries, to these Japanese scientists and physicians in exchange for their work on biological warfare research and human experimentation. These people were recruited not only by the military, but by the CDC, the US State Department, military intelligence, the CIA, and the US Department of Agriculture, all for work on “secret government projects”.
Epilogue
From the very earliest days of America’s bio-warfare experiments, US political and military leaders, as well as CIA officials, made no effort to hide their interest in developing methods of infecting individuals with cancer as a method of ridding themselves of national leaders they didn’t like, a method with perfect deniability. The US record of having assassinated by various means about 150 political leaders in other nations will attest to this assertion.
“The attraction is that bio-weapons are not only very efficient mass killers but are quite cost-effective compared to shooting wars. As well, genetic weapons can be dispersed in a multitude of ways, using virus-infected insects or bacteria, or spliced into GM seeds. These weapons are difficult to detect and identify, and often a treatment or vaccine could be years in the making.”
Dr. Leonard Horowitz, the famed pharma industry whistleblower, quoted one expert as saying he would plan a bio-attack
“with subtle finesse, to make it look like a natural outbreak. That would delay the response and lock up the decision-making process. Even if you suspect biological terrorism, it’s hard to prove. It’s equally hard to disprove . . . You can trace an arms shipment, but it’s almost impossible to trace the origins of a virus that comes from a bug.”
One author noted that a properly-done release of an infectious agent would make diagnosis and treatment difficult, adding that this kind of bio-warfare cannot be traced to its source and might be considered an “act of God”.
Many recent disease outbreaks would seem to properly qualify as potential bio-warfare agents: AIDS, SARS, MERS, Bird Flu, Swine Flu, Hantavirus, Lyme Disease, West Nile Virus, Ebola, Polio (Syria), Foot and Mouth Disease, the Gulf War Syndrome and ZIKA.
The Western mass media have ignored all of this, censoring this entire portion of history, and even the Internet has been scrubbed with Google and Bing unable to find the truth which is out there. Once again, freedom of speech depends entirely on who controls the microphone.
Tyler Durden
Sat, 02/15/2020 – 23:30 - Planet-Killer? NASA On Alert For 'Potentially Hazardous' Asteroid Fast-Approaching Earth
Planet-Killer? NASA On Alert For ‘Potentially Hazardous’ Asteroid Fast-Approaching Earth
NASA has confirmed that a potentially hazardous asteroid is traveling towards Earth at a mind-numbing 34,000 mph this weekend, the International Business Times reported.
NASA’s Center for Near-Earth Object Studies (CNEOS) detected the incoming asteroid as 163373 (2002 PZ39), measures about 3,250 feet across, and is expected to pass over Earth on Saturday.
“Potentially Hazardous Asteroids (PHAs) are currently defined based on parameters that measure the asteroid’s potential to make threatening close approaches to the Earth,” NASA said in a statement.
NASA has been simulating for an “asteroid apocalypse” to help the space agency better prepare for an asteroid strike. But don’t be alarmed, this weekend’s extremely close pass over will miss Earth by a distance 0.03860 astronomical units, or about 3.6 million miles.
With a near-miss expected this weekend, there’s another asteroid lurking above that measures a mile long and could threaten human civilization.
Japanese scientists warned last month, “the potential breakup of the rock could be dangerous to life on Earth. Those resulting asteroids could hit the Earth in the next 10 million years or so.”
And it makes complete sense, why not just NASA, but Zerohedge readers are really going to like this, the Federal Emergency Management Agency (FEMA) has also been preparing for a possible disaster of an asteroid strike.
The European Space Agency (ESA) recently ran simulations of an asteroid strikes on Earth, indicating that it too is preparing for a future catastrophic event.
And why are government agencies around the world preparing for asteroid strikes?
Well, it could be due to the “God of Chaos” asteroid, which is slated to skim past the Earth in 2029, could be what ends life as we know it.
Tyler Durden
Sat, 02/15/2020 – 23:00 - Socialism: A Brief Taxonomy
Socialism: A Brief Taxonomy
Authored by Allen Gindler via The Mises Institute,
There are myriads of words written about socialism, and yet lots of misconceptions about it still exist even in the minds of those who are on the opposite side of the political spectrum. The most striking and frequent blunders are the identification of socialism exclusively with Marxism, the confusion between the concepts of socialism and communism, and the claim that fascism and National Socialism belong to the right, to name a few.
It is necessary to give a comprehensive definition of socialism, determine the principal attributes that indicate belonging to socialism, and to classify the socialist trends on these grounds to clarify the concept once and for all.
The contemporary meaning of socialism often runs along the lines that it is a politico-economic theory in which the means of production, wealth distribution, and exchange are supposed to be owned and regulated by the community as a whole. This characterization of socialism emphasizes its important economic features; however, it cannot be considered a comprehensive definition. The wording implies a narrow understanding of socialism from the point of view of materialist and positivist currents of socialism but does not fully encompass the features exhibited in antimaterialist, anti-Cartesian, and Kantian members of the socialist family.
It seems to me that the most inclusive definition of socialism is as follows:
Socialism is a set of artificial socioeconomic systems that are characterized by varying degrees of collectivization of property, or consciousness, or the redistribution of wealth.
Notice that socialism is designated as an artificial entity, meaning that it does not occur naturally during the evolution of human society but is imposed on nations coarsely through the actions of activists.
This definition derives from the parsimonious solution of qualitative comparative analysis (QCA) of the twelve most relevant currents of socialism, and it meets the criterion of necessity and sufficiency. In other words, socialization of property, collectivization of consciousness, and wealth redistribution are necessary and sufficient causative factors that taken separately or in combination unambiguously define an ideology as socialistic and designate preferred paths to socialism.
Given these three main causative conditions, it is easy to identify and classify socialist movements in the universe of political philosophies. The nuanced distinction between socialist movements is explained by attributes that seem essential but not general enough to influence the grouping of political philosophy in one direction or another. At the same time, any of the following ideologies has at least one causative factor that fully characterizes the doctrine as socialist.
The generic realm of socialism comprises several ideologies, which, more often than not, have historically been hostile to each other:
Marxism is the particular and extreme case of socialism named communism. Marx did not invent the notion of socialism. The ideas of socialism were known long before Marx and indisputably influenced his worldview. Instead, Marx created the theory of “scientific communism.” Communism is characterized by the complete socialization of property and the total collectivization of consciousness. The orthodox Marxism has never been materialized.
Marxism-Leninism, also known as Bolshevism, is a revision of Marxism regarding the scope and driving forces of the communist revolution. If, as according to Marx, the revolution should be brought on simultaneously in developed industrialized countries by the mass proletarian movement, then, for Lenin, the Bolshevik revolution might take place in a single agrarian country under the leadership of the vanguard of revolutionaries. Nevertheless, the goal of Marxism-Leninism was communism, implying total collectivization of everything and everyone. A Bolshevik coup succeeded in the Russian Empire, and the communist regime existed from 1917 to 1991.
Trotskyism is, in essence, genuine Marxism-Leninism, which tries politically to preserve its theoretical purity. Trotsky was a founder of the theory of “permanent revolution,” which posits that a proletarian revolution in one country should spread to neighboring nations until communist revolutionary transformations embrace the whole world. He criticized Stalin’s policy from the left, arguing that building communism in one separate country was a deviation from the original intent, that the expropriation of peasant property should have been completed immediately, and that the proletariat had been deceived and continued to be exploited but this time by the Soviet nomenclature. In general, Trotsky accused Stalin of betraying the ideals of the proletarian revolution.
Anarcho-communism also implies the complete collectivization of property and consciousness. However, the doctrine does not accept the Marxist idea of the dictatorship of the proletariat, the appointment of the working class as the sole agent of the revolution, and two stages on the path to a communist society. The anarcho-communists hoped to build a stateless communist society as soon as they gained power during the revolutionary war. Anarcho-communism was briefly institutionalized on the free territory of southeastern Ukraine from 1918 to 1921, during the revolution and the civil war in the Russian Empire.
Reformism or Social Democracy (Europe), also known as Democratic Socialism in the USA, is a significant revision to Marxism, which practically does not leave even the foundation of genuine Marxist principles. Reformism has been a mainstream form of socialist ideology and practice since the end of the nineteenth century. Redistribution of wealth and partial socialization of consciousness are the main paths being utilized by the doctrine. Socialism is supposed to be gradually built within a capitalistic society by methodically changing the socioeconomic laws of the land using parliamentary procedures. Great importance is also attached to the mental transformation of members of the society through the indoctrination of the population in educational institutions and the propaganda of the socialistic ideals in the mass media, social networks, and materials of pop culture.
Revolutionary Syndicalism (in Italy, France), Anarcho-syndicalism (in Spain), and Guild Socialism (in Great Britain) are non-Marxian currents of socialism, meaning that they did not adhere to the tenets of scientific communism. The main path to socialism is the expropriation of private property from its rightful owners, with its subsequent collectivization and transfer to the management of the labor collective. It was assumed that the fruits of labor would be exchanged in the market between various producers as well as between the villages and the cities. Anarcho-syndicalists managed to gain political power in Aragon, Andalusia, and Catalonia during the Spanish Civil War (1936–39).
Fascism (Italy) is a non-Marxian, antimaterialist, antipositivist current of socialism. Italian fascism envisioned a new type of society that would supersede both communism and classical liberalism; it was conceived as neither on the right nor the left. However, the practical implementation of fascism was the complete socialization of the consciousness, the partial collectivization of the means of production, and unprecedented wealth redistribution. The means of production de jure remained in possession of the owners, but de facto they could not freely dispose of them. Fascism was imposed on Italian society from 1922 to 1945.
National Socialism (Germany) is a non-Marxian flavor of socialism, based on the racial and pseudo-scientific theory of the superiority of Aryans. National Socialism pursued complete collectivization of the consciousness, partial socialization of the means of production, and aggressive wealth redistribution as a method of achieving a socialist paradise for das Volk. As in any other totalitarian society, the state was the ultimate owner of the means of production, despite a de jure allowance of private ownership. Contrary to fascism, National Socialism did not believe in the antagonism between labor and capital and insisted on the unity of the nation in the face of socioeconomic and military challenges. National Socialism materialized in Germany and lasted from 1933 to 1945.
It should be noted that if a socialist current of any flavor is given sufficient run time, then, regardless of the chosen path, all causative factors will reach their maximum value.
That is, in the limit, as mathematicians say, all means of production will inevitably be socialized, and the individual will be coercively subjugated to the collective. In this sense, such a seemingly mild current like democratic socialism is just as dangerous as all the other members of the socialist family.
Tyler Durden
Sat, 02/15/2020 – 22:30 - Dan Loeb's Luxury Yacht Slams Into "The Most Remarkable Reef In The West Indies" Near Belize
Dan Loeb’s Luxury Yacht Slams Into “The Most Remarkable Reef In The West Indies” Near Belize
When you become a billionaire, you run into a whole new class of problems that you sometimes have to deal with.
For instance, those making minimum wage at a Burger King somewhere, while honorable work, may not have the luxuries of the billionaire lifestyle – but at least they never have to worry about slamming their super-yacht into the side of a prized coral reef off the coast of Belize.
Because that’s the problem that hedge fund manager Daniel Loeb is being forced to deal with this week. Loeb’s yacht damaged what is being called a “pristine reef” near the famous Great Blue Hole outside of Belize, according to Bloomberg.
Loeb’s 200 foot yacht was filmed last Sunday anchored at Belize’s Lighthouse Reef Atoll. Spokespeople say Loeb was not on the yacht at the time and the Financial Times has reported there will be an official investigation.
A spokesperson for Belize’s department of the environment said Loeb’s yacht caused the damage: “Samadhi on Sunday lowered the anchor in a very sensitive area of Belize. Officers are doing an investigation. We know that damage was done,” the spokesperson to FT.
Loeb responded:
“As a life-long surfer and someone who loves the ocean, I was horrified to hear about this incident in Belize. We promptly contacted the Belize Audubon Society (a conservation group) and are committed to working together to restore the reef.”
Tyler Durden
Sat, 02/15/2020 – 22:00 - The Koch-Soros Quincy Project: A Train Wreck Of Neocon And 'Humanitarian' Interventionists
The Koch-Soros Quincy Project: A Train Wreck Of Neocon And ‘Humanitarian’ Interventionists
Authored by Daniel McAdams via The Ron Paul Institute for Peace & Prosperity,
Those hoping the non-interventionist cause would be given some real muscle if a couple of oligarchs who’ve made fortunes from global interventionism team up and pump millions into Washington think tanks will be sorely disappointed by the train wreck that is the Koch/Soros alliance.
The result thus far has not been a tectonic shift in favor of a new direction, with new faces and new ideas, but rather an opportunity for these same old Washington think tanks, now flush with even more money, to re-brand their pet interventionisms as “restraint.”
The flagship of this new alliance, the Quincy Institute for Responsible Statecraft, was sold as an earth-shattering breakthrough – an “odd couple” of “left-wing” Soros and “right-wing” Koch boldly tossing differences aside to join together and “end the endless wars.”
That organization is now up and running and it isn’t pretty.
To begin with, the whole premise is deeply flawed. George Soros is no “left-winger” and Koch is no “right-winger.” It’s false marketing, like the claim that drinking Diet Coke will make you skinny. Both are globalist oligarchs who continue to invest hundreds of millions of dollars to create the kind of world where the elites govern with no accountability except to themselves, and “the interagency,” rather than an elected President of the US, makes US foreign policy.
As libertarian intellectual Tom Woods once famously quipped, “No matter whom you vote for, you always wind up getting John McCain.” That is exactly the world Koch and Soros want. It’s a world of Davos with fangs, not Mainstreet, USA.
A ‘New Vision’?
Anyone doubting that Quincy is just a mass re-branding effort for the same failed foreign policies of the past two decades need look no further than that organization’s first big public event, a February 26th conference with Foreign Policy Magazine, to explore “A New Vision for America in the World.”
Like pouring old wine into new bottles, this “new vision” is being presented by the very same people and institutions who gave us the “old vision” – you know, the one they pretend to oppose.
How should anyone interested in restraining foreign policy – let alone actual non-interventionism – react to the kick-off presentation of the Quincy Institute’s conference, “Perspective on U.S. Global Leadership in the 21st Century,” going to disgraced US General David Petraeus?
Petraeus is, among many other things, an architect of the disastrous and failed “surge” policy in Iraq. He is still convinced (at least as of a few years ago) that “we won” in Iraq…but that we dare not end the occupation lest we lose what we “won.” How’s that for “restraint”?
While head of the CIA, he teamed up with then-Secretary of State Hillary Clinton to develop and push the brilliant idea of directly and overtly training and equipping al-Qaeda and other jihadists to overthrow the secular government of Bashar Assad. How’s that for “restraint”?
When a tape leaked of Fox News contributor Kathleen T. McFarland meeting with Petraeus at the behest of then-Fox Chairman Roger Ailes to convince him to run for US president, Petraeus told her that the CIA in his view is “a national asset…a treasure.” He then went on to speak favorably of the CIA’s role in Libya.
But the absurdity of leading the conference with such an unreconstructed warmongering interventionist is only the beginning of the trip down the Quincy conference rabbit hole.
Rogues’ Gallery of Washington’s Worst
Shortly following the disgraced general is a senior official from the German Marshal Fund, Julianne Smith, to give us “A New Vision for America’s Role in the World.” Her organization, readers will recall, is responsible for some of the most egregious warmongering propaganda.
The German Marshal Fund launched and funds the Alliance for Securing Democracy, an organization led by such notable proponents of “restraint” as neoconservative icon William Kristol, John McCain Institute head David Kramer, Michael “Trump is an agent of Putin” Morell, and, among others, the guy who made millions out of scaring the hell out of Americans, former Homeland-Security-chief-turned-airport-scanner-salesman Michael Chertoff.
The Alliance for Securing Democracy was responsible for the discredited “Hamilton 68 Dashboard,” a magic tool they claimed would seek and destroy “Russian bots” in the social media. After the propaganda value of such a farce had been reaped, Alliance fellow Clint Watts admitted the whole thing was bogus.
Moving along, so as not to cherry pick the atrocities in this conference, moderating the section on the Middle East is one “scholar,” Mehdi Hasan, who actually sent a letter to Facebook demanding that the social media company censor more political speech! He has attacked what he calls “free speech fundamentalists.”
Joining the “Regional Spotlight: Asia-Pacific” is Patrick Cronin of the thoroughly – and proudly – neoconservative Hudson Institute. Cronin’s entire professional career consists of position after position at the center of Washington’s various “regime change” factories. From a directorial position at the mis-named US Institute for Peace to “third-ranking position” at the US Agency for International Development to “senior director of the Asia-Pacific Security Program at the [neoconservative] Center for a New American Security.” This is a voice of “restraint”?
Later, the segment on “Ending Endless War” features at least two speakers who absolutely oppose the idea. Rosa Brooks, Senior Fellow at the “liberal interventionist” New America Foundation, wrote not long ago that, “There’s No Such Thing as Peacetime.” In the article she argued the benefits of “abandon[ing] the effort to draw increasingly arbitrary lines between peacetime and wartime and instead focus[ing] on developing institutions and norms capable of protecting rights and rule-of-law values at all times.” In other words, war is endless so man up and get used to it.
This may be the key for how you end endless war. Just stop calling it “war.”
Brooks’ fellow panelist, Tom Wright, hails from the epicenter of liberal interventionism, the Brookings Institution, where he is director of the “Center on the United States and Europe.” Brookings loves “humanitarian interventions” and has published pieces attempting to convince us that the attack on Libya was not a mistake.
Wright himself is featured in the current edition of the Council on Foreign Relations’ publication Foreign Affairs arguing that old interventionist shibboleth that the disaster in Iraq was not caused by the US invasion, but rather by Obama’s withdrawal.
This Quincy Institute champion of “restraint” concludes his latest piece arguing that:
Now is not the time for a revolution in U.S. strategy. The United States should continue to play a leading role as a security provider in global affairs.
How revolutionary!
The moderator of that final panel in the upcoming Quincy Institute first conference is Loren DeJonge Schulman, a deputy director at the above-named Center for a New American Security. Before joining that neoconservative think tank, Schulman served as Senior Advisor to National Security Advisor Susan Rice! Among her other international crimes, readers will recall that Rice was a chief architect of the US attack on Libya.
Schulman’s entire career is, again, in the service of, alternatively, the war machine and the regime change machine.
The Quincy Institute’s first big event, which it bills as a showcase for a new foreign policy of “restraint,” is in fact just another gathering of Washington’s usual warmongers, neocons, and “humanitarian” interventionists.
Quincy has been received with gushing praise from people who should know better. Any of those gushers who look at this first Quincy conference and continue to maintain that a revolution in foreign policy is afoot are either lying to us or lying to themselves.
But Wait…There’s More!
Sadly, the fallout extends beyond just this particular new institute and this particular event.
Those who continue to push the claim that Koch and Soros are changing their spots and now supporting restraint and non-interventionism should be made to explain why the most egregiously warmongering and interventionist organizations are finding themselves on the receiving end of oligarch largese.
Just days ago a glowing article in Politico detailed the recipients of millions of Koch dollars to promote “restraint.” Who is leading the Koch brigades in the battle for a non-interventionist, “restrained” foreign policy?
Politico reveals:
Libertarian business tycoon Charles Koch is handing out $10 million in new grants to promote voices of military restraint at American think tanks, part of a growing effort by Koch to change the U.S. foreign policy conversation.
The grants, details of which were shared exclusively with POLITICO, are being split among four institutions: the Atlantic Council; the Center for the National Interest; the Chicago Council on Global Affairs; and the RAND Corporation.
The Atlantic Council has been pushing US foreign policy toward war with Russia for years, pumping endless false propaganda and neocon lies to fuel the idea that Russia is engaged in an “asymmetric battle” against the US, that the mess in Ukraine was the result of a Russian out-of-the-blue invasion rather than an Obama Administration coup d’etat, that Russia threw the elections to Putin’s agent Trump, and that Moscow is seeking to to sap and impurify all of our precious bodily fluids.
The Atlantic Council’s “Disinfo Portal,” a self-described “one-stop interactive online portal and guide to the Kremlin’s information war,” is raw, overt war propaganda. It is precisely the kind of war propaganda that has fueled three years of mass hysteria called “Russiagate,” which though proven definitively to be an utter fraud, continues to animate most of Washington’s thinking on the Left and Right to this day.
The Atlantic Council, through something it calls a “Digital Forensic Research Lab,” works with giant social media outlets to identify and ban any independent or alternative news outlets who deviate from the view that the US is besieged by enemies, from Syria to Iran to Russia to China and beyond, and that therefore it must continue spending a trillion dollars per year to maintain its role as the unipolar hyperpower. Thus, the Atlantic Council – a US government funded entity – colludes with social media to silence any deviation from US government approved foreign policy positions.
And these are the kinds of organizations that Koch and Soros claim are going to save us from Washington’s interventionist foreign policy?
Equally upsetting is the “collateral damage” that the Koch/Soros alliance and its love child Quincy hath wrought. To see once-vibrant and reliably non-interventionist upstarts like The American Conservative Magazine (TAC) lured away from the vision of its founders, Pat Buchanan and Taki Theodoracopulos, to slip into the warm Hegelian embrace of well-funded compromise is truly heartbreaking. It is to witness the soiling of that once-brave publication’s vindication for being right about Iraq War 2.0 while virtually all of Washington was wrong.
Incidentally, and to add insult to injury, it is precisely these kinds of Washington institutions who most viciously attacked TAC in those days who now find themselves trusted partners and even “expert” sources!
TAC! Beware! It’s not too late to wake up and smell the deception!
How to End Endless Wars (The Easy Way)
If a Soros-Koch alliance was actually interested in ending endless US wars and re-orienting our currently hyper-interventionist foreign policy toward “restraint,” it would simply announce that not another penny in campaign contributions would go to any candidate for House, Senate, or President who did not vow publicly in writing to vote against or veto any legislation that did not reduce military spending, that imposed sanctions overseas, that threatened governments overseas, that appropriated funds in secret or overtly to destabilize or overthrow governments overseas, or that sent foreign “aid” to any government overseas.
It would cost pennies to make such an announcement and stick to it, and the result would be a massive shift in the American body politic toward what the current alliance advertises itself as promoting.
But Koch/Soros don’t really want to end endless US interventions overseas. They want to fund the same old think tanks who are responsible for the disaster that is US foreign policy, re-brand interventionism as non-interventionism, and hope none of us rubes in flyover country notices.
To paraphrase what Pat Buchanan said about Democrats in his historic 1992 convention speech, the whitewashing of Washington’s most egregiously interventionist institutions and experts as “restrained” non-interventionists is “the greatest single exhibition of cross-dressing in American political history.”
Tyler Durden
Sat, 02/15/2020 – 21:30 - Senate Dems Question Trump's Response To Virus: "Very Grave Threat To The World"
Senate Dems Question Trump’s Response To Virus: “Very Grave Threat To The World”
In what will likely come as absolutely no surprise to anyone who has been capable of fogging a mirror for the last few years, Senate Democrats have decided to write a sternly-worded email to the Trump administration questioning their response to the Covid-19 outbreak, demanding they increase spending immediately.
26 Democrats including Patty Murray, ranking member of the Health, Education, Labor & Pensions Committee, Minority Leader Charles Schumer, and Presidential candidates Elizabeth Warren and Amy Klobuchar signed the letter claiming Alex Azar (secretary of the Health and Human Services Department) and Office of Management and Budget Director Mick Mulvaney are skimping on efforts to contain the coronavirus and should immediately request additional funds.
“We remain deeply concerned,” the Senators begin, “that the virus is not only a serious emergency for China, but a very grave threat for the rest of the world.”
And while they “appreciate” the efforts underway, the Democrats question the resources allocated and claim that “pulling funds from other critical programs with HHS is not the solution,” preferring instead that big government gets bigger and an additional supplemental budget be requested to cover the escalating costs of travel screening, isolation and quarantine, staffing, and equipment for the response.
Officials from the agencies involved have told Congress they have enough money to handle the crisis, and haven’t made a supplemental funding request.
* * *
Full letter below:
Will the President be impeached for not demanding more money to fund a fearmongering national quarantine against Covid-19?
Or, as Jim Kunstler recently noted, is there an ulterior motive for Democrats to make more of this than it already is?
What if the Corona virus turns out to be a genuine pandemic with legs, not some punk-ass, flash-in-the-pan bug like SARS… and infects hundreds of millions around the world…? And what if it happens to go logarithmic in the USA, as in China now…? And what if takes a few months, or half a year, to do that…? And what if Americans will not get on airplanes when that happens…? Or gather together in large numbers…? Or if government imposes quarantines …?
Will the parties hold their nominating conventions? Might the November election have to be postponed?
Might that be the Democrats’ easiest route to not losing in November?
Tyler Durden
Sat, 02/15/2020 – 21:00 - The Philippines Want The US Out… And They're Not Alone
The Philippines Want The US Out… And They’re Not Alone
Authored by Tim Kirby via The Strategic Culture Foundation,
The pawns of the Grand Chessboard are starting to move much more boldly – in an unpredicted by the punditry decision the Philippines have asked U.S. forces to leave their islands indefinitely. It was impossible to think even 10 or 15 years ago that a country as completely militarily helpless as the Philippines would dare to stand up to Uncle Sam, but now this has become a reality. In a microcosm this move could be blamed on Duterte’s fiery personal character, or as some sort of fluke, but this is a growing trend that will probably continue for at least the next few years, in which ideology actually plays a major unseen role.
The Philippines are a poor troubled island nation that is starting to get its house in order thanks mostly to a powerful charismatic central figure, but if we look at the country through the lens of “Geopolitics 101” then we can see that this nation has more value than one would think due to its location.
Souce: Foreign Policy Research Institute
If we can believe the maps of U.S. base locations presented to us via various forms of media then we can see that even without Manila’s blessing the U.S. still dominates the Pacific Ocean as a whole. Total control of the Atlantic and the Pacific thanks to the Allied victory in WWII has been very good for America to say the least and they need to continue to maintain it. The thing that makes losing the Philippines bad for the U.S. is that it could seriously erode the U.S.’s ability to create a naval blockade around China.
Although not stated explicitly one of the key reasons for China’s Belt and Road Initiative is the fact that at any moment Washington could completely cut off China’s sea trade. One of the reasons why Chinese goods have come to dominate the global market is due to the rise of cheap shipping costs. Loading a massive boat with cheap goods allows China to make things on the other half of the world for far less, than American workers can in their own country. But without waterways (cheap shipping), the Chinese advantage would be smashed and China as we know it today could be shattered.
The Philippines are located in the region of a potential Naval blockade, meaning that without them suffocating the Chinese from a naval standpoint becomes much more difficult and perhaps impossible. Not surprisingly, Duterte has been accused of making a pivot to China so perhaps his motivations for getting rid of the U.S. are not entirely morality based, but then again as a weak country the only way for the Philippines to matter is by playing great powers against themselves (or perhaps Chinese bribe money is sweeter). It is very possible that for this group of islands to have any sovereignty it needs bigger players to be fighting over it.
It may be too early to say because of Duterte’s bold move “the dominos are falling” but this is not the only nation that is trying to or has successfully removed U.S./NATO forces. The Kyrgyz ended foreign operations in their country most of which used their largest airport in Bishkek. (On a personal note it was very odd and humiliating to see an international airport with more foreign military planes in Bishkek than civilian, there were also many accusations of bad behavior towards locals including one alleged murder). Surprisingly even the Iraqi government which was essentially built by the U.S. has asked their forces to leave the country after the assassination of Iranian General Soleimani. Even the Mainstream Media admits that tens of thousands of Japanese have protested against U.S. bases in other country (again due to alleged abuse of locals). However, the government of Japan has made no formal requests to have U.S. forces leave, but quietly the constitutional ban on having a real military is being worn away by Tokyo as it has seen its first round of military expansion in decades.
In order for the U.S. to maintain its global military presence it needs to take a look at cases in which occupation has been seen as a positive by locals – South Korea. No matter what one’s personal feelings are about the North and South, the simple fact of the matter is that the Korean Peninsula is an all or nothing game. If the U.S. were to give up on Seoul then the North (with Chinese support) would come down and “unify” the nation. Many South Koreans are happy with the status quo and without the USA being around their lives are going to change quickly violently (and from their perspective) for the worse. This American necessity is not felt in Iraq, the Philippines or Kyrgyzstan, but if Washington wants to remain in these places they need to create it. The Cold War is over and America’s classic strategy of “side with Capitalism and you’ll get jeans and cars” is longer an option as the Chinese and to a lesser extent the Russians can also offer up plenty of Materialism.
A key factor in the Cold War division of the world was ideology. This allowed the U.S. and USSR to put foreign bases all over the planet. The collapse of America’s ideological strength will continue to allow uppity nations to one-by-one say good-bye forever. “The Russian are bad” or “we’ll give you Materialism” are no longer enough to justify foreign occupation. Washington needs to come up with a new ideological strategy and the Russians and Chinese need to be ready for this and at the same time continue to chip away at the failing Monopolar World. When locals see people they perceive as foreigners dominated their country, walking around with guns and occasionally abusing locals there needs to be some sort of grand justification for this.
In the Philippines there is not such justification. There is no reason from Manila’s or the man-on-the-street’s perspective that American troops should be in their country. The ideological erosion of American values after the U.S. victory in the Cold War must be stopped if the U.S. wants to remain the only global hyperpower.
Tyler Durden
Sat, 02/15/2020 – 20:30 - Bernie Sanders Punk'd By Russians Posing As Greta Thunberg
Bernie Sanders Punk’d By Russians Posing As Greta Thunberg
Two Russian pranksters duped U.S. Democratic presidential candidate Bernie Sanders into believing they were climate change activist Greta Thunberg and her father, Svante.
Vladimir Kuznetsov and Alexey Stolyarov told A.P. News they fooled Sanders in an 11-minute call, all recorded and uploaded to YouTube on Friday.
The call was allegedly recorded in early December, over a Skype interview with Stolyarov taking the role of Svante while an unknown woman pretends to be Greta.
The imitators started with the possibility of “Greta” endorsing Sanders’ presidential campaign.
“Let us continue to talk and when you come to the United States I will bring some people together and we can do some interesting things, and if you wanted to make a statement in support of my candidacy and the program we have outlined for climate change, I would be very very appreciative,” Sanders said.
The pranksters then suggested that “Greta” would record a hip-hop song in support of Sanders together with singer Billie Eilish and rapper Kanye West. They said there would be luxury sports cars and hot women dancing while Sanders wears “gold jewelry.” The senator thought it was funny and laughed it off, but apparently, “Greta” was serious.
Sanders said the best way for “Greta” to get involved with his campaign was to release a statement of support, along with, if she was in the U.S., could visit him on the campaign trail.
The YouTube video is absolutely hilarious, until it all went downhill after “Greta” asked the Vermont senator about his 1988 visit to the Soviet Union.
“In the Soviet Union in 1988, after you were recruited, you were programmed to work for Russia, and your memory was erased so the CIA wouldn’t track you down,” she said.
“This is what you believe?” Sanders responded. “Yes, you became a sleeper agent of the KGB. Now it’s time to wake up and fulfill your mission, become president of the United States, build communism in the United States, and work for Russia!”
And it was at that very moment, a little after ten minutes on the call, Sanders hung up after he realized he was punk’d.
Kuznetsov and Stolyarov have fooled other high-profile victims around the world, including Democratic Rep. Maxine Waters, former U.S. Ambassador to the UN Nikki Haley, actor Joaquin Phoenix, singer Elton John, and President Emmanuel Macron.
Tyler Durden
Sat, 02/15/2020 – 20:00 - Is Political Change Coming To China?
Is Political Change Coming To China?
Authored by Yuen Yuen Ang via Project Syndicate,
In contemporary China, profound political transformation can – and has – taken place in the absence of regime change or Western-style democratization. The starkest example is the period of “reform and opening” that began in 1978 under Deng Xiaoping’s charge. Although Deng rejected multiparty elections, he fundamentally changed the direction of the Communist Party of China (CPC), as well as the distribution of power within it.
The coronavirus epidemic that began in Wuhan in December 2019 may augur a similar historic turning point. The outbreak of what is now called COVID-19 represents more than just a passing moment of stress for the CPC. The world should be prepared for what could come next.
Normally, a single epidemic, even if mishandled, would not break the Chinese regime. Over the past four decades, the CPC has weathered numerous crises, from the 1989 Tiananmen tragedy and the 2002-03 SARS epidemic to the 2008 global financial crisis. Some of the regime’s critics have long predicted its imminent demise, only to be proven wrong. Before President Xi Jinping, the Chinese style of governance was adaptive and decentralized, or what I call “directed improvisation.” In addition, civil society, including muckraking journalism, expanded rapidly.
This time is different. Since coming to power in 2012, Xi has tightened political control at home and projected superpower ambitions abroad. These policies have unnerved Chinese private investors, alarmed Western powers, and sharpened tensions with the United States, all of which have contributed to a broader economic slowdown.
The COVID-19 outbreak has added an additional source of stress and unpredictability to the regime’s mounting challenges. As the epidemic persists, China will struggle to reopen for business, bringing even stiffer economic headwinds as small- and medium-size enterprises fail, workers lose jobs, and inflation picks up. While the Chinese leadership is highly adept at solving one crisis at a time, it has rarely had to confront so many near-existential crises at once.
In a recent commentary, Kevin Rudd, a former Australian prime minister who is now president of the Asia Society, argued that “the crisis, once resolved, will not change how China is governed in the future.” But that prognosis is too optimistic. Indeed, cracks are already appearing in Xi’s supreme leadership.
For example, at the peak of the public outrage over the government’s initial cover-up of the outbreak, Xi disappeared from public view. After his meeting with the director-general of the World Health Organization, Tedros Adhanom Ghebreyesus, on January 28, he didn’t resurface until his state meeting with Cambodian Prime Minister Hun Sen on February 5. For a leader who normally dominates China’s news cycle every day, Xi’s absence amid a national panic was conspicuous, and led some Chinese observers to speculate that his grip on power may be in peril.
If that seems unthinkable, it is worth remembering that the past years have produced events that few anticipated. Who predicted, for example, that an American real-estate mogul would face off with a Chinese princeling in an earth-shaking superpower rivalry, or that China might replace the United States as a champion for capitalist globalization? The current moment of precariousness could well give way to more profound political change.
Three possibilities stand out.
The most extreme, worst-case scenario is regime collapse.
China bashers who read that sentence should not gloat, because the sudden dissolution of an authoritarian regime does not necessarily lead to democratization; in many cases, it leads to civil war, as we saw in Iraq after the United States forcibly removed Saddam Hussein and as we see today in post-Qaddafi Libya. A violent power struggle within China would be catastrophic for the entire world.
Fortunately, this scenario is unlikely. Although China is under unprecedented stress, its economy has not come to a standstill. As Shang-Jin Wei of Columbia University pointed out, China’s highly developed e-commerce industry allows residents to continue shopping from home. And while tens of thousands of Chinese are infected with the virus and many more are furious at the government, the vast majority of the population is nowhere near desperation.
The second scenario is a change in leadership at the highest level.
Xi cannot avoid blame for the backlash against his restrictive domestic policies and assertive actions abroad, which had already begun to undercut support for him even before the COVID-19 epidemic. With the death of Li Wenliang, a doctor who was rebuked by state authorities for warning others about the virus, the failings of Xi’s top-down approach have been laid bare. News of Li’s passing unleashed a firestorm of online criticism of the government, and Xi’s failure to appear on the frontlines of the fight has further diminished his credibility as a populist leader.
In principle, Xi’s abolition of constitutional term limits allows him to stay on as president for life. But whether he actually will remain in office after his current term ends in 2022 is now an open question.
Owing to the concentration of power in the Chinese system, the paramount leader has an outsize impact on all spheres of society, as well as foreign policy. If a new leader were to take over in 2022 – or even before then – the most likely outcome would be a reset of all of Xi’s policy priorities, forcing the rest of the world to revisit its thinking about China and its global role.
In the third scenario, Xi clings to his post, but it is hollowed out and power shifts over to various other competing factions.
Such an arrangement would not be without precedent. After the Great Leap Forward, Mao Zedong’s fanatical campaign in 1958-62 to “catch up with Britain in ten years,” killed 30 million peasants, Mao was forced into retirement but remained paramount leader in name. (Later, he would stage a comeback, ushering in another decade-long disaster: the Cultural Revolution).
It is already clear that Chinese politics and governance will not be the same after the COVID-19 outbreak. The myth that Xi and his supporters have sustained about the virtues of centralized control has been demolished. Li’s parting words – “A healthy society should not have only one voice” – will remain etched in the minds of hundreds of millions of Chinese, who have seen for themselves that censorship can endanger their lives.
Tyler Durden
Sat, 02/15/2020 – 19:30 - "Tankers, Tankers. Everywhere!" – Virus Causes Historic' Traffic Jam' Across Asian Supply Lines
“Tankers, Tankers. Everywhere!” – Virus Causes Historic’ Traffic Jam’ Across Asian Supply Lines
Covid-19’s effect on global energy markets has been disastrous. OPEC slashed its oil demand forecast last week, and Goldman Sachs doubled down on its bearish oil take and has cut its oil price target by $10 to $53 for the year, as a result of a “demand shock” that is set to collapse Chinese oil consumption by 20%, or as much as 4 million barrels per day.
The sharp decline in demand in China, which by the way, is the world’s largest oil importer, is now stranding oil cargoes off the country’s coast and across Asia.
Bloomberg’s Stephen Stapczynski records footage of an impressive parking lot of tankers and other vessels off the coast of the anchorages of the port of Singapore, one of the largest freight hubs and busiest ports in the world.
Tankers… tankers everywhere.#singapore pic.twitter.com/RCEysNtDKo
— Stephen Stapczynski (@SStapczynski) February 15, 2020
https://platform.twitter.com/widgets.js
Much of the oil consumption decline is because, as we reported on Friday, China’s economy is faltering as its industrial hubs remain shuttered.
Take a look at the chart below, in the Feb 7-13 week, steel apparent demand is down a whopping 40%, but that’s only because flat steel is down “only” 12% Y/Y as some car plants have ordered their employee to return to work.
Real-time measurements of air pollution (a proxy for industrial output), daily coal consumption (a proxy for electricity usage and manufacturing), and traffic congestion levels (a proxy for commerce and mobility) suggest that the second-largest economy in the world has frozen. This all indicates the demand for energy products to power machines and vehicles has abruptly stopped.
A significant bottleneck for Very Large Crude Carriers (VLCCs) deliveries to China is developing, forcing some ports to reject new tanker loads, contributing to a parking lot of tankers sitting off the coast and in other regions in Asia.
Some cargos have been diverted to Singapore, Malaysia, South Korea, but even in those regions, tanker traffic jams are building.
Crude storage in China filled up near full capacity last summer, mostly due to declining demand thanks to a decelerating economy.
China’s overall crude storage is around 760 million barrels, versus a peak of 780 million barrels last June.
Middle East traders who export crude via VLCCs to China reported weaker demand. VLCC rates from the Middle East to China have plunged since the virus outbreak began early last month.
“In gas markets, a one Chinese company declared force majeure, potentially allowing it to walk away from contractual commitments. The measure was rejected by Total SA and Royal Dutch Shell Plc. There are now 12 empty liquefied gas carriers sitting off the coast of Qatar, one of the world’s biggest producers. While the precise reasons for the idling vessels aren’t known, the timing coincides with ship diversions, cargo cancellations and reduced demand in Asia since the virus took hold. Oil tankers have been dawdling off China,” reported Bloomberg.
The parking lot of tankers developing off the coast of not just China but other countries in the region have forced some traders to transfer crude to less expensive tankers to save on demurrage costs, over the fear cargos could be moored offshore for an extended period as an economic crisis in China unfolds.
And to summarize what we know so far: China’s economy is collapsing, crude consumption is plunging, which has forced refiners to cut runs as a glut is developing, has now led to tanker parking lots moored off the shores of many countries in Asia.
What is also known is that bunker fuel prices at major ports in Asia, including Singapore, Hong Kong, South Korea, Taiwan, and Japan, have been declining since the virus outbreak began early last month.
The world is bracing for a huge virus shock from China, not seen in over a decade – this could easily tilt the world into recession.
Tyler Durden
Sat, 02/15/2020 – 19:00 - Is Poetic Justice Coming For The 1%?
Is Poetic Justice Coming For The 1%?
Authored by John Rubino via DollarCollapse.com,
To understand just how grim the coming decade is likely to be for the world’s super-rich, let’s start with three premises:
1) Capitalist democracy — defined as free individuals managing their own property and periodically electing new leaders — is the only system of social organization that’s consistent with human nature and is, therefore, sustainable.
2) Capitalism inevitably produces inequality as a few participants — through energy, creativity, and (frequently) luck — do extremely well while the vast majority do okay and a few do very badly.
3) Since the big winners — now commonly known as the 1% — are vastly outnumbered by the rest of society, they can only keep their exulted position if they convince the 99% to let them be. If the rich fail to make their case, everyone else will simply vote to expropriate the most visible fortunes.
If you accept these assertions, it follows that enlightened elites would be all about fostering upward mobility, because when people on the lower rungs of the economic ladder know that by working hard and following the rules they can move their families to the next higher rung in a reasonable amount of time, they focus on their on improving prospects and don’t much care if a few billionaires live like princes and kings.
But that’s emphatically not the case these days. The current generation of corporate and political winners have blatantly and systematically exploited nearly everyone else. Amazon, for instance, staffs its hellscape warehouses with RV caravans of migrant senior citizens working long, hard days for subsistence wages. Apple makes its high-margin phones in Chinese sweatshop factories where suicide is the biggest occupational health hazard.
Manufacturing company CEOs close their domestic factories and ship the jobs overseas, then pay themselves massive year-end bonuses to reflect the resulting slight uptick in profit margins. Banks hijack the political process to get themselves deregulated and then pass laws that make borrowers lifetime slaves of creditors. Politicians enter public life with modest bank accounts and retire multi-millionaires. Pretty much the entire political/corporate class favors more-or-less open borders, guaranteeing themselves cheap nannies and gardeners while American wages stagnate.
And they do all this publicly, apparently so sure of their virtue that they see no need to hide their predation.
And now, as debts mount and anger builds, the typical response of this “breakaway civilization” is to buy compounds in New Zealand in which to weather the end of the financial world.
Populism becomes the new normal
Why would any voting majority put up with the above? Well, they wouldn’t if they have alternatives. And now the political system is offering plenty, in the form of left and right-wing populism. In virtually every major country there are movements, parties and individual politicians who point out that the system is rigged in favor of the rich an promise to claw back what was stolen. And they’re doing well. Donald Trump, Brexit, France’s Yellow Vest protesters and Bernie Sanders are examples of this process in action, but they’re just the beginning. Every major country will have its Trump or Sanders in the coming decade, which means globalism will be dismantled, marginal tax rates will soar, fortunes will be expropriated, and borders will be closed to free movement of people and/or capital. It will, in short, be open season on the aristocracy.
Imagine, for instance, President Bernie Sanders’ reaction to a mass migration of mega-fortunes to overseas end-of-the-world bunkers: “Oh, you’re leaving? Fine. Go. But your mansions, bank accounts and stock portfolios stay here to fund health care. And we’re talking to New Zealand about a bunker tax. Bon voyage.”
This of course will lead to an implosion of capitalist wealth creation right out of Atlas Shrugged. Which is to say the 1% will lose twice, first when governments take big chunks of their fortunes, and then when whatever is left evaporates in a global financial crisis.
To sum up, the coming decade will be bad for just about everyone except gold bugs. But it will be the fault of the people who should have seen it coming and could have prevented it.
Tyler Durden
Sat, 02/15/2020 – 18:30 - Investors Agree To Unprecedented 95% "Gate" As They Hand $3 Billion To Englander's Millennium
Investors Agree To Unprecedented 95% “Gate” As They Hand $3 Billion To Englander’s Millennium
Back in 2014, we speculated that as the market rose ever higher on ever lower liquidity and ever more central bank intervention, if and when the moment came that price discovery was permitted again, the avalanche of selling would be unstoppable and the entire market would be halted indefinitely, very much as what happened to 2014’s high flying penny stock CYNK.
Yet while a marketwide halt would not surprise us, what we find remarkable, is just how many investors now seem resigned, even if subconsciously, to never getting their money back after the next crash.
Case in point, Izzy Englander’s multi-billion “pod-based” fund, Millennium Management, which according to Bloomberg has managed to raise $3 billion without batting an eyelid, a remarkable achievement for a hedge fund at a time when its peers suffered nearly $100 billion in outflows in 2019, just shy of the biggest annual outflow since the financial crisis.
Yet while Millennium’s ease at raising money is indeed impressive (the $40+ billion fund returned less than 10% last year, a third of the S&P, but has been consistently profitable for the past decade), what we find fascinating is not only the ease with which investors handed over their money to the 72-year-old former options guru Englander, but their willingness to be constrained by one of the most draconian locks up in hedge fund history.
According to Bloomberg, which read a Feb 12 letter from the fund to investors, the share class open to new investments limits the amount clients can pull to 5% of their money each quarter, meaning it would take them five years to fully cash out. The 5% quarterly redemption limit means that in a quarter in which markets tank and investors want to pull their money, they will only be allowed to pull just 5%. In other words, Millennium investors have pre-emptively agreed to be gated to at least 95% of their capital following a “market event.” And all this just to be allowed to invest in the vaunted Englander’s hedge fund.
“The 5% quarterly share class will be the primary form of any new investment,” Englander wrote in the letter. A spokesman for the New York-based firm declined to comment.
One reason why Millennium has pushed such draconian terms on new investors is that it already has a line of people waiting to give it money: the hedge fund raised $4.1 billion in 2019, when it opened to new capital for the first time in two years. Now, it expects that to reach $7.1 billion by March, according to a Feb. 12 letter to investors. The total would push its total AUM to roughly $50 billion, even as its regulatory assets under management surpass $200 billion (MLP is one of “those” hedge funds that rely a lot on bank repo arrangements)
Millennium’s remarkably long lock up, one which puts some private equity funds to shame, comes as Hedge funds are increasingly trying to secure investor capital over longer periods to avoid sudden mass redemptions if markets turn volatile. Millennium had withdrawals of at least $1 billion in 2008 as investors found themselves in need of capital during the financial crisis. One can argue that by effecting pre-emptive “gates” that allow investors to pull just 5% of their capital, Englander is telegraphing that the party is about to end and that investors will rush for the exits. The only problem: they won’t be able to as the fine print in their contract now says.
To be sure, Millennium’s brazen lock up is something that only a handful of stellar hedge funds can afford: as Bloomberg notes, “the firm’s growth shows that some big-name hedge funds with solid track records still have committed clients even as investors remain skeptical toward the industry. High fees and mediocre returns sparked accelerating redemptions industrywide last year.”
The firm returned profits to investors in 2019 for the second year in a row, according to a person with knowledge of the matter, who asked not to be identified because the information isn’t public.
Ironically, most of Millennium’s new capital will come from existing clients either reinvesting gains or adding fresh cash; in other words the nearly 11 year long bull market has made investors forget what happens when there is a market crash and a panicked flight for exits. And Millennium is capitalizing on just that.
Other highlights from the letter:
- After a hiring spree, Millennium ended 2019 with “the largest number of portfolio managers in our history” — more than 230. Much of the activity was in Europe and Asia.
- Millennium is pursuing “new types of quantitatively driven trading strategies.” As technology has advanced, the firm has worked to hire a wider array of quant managers.
- The firm has built up its infrastructure to “ingest, cleanse and curate data.” It manages more than 2,000 data sets across almost 400 providers, more than 10 trillion records of ready-to-use data and 2,000-plus terabytes of compressed stored data.
Tyler Durden
Sat, 02/15/2020 – 18:00 - The Gold-Silver Ratio
The Gold-Silver Ratio
Authored by ‘mickeyman’ via The World Complex blog,
A couple of weeks ago, Wheaton Precious Metals released a very useful study on the gold-silver ratio.
Today I would like to take a look at some of its implications.
The most important implication is one that everyone needs a little time to absorb. That is that there is no characteristic value for the gold-silver ratio (GSR).
That means that there is no “true north”, or no mythic value (16, for instance) to which it is attracted, and to which it would return if only the world stopped manipulating its price.
The Wheaton conclusions are quite definite.
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The gold-silver rises during deflationary periods and disinflationary periods (we’ll look at this distinction shortly).
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The gold-silver ratio falls during inflationary periods.
What is unclear is whether a rising GSR causes deflation, or deflation causes a rising GSR. I know which one I believe.
Let’s test this against some measures I’ve used for deflation/inflation. I’ll use the weekly chart of USDX vs gold price, weekly, going back to the beginning of 2008.
It is a busy visual, but what we want to do is look at longer-scale variations.
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Intervals when both the USDX index and the gold price rise are considered deflationary.
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If gold rises and the US dollar index falls, we have inflation (hence inflation and deflation are not opposites).
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Gold falling and the dollar rising will be disinflation, and I suppose that
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if both gold and the US dollar fall, we must have disdeflation, although I have never seen that word anywhere. It’s a little hard to say, so it might be best to leave it nameless, and remember that if it ever happens, you should be shorting gold stocks.
Through most of 2008, the graph above suggests we were experiencing disinflation, and over that interval, GSR rises from 55.7 to 77.1
Much of 2009 was characterized by inflation, and the GSR fell from 77.1 to 63.3.
Until the middle of 2010, we had disinflation, and the GSR rose slightly.
The big inflationary pulse into late 2011 saw the GSR falling to 40.8. The final blow-off in the gold price did not see any movement in the US dollar index, so it technically lies between inflation and deflation, but I don’t know what to call it. The GSR actually rose during that interval, which makes some sense as the gold price rose over $200 in that time.
The following disinflationary episode that lasted through 2013 saw the GSR rise to 65.9.
Since then, the dominant trend has been deflationary, although realistically there have only been two deflationary pulses–through early 2015 (GSR 74.5) and over the past 18 months (GSR at 88.6). Most of the time has been consumed by short inflation-disinflation cycles, with slight rises and falls of the GSR without significant trend.
Over the entire chart (twelve years) the big picture is deflation, but most of that has been accommodated through cycles of inflation and disinflation.
So long as deflationary conditions persist, the GSR may rise without limit. As long as debts are created beyond any ability to repay them, deflationary conditions will rule. Under such conditions, despite the GSR being pretty much the highest in history, gold remains a better investment than silver.
However, as much of the actual deflationary effect is brought about by cycles of inflation and disinflation, there are brief intervals where silver makes a better investment than gold. But rather than using the level of the GSR as your selection criterion, you need to look closely at monetary policy instead.
Tyler Durden
Sat, 02/15/2020 – 17:30 -
- Trump & Erdogan Discuss Ending "Unacceptable" Syrian Offensive To Take Back Idlib
Trump & Erdogan Discuss Ending “Unacceptable” Syrian Offensive To Take Back Idlib
On Saturday President Trump held a much anticipated and crucial phone call with his Turkish counterpart Tayyip Erdogan at a moment tensions are soaring over Idlib, and after a week of direct confrontations between the Syrian and Turkish armies left scores dead and wounded on either side.
Turkey’s foreign minister said the two leaders discussed the unfolding crises in Syria and Libya — both places where Turkey is controversially intervening militarily — as well as the White House’s peace plan for the Israel-Palestine conflict, which Erdogan in no uncertain terms has rejected. And though few details were given, the two reportedly agreed for the resumption of US-Turkey trade talks.
File image: AFP As expected the two condemned the Syrian Army advance into Idlib, calling the military offensive with Russian support “unacceptable”. This after last week the US dispatched special envoy for the region James Jeffrey to Ankara, where the diplomat verbalized full support to “our NATO ally Turkey”.
“Stressing that the regime’s most recent attacks are unacceptable, the president and Trump exchanged views on ways to end the crisis in Idlib without further delay,” the Turkish presidency said in a statement.
Turkey is worried about record-number refugee displacement as hundreds of thousands are reportedly now fleeing to the border, while Damascus and Moscow have charged Turkey with protection terrorists operating in Idlib. They expressed their desire for an immediate halt to the fighting.
On the issue of Trump’s ‘Deal of the Century,’ Erdogan reiterated during a separate remarks to reporters on Saturday:
“I would like to state once again that this so-called peace plan is nothing but a dream that threatens the regional peace and tranquility,” Erdogan told reporters upon his return to Turkey after his Pakistan visit.
He said Turkey would never allow for the “legitimization of invasion, annexation and destruction” of the Palestinian state and its people.
Immediately after the January roll-out of the plan with Israeli PM Benjamin Netanyahu, Turkey was the first country to slam it as merely justifying “Israeli occupation and annexation of Jerusalem and the West Bank.”
Foreign Minister Mevlut Cavusoglu revealed some of the details of the Erdogan-Trump phone call after meeting with his Russian counterpart at the Munich Security Conference.
Tyler Durden
Sat, 02/15/2020 – 17:00 - Senate Attacks Judy Shelton For Sin Of Being Outside The Mainstream
Senate Attacks Judy Shelton For Sin Of Being Outside The Mainstream
Authored by Tho Bishop via The Mises Institute,
Earlier this week, the Senate Banking Committee held a hearing for President Trump’s two most recent Federal Reserve nominees.
In one chair sat Christopher Waller, vice president and director of research at the Federal Reserve Bank of St. Louis, whose dreadfully dull answers could have been the product of a bot forced to watch one thousand hours of central bank testimony.
Luckily for those watching, most of the questions were directed towards the far more intriguing – and controversial – Judy Shelton.
Although by no means an Austrian, Judy Shelton’s record includes public support for a modern gold standard, criticism of the Fed’s response to the financial crisis, and even a comparison of America’s central bank to Soviet central planners. On the topic of competing currencies, Ms. Shelton once referred to Bernard von NotHaus, a man arrested by the US government for the production of silver “Liberty Dollars,” as the “Rosa Parks of monetary policy” for his willingness to challenge the Fed. Beyond monetary policy, she cited government deposit insurance as a program that risks creating moral hazard, suggested that the US could pay off its public debts by selling off assets such as the US Postal Service and federally held public lands, and even publicly questioned the accuracy of government inflation measures.
The recounting of the greatest hits of Judy Shelton offered a glimpse of what it would look like to actually drain the swamp of central bankers.
Of course, all of this was sharply – and at times uncivilly – criticized by duly elected economic midwits who sought to lecture to Shelton while desperately relying upon the prepared questions of legislative aides.
Senator Richard Shelby, at one point the chairman of the banking committee, was particularly appalled at the notion of nominating a Federal Reserve candidate so outside the mainstream. His grilling of Ms. Shelton included sagely pointing out that the amount of gold in the world is worth less than the American GDP and suggesting that the gold standard was a product of the days when the US was a “barter economy.”
Of course, it is a reflection of the dilapidated state of modern economics that Shelby’s ignorance would make him a safer choice for the Federal Reserve than either Shelton or her friend James Grant.
It is also sad to see Shelton, obviously a very intelligent woman, take the strategy of trying to sing from a more traditional script rather than take the opportunity of the hearing to defend the ideas she has long supported. Although there were times when she offered clever outs to her testimony, such as declaring that she would never want to “go back” to any previously existing monetary system (which is not the same thing as seeing a potential use for a newly priced gold backing in the future), for the most part Shelton attempted to try to present herself as a more status quo figure.
In one of the more entertaining exchanges, Senator John Kennedy of Louisiana pushed Ms. Shelton on what she would recommend if faced with an abrupt financial crisis. Her response, unfortunately, was more of the same – taking interest rates to 0, more QE. It was an answer so uninspired that it was basically repeated by Mr. Waller.
Shelton was also attacked for apparent changes in her policy prescriptions during the Trump regime.
Although she once (accurately) blasted the Obama administration for monetary and fiscal recklessness, she has advocated for more accommodative policy in recent years. One could perhaps forgive Shelton for the sin of identifying the Federal Reserve for what it really is – a political institution – but her nomination is likely to be killed by senators who prefer to maintain that the illusion it is anything but.
In fact, shortly after the hearing, Washington was already filled with whispers about her nomination already being dead.
If true, Congress will miss the opportunity to actually act on the goal that is so often given lip service on the Hill—increasing diversity on the Fed. Beyond the irrelevant point of her gender, Judy Shelton would have brought a heterodox economic perspective from well beyond the echo chamber of modern central banking. Having received her PhD in business administration from Utah State University, she is far removed from the elite institutions that are quite effective at wiping out common sense.
At least the Fed will have the addition of Mr. Waller, who can offer such pearls of wisdom as:
The fiat monetary system we have around the world works well as long as it is managed well by the central bank.
Where would America be without such invaluable insight!
Tyler Durden
Sat, 02/15/2020 – 16:30 - Wuhan's Hastily-Constructed 1,000-Bed Coronavirus Hospital Is Already Falling Apart
Wuhan’s Hastily-Constructed 1,000-Bed Coronavirus Hospital Is Already Falling Apart
The 1,000-bed hospital constructed in about a week to handle the Covid-19 outbreak in Wuhan, China, opened its doors about 13 days ago, or around Feb 03, has already experienced a massive water leak that has flooded hallways, according to an alleged video posted by Twitter handle Harry Chen PhD on Saturday.
The hospital built in 5 days leaks! And not a little…a lot!
Exclusive insider’s look!!!#coronavirus #CoronavirusOutbreak #Wuhan #COVID19 #coronavirusaustralia #CoronaVirusCanada pic.twitter.com/ue7mLgPAsR
— Harry Chen PhD (@IsChinar) February 15, 2020
https://platform.twitter.com/widgets.js
Chen tweeted another video of water falling from the ceiling on hospital beds for virus-infected patients.
The little hospital that couldn’t is a petri dish of positive vibes…
“its just a fancy humidifier and it’s just the flu…go back to sleep…🔥🔥🔥🤫”
-coronavirus, February, 2020 pic.twitter.com/Q4WzT54k0U
— Harry Chen PhD (@IsChinar) February 15, 2020
https://platform.twitter.com/widgets.js
We noted earlier this month that Wuhan’s new 25,000-square-meter hospital, one of two new facilities commissioned in response to the virus outbreak, was completed around the first of the month. Here’s a time-lapse video of the construction:
The building of the hospital, and the news headlines that surrounded it, was nothing more than propaganda spread by the Communist Party of China to Western media outlets to obtain the image that everything was under control. However, that narrative of “contained” collapsed last week as confirmed cases in China skyrocketed, and deaths soared, leaving many to believe that the virus crisis is worsening.
What a disaster the virus outbreak has become. Governments and their corporate media counterparts are failing to control the narrative that everything is “contained” as we close out the second week of Feb.
The virus is going global, and there’s no vaccine for at least 12-18 months.
Tyler Durden
Sat, 02/15/2020 – 16:00 - The Four Coronavirus Scenarios: The Bad; The Worse; The Ugly; And The Unthinkable
The Four Coronavirus Scenarios: The Bad; The Worse; The Ugly; And The Unthinkable
Submitted by Michael Every of Rabobank
Summary
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The Covid-19 coronavirus could be more disruptive than markets are currently pricing in. Not in the least because the ‘true’ number of infected people remains uncertain, as the recent surge in cases exemplifies
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We outline four scenarios in which the virus increasingly becomes severe: The Bad; The Worse; The Ugly; and The Unthinkable
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We provide rough estimates for China’s growth trajectory in these scenarios although we stress that these are not our official forecasts since we are still working out the details
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The three main channels through which Covid-19 will affect the global economy are tourism, net exports, and intermediate goods
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In the ‘Bad’ scenario the virus outbreak does not last far beyond Q1. China’s GDP growth for 2020 could drop to below 5%, with production taking the biggest hit and a catch up in Q3 and Q4. This is our base case scenario, although with the recent surge in mind, the second scenario is becoming increasingly likely
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In the ‘Worse’ scenario, the virus outbreak lasts beyond Q1. In that case China’s GDP growth could end up below 4% in 2020
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In this scenario, next to China, Asia will bear the brunt of the prolonged outbreak due to its dependence on Chinas as an export market and intermediate imports as well as for tourism
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In China itself, defaults of non-financial corporates in China could start to rise rapidly
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This will lead to a decline in China’s long-term growth potential as private companies will suffer most, while less efficient SOEs will likely be bailed out. As a result, debt levels will balloon further, leaving China more vulnerable in the future
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There will also be downwards pressure on the Chinese currency as extra CNY liquidity is made available
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In the Ugly scenario, the virus spreads beyond China, and spreads to Asia as well as developed economies. Its effects will likely resemble the Global Financial Crisis of 2008/2009 more than the SARS outbreak in 2003
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The Unthinkable scenario is a far left tail scenario, in which the virus mutates and becomes a truly global pandemic
Risk on?
Financial markets have been on a roller-coaster ride since the Novel coronavirus Covid-19 stole the headlines – albeit mainly on the ascent phase (bar today’s reaction) of the ride so far in terms of equities at least. At this stage, it’s still too early to tell whether or not Covid-19 is ‘under control’ or not. Especially given that the most surge in cases (due to a new counting methodology) shows that we don’t really know the actual number of infected cases (Figure 1).
In a research report published end-January we discussed the ‘most likely’ outcome for the global economy and markets based on what we knew at the time. But the huge uncertainty surrounding the spread of the virus as well as its impact on economic behaviour implies that we are still dealing with a wide range of possibilities from a relatively quick stabilization of the situation to a full-blown pandemic with far far-reaching consequences.
This report will therefore examine what the potential impact of the virus will be on the Chinese, Asian, and global economies under four different scenarios. As shall be seen, none of these are positive, in contra-distinction to the relative optimism shown by equity markets at present. In fact, all of them are negative to varying degrees such that we dub them: The Bad; The Worse; The Ugly; and The Unthinkable.
The Bad
This scenario is actually the ‘good’ one that markets are apparently pricing for, which would see a quick stabilization of the situation in China and assumes that the international spread of the virus remains limited to a number of countries, notably in the Asian region, but with no repeat of the swift spread we initially saw on mainland China.
This is a relatively benign scenario with the economic effects mostly concentrated in Q1 and part of Q2 2020. Regardless, we still envisage that China’s Q1 growth rate in this scenario could fall to 2.9% y-o-y, which is 3% lower than our previous forecast of 5.9%. Assuming the most draconian containment measures are gradually withdrawn during Q2, the impact on Q2 growth is likely to be smaller but still negative. Only in H2 would we expect a partial rebound. For 2020, our ballpark growth figure is 4.8% – 5.6% y/y GDP growth, and then and between 5.5% – 6.3% for 2021. (These are not our official forecasts. We are still working out the details and will present them in our upcoming quarterly outlook).
We expect Chinese industrial production to take the biggest hit near-term as factories remain mostly closed in Q1. Production growth in this scenario will drop to 2.2% y-o-y in the quarter, which is 4% below its 3-year average (6.1% y/y). However, there will likely be some catch-up growth in production in Q3 and Q4.
Services will take the second largest hit, slowing to 3.5% y-o-y, which is 3 percentage points below its 3-year average (7.5% y/y). Services will rebound too in H2, albeit partially. We say partially because while industrial production may “catch-up”, consumer spending is less likely to do so. People will not get an extra haircut or go on vacation twice to catch up on missed haircuts and vacations. Crucially, the services sector now comprises more than half of China’s economy (52%); in 2003 this was just 42%.
In terms of stimulus, we can naturally expect both fiscal and monetary policy to play a large role. The PBOC has already injected a significant quantity of liquidity via various channels, including reverse repo, totalling CNY2.9 trillion (USD 414 bn) at the time of writing (although a large part of this injection is for refinancing of previously ending contracts). More will be forthcoming, in their own words. Interest rates, such as where they matter in a quantity-driven credit economy like China, will also be lowered.
At the same time, the fiscal taps will have to open. We are again already seeing accelerated issuance of local government special bonds, and the central government fiscal deficit will also widen as needed to ensure the economy gets back on track as soon as possible.
However this is not a cost-free exercise. Already-high debt-ratios of corporates and the state in China will rise even higher. The narrative of deleveraging, which we did not subscribe to, will be comprehensively debunked. China will have to carry that debt with it in the future.
Concurrently, this new stimulus runs counter to China’s ambition to make its financial system more stable. Chinese banks already face rising non-performing loan (NPL) levels. For example, S&P estimate that in a growth slow-down these could multiple five or six fold, into the hundreds of USD billions. The actual, rather than realised, figure is likely to be far worse.
Crucially, China’s banks are also already capital constrained. Having to step in and support so much of the economy will almost certainly see them having to raise capital or rely on the PBOC. Indeed, in almost all scenarios the PBOC will be doing much more ahead.In which case, a combination of increased CNY liquidity and lower Chinese rates, to say nothing of a drop in capital inflows, is likely to place significant downwards pressure on CNY. Might this even limit the PBOC’s room for action given China’s commitment to the US under the Phase One Trade Deal not to weaken its currency? Notably, the US is already recognising that there will be delays in China meeting its other promise, of huge US goods purchases.
For the global economy this scenario is also painful as China has become a critical driver of global economic growth. The sensitivity of the world economy to China’s growth rate was 0.17 between the 1980s and 2000, which has almost tripled to 0.47 in the last 15 years. Thus each percentage point of Chinese GDP growth coincides (we don’t say ‘leads to’) with about half a percentage point in world GDP growth (Figure 2). This scenario will see 2020 world GDP growth -0.2ppts lower than our current estimate of 2.9%.
The economic transmission mechanisms are as clear as those of the virus.
Automatic transmission
On the demand side, China is responsible for more than 25% of tourists in a host of countries such as South Korea, Vietnam and Thailand, but also Australia, New Zealand, and Hong Kong (Figure 3). It also sends millions of tourists further afield, to Europe and the US, for example. Naturally, a decline in Chinese tourists will hit hardest for the countries where tourism is largest as a share of GDP.
Thai tourism, for example, constitutes 20% of GDP and employs about 10% of the workforce. Chinese tourists alone account for about 6% of Thai GDP. Indeed, the virus is already hitting Thailand hard as seen from anecdotal reports from Thai resorts and Bangkok, which is a popular destination for visitors from Wuhan.
The second channel of demand-based transmission is exports. For Australia, New Zealand, Taiwan, and South Korea, more than 25% of exports go to China; for Hong Kong this figure is as high as 78% (Figure 4).
Even Europe cannot escape: 7% of Germany’s exports (EUR 96 bln) go to China, a quarter of which are cars. The rest of Asia constitutes 11% of German exports. Thus a full 18% of German exports will be hit directly or indirectly be less demand from China as well as disruption of transport routes. With German automotive output already at its lowest level since 2010 (Figure 5), significant weakness in Chinese demand could be a serious headwind for Germany.
The third transmission channel is indirect, and potentially just as disruptive: a supply shock. China is a vital part of international value chains and international firms rely on Chinese intermediate goods to produce their end products. Thus, a disruption in Chinese output means these companies are unable to produce their final goods, or at least face delays in production, depending on when production in China can be re-started.
On a macro level countries such as Vietnam, South Korea and Indonesia are especially prone to this (Figure 6), and in Europe so is Germany: about 9% of Germany’s total import of intermediate goods is from China. Germany’s car sector could thus feel the effects of the coronavirus via its exports to China, which will be hit, as well as in the difficulty getting of getting key imports from China in order to produce the cars.
Indeed, we have already seen several major Korean firms such as Hyundai and Kia shut down some local production due to lack of inputs from China, with consequent spill-over effects on to their own national supply-chains.
It should also go without saying that this trend is also playing out within China itself: China is vastly more correlated with China than it is with the rest of the world! Indeed, the under-appreciated risks of long- and China-centric supply chains are being underlined by the current crisis.
Longer-term impact
One also needs to consider the longer-term structural damage that will be seen the longer the virus is present for. The Chinese government will naturally aim to bail out its large State-Owned Entities (SOEs) if they suffer; but could it really do the same for private companies, SMEs, or for indebted households? That seems far less achievable. How far can the state really prop up the domino effect of cascading small and medium firm failures? How can it make households good short of suspending mortgage payments, for example, or huge increases in welfare spending, which China does not currently have systems in place for?
As such, Chinese GDP growth may only be sustained by a deepening of state activity and PBOC activism. The long-term effects of this kind of bail-out at a time when China is ostensibly supposed to be reforming would be that the Chinese economy as whole becomes less efficient in terms of its investment, which is already a key problem. This would mean a short-term stimulus sitting alongside a reduction China’s long term growth potential.
In addition, and as we already noted, either China’s government debt will balloon because of large bailouts of even-more indebted firms and households, at a time when this is already becoming an issue of concern. Note that the combined debt of non-financial corporates, the government and households has already reached 260% of GDP (Figure 7).
The Chinese currency could come under increased downwards pressure in financial markets as well, due to the massive extra CNY liquidity and matching lower Chinese rates.
The Worse
In ‘The Worse’ scenario the virus spreads further within China and lasts longer than in the previous scenario (6-9 months).
Within China, the economic impact will naturally be amplified, with only a partial bounce-back in H2 2020. The pressures on the Chinese government, corporates, and households if nobody is able to work for an extended period, and then on its banks and through to CNY, would increase by orders of magnitude.
In order to ascertain how likely this outcome is, one can arguably track real-time day-to-day air quality data looking at Nitrous Dioxide (NO2) levels in major Chinese cities, as a proxy for the polluting effects of economic activity. What can be seen at time of writing matches anecdotal descriptions of a property market in deep-freeze, ghost cities, and shuttered factories.
Assuming a longer, deeper virus impact we see China’s GDP growth for 2020 in a 3.8%-4.6% y/y range. Again production will take the largest hit because factories will be shut down longer. Services will take the secondary hit. Moreover, the global effect will be far stronger: global growth could decline by a full 1% in 2020. However, we do expect some rebound in late Q3 and in Q4, although the recovery in services will be relatively less due to an extended period of negative sentiment.
The Ugly
This ‘Ugly’ scenario would see the virus continue to rage in China, spread to ASEAN, Australia and New Zealand, and the cluster of cases in the US and Europe snowball at an exponential growth rate from their currently low base. In other words, developed economies would also be hit.
If the virus spreads in the West public panic would naturally be the immediate response. Just as seen in China today, people would stop going out and shopping to stay safe at home, or make panic purchases on fears of supply shortages and then stay at home. In short, the economy would largely grind to a halt.
Naturally, the services sector on which the West relies far more than China would be smashed: restaurants; pubs; bars; cinemas; concerts; conferences would all grind to a halt. International travel bans would be put in place. Supply chains would be broken. International trade would collapse along with domestic demand.
The government would immediately start to institute similar quarantine steps as seen in China. Regardless of the differences in political systems, quarantine is quarantine (and the word originates from Venice, after all). Presuming this was ineffective due to earlier symptom-free transmission then the quarantine would have to be expanded. We could expect a mirror of the Chinese villages building barriers around themselves to keep strangers out.
In this kind of scenario it is impossible to estimate the precise impact on the global economy – because there would be little *global* economy to speak of. Suffice to say, it would be a true depression: a sharp downturn like in 2008-09 that grinds on – and a recovery based on medical breakthroughs rather than monetary-policy ones.
Nonetheless, interest rates would obviously be slashed, where they can, and emergency government spending on anti-virus measures would be stepped up regardless of the size of fiscal deficits. At the same time banks would be told by central banks to keep supporting all firms, especially SMEs, that are facing bankruptcy as their revenues evaporate.
Yet would banks listen to their new orders to lend? Which staff would be doing this, if nobody is in the office? Banks haven’t done much real-economy lending under QE liquidity and no virus conditions, for example. Firms themselves would be told to keep paying their workers even if they can’t do any work – but as in China, would SMEs be able to afford to? And what about the gig economy and the huge number of self-employed?
As such, the state would be forced to expand its role markedly in order to stop a total economic collapse – once again, as in China. This would be akin to current populist arguments for a fiscal-QE-driven ‘Green New Deal’, but in this case wrapped up in biosecurity terms. However, our health and armed forces (which would be needed to keep control) are arguably over-stretched and under-resourced already in many countries, and are not something that can be turned on/off quickly like a switch.
The Unthinkable
This scenario is very short. The virus spreads globally and also mutates, with its transmissibility increasing and its lethality increasing too. The numbers infected would skyrocket, as would casualties. We could be looking at a global pandemic, and at scenarios more akin to dystopian Hollywood films than the realms of economic analysis. Let’s all pray it does not come to pass and just remains a very fat tail risk.
However, one can see that in each of these four scenarios things are ugly, even in the first two ones. As such, the relative financial market optimism still seems to be based on the belief that central-bank liquidity supersedes virus transmissibility. That’s still quite optimistic given the uprise in uncertainty about the coronavirus.
Tyler Durden
Sat, 02/15/2020 – 15:55 -
- Using '1984'-Style Propaganda, Communist Party Claims President Xi Acted To Suppress Virus Earlier Than Previously Believed
Using ‘1984’-Style Propaganda, Communist Party Claims President Xi Acted To Suppress Virus Earlier Than Previously Believed
Summary:
- First COVID-19 death in Europe
- More cases reported in Africa
- COVID-19 case confirmed on cruise ship offered safe harbor in Cambodia.
- “Leaked” speech suggests Xi involved in fighting coronavirus earlier than previously known
- More than 200 cases reported aboard ‘Diamond Princess’
- France confirms 12th case as virus spreads in Europe
* * *
Update (1540ET): Who controls the present, controls the past.
Beijing’s whitewashing of the Politburo Standing Committee’s stumbles during the early days of the outbreak progressed on Saturday with reports about President Xi claiming in a speech that he issued “secret orders” related to fighting the outbreak on Jan. 7, two weeks before the Party came forward and informed the international community and the rest of the Chinese people.
This narrative was picked up by western media outlets, including the New York Times.
According to the report, Xi didn’t say anything specific about the orders. There’s only the implication that Hubei’s leaders, who were fired on Thursday and scapegoated with responsibility for the outbreak, should have known the leadership was paying attention to the outbreak, and they should have taken more aggressive steps.
Per the NYT, Xi “leaked” the speech, which was made to senior party officials, to craft a narrative that President Xi commanded the “People’s War” against one of the most ferociously infectious viruses to emerge in modern times.
Ironically, the NYT says the initial reports of the speech were published by “Seeking Truth”, a Communist Party “doctrinal journal”.
* * *
Remember the cruise ship that was refused entry by four countries, despite having zero confirmed cases of COVID-19? In hindsight, those countries might have had a point.
Because Reuters reports that the first case of coronavirus has been detected among the ship’s passengers, who docked in Cambodia on Friday.
Remember when the whole region applauded Cambodia for its heroism in accepting the ship, which was close to running out of food and other essential supplies?
What’s more: the patient is an 83-year-old American woman. Health authorities in Malaysia confirmed the infection after the woman tested positive on Saturday.
Wait, but didn’t the ship dock in Cambodia? Why is this woman being tested in Malaysia.
Well, first – yes, it did.
Second, it appears that the Cambodian authorities allowed 144 passengers to fly to Malaysia after disembarking on Friday, apparently without even screening them thoroughly.
According to Reuters, the passengers were tested regularly on board and Cambodia also tested 20 passengers after the ship docked. But it’s not clear what kind of tests they were using – swab tests have proved notoriously unreliable.
And clearly, whatever they did, it wasn’t thorough enough, because this woman got through.
At some point, the woman’s symptoms were noted, she was tested, and is now being quarantined.
But if there’s one thing we’ve learned about COVID-19, it’s that there’s never just one case in a group. And Malaysia has already reported dozens of cases.
Also, as we’ve seen with the ‘Diamond Princess’ cases, cruises are extremely susceptible to widespread outbreaks, which means there could be dozens of others infected.
The Westerdam was carrying 1,455 passengers and 802 crew, and it spent two weeks at sea.
After reading a story in today’s South China Morning Post, we realized that President Xi’s immediate economic priority is making sure he can present a believable vision of China having ‘contained’ the outbreak so that the Chinese people and the global community will accept his government’s growth-rate targets laid out in the Party’s ‘Annual Work Report’, which is expected to be released at the next National People’s Congress in early March.
Here’s SCMP’s latest global tally for cases and deaths; it’s missing cases in Singapore that were reported earlier Saturday morning.
Delaying the release could be construed as a sign of weakness, so we suspect Xi will make sure to pad it with some of China’s famously goalseeked stats. Still, like any other form of propaganda, goalseeking is a strategy, and it only works if at least some of the target audience finds it believable.
Elsewhere, there was an interesting COVID-19 develop in North Korea overnight: Yonhap has reportedly confirmed that a North Korean coronavirus patient escaped quarantine and traveled to a public area before being apprehend and…immediately executed. Over in Europe, France on Saturday confirmed a 12th case of the virus, and the sixth confirmed case in Contamines-Montjoie.
Circling back to “Diamond Princess”, another 67 people have tested positive on Saturday, as we mentioned earlier, bringing the total above 200.
Some 400 American passengers have been stuck on the ship, and the US government is hoping to evacuate them on Sunday.
The State Department has said it wants to help North Korea deal with the outbreak, though Kim Jong Un and his government continue to insist that there is no outbreak (though of course Kim would probably rather watch 1 million North Koreans suffocate to death from pneumonia before allowing the US to play white knight).
We’ve already noted some other interesting developments that were reported early Saturday, including the first coronavirus death in Europe, while cases aboard the ‘Diamond Princess’ spike 30%.
Tyler Durden
Sat, 02/15/2020 – 15:53 - Five Signs That Ethereum's Moment Has Come
Five Signs That Ethereum’s Moment Has Come
Authored by Andrew Fenton via CoinTelegraph.com,
Ether has more than doubled in value so far this year, with strong fundamentals and increasing numbers of projects being built on the network.
image courtesy of CoinTelegraph
Here are five signs from this week that Ethereum’s time may have finally come.
1. Institutional investors are now paying a 220% premium
Accredited investors are currently paying a 220% premium to buy Ether through Grayscale’s Ethereum Trust.
The price of a single share in the Ethereum Trust is currently trading for $81.50 even though one share represents Ether worth just $25.46. Yesterday the premium was even higher, at 312%.
The Grayscale Ethereum Trust has $154.5 million in assets under management and is aimed at institutional investors who are willing to pay a premium to avoid investing directly in cryptocurrency with its attendant custody and regulatory issues.
Some retail investors are also paying over the odds. Coinbase, a major fiat gateway used by retail investors, has seen Ether trading at a $1 to $1.50 premium over non-fiat exchanges recently, which may indicate additional fiat coming into the market.
2. Study finds Ether is a hedge and safe haven asset
The first study to examine Ether’s potential as a “hedge, diversifier or a safe haven asset” on an intraday basis has been released by San Jose State University. It examined the data between December 2017 and December 2018 and concludes that:
“Ethereum crypto-currency is a hedge against the U.S. stock and gold markets. Also, Ethereum tends to behave as a safe haven for gold markets. When currency markets are concerned, we document that Ethereum is a diversifier for the US Dollar.”
More research over longer time periods is needed to confirm the findings in other scenarios, but the news will be noticed by investors looking to diversify from stocks, gold or Bitcoin (BTC).
3. JPMorgan looks to merge blockchain division with Consensys
JPMorgan, the largest bank in the United States, is in talks to merge its Quorum blockchain division with development studio ConsenSys — founded by Ethereum co-founder, Joe Lubin.
The bank built its private Quorum blockchain using the Ethereum network. It is used for the Interbank Information Network of 365 banks, and was mooted as the backbone for the JPMorgan digital currency.
If successful, the deal is likely to be announced within six months, with speculation it could see the bank investing further in the Ethereum ecosystem.
4. Ether price is at a seven month high
The Ether price has risen for seven weeks in a row to peak around $274 yesterday — the highest price since July last year.
The longest weekly winning streak for Ether was from January to March 2017. If the Ether price closes green this week and next, it’ll cap a record breaking run (even though it has risen far more sharply in the past).
The price rise has been accompanied by increased network usage. According to Glassnode data, the total daily gas usage has just hit the highest point since September last year.
The number of active Ethereum addresses has grown by 21.5% over the past week, and transactions have increased by 13.2%.
5. DeFi tops $1 billion
The amount of funds staked in Decentralized Finance applications has just topped $1 billion for the first time (and is currently at $1.15 billion). Ether accounts for about 70% of the total, and Bitcoin’s Lightning Network is the only project in the top 20 not built on the Ethereum blockchain
Kain Warwick, founder of the third largest DeFi project, Synthetix told Cointelegraph that DeFi’s success has helped people understand Ethereum’s potential and the large number projects being built on the blockchain, which helped combat “mispricing in the market.”
“The idea that Ethereum is replicating these traditional financial applications on a decentralized platform has finally crossed the chasm and got to the point where people understand it,” he said.
“Once you start looking it becomes obvious just how much stuff is happening on Ethereum. When you compare it to something like Bitcoin it’s just orders of magnitude larger.”
Warwick quickly added that he’s also bullish on Bitcoin and thinks it’s a very valuable asset.
“But in terms of what is the thing facilitating all this activity that’s getting people excited about crypto again? It’s Ethereum. That’s where everything is happening. All of the cool projects and interesting applications are emerging out of Ethereum and it’s hard to see how that doesn’t drive awareness and this reassessment of the value proposition.”
Tyler Durden
Sat, 02/15/2020 – 15:35
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