- Martial Law In The US: How Likely Is It, & What Will Happen?
Martial Law In The US: How Likely Is It, & What Will Happen?
Authored by Robert Richardson via OffGridSurvival.com,
The march towards martial law is something that is often ignored by the general public, often labeled as Quackery or something belonging on conspiracy websites. But what’s happening in this country is exactly what our founders warned us about, and martial law is something they took very, very seriously.
What is martial law?
If you’re looking for a definition, then Martial Law basically means using state or national military force to enforce the will of the government on the people.
Under a declaration of martial law, Constitutional freedoms and liberties are suspended, and civilians are no longer entitled to their civil rights. It basically allows the government, or a tyrannical politician, to shred the Constitution and impose its will through military force.
History of Martial Law in the United States of America
“Those that fail to learn from history, are doomed to repeat it.”
– Winston Churchill
In one way or another, there have always been tyrants who have used the power of government to suppress and control the public. But if we are looking for specific examples of Martial Law being used inside the United States, we don’t have to look very hard or far to find them.
Using the strictest definition of the term, we can see the roots of martial law in America take hold during the lead up to the Revolutionary war. Although there were many reasons for the war, including resistance to taxes imposed by the British parliament, the main catalyst was England’s decision to use military troops to enforce everyday law throughout the colonies.
The beginning of the end? The Civil War Ushers in a Strong Central Government through Martial Law Enforcement
Flash forward a hundred years, and many of the most egregious examples of martial law can be found throughout the civil war. While today’s history books largely ignore the real reasons for the war or the many atrocities committed by President Lincoln, the facts of what really happened cannot be disputed.
The reason we have lost so many of our liberties can be tied directly to the civil war.
On September 15, 1863, President Lincoln imposed Congressionally-authorized martial law. While history contends the war was fought to end slavery, the truth is, Lincoln by his own admission never really cared about freeing slaves. In fact, Lincoln never intended to abolish slavery, his main interest was centralizing government power and using the federal government to exert complete control over all citizens. The abolishment of slavery was only a byproduct of the war. It actually took the 13th amendment to end slavery, since Lincoln actually only freed Southern slaves, not slaves in states loyal to the Union.
During the Civil War, Lincoln continually violated the Constitution, in some cases suspending the entire Constitution that he swore to uphold.
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He suspended the writ of Habeas Corpus without the consent of congress.
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He shut down newspapers whose writers displayed any dissent to Union policy or spoke out against him.
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He raised troops without the consent of Congress.
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He closed courts by force.
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He even imprisoned citizens, newspaper owners,and elected officials without cause and without a trial.
Our founders were very wary of using the military to enforce public policy, and concerns about this type of abuse date back to, and largely influenced, the creation of the Constitution. The founders continually warned about using military force to uphold law and order; unfortunately, most Americans are rather ignorant of history and are even more ignorant to what our founders intended when they created the Constitution and the Bill of Rights.
What will happen under Martial law?
The actual words martial law will probably never be used.
The first thing you will likely see is a declaration of a “State of Emergency”. This may be done nationally, in cases of war or a large-scale terrorist attacks; or it may happen locally, as witnessed in the wake of Hurricane Katrina.
In August of 2005, New Orleans was declared a disaster area and a state of emergency was declared by the governor. This allowed state officials to order evacuations and forcefully remove residents from their homes, suspend certain laws, confiscate firearms, and suspend the sale of items like liquor, firearms, and ammunition.
In the aftermath of Hurricane Katrina, New Orleans police, the U.S. Marshals office, and the Louisiana National Guard forcibly confiscated over 1,000 legal firearms from law-abiding citizens.
Depending on the reasons behind the declaration you may also see:
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The suspension of the Constitution, probably starting with the first and second amendment.
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Confiscation of firearms; it has happened and it will happen again.
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Suspension of Habeas corpus: Imprisonment without due process and without a trial.
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Travel Restrictions, including road closures and possibly, even quarantine zones.
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Mandatory Curfews and Mandatory Identification.
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Automatic search and seizures without a warrant.
When can Martial Law be enacted?
When Martial Law can be enacted is a pretty touchy subject, largely because our founders never intended the federal government or a standing army be permitted to take such actions. Unfortunately, most people accept these unconstitutional activities and are more than willing to give up their essential liberties in exchange for peace of mind and not having to think for themselves.
This is something Benjamin Franklin warned about when he famously wrote,
“Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.”How likely is martial law in the United States?
Let’s face it, this country is a ticking time bomb. From widespread social unrest, crime, and violence to a growing national debt which includes an entire subset of our population that depends on government assistance to exist, the writing is on the wall: Trouble is Coming.
In my opinion, we are already under a form of martial law. The founders never intended standing armies policing the citizens of the United States; sadly that is exactly what we have.
Drones, armored vehicles with high power weapons, tanks, and battlefield helicopters are no longer something that you see on some foreign battlefield; it’s now standard operating procedure at police stations throughout the country. Our federal government has poured billions of dollars into militarizing and taking over our country’s local police forces, in what can only be described as a domestic military force or standing army meant to enforce federal law.
President Bush Expands Martial Law Authority
On September 29, 2006, President George W. Bush signed the John Warner National Defense Authorization Act (NDAA) for Fiscal Year 2007 (H.R. 5122). The law expanded the President’s authority to declare Martial Law under revisions to the Insurrection Act and actually allowed the President to take charge of National Guard troops without state governor authorization.
While certain aspects of the bill were rolled back in 2008, President Obama used the 2012 NDAA to further strengthen the Executive offices ability to declare Martial Law and added provisions that would allow military troops to detain U.S. citizens without a trial.
President Obama Forms National Police Task Force; Uses Social unrest as Justification.
In March of 2015, the Obama administration put together a task force that outlined rules for our nation’s police.
In his Task Force on 21st-century policing report, he outlined the formation of a National Policing Practices and Accountability Division within the federal government. The report went on to describe how the Department of Homeland Security could be used to “ensure that community policing tactics in state, local, and tribal law enforcement agencies are incorporated into their role in homeland security.”
Increasing number of Joint Police/Military Drills are using American Citizens as Theoretical Threats.
From the Jade Helm Military drills that classified Texas and Utah as hostile zones, to National Guard troops in California using crisis actors to portray “right-wing” U.S. citizens in their training exercises, there is a growing number of military-style drills that are portraying American citizens as the perceived threat.
Back in 2012, an army report about the future use of the military as a police force within the United States looked at theoretical situations where the U.S. Army could be used against Tea Party “insurrectionists” who take over U.S. cities. During that same time period, the Department of Homeland Security released a report titled, “Hot Spots of Terrorism and Other Crimes in the United States,” where they outlined who the federal government sees as the largest terrorist threat in the country – that threat was U.S. citizens with extreme “right-wing” views.
The United Stated of America that our Founders created is gone; it’s been replaced by a system that has grown so powerful that most people don’t even realize they’ve become enslaved by that very system.
So how likely is Martial Law in the United States? Well, in some form it’s already here; unfortunately, most people choose to ignore the reality of the situation. That being said, to see it fully enacted we will likely first see a major crisis – either real or manufactured – something like a large-scale terror attack, war with a rogue nation, or a major pandemic disease outbreak.
Martial Law Preparedness Resources:
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Prepper 101: Your Survival Guide to Getting Started: General preparedness guidelines that will help during any crisis or long-term survival situation.
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Bugout Planning: During martial law, it’s likely that most routes of travel will be severely restricted making bugging out something you need to think about well ahead of time.
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Pandemics and How to Prepare for a Pandemic Outbreak: We list this here because it’s one disaster situation that has the potential to scare the entire populace into accepting some form of martial law, quarantine, and military checkpoints.
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Emergency Communication Preparedness Checklist: During times of crisis, especially a martial law situation, uncensored information will be hard to come by. In all likelihood, you will see a sort of digital quarantine on top of the physical barriers with information on the internet and digital airwaves controlled by the government. You need to have a plan to get unfiltered news and information from trusted sources.
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Best Emergency Food: The Top Survival Food Supplies: During any type of disaster you need to make sure you have adequate supplies on hand, including food, water, medical supplies, and self-defense supplies.
Tyler Durden
Sat, 03/21/2020 – 23:50 -
- Half Of Americans Don't Trust Mainstream Media's COVID-19 Coverage
Half Of Americans Don’t Trust Mainstream Media’s COVID-19 Coverage
Americans are split on whether to trust news media with information regarding the coronavirus outbreak, according to a new poll.
As Statista’s Willem Roper notes, a joint poll conducted by NPR, PBS NewsHour and Marist, shows that 47 percent of U.S. adults responded by saying “not very much” or “not at all” when asked how much they trusted news media with coronavirus information.
This poll also included questions asking how much Americans trusted President Donald Trump, with 60 percent saying they didn’t trust him with coronavirus information, and on public health experts, with 13 percent saying they had little to no trust.
Unsurprisingly, Americans views on the news media were split along partisan lines. For Democrats, only 33 percent said they had little to no trust in the news media. Republicans, however, responded at a substantial 60 percent on their lack of confidence in the news media handling coronavirus information. Independents were equally high in their skepticism at 47 percent
You will find more infographics at Statista
Democrats and Republicans have been pointing fingers at news organizations since the coronavirus outbreak began to reach the U.S. Some Republicans believed liberal-leaning news outlets were blowing the outbreak out of proportion to damage the presidency and economy, while some Democrats believed conservative-leaning outlets were endangering American lives by not taking the outbreak seriously enough.
Tyler Durden
Sat, 03/21/2020 – 23:25 - A 'Made-In-China' Pandemic
A ‘Made-In-China’ Pandemic
Authored by Brahma Chellaney via Project Syndicate,
The new COVID-19 coronavirus has spread to more than 100 countries – bringing social disruption, economic damage, sickness, and death – largely because authorities in China, where it emerged, initially suppressed information about it. And yet China is now acting as if its decision not to limit exports of active pharmaceutical ingredients (APIs) and medical supplies – of which it is the dominant global supplier – was a principled and generous act worthy of the world’s gratitude.
When the first clinical evidence of a deadly new virus emerged in Wuhan, Chinese authorities failed to warn the public for weeks and harassed, reprimanded, and detained those who did. This approach is no surprise: China has a long history of “killing” the messenger. Its leaders covered up severe acute respiratory syndrome (SARS), another coronavirus, for over a month after it emerged in 2002, and held the doctor who blew the whistle in military custody for 45 days. SARS ultimately affected more than 8,000 people in 26 countries.
This time around, the Communist Party of China’s proclivity for secrecy was reinforced by President Xi Jinping’s eagerness to be perceived as an in-control strongman, backed by a fortified CPC. But, as with the SARS epidemic, China’s leaders could keep it under wraps for only so long. Once Wuhan-linked COVID-19 cases were detected in Thailand and South Korea, they had little choice but to acknowledge the epidemic.
About two weeks after Xi rejected scientists’ recommendation to declare a state of emergency, the government announced heavy-handed containment measures, including putting millions on lockdown. But it was too late: many thousands of Chinese were already infected with COVID-19, and the virus was rapidly spreading internationally. US National Security Adviser Robert O’Brien has said that China’s initial cover-up “probably cost the world community two months to respond,” exacerbating the global outbreak.
Beyond the escalating global health emergency, which has already killed thousands, the pandemic has disrupted normal trade and travel, forced many school closures, roiled the international financial system, and sunk global stock markets. With oil prices plunging, a global recession appears imminent.
None of this would have happened had China responded quickly to evidence of the deadly new virus by warning the public and implementing containment measures. Indeed, Taiwan and Vietnam have shown the difference a proactive response can make.
Taiwan, learning from its experience with SARS, instituted preventive measures, including flight inspections, before China’s leaders had even acknowledged the outbreak. Likewise, Vietnam quickly halted flights from China and closed all schools. Both responses recognized the need for transparency, including updates on the number and location of infections and public advisories on how to guard against COVID-19.
Thanks to their governments’ policies, both Taiwan and Vietnam – which normally receive huge numbers of travelers from China daily – have kept total cases under 50. Neighbors that were slower to implement similar measures, such as Japan and South Korea, have been hit much harder.
If any other country had triggered such a far-reaching, deadly, and above all preventable crisis, it would now be a global pariah. But China, with its tremendous economic clout, has largely escaped censure. Nonetheless, it will take considerable effort for Xi’s regime to restore its standing at home and abroad.
Perhaps that is why China’s leaders are publicly congratulating themselves for not limiting exports of medical supplies and APIs used to make medicines, vitamins, and vaccines. If China decided to ban such exports to the United States, the state-run news agency Xinhua recently noted, the US would be “plunged into a mighty sea of coronavirus.” China, the article implies, would be justified in taking such a step. It would simply be retaliating against “unkind” US measures taken after COVID-19’s emergence, such as restricting entry to the US by Chinese and foreigners who had visited China. Isn’t the world lucky that China is not that petty?
Maybe so. But that is no reason to trust that China will not be petty in the future. After all, China’s leaders have a record of halting other strategic exports (such as rare-earth minerals) to punish countries that defied them.
Moreover, this is not the first time China has considered weaponizing its dominance in global medical supplies and APIs. Last year, Li Daokui, a prominent Chinese economist, suggested curtailing Chinese API exports to the US as a countermeasure in the trade war.
“Once the export is reduced,” Li noted, “the medical systems of some developed countries will not work.”
That is no exaggeration. A US Department of Commerce study found that 97% of all antibiotics sold in the US come from China.
“If you’re the Chinese and you want to really just destroy us,” Gary Cohn, former chief economic adviser to US President Donald Trump, observed last year, “just stop sending us antibiotics.”
If the specter of China exploiting its pharmaceutical clout for strategic ends were not enough to make the world rethink its cost-cutting outsourcing decisions, the unintended disruption of global supply chains by COVID-19 should be. In fact, China has had no choice but to fall behind in producing and exporting APIs since the outbreak – a development that has constrained global supply and driven up the prices of vital medicines.
That has already forced India, the world’s leading supplier of generic drugs, to restrict its own exports of some commonly used medicines. Almost 70% of the APIs for medicines made in India come from China. If China’s pharmaceutical plants do not return to full capacity soon, severe global medicine shortages will become likely.
The COVID-19 pandemic has highlighted the costs of Xi’s increasing authoritarianism. It should be a wake-up call for political and business leaders who have accepted China’s lengthening shadow over global supply chains for far too long. Only by loosening China’s grip on global supply networks – beginning with the pharmaceutical sector – can the world be kept safe from the country’s political pathologies.
Tyler Durden
Sat, 03/21/2020 – 23:00 - As COVID-19 Drives People Into Isolation, Wall Street's New 'Virtual Workplace' May Become The Norm
As COVID-19 Drives People Into Isolation, Wall Street’s New ‘Virtual Workplace’ May Become The Norm
As governments take drastic measures to slow the spread of the Wuhan coronavirus pandemic, Wall Street – much like a plethora of other industries – has embraced the virtual workplace, according to Bloomberg.
In Hong Kong, bankers have learned to win stock offerings by video chat, and Morgan Stanley is hosting a virtual meeting for a thousand-plus attendees. At Swiss giant UBS Group AG, wealth management executives have realized trips to see clients weren’t as crucial as thought. In California, an investor in hedge funds said he’s pleasantly surprised by how much faster he can confer with them remotely. –Bloomberg
And according to the report, virtual finance may outlast the coronavirus – assuming a treatment is eventually found. Bloomberg notes that there are “early signs that some of the emergency measures Wall Street is rolling out to keep employees safe in a pandemic will become a lasting practice in an industry that’s long mythologized the handshake.”
Early reports of tele-banking success came from Asia, forcing bankers to hunker down as COVID-19 began spreading like wildfire. Many predict their colleagues in other countries will easily adapt to the changes as well – beginning with sales and trading.
“The outbreak has created the urgency to try out new ideas,” says Morgan Stanley’s head of Asia institutional equity distribution, Mehdee Reza, who oversees the firm’s annual investor summit in Hong Kong next week. After the event moved online, reservations jumped 50% – topping estimated participation by more than 400%.
Morgan has moved other events online as well, with one focusing on Indian financial companies seeing a surge in registrants.
UBS, meanwhile, saw travel costs for Asia plunge 90% in February after the outbreak curtailed movement, according to one person familiar with the situation. Now, the financial firm is considering a long-term shift toward remote meetings for bankers who cover the region.
The firm’s dealmakers recently completed at least five pitch meetings on about $2 billion of stock sales with corporate clients via Skype and Zoom as they dialed in from home or from separate rooms, the people said. Citigroup Inc. bankers have been pitching via video conference on five to 10 transactions a week this year across mergers and acquisitions, equity and debt issuance, said Jan Metzger, head of Asia Pacific banking, capital markets and advisory.
“With today’s technology you can interact quicker with a client than ever before and this could be a model for the future even when this situation resolves itself,” Metzger said. –Bloomberg
At UBS’s Zurich headquarters, meanwhile, wealth management officials are considering a significant reduction in travel – though executives will still fly to meet clients who prefer it, or for types of business which must be conducted in person.
Traders and salespeople in New York and London are setting up shop in their dens and kitchens for the long haul – though some are grumbling about lack of access to the full array of resources in the office. Others are parents who have been arguing for years that it’s easy to handle transactions remotely.
LA hedge fund investor Michael Rosen says he’s enjoying the efficiency that telecommuting brings. Instead of traveling to meetings, he uses video-conferencing programs such as Zoom to hold meetings – though he does admit that lack of face-to-face interaction makes it harder to do gut-checks before handing millions of dollars to a fund manager.
“We will return, one day, to in-person meetings, but video technology is here to stay and will only grow in importance,” said Rosen. “I suspect it is now a core feature of how we will work in the future.”
It’s not just small gatherings. Manulife Financial Corp. organized a virtual town hall for 800 staff in Hong Kong and has been sharing its experience with its offices in the U.S. and Canada. Vanguard Group Inc.’s chief economist for the Asia-Pacific region has been holding webcasts for clients to discuss the outlook for the economy and markets.
Even the crucially face-to-face world of recruiting has temporarily moved virtual, according to Ilana Weinstein, the founder and chief executive officer of Wall Street headhunter IDW Group, which counts some of the world’s biggest hedge funds as clients. The market’s swings are stirring up demand for hedge fund managers who can make money in times like these, said Weinstein, who instituted a 10-foot-distance policy before taking her meetings virtual with Skype.
“As this proves efficient, it may be utilized more frequently,” she said. Still, “there’s nothing better than in-person when convincing someone to make a move. It’s about comfort with the unknown, and a layer of distance does not help.” –Bloomberg
According to Morgan Stanley co-chief CEO of Asia-Pacific and co-head of global equities, “There will be a change, there’s no question.”
“I don’t know that we’re going to go all the way back to where we were. I think we will end up somewhere in the middle.”
Tyler Durden
Sat, 03/21/2020 – 22:35 - COVID-19 Has Exposed Our Financial Fragility
COVID-19 Has Exposed Our Financial Fragility
Authored by Jonathan Tepper via Unherd.com,
An orgy of borrowing, speculation and euphoria has left the markets on the verge of catastrophe…
Financial markets have experienced the fastest ever crash over the past few weeks. Even during the dotcom bust and the Lehman crisis, stocks did not fall this quickly. In less than a month, we have seen major indices fall almost 30%, and stocks in sectors such as oil and travel down by 80%. We are experiencing terrifying daily declines not seen since the 1929 stock market crash that preceded the Great Depression.
We are at a watershed moment: the coronavirus Covid-19 is a catalyst fast bringing many long simmering problems to the boil. It is exposing the creaking financial systems around us and it will change the way economies function. Economic and financial pundits, however, have been focusing almost exclusively on the short-term effects of coronavirus and so are missing the much bigger themes at play.
Epidemiologists tell us that when it comes to the virus, we are looking at a once in a century event. It is highly contagious and highly lethal. Experts are not comparing Covid-19 to SARS or Swine Flu, but to the Spanish influenza of 1918 that killed between 50 and 100 million people worldwide.
We do not have good data on what the stock market did during the 1918 flu, but we do know that it led to a severe recession. The connection between influenza and recessions is well documented. Going as far back as the Russian flu in 1889-90, the Spanish flu in 1918, the Asian flu in 1957-58 and the Hong Kong flu of 1968-69 — they all led to recessions. This one will be no different.
But this recession will not only be driven by the economic loss of able-bodied workers, it will be helped along too by the steps political leaders take to avoid the spread of the coronavirus. In medicine, the immune system’s response can often be worse than the disease. When the body goes into septic shock, the immune system overreacts, releasing what doctors refer to as a cytokine flood, which can reduce blood to vital organs and lead to death. Sepsis is common and kills more than 10 million people a year. Today, the political reaction to Covid-19 is causing something akin to a septic shock to the global economy.
The recession is likely to be very sharp but brief. Recessions are self-regulating. De-stocking of shelves and warehouses leads to re-stocking. Collapsing low interest rates and oil prices eventually spur spending and borrowing. Government spending and central bank easing eventually feed through to the real economy. While there will be massive panic and bankruptcies today, there is little doubt that markets will be better in a year, and certainly will be in two to three years,
But the structural changes to how our economy operates, however, will be felt for decades to come. And this is in large part because we didn’t learn the lessons of the last crash.
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Over the years since the 2008 crisis, central banks have been trying to stamp out every single small fire that flares up (the European crisis in 2011-12, the Chinese slowdown in 2015-16, the slowdown last year); but suppressing volatility and risk only creates bigger fires. Risk is like energy and cannot be destroyed. It can only be transformed.
Forest fires are a useful analogy. California has infrequent, devastating forest fires; the Mexican state of Baja California has many small frequent fires and almost no major catastrophic fires. Both states have a similar climate and vegetation, yet they have vastly different outcomes. That’s because when there are very few small fires, underbrush grows, vegetation increases and creates greater kindling for the next fire. Suppressing small risks only makes them emerge eventually as very big ones.
In politics and economics, massive change events tend to happen not in orderly sequences, but in sudden spasms, like the Arab Spring, or the collapse of the Eastern Bloc. Watching events unfold is often like watching sand grains pile slowly on top of one another until a final, random grain causes the entire pile to collapse. People knew the Arab countries were fragile and that the Eastern Bloc might eventually fall, but predicting which grain of sand would do it precipitate either was impossible.
Physicists call these transitions critical thresholds. Critical thresholds are everywhere in nature. Water at moderate temperatures is disorganised and free-flowing, yet at a given critical value, it has an abrupt transition to a solid. It’s the same with the sandpile: one grain too many can trigger collapse — but which one?
In 1987 Per Bak, Chao Tang, and Kurt Wiesenfeld found that while sandpiles may be individually unpredictable, they all behave the same way. The critical finding of their experiments was that the distribution of sand avalanches obeys a mathematical power law: The frequency of avalanches is inversely proportional to their size. Much like forest fires, the less frequent they are, the more catastrophic they are.
It’s the same with financial markets and the economy. We will experience years of quiet, interrupted by sudden avalanche. Years of slowly adding grains of sand can end abruptly — to our great surprise. Today in financial markets, many unsustainable trends have been building, and the coronavirus is merely the grain of sand that has tipped the sandpile.
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It would be controversial to say that the stock market reaction to the coronavirus would not have been very big had we not been in the middle of an orgy of borrowing, speculation and euphoria. Of course, stocks would have fallen with coronavirus headlines, but it is unlikely they would have crashed the way they did without those exacerbating factors. Furthermore, without enormous underlying imbalances of high corporate debt, the prospect of poor sales would not have driven so many stocks to the verge of collapse.
This aspect of the current crisis has so far gone unreported. But not unmentioned. A few weeks before the crash, Charlie Munger, vice chairman of Berkshire Hathaway and Warren Buffett’s longtime business partner, issued a dire warning, “I think there are lots of troubles coming,” he said at the Los Angeles-based Daily Journal annual shareholders meeting. “There’s too much wretched excess.”
Speculative euphoria was at record highs. As Sir John Templeton once said, “Bull markets are born in pessimism, grow on skepticism, mature on optimism and die on euphoria.” Investors were all on the same side of the boat, and it capsized, as happens in market crashes.
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Investors were buying a record amount of call options, or bets on stock prices rising further. According to SentimenTrader, by early February, “We’ve never seen this level of speculation before. Not even close.”
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Asset managers were betting in record quantities on stock futures, which are instruments to bet on underlying indices. Positioning in S&P futures hit a new high as of February 11.
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Hedge fund borrowing to buy stocks was at a 24-month high. They were highly confident markets would keep rising.
It was not a coincidence that there was such euphoria. Retail brokerages had announced over the past few months that they were eliminating all commissions on trading activity. Buying and selling stocks was suddenly “free”. It was like pouring truckloads of kerosene on a blaze. At Charles Schwab, daily average trading revenue exploded 74% after the change.
In scenes reminiscent of the dotcom boom, stocks were doubling overnight. Virgin Galactic Holdings, with no revenue, was worth over $6 billion dollars. Tesla, which has never made money selling cars, had a market capitalisation greater than any other car manufacturer. Its stock price quadrupled in less than three months. The market was so stretched that it would have crashed due to its own absurdity — with or without coronavirus.
The source of this “free” trading came from high frequency trading firms that are supposed to act as market makers, executing buys and sells for clients. Except that they are not really disinterested middlemen; they are running their own trading strategies to make money off retail investors. They execute the order flow of so called mom and pop investors and profit from these “dumb money” retail traders, in the words of Reuters.
The brokerages which sell retail orders receive hundreds of millions of dollars in return from the market makers. This means that, essentially the market makers are bribing the brokerages to profit from retail traders. For example, E*Trade received $188 million for selling its customer order flow last year, while TD Ameritrade made $135 million in the fourth quarter alone. The market makers are willing to pay so much because they almost never lose money — they trade fast and know where the market is going.
As Warren Buffet once said, “As they say in poker, ‘If you’ve been in the game 30 minutes and you don’t know who the patsy is, you’re the patsy.’” Retail is the patsy.
Ken Griffin is the owner of Citadel Securities the biggest market-making firm, and his business is so profitable that he has gone on one of the greatest property buying sprees of all time. In 2015 Griffin paid $60 million for multiple condo units in Miami. He paid a U.S.-record $239.96 million penthouse in New York City, a $122 million mansion in London, and over $250 million in Palm Beach properties. Market making against “dumb money” is a fabulous business.
As the mania deflated in late February, though, mom and pop were abandoned. As the crash started, market makers pulled back and provided less liquidity. Retail investors were left high and dry. It is no wonder prices fell so quickly.
The high frequency market makers have since been pleading for more capital, and rumors swirl that many are experiencing financial difficulties. The illusion of benign market makers looking after retail investors has vanished.
There are echoes here of the old problems from the Lehman crisis; but they have mutated into different forms. During the Lehman crisis, mortgage bonds were pooled together, and insurance companies and pension funds bought them. Today, retail investors have been buying popular funds known as Exchange Traded Funds (ETFs). These are easy to trade and cheap, but they have a fundamental problem. While ETFs have simple tickers like HYG, JNK, LQD that the average retail broker can trade on their screen, they are really holding hundreds of individual bonds inside of them that the investor is unaware of. These bonds are not easy to trade at a moment’s notice and are highly illiquid. But while the ETFs rose slowly and steadily, and investors poured more money in, lulled by a false sense of security.
While the ETF shares trade daily by the second, the underlying bonds are not easy to trade on their own. In the old days, insurers and pension funds bought these bonds, put them away in a drawer and never traded them. Today, though, investors expect instant liquidity from an illiquid investment. Liquidity mismatches are as old as banking itself (deposits and cash are highly liquid, while mortgages and loans are often completely illiquid); the problems of ETFs have been known all along, and the outcome has been inevitable.
As the coronavirus panic spread, the ETFs started trading at big discounts to the underlying value of the baskets of bonds. Markets are broken, and the gap is a sign of how illiquid the underlying holdings really are.
But these ETFs should never have been allowed in the first place.
In the words of Christopher Wood, an investment strategist at Jefferies, “they commoditise equity and bond investing in an insidious way which ultimately creates a dangerous illusion of liquidity. True, ETFs are cheap. But so is fast food.”
While ETFs may appear technical and unrelated to the broader problems in markets, they share the same underlying problem. We have had the illusion of safety and liquidity for some time, and it is the coronavirus that has exposed the gaping holes in financial markets.
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The coronavirus won’t kill companies. But it will expose their bloated, overleveraged balance sheets. Corporate debt in companies has never been higher and has now reached a record 47% of GDP.
Rather than encouraging moderation, central bankers and policy makers have been reloading the all you can eat buffet and persuading everyone to come back for third and fourth plates. The European Central Bank and the Bank of Japan have been buying corporate bonds, and central banks have kept funding at zero rates, which has encouraged a massive increase in indebtedness over the past decade.
Central bankers have long promoted high corporate leverage because they see it as a way to stimulate demand. Even now, many economists see no problems on the horizon. In the New York Times, Nicolas Veron, a senior fellow at the Peterson Institute for International Economics in Washington, was openly mocking anyone advocating prudence, “The prophets of doom who thought that more debt was more risk have generally been wrong for the last 12 years.” Like most central bankers for the past decade, he argued, “More debt has enabled more growth, and even if you have a bit more volatility, it’s still net positive for the economy.”
But while debt has encouraged growth, it has also introduced much greater financial fragility, and so the growth is fundamentally unsound. We are now finding out that less debt, rather than lower rates is better for financial stability.
According to FactSet, 17% of the world’s 45,000 public companies haven’t generated enough cash to cover interest costs for at least the past three years. Debt has been used to finance more debt in a Ponzi fashion. The Bank for International Settlements looked at similar economic measures globally and found that the proportion of zombie companies — companies that earn too little even to make interest payments on their debt, and survive only by issuing new debt — is now higher than 12%, up from 4% in the mid 1990s.
Entire industries are zombies. The most indebted and bankruptcy prone industry has been the shale oil industry. In the last five years, over 200 oil producers filed for bankruptcy. We will see dozens if not hundreds more bankruptcies in the coming year. They were all moribund with oil at $50 dollars; they’re now guaranteed to go bust with oil at $30.
Only now, belatedly, are groups like the IMF waking up to the scale of the problem. In a recent report they warned that central banks have encouraged companies to pursue “financial risk-taking” and gorging on debt. “Corporate leverage can also amplify shocks, as corporate deleveraging could lead to depressed investment and higher unemployment, and corporate defaults could trigger losses and curb lending by banks,” the IMF wrote.
According to the IMF, a downturn only half as bad as 2008 would put $19 trillion of debt—nearly 40% of the corporate borrowing in major countries—at risk of default. The economic consequences would be horrific.
Corporate debt has doubled in the decade since the financial crisis, non-financial companies now owe a record $9.6 trillion in the United States. Globally, companies have issued $13 trillion in bonds. Much of the debt is Chinese, and their companies will struggle to repay any of it given the lockdown and the breakdown in supply chains.
We have not even begun to see the full extent of the corporate bond market meltdown. One little discussed problem is that a large proportion of the debt is “junk”, i.e. lowly rated. An astonishing $3.6 trillion in bonds are rated “BBB”, which is only one rating above junk. These borderline bonds account for 54% of investment-grade corporate bonds, up from 30% in 2008. When recessions happen, these will be downgraded and fall into junk category. Many funds that cannot own junk bonds will become forced sellers. We will see an absolute carnage of forced selling when the downgrades happen. Again, the illusion of safety and liquidity will be exposed by the coronavirus.
* * *
The average family is encouraged to save money for a rainy day, in case they are fired, or they face hardship. Saving some money is considered prudent. It’s quite different for business. Companies pocket the profits in the good years and ask Uncle Sam to bail them out in the bad years. Heads shareholders win, tails the taxpayer loses.
Industry can’t be blamed for not expecting an act of God or force majeure, but in the past 30 years we have seen two Gulf Wars, 9/11, SARS, MERS, Swine Flu, the Great Financial Crisis, etc. Saving for a rainy day should only be expected in cyclically sensitive industries.
But rather than do that, companies have been engaging in a rather more reckless strategy: borrowing to buyback shares. This may boost their Return on Equity (ROE), but it is not remotely prudent and makes their companies highly vulnerable. Borrowing to prop up their own shares means they have less on hand when hard times come.
According to Barons, “Stock buybacks within the S&P 500 index totaled an estimated $729 billion in 2019, down from a record $806 billion in 2018.”
And then along came coronavirus.
Of those industries that are now seeking a bailout, none has saved for a rainy day. Boeing, the poster boy of financial engineering and little real engineering, bought back over $100 billion worth of stock over the past few years. Today it is asking the government for a backstop to its borrowing.
According to Bloomberg, since 2010, the big US airlines have spent 96% of their free cash flow on stock buybacks. Today, they’re asking US taxpayers for $25 billion.
Airline CEOs have been handsomely paid while not saving for a rainy day. Delta Airline’s CEO Ed Bastian made the most, earning nearly $15 million in total compensation. American CEO Doug Parker $12 million, while United CEO Oscar Munoz earned total compensation last year of $10.5 million.
The cruise liners were little different. Over the past decade, Carnival Cruises paid $9.2 billion dollars in dividends to its billionaire owners and bought back $6.7 billion of shares. Royal Caribbean, which is a smaller company, paid out $2.7 billion in dividends and $1.6 billion in buybacks. And the smallest cruise liner Norwegian Cruise Line spent $1.3 billion on share buybacks.
For years, the cruise lines have triumphally proclaimed massive dividends and buybacks. For example, Carnival proudly announced in 2018. “In just three years, we have doubled our quarterly dividend and invested $3.5 billion in Carnival stock.”
Cruise lines have no real claim to any bailout. They pay no taxes due to a legal loophole, and all their vessels fly the flags of Liberia, Panama and the Marshall Islands. Furthermore, their owners tend to be billionaires with more than enough financial wherewithal to recapitalise their own businesses. Their shareholders are not among the 1%. They’re among the 0.01% of richest people in the world. In the worst-case scenario, the US has a highly efficient bankruptcy process. Bondholders of today become shareholders of tomorrow, and the companies can have a fresh start. Bondholders would only be more than happy to own the equity of these companies.
Banks, too, will inevitably be asking for bailouts before this is over. Banks have among the most aggressive stock buyback programs of any industry, with some repurchasing a staggering 10% of their outstanding shares annually. The eight biggest banks have announced they will suspend their share buybacks for the next two quarters due to the COVID-19 pandemic on the global economy. In 2019, the top eight banks bought back $108 billion of their own stock.
If any good can come of the current crisis, perhaps it is exposing the irresponsibility of share buybacks and lack of prudence of most companies.
* * *
Monetary policy was one of the mechanisms employed in response to the last crisis, in the hope its effects would trickle down to the unwashed masses. Central banks bought vast amounts of treasuries and mortgage bonds to tighten financial spreads for banks and borrowers, but none of it went directly to households. It was all intermediated by the financial system and those who had access to capital.
The absurdity of the policy was perfectly illustrated recently in Europe. The European Central Bank has been busy buying bonds, and recently it bought bonds from LVMH, the luxury conglomerate owned by the world’s richest man Bernard Jean Étienne Arnault. The bonds had a negative yield, meaning that the ECB was paying LVMH to borrow. LVMH used the ECBs money to buy Tiffany.
If rates are now so low that billionaires are being paid to borrow, monetary policy has reached the limits of its usefulness.
Investors own stocks because their bond portfolios have acted like a hedge. Whenever stocks have fallen, bonds have gone up. In every downturn since the 1980s, central banks have cut rates, but most government bonds now have close to zero yields.
Extremely low interest rates and high valuations mean that any small change in interest rates will make portfolios much more volatile. If interest rates were to rise even slightly, they would vaporise many bond and stock portfolios. The margin of safety in bonds and stocks has diminished rapidly as rates have approached zero.
The world is now upside down. Many investors now buy stocks for current income and buy bonds to trade given how volatile they have become. Things cannot hold.
* * *
What do high frequency market making, share buybacks and high corporate debt have in common? They are supposedly tools to make trading, growth and returns on capital more efficient and cheaper, yet they have made the system more fragile and less resilient. Perhaps returns on capital and cheapness of market orders and ETFs are less important than stability and anti-fragility, i.e. designing systems that are robust in the face of stress.
We have seen the fragility in supply chains in the recent crisis.When the coronavirus struck in China, suddenly companies everywhere found out that outsourcing all their manufacturing and even medicines and face masks to China might be a problem.
Manufacturing has become less robust, more fragile, even if the returns on capital are better for those companies that outsource everything to China in pursuit of share buybacks.
The lessons of history are instructive. Although planting a single, genetically uniform crop might be more efficient and increase yields in the short run, low genetic diversity increases the risk of losing it all if a new pest is introduced or rainfall levels drop.
The Irish Potato Famine is one such cautionary tale of the danger of monocultures, or only growing one crop. The potato first arrived in Ireland in 1588, and by the 1800s, the Irish had used it to solve the problem of feeding a growing population. They planted the “lumper” potato variety. All of these potatoes were genetically identical to one another, and it was vulnerable to the pathogen Phytophthora infestans. Because Ireland was so dependent on the potato, one in eight Irish people died of starvation in three years during the Irish potato famine of the 1840s.
The lessons from nature are dire. In the 1920s, the Gros Michel banana was almost wiped out by a fungus known as Fusarium cubense, and banana shortages became a growing problem. The widespread planting of a single corn variety contributed to the loss of over a billion dollars worth of corn in 1970, when a fungus hit the US crop. In the 1980s, dependence upon a single type of grapevine root forced California grape growers to replant approximately two million acres of vines when the pest phylloxera attacked.
Today, China is manufacturing’s monoculture.
* * *
Against this dangerous backdrop of volatility and uncertainty, the coronavirus will now achieve the impossible. For the past few years, two ideas have floated around on the political fringes of the Left, but they have been dead on arrival. No one has seriously thought they might become government policy. Today, the Left and Right in the United States and Europe are embracing them.
Andrew Yang, a former tech executive from New York, ran a quixotic, obscure presidential campaign in the United States based on the idea that every citizen should receive a Universal Basic Income (UBI). He advocated a “Freedom Dividend”. This would be a form of universal basic income that would provide a monthly stipend of $1,000 for all Americans between the ages of 18 and 64.
Today, Trump, Pelosi, Romney and others are fully backing Yang’s idea. Respected think tanks such Brookings and Chatham House have advocated UBI. But once it is implemented, there will be no going back. Handouts will start small and grow.
The other big idea has come from Stephanie Kelton, who advised Bernie Sanders and advocates for Modern Monetary Theory (MMT). Kelton argues that in any country with its own currency, budget deficits don’t matter unless they cause inflation. The government can pay for what it needs by simply printing more money — no reason to borrow by issuing bonds. Helicopter money.
Her ideas were widely criticised across the Left and Right, ranging from Paul Krugman to Warren Buffett to Federal Reserve Chairman Jay Powell.
Yet today, the two ideas have come together. There are no atheists in foxholes. Even libertarians on Twitter are now calling for government intervention. Investors and politicians of all stripes are calling for UBI financed by MMT money issuing.
This is an epochal turning point, a great reset. The coronavirus is the grain of sand that will cause the avalanche.
For once the taboo of printing money to pay citizens is broken, we can never go back. Governments will spend money with few constraints, aided by central banks. It’s a strategy that has not worked well in emerging markets, and it did not work well in the 1970s — which has conveniently been forgotten.
Undoubtedly, the government must compensate citizens from mandatory curfews and quarantines. The short-term impacts of the lockdowns must be mitigated, but temporary policies must not become permanent political expedients.
That’s why the danger is not today or even a year from now, it’s five to ten years away, when the crisis has past, along with the reason for UBI and monetary easing. What politican will be disciplined enough to stop spending? What central banker will raise rates when it is unpopular to do so?
Today we are reaping the whirlwind of the last financial crisis. Rather than pursue lower leverage, less debt and more robust institutions and more responsible corporate behaviour, investors and companies instead learned that they would be bailed out in a crisis.
Central banks became enamored of their own success as fire fighters, and they have busily been trying to put out fires by encouraging reckless behaviour, prizing low volatility above a robust financial system, viewing “risk management” as preferring no financial corrections ever.
They should accept that sometimes putting out every single fire creates greater conflagrations. They should be humbler about the extent and limits of their power.
It looks like they’re about to learn the hard way.
Tyler Durden
Sat, 03/21/2020 – 22:10 -
- US Automakers Beg For Tax Cuts And Delays Implementing USMCA Amidst Economic Shock
US Automakers Beg For Tax Cuts And Delays Implementing USMCA Amidst Economic Shock
While the economy continues its unprecedented collapse as a result of the coronavirus and the ensuing lockdowns, there has been nary an industry that has not gone rushing directly to Uncle Sam (and the taxpayer) for a bailout and/or some type of fiscal relief.
The U.S. auto industry, famous for being bailed out in 2008, is no exception.
Trade groups that represent the industry are now pleading with Washington for tax relief and delays in implementing the USMCA trade agreement, according to Bloomberg. They are asking for the concessions in hopes of blunting some of the economic blow from the shutdown of the industry, as a result of the virus.
The Alliance for Automotive Innovation and Motor and Equipment Manufacturers Association has specifically asked lawmakers for a tax deduction or credit for companies that provide paid sick leave for workers related to Covid-19.
They are also asking to delay or defer 2020 quarterly federal tax payments and for a temporary employer payroll tax holiday.
Additionally, automakers are seeking to expand and extend expensing for equipment and machinery while at the same time delaying the June 1 implementation date for the USMCA.
The trade group said in its letter: “We are already seeing a steep drop in retail sales over the last ten days, as well as significant disruptions in production, including temporary closures of numerous manufacturing facilities, while dealers and service centers largely remain open.”
Recall just days ago we reported that the Big 3 automakers were shuttering all domestic manufacturing over concerns about the virus.
All three of Detroit’s “Big 3” automakers announced around midday on Wednesday that they would shutter all domestic production. The decision follows Daimler, BMW and a handful of other carmakers in Europe and Asia shuttering factories to combat the coronavirus outbreak – and to prevent a glut of supply.
Tyler Durden
Sat, 03/21/2020 – 21:45 - Why Is CrowdStrike Confused On 11 Key Details About The DNC 'Hack'?
Why Is CrowdStrike Confused On 11 Key Details About The DNC ‘Hack’?
Authored by Larry Johnson via Sic Semper Tyrannis blog,
Here is the bottom-line – despite being hired in late April (or early May) of 2016 to stop an unauthorized intrusion into the DNC, CrowdStrike, the cyber firm hired by the DNC’s law firm to solve the problem, failed abysmally. More than 30,000 emails were taken from the DNC server between 22 and 25 May 2016 and given to Wikileaks. Crowdstrike blamed Russia for the intrusion but claimed that only two files were taken. And CrowdStrike inexplicably waited until 10 June 2016 to reboot the DNC network.
CrowdStrike, a cyber-security company hired by a Perkins Coie lawyer retained by the DNC, provided the narrative to the American public of the alledged hack of the DNC, But the Crowdstrike explanation is inconsistent, contradictory and implausible. Despite glaring oddities in the CrowdStrike account of that event, CrowdStrike subsequently traded on its fame in the investigation of the so-called Russian hack of the DNC and became a publicly traded company. Was CrowdStrike’s fame for “discovering” the alleged Russian hack of the DNC a critical factor in its subsequent launch as a publicly traded company?
The Crowdstrike account of the hack is very flawed. There are 11 contradictions, inconsistencies or oddities in the public narrative about CrowdStrike’s role in uncovering and allegedly mitigating a Russian intrusion (note–the underlying facts for these conclusions are found in Ellen Nakashima’s Washington Post story, Vicki Ward’s Esquire story, the Mueller Report and the blog of Crowdstrike founder Dmitri Alperovitch):
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Two different dates—30 April or 6 May—are reported by Nakashima and Ward respectively as the date CrowdStrike was hired to investigate an intrusion into the DNC computer network.
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There are on the record contradictions about who hired Crowdstrike. Nakashima reports that the DNC called Michael Sussman of the law firm, Perkins Coie, who in turn contacted Crowdtrike’s CEO Shawn Henry. Crowdstrike founder Dmitri Alperovitch tells Nakashima a different story, stating our “Incident Response group, was called by the Democratic National Committee (DNC).
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CrowdStrike claims it discovered within 24 hours the “Russians” were responsible for the “intrusion” into the DNC network.
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CrowdStrike’s installation of Falcon (its proprietary software to stop breaches) on the DNC on the 1st of May or the 6th of May would have alerted to intruders that they had been detected.
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CrowdStrike officials told the Washington Post’s Ellen Nakashima that they were, “not sure how the hackers got in” and didn’t “have hard evidence.”
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In a blog posting by CrowdStrike’s founder, Dmitri Alperovitch, on the same day that Nakashima’s article was published in the Washington Post, wrote that the intrusion into the DNC was done by two separate Russian intelligence organizations using malware identified as Fancy Bear (APT28) and Cozy Bear (APT29).
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But, Alperovitch admits his team found no evidence the two Russian organizations were coordinating their “attack” or even knew of each other’s presence on the DNC network.
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There is great confusion over what the “hackers” obtained. DNC sources claim the hackers gained access to the entire database of opposition research on GOP presidential candidate Donald Trump. DNC sources and CrowdStrike claimed the intruders, “read all email and chat traffic.” Yet, DNC officials insisted, “that no financial, donor or personal information appears to have been accessed or taken.” However, CrowdStrike states, “The hackers stole two files.”
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Crowdstrike’s Alperovitch, in his blog posting, does not specify whether it was Cozy Bear or Fancy Bear that took the files.
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Wikileaks published DNC emails in July 2016 that show the last message taken from the DNC was dated 25 May 2016. This was much more than “two files.”
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CrowdStrike, in complete disregard to basic security practice when confronted with an intrusion, waited five weeks to disconnect the DNC computers from the network and sanitize them.
Let us start with the very contradictory public accounts attributed to Crowdstrke’s founder, Dmitri Alperovitch. The 14 June 2016 story by Ellen Nakashima of the Washington Post and the October 2016 piece by Vicki Ward in Esquire magazine offer two different dates for the start of the investigation:
When did the DNC learn of the “intrusion”?
Ellen Nakashima claims it was the end of April:
“DNC leaders were tipped to the hack in late April. Chief executive Amy Dacey got a call from her operations chief saying that their information technology team had noticed some unusual network activity… That evening, she spoke with Michael Sussmann, a DNC lawyer who is a partner with Perkins Coie in Washington. Soon after, Sussmann, a former federal prosecutor who handled computer crime cases, called Henry, whom he has known for many years. Within 24 hours, CrowdStrike had installed software on the DNC’s computers so that it could analyze data that could indicate who had gained access, when and how.
Ward’s timeline, citing Alperovitch, reports the alert came later, on 6 May 2016:
At six o’clock on the morning of May 6, Dmitri Alperovitch woke up in a Los Angeles hotel to an alarming email. . . . late the previous night, his company had been asked by the Democratic National Committee to investigate a possible breach of its network. A CrowdStrike security expert had sent the DNC a proprietary software package, called Falcon, that monitors the networks of its clients in real time. Falcon “lit up,” the email said, within ten seconds of being installed at the DNC: Russia was in the network.
This is a significant and troubling discrepancy because it marks the point in time when CrowdStrike installed its Falcon software on the DNC server. It is one thing to confuse the 30th of April with the 1st of May. But Alperovitch gave two different reporters two different dates.
What did the “hackers” take from the DNC?
Ellen Nakashima’s reporting is contradictory and wrong. Initially, she is told that the hackers got access to the entire Donald Trump database and that all emails and chats could be read. But then she is assured that only two files were taken. This was based on Crowdstrike’s CEO’s assurance, which was proven subsequently to be spectacularly wrong when Wikileaks published 35,813 DNC emails. How did Crowdstrike miss that critical detail? Here is Nakashima’s reporting:
Russian government hackers penetrated the computer network of the Democratic National Committee and gained access to the entire database of opposition research on GOP presidential candidate Donald Trump, according to committee officials and security experts who responded to the breach.
The intruders so thoroughly compromised the DNC’s system that they also were able to read all email and chat traffic, said DNC officials and the security experts. . . .
The DNC said that no financial, donor or personal information appears to have been accessed or taken, suggesting that the breach was traditional espionage, not the work of criminal hackers.
One group, which CrowdStrike had dubbed Cozy Bear, had gained access last summer (2015) and was monitoring the DNC’s email and chat communications, Alperovitch said.
The other, which the firm had named Fancy Bear, broke into the network in late April and targeted the opposition research files. It was this breach that set off the alarm. The hackers stole two files, Henry said. And they had access to the computers of the entire research staff — an average of about several dozen on any given day. . . .
CrowdStrike is continuing the forensic investigation, said Sussmann, the DNC lawyer. “But at this time, it appears that no financial information or sensitive employee, donor or voter information was accessed by the Russian attackers,” he said.
The DNC emails that are posted on the Wikileaks website and the metadata shows that these emails were removed from the DNC server starting the late on the 22nd of May and continuing thru the 23rd of May. The last tranche occurred late in the morning (Washington, DC time) of the 25th of May 2016. Crowdstrike’s CEO, Shawn Henry, insisted on the 14th of June 2016 that “ONLY TWO FILES” had been taken. This is demonstrably not true. Besides the failure of Crowdstrike to detect the removal of more than 35,000 emails, there is another important and unanswered question—why did Crowdstrike wait until the 10th of June 2016 to start disconnecting the DNC server when they allegedly knew on the 6th of May that the Russians had entered the DNC network?
Crowdstrike accused Russia of the DNC breach but lacked concrete proof.
Ellen Nakashima’s report reveals that Crowdstrike relied exclusively on circumstantial evidence for its claim that the Russian Government hacked the DNC server. According to Nakashima:
CrowdStrike is not sure how the hackers got in. The firm suspects they may have targeted DNC employees with “spearphishing” emails. These are communications that appear legitimate — often made to look like they came from a colleague or someone trusted — but that contain links or attachments that when clicked on deploy malicious software that enables a hacker to gain access to a computer. “But we don’t have hard evidence,” Alperovitch said.
There is a word in English for the phrases, “Not sure” and “No hard evidence”–that word is, “assumption.” Assuming that the Russians did it is not the same as proving, based on evidence, that the Russians were culpable. But that is exactly what CrowdStrike did.
The so-called “proof” of the Russian intrusions is the presence of Fancy Bear and Cozy Bear?
At first glance, Dmitri Alperovitch’s blog posting describing the Fancy Bear and Cozy Bear “intrusions” appears quite substantive. But cyber security professionals quickly identified a variety of shortcomings with the Alperovitch account. For example, this malware is not unique nor proprietary to Russia. Other countries and hackers have access to APT28 and have used it.
Skip Folden offers one of the best comprehensive analyses of the problems with the Alperovitch explanation:
No basis whatsoever:
APT28, aka Fancy Bear, Sofacy, Strontium, Pawn Storm, Sednit, etc., and APT29, aka Cozy Bear, Cozy Duke, Monkeys, CozyCar,The Dukes, etc., are used as ‘proof’ of Russia ‘hacking’ by Russian Intelligence agencies GRU and FSB respectively.
There is no basis whatsoever to attribute the use of known intrusion elements to Russia, not even if they were once reverse routed to Russia, which claim has never been made by NSA or any other of our IC.
On June 15, 2016 Dmitri Alperovitch himself, in an Atlantic Council article, gave only “medium-level of confidence that Fancy Bear is GRU” and “low-level of confidence that Cozy Bear is FSB.” These assessments, from the main source himself, that either APT is Russian intelligence, averages 37%-38% [(50 + 25) / 2].
Exclusivity:
None of the technical indicators, e.g., intrusion tools (such as X-Agent, X-Tunnel), facilities, tactics, techniques, or procedures, etc., of the 28 and 29 APTs can be uniquely attributed to Russia, even if one or more had ever been trace routed to Russia. Once an element of a set of intrusion tools is used in the public domain it can be reverse-engineered and used by other groups which precludes the assumption of exclusivity in future use. The proof that any of these tools have never been reverse engineered and used by others is left to the student – or prosecutor.
Using targets:
Also, targets have been used as basis for attributing intrusions to Russia, and that is pure nonsense. Both many state and non-state players have deep interests in the same targets and have the technical expertise to launch intrusions. In Grizzly Steppe, page 2, second paragraph, beginning with, “Both groups have historically targeted …,” is there anything in that paragraph which can be claimed as unique to Russia or which excludes all other major state players in the world or any of the non-state organizations? No.
Key-Logger Consideration:
On the subject of naming specific GRU officers initiating specific actions on GRU Russian facilities on certain dates / times, other than via implanted ID chips under the finger tips of these named GRU officers, the logical assumption would be by installed key logger capabilities, physical or malware, on one or more GRU Russian computers.
The GRU is a highly advanced Russian intelligence unit. It would be very surprising were the GRU open to any method used to install key logger capabilities. It would be even more surprising, if not beyond comprehension that the GRU did not scan all systems upon start-up and in real time, including key logger protection and anomalies of performance degradation and data transmissions.
Foreign intelligence source:
Other option would be via a foreign intelligence unit source with local GRU access. Any such would be quite anti-Russian and be another nail in the coffin of any chain of evidence / custody validity at Russian site.
Stated simply, Dmitri Alperovitch’s conclusion that “the Russians did it” are not supported by the forensic evidence. Instead, he relies on the assumption that the presence of APT28 and APT29 prove Moscow’s covert hand. What is even more striking is that the FBI accepted this explanation without demanding forensic evidence.
Former FBI Director James Comey and former NSA Director Mike Rogers testified under oath before Congress that neither agency ever received access to the DNC server. All information the FBI used in its investigation was supplied by CrowdStrike. The Hill reported:
The FBI requested direct access to the Democratic National Committee’s (DNC) hacked computer servers but was denied, Director James Comey told lawmakers on Tuesday.
The bureau made “multiple requests at different levels,” according to Comey, but ultimately struck an agreement with the DNC that a “highly respected private company” would get access and share what it found with investigators.
The foregoing facts raise major questions about the validity of the Crowdstrike methodology and conclusions with respect to what happened on the DNC network. This is not a conspiracy theory. It is a set of facts that, as of today, have no satisfactory explanation. The American public deserve answers.
Tyler Durden
Sat, 03/21/2020 – 21:20 -
- 'Stay Indoors Or Risk A Year In Prison': Jordan Blows Sirens At Start Of Virus Lockdown
‘Stay Indoors Or Risk A Year In Prison’: Jordan Blows Sirens At Start Of Virus Lockdown
Jordan has imposed an unprecedented nation-wide curfew on Saturday to combat the spread of coronavirus at a moment its official confirmed number of cases approaches 100. As of Friday health officials said Jordan has 85 confirmed infections while emphasizing they expect numbers to rise rapidly.
“Jordan blew sirens at the start of a nationwide curfew on Saturday, limiting the mobility of its 10 million citizens indefinitely to combat the spread of coronavirus, witnesses and officials said,” Reuters reports.
The round-the-clock ban on residents going outside started at 7am with warning sirens literally sounding across Amman. The new curfew is being widely described as the most severe measure any country has imposed on a nation-wide level thus far in the crisis.
Jordanian soldiers in the capital Amman on March 18, 2020. Image source: AFP As nations across the globe move to a militarized response, and with even the United States witnessing the rare deployment of National Guard units to city streets, such as in New York and Georgia, the government of Jordan is poised to impose perhaps the most draconian penalties for violating the newly announced measures.
The Jordanian Army announced Saturday curfew violators for all but authorized emergency personnel and vital services will face up to a year in jail. Thousands of soldiers have already been deployed to city streets and highways, especially in the sprawling capital of Amman.
“Anyone going outside will be subjecting themselves to punishment,” Justice Minister Bassam Talhouni said in an Arabic broadcast. Already at least 400 were arrested Saturday. “Nearly 400 people have been arrested in Jordan for violating an indefinite curfew introduced on Saturday that bans people from leaving their homes even to purchase food,” The Guardian reports.
Watch: Sirens blared at the start of a curfew across #Jordan earlier in the day, limiting the mobility of 10 million citizens indefinitely to combat the spread of #COVID_19 #coronavirus.
The Jordanian army says 392 violations have been recorded so far.https://t.co/jVDgOTbYXO pic.twitter.com/OeyAReyU7q
— Al Arabiya English (@AlArabiya_Eng) March 21, 2020
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The stringent measures immediately resulted in the following scene, as Reuters describes:
Armored police vehicles roamed the streets of main cities, calling on people to heed warnings not to leave their homes, witnesses said.
Streets across the capital and main cities were deserted, with shops shuttered as police patrolled neighborhoods and the army manned checkpoints, witnesses said.
Amman officials say they had to take drastic measures due to the “recklessness” of some elements among the population who refuse to take the pandemic threat seriously.
“Unfortunately we have seen recklessness in scenes of shopping and moving around in the streets. These pose a grave danger to our efforts to contain the epidemic,” Amjad Adailah, a cabinet minister and government spokesman said.
The air raid sirens at 7 am in Amman Jordan signaling the start of a three day curfew – that means, stay inside or risk jail. #Covid_19 #Amman #lockdown pic.twitter.com/GYBhyAnQPd
— amandaorr (@amandaorr) March 21, 2020
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Similar but arguably less draconian measures have been deployed in some communities and cities in neighboring Israel and the West Bank.
Also, Syria to the north is presenting an increasingly worrisome situation: the Assad government has ordered the closure of all schools, restaurants, theaters and public places, and has even sent many government workers home as of Saturday. Yet authorities in Damascus are still officially reporting zero cases. However, it could also be the case they acted quickly enough, with WHO officials looking on and administering tests, amid all but the Lebanese border being for years shutdown due to war.
The potential for an outbreak inside squalid and over-crowded refugee camps in the region is also alarming international health officials. The WHO is reportedly attempting to set up urgent testing inside camps along the Syrian-Turkish border, after a handful of cases appeared in an internally displaced persons (IDP) camp in Iraq.
Tyler Durden
Sat, 03/21/2020 – 20:55 - The Fed Is A One-Trick Pony
The Fed Is A One-Trick Pony
Authored by William Anderson via The Mises Institute,
In slashing its key interest rate to zero in response to the economic calamities imposed by all levels of government ostensibly to fight the coronavirus, the Federal Reserve System is trying to regenerate the crashing stock market.
At opening bell right afterward, however, the market continued to crash, and those results perhaps should be telling us that the Fed’s one-trick solution to economic crises is just that: a trick.
Please understand that the central bank is doing what it always does when it seems there is an emergency: print money. Now, this is not like what we see in Venezuela, with wads of printed money lying in gutters or even what was seen in Weimar Germany in the fall of 1923. In contrast, the Fed wants us to see Very Serious Central Bankers ensuring that an imploding economy has plenty of “liquidity.”
When a proposed congressional bill caused the October 1987 stock market crash, newly appointed Fed chairman Alan Greenspan immediately promised to provide “liquidity” to Wall Street banks. When the Y2K scare loomed, the Fed was there to “provide liquidity.”
When the Housing Bubble burst in 2008, something Austrians had predicted more than a year before, Greenspan’s successor, Ben “Helicopter” Bernanke, made good on his promise to backstop the entire financial system with “liquidity” as the Fed went on an unprecedented spree of buying near-worthless securities in order to try to prop up the system (see diagram below).
Despite the attempt by Time to beatify Bernanke by putting him of the cover with the title “The Man Who Saved the World,” he didn’t save anything except for the existence of those very securities that had been the guts of the financial bubble and that the market itself already had declared near worthless. From valueless mortgage securities to long-term US Treasury bonds (part of “Operation Twist”), Bernanke’s Fed supposedly breathed life into the entire economy. (Here is a more current snapshot of the trend of Fed purchases, although the diagram does not break down the various assets.)
In reality, Bernanke was depressing the economy by propping up the economic sectors featuring massive malinvestments and keeping resources from moving from lower-valued to higher-valued uses by tying up about a fifth of GDP with underperforming assets. That most financial journalists and academic economists failed to recognize what Bernanke was actually doing is an indictment upon their various professions and speaks volumes about the willful ignorance in newsrooms and in the halls of academe.
(Fed chairs from Bernanke’s successor, Janet Yellen, to current Fed chairman Jerome Powell all have imbibed from the same spiked Kool-Aid and there certainly is no threat of the current crop of financial journalists and economics/finance professors exposing the scam. The beat goes on.)
So, now we have yet another “exit stage right” performance by the central bank that is part of the long line of Fed interventions that do little more than kick the proverbial can down the road. The reasoning goes like this: the huge work stoppage imposed by various governments means that people cannot pay their bills, and ultimately that winds up depressing banking assets, and depressed banking assets threaten the entire financial system and can bring down an economy.
What to do? Just substitute the Fed’s funny money for real payments so that at least on paper, the bank balance sheets are in the black. It is another chapter of the “Perception Over Reality” work of fiction in which virtual printed money carries the same weight and value as money earned through real live economic activity. As economist Joseph T. Salerno recently wrote:
Printing up paper money and giving it or lending it to domestic businesses or to India will not bring about a miraculous replacement of the lost goods and services or repair broken supply chains. However, the “pandemic shock” may, and probably will, have repercussions on the demand side of the economy, likely precipitating a financial crisis. But this is due to the designed fragility of a financial system based on fractional reserve banking and propped up by governmental policies such as deposit insurance and the too-big-to-fail doctrine.
It is both discouraging and encouraging to see the market’s response. Like all of us who have thousands (and, really, hundreds of thousands) of dollars invested, we are taking a financial hit, and I have no idea if when this crisis passes my investment portfolio is going to resemble Berlin in 1945 or not. (I suspect I will be among the walking wounded.)
However, the encouraging part—and this is a bit of a stretch—is that markets may finally—FINALLY—have recognized that a real economy with real production is different than the house of paper that the Fed has been creating the past few decades. Whether or not Americans are willing to take a hard look at our economy is another matter. With socialists claiming that they can create paradise via fiat and higher taxes and Trump supporters saying that the market surge (at least until the coronavirus hit) was “proof” that we had a great economy, there is plenty of delusion out there. It is time to pull back the curtain and expose the Fed for the humbug it truly is.
Tyler Durden
Sat, 03/21/2020 – 20:30 - Biden Plans 'Fireside Corona Chats' To Snipe At Trump Virus Response
Biden Plans ‘Fireside Corona Chats’ To Snipe At Trump Virus Response
Seizing on the coronavirus national emergency, Joe Biden is now planning to give regular ‘shadow briefings’ as soon as Monday to undermine President Trump’s ‘lies and failures’ in responding to COVID-19, and offer his own thoughts on how to handle the crisis, according to Politico.
“President Trump stop saying false things, will ya?” Biden said in a Friday preview with reporters, where he rattled off a list of statements made by the POTUS.
Most of Biden’s time was spent lighting up Trump.
Biden pointed out that the president said the U.S. is “very close” to making a coronavirus vaccine, but that could be a year away (and Trump confused the coronavirus with Ebola). Biden noted that Trump said two Navy ships are in “tip top shape” and on the way to help, but the Navy said one is in maintenance and the other lacks a medical crew and is being “spruced up,” according to NBC News. The 500 million respirator masks that Trump said the government ordered, Biden noted, could take 18 months to arrive. And he faulted Trump for doing too little to support state and local governments. Politico
In other words, Biden’s team is feeding him a list of ‘gotchas’ to go after Trump leading up to the November election, assuming it happens in November.
“People are worried they are really frightened, when these things don’t come through. He just exacerbates their concern. Stop saying false things you think make you sound like a hero and start putting the full weight of the federal government behind finding fast, safe and effective treatments.”
Biden made his comments from his home in Wilmington, Delaware, where he has been holed up for more than a week in adherence with Centers for Disease Control guidelines that urge people to practice social distancing.
Immediately after the initial onset of the crisis, Biden also held his fire against the president out of concern it would look too political — an accusation leveled at him anyway by Trump campaign manager Brad Parscale, who said that “Biden will take attention from real updates Americans should know just to score political points.” –Politico
Biden has withdrawn from public following last week’s decisive primary victories against Bernie Sanders in Florida, Illinois and Arizona – and says he’s been spending time speaking with businesses, governors, health officials and members of Congress.
He says he’s been outfitting his house with new-fangled equipment that will ‘enable him to livestream events,’ as well as have interactive ‘tele-press conferences’ as well as broadcast interviews with a network television.
In short, Biden has joined the 21st century.
“I would like to get in the position and we’re trying to work out so that the headquarters … to be able to accommodate my directly answering questions in front of a press that’s assigned to me,” he said, adding “We’ve hired a professional team to do that now. And excuse the expression that’s a little above my pay grade to know how to do that.”
Because politicizing a national emergency is what America needs most right now.
Tyler Durden
Sat, 03/21/2020 – 20:05 - COVID-19 – Evidence Over Hysteria
COVID-19 – Evidence Over Hysteria
Authored by Aaron Ginn via Medium.com,
After watching the outbreak of COVID-19 for the past two months, I’ve followed the pace of the infection, its severity, and how our world is tackling the virus. While we should be concerned and diligent, the situation has dramatically elevated to a mob-like fear spreading faster than COVID-19 itself.
When 13% of Americans believe they are currently infected with COVID-19 (mathematically impossible), full-on panic is blocking our ability to think clearly and determine how to deploy our resources to stop this virus. Over three-fourths of Americans are scared of what we are doing to our society through law and hysteria, not of infection or spreading COVID-19 to those most vulnerable.
The following article is a systematic overview of COVID-19 driven by data from medical professionals and academic articles that will help you understand what is going on (sources include CDC, WHO, NIH, NHS, University of Oxford, Stanford, Harvard, NEJM, JAMA, and several others). I’m quite experienced at understanding virality, how things grow, and data. In my vocation, I’m most known for popularizing the “growth hacking movement” in Silicon Valley that specializes in driving rapid and viral adoption of technology products. Data is data. Our focus here isn’t treatments but numbers. You don’t need a special degree to understand what the data says and doesn’t say. Numbers are universal.
I hope you walk away with a more informed perspective on how you can help and fight back against the hysteria that is driving our country into a dark place. You can help us focus our scarce resources on those who are most vulnerable, who need our help.
Note: The following graphs and numbers are as of mid-March 2020. Things are moving quickly, so I update this article twice a day. Most graphs are as of March 20th, 2020.
* * *
Total cases are the wrong metric
A critical question to ask yourself when you first look at a data set is, “What is our metric for success?”.
Let’s start at the top. How is it possible that more than 20% of Americans believe they will catch COVID-19? Here’s how. Vanity metrics — a single data point with no context. Wouldn’t this picture scare you?
Look at all of those large red scary circles!
These images come from the now infamous John Hopkins COVID-19 tracking map. What started as a data transparency effort has now molded into an unintentional tool for hysteria and panic.
An important question to ask yourself is what do these bubbles actually mean? Each bubble represents the total number of COVID-19 cases per country. The situation looks serious, yet we know that this virus is over four months old, so how many of these cases are active?
Immediately, we now see that just under half of those terrifying red bubbles aren’t relevant or actionable. The total number of cases isn’t illustrative of what we should do now. This is a single vanity data point with no context; it isn’t information or knowledge. To know how to respond, we need more numbers to tell a story and to paint the full picture. As a metaphor, the daily revenue of a business doesn’t tell you a whole lot about profitability, capital structure, or overhead. The same goes for the total number of cases. The data isn’t actionable. We need to look at ratios and percentages to tell us what to do next — conversion rate, growth rate, and severity.
Time lapsing new cases gives us perspective
Breaking down each country by the date of the first infection helps us track the growth and impact of the virus. We can see how total cases are growing against a consistent time scale.
Here are new cases time lapsed by country and date of first 100 total cases.
Here is a better picture of US confirmed case daily growth.
The United States is tracking with other European nations at doubling every three days or so. As we measure and test more Americans, this will continue to grow. Our time-lapse growth is lower than China, but not as good as South Korea, Japan, Singapore, or Taiwan. All are considered models of how to beat COVID-19. The United States is performing average, not great, compared to the other modern countries by this metric.
Still, there is a massive blindspot with this type of graph. None of these charts are weighted on a per-capita basis. It treats every country as a single entity, as we will see this fails to tell us what is going on in several aspects.
On a per-capita basis, we shouldn’t be panicking
Every country has a different population size which skews aggregate and cumulative case comparisons. By controlling for population, you can properly weigh the number of cases in the context of the local population size. Viruses don’t acknowledge our human borders. The US population is 5.5X greater than Italy, 6X larger than South Korea, and 25% the size of China. Comparing the US total number of cases in absolute terms is rather silly.
Rank ordering based on the total number of cases shows that the US on a per-capita basis is significantly lower than the top six nations by case volume. On a 1 million citizen per-capita basis, the US moves to above mid-pack of all countries and rising, with similar case volume as Singapore (385 cases), Cyprus (75 cases), and United Kingdom(3,983 cases). This is data as of March 20th, 2020.
But total cases even on a per-capita basis will always be a losing metric. The denominator (total population) is more or less fixed. We aren’t having babies at the pace of viral growth. Per-capita won’t explain how fast the virus is moving and if it is truly “exponential”.
COVID-19 is spreading, but probably not accelerating
Growth rates are tricky to track over time. Smaller numbers are easy to move than larger numbers. As an example, GDP growth of 3% for the US means billions of dollars while 3% for Bermuda means millions. Generally, growth rates decline over time, but the nominal increase may still be significant. This holds true of daily confirmed case increases. Daily growth rates declined over time across all countries regardless of particular policy solutions, such as shutting the borders or social distancing.
The daily growth data across the world is a little noisy.
Weighing daily growth of confirmed cases by a relative daily growth factor cleans up the picture, more than 1 is increasing and below 1 is declining. For all of March, the world has hovered around 1.1. This translates to an average daily growth rate of 10%, with ups and downs on a daily basis. This isn’t great, but it is good news as COVID-19 most likely isn’t increasing in virality. The growth rate of the growth rate is approximately 10%; however, the data is quite noisy. With inconsistent country-to-country reporting and what qualifies as a confirmed case, the more likely explanation is that we are increasing our measurement, but the virus hasn’t increased in viral capability. Recommended containment and prevention strategies are still quite effective at stopping the spread.
Cases globally are increasing (it is a virus after all!), but beware of believing metrics designed to intentionally scare like “cases doubling”. These are typically small numbers over small numbers and sliced on a per-country basis. Globally, COVID-19’s growth rate is rather steady. Remember, viruses ignore our national boundaries.
Viruses though don’t grow infinitely forever and forever. As with most things in nature, viruses follow a common pattern — a bell curve.
Watch the Bell Curve
As COVID-19 spreads and declines (which it will decline despite what the media tells you), every country will follow a similar pattern. The following is a more detailed graph of S. Korea’s successful defeat of COVID-19 compared also to China with thousands of more cases and deaths. It is a bell curve:
Here is a more detailed graph of S. Korea graphed against the total number of cases.
Here is a graph from Italy showing a bell curve in symptom onset and number of cases, which may point to the beginning of the end for Italy —
JAMA — https://jamanetwork.com/journals/jama/pages/coronavirus-alert
Bell curves is the dominant trait of outbreaks. A virus doesn’t grow linearly forever. It accelerates, plateaus, and then declines. Whether it is environmental or our own efforts, viruses accelerate and quickly decline. This fact of nature is represented in Farr’s law. CDC’s of “bend the curve” or “flatten the curve” reflects this natural reality.
It is important to note that in both scenarios, the total number of COVID-19 cases will be similar. “Flattening the curve”’s focus is a shock to the healthcare system which can increase fatalities due to capacity constraints. In the long-term, it isn’t infection prevention. Unfortunately, “flattening the curve” doesn’t include other downsides and costs of execution.
Both the CDC and WHO are optimizing virality and healthcare utilization, while ignoring the economic shock to our system. Both organizations assume you are going to get infected, eventually, and it won’t be that bad.
A low probability of catching COVID-19
The World Health Organization (“WHO”) released a study on how China responded to COVID-19. Currently, this study is one of the most exhaustive pieces published on how the virus spreads.
The results of their research show that COVID-19 doesn’t spread as easily as we first thought or the media had us believe (remember people abandoned their dogs out of fear of getting infected). According to their report if you come in contact with someone who tests positive for COVID-19 you have a 1–5% chance of catching it as well. The variability is large because the infection is based on the type of contact and how long.
The majority of viral infections come from prolonged exposures in confined spaces with other infected individuals. Person-to-person and surface contact is by far the most common cause. From the WHO report, “When a cluster of several infected people occurred in China, it was most often (78–85%) caused by an infection within the family by droplets and other carriers of infection in close contact with an infected person.
From the CDC’s study on transmission in China and Princess Cruise outbreak –
A growing body of evidence indicates that COVID-19 transmission is facilitated in confined settings; for example, a large cluster (634 confirmed cases) of COVID-19 secondary infections occurred aboard a cruise ship in Japan, representing about one fifth of the persons aboard who were tested for the virus. This finding indicates the high transmissibility of COVID-19 in enclosed spaces
Dr. Paul Auwaerter, the Clinical Director for the Division of Infectious Diseases at Johns Hopkins University School of Medicine echoes this finding,
“If you have a COVID-19 patient in your household, your risk of developing the infection is about 10%….If you were casually exposed to the virus in the workplace (e.g., you were not locked up in conference room for six hours with someone who was infected [like a hospital]), your chance of infection is about 0.5%”
According to Dr. Auwaerter, these transmission rates are very similar to the seasonal flu.
Air-based transmission or untraceable community spread is very unlikely. According to WHO’s COVID-19 lead Maria Van Kerkhove, true community based spreading is very rare. The data from China shows that community-based spread was only a very small handful of cases. “This virus is not circulating in the community, even in the highest incidence areas across China,” Van Kerkhove said.
“Transmission by fine aerosols in the air over long distances is not one of the main causes of spread. Most of the 2,055 infected hospital workers were either infected at home or in the early phase of the outbreak in Wuhan when hospital safeguards were not raised yet,” she said.
True community spread involves transmission where people get infected in public spaces and there is no way to trace back the source of infection. WHO believes that is not what the Chinese data shows. If community spread was super common, it wouldn’t be possible to reduce the new cases through “social distancing”.
“We have never seen before a respiratory pathogen that’s capable of community transmission but at the same time which can also be contained with the right measures. If this was an influenza epidemic, we would have expected to see widespread community transmission across the globe by now and efforts to slow it down or contain it would not be feasible,” said Tedros Adhanom, Director-General of WHO.
An author of a working paper from the Department of Ecology and Evolutionary Biology at Princeton University said, “The current scientific consensus is that most transmission via respiratory secretions happens in the form of large respiratory droplets … rather than small aerosols. Droplets, fortunately, are heavy enough that they don’t travel very far and instead fall from the air after traveling only a few feet.”
The media was put into a frenzy when the above authors released their study on COVID-19’s ability to survive in the air. The study did find the virus could survive in the air for a couple of hours; however, this study was designed as academic exercise rather than a real-world test. This study put COVID-19 into a spray bottle to “mist” it into the air. I don’t know anyone who coughs in mist form and it is unclear if the viral load was large enough to infect another individual As one doctor, who wants to remain anonymous, told me, “Corona doesn’t have wings”.
To summarize, China, Singapore, and South Korea’s containment efforts worked because community-based and airborne transmission aren’t common. The most common form of transmission is person-to-person or surface-based.
Common transmission surfaces
COVID-19’s ability to live for a long period of time is limited on most surfaces and it is quite easy to kill with typical household cleaners, just like the normal flu.
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COVID-19 be detected on copper after 4 hours and 24 hours on cardboard.
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COVID-19 survived best on plastic and stainless steel, remaining viable for up to 72 hours
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COVID-19 is very vulnerable to UV light and heat.
Presence doesn’t mean infectious. The viral concentration falls significantly over time. The virus showed a half-life of about 0.8 hours on copper, 3.46 hours on cardboard, 5.6 hours on steel and 6.8 hours on plastic.
According to Dylan Morris, one of the authors, “We do not know how much virus is actually needed to infect a human being with high probability, nor how easily the virus is transferred from the cardboard to one’s hand when touching a package”
According to Dr. Auwaerter, “It’s thought that this virus can survive on surfaces such as hands, hard surfaces, and fabrics. Preliminary data indicates up to 72 hours on hard surfaces like steel and plastic, and up to 12 hours on fabric.”
COVID-19 will likely “burn off” in the summer
Due to COVID-19’s sensitivity to UV light and heat (just like the normal influenza virus), it is very likely that it will “burn off” as humidity increases and temperatures rise.
Released on March 10th, one study mapped COVID-19 virality capability by high temperature and high humidity. It found that both significantly reduced the ability of the virus to spread from person-to-person. From the study,
“This result is consistent with the fact that the high temperature and high humidity significantly reduce the transmission of influenza. It indicates that the arrival of summer and rainy season in the northern hemisphere can effectively reduce the transmission of the COVID-19.”
The University of Maryland mapped severe COVID-19 outbreaks with local weather patterns around the world, from the US to China. They found that the virus thrives in a certain temperature and humidity channel. “The researchers found that all cities experiencing significant outbreaks of COVID-19 have very similar winter climates with an average temperature of 41 to 52 degrees Fahrenheit, an average humidity level of 47% to 79% with a narrow east-west distribution along the same 30–50 N” latitude”, said the University of Maryland.
“Based on what we have documented so far, it appears that the virus has a harder time spreading between people in warmer, tropical climates,” said study leader Mohammad Sajadi, MD, Associate Professor of Medicine in the UMSOM, physician-scientist at the Institute of Human Virology and a member of GVN.
In the image below, the zone at risk for a significant community spread in the near-term includes land areas within the green bands.
Children and Teens aren’t at risk
It’s already well established that the young aren’t particularly vulnerable. In fact, there isn’t a single death reported below the age of 10 in the world and most children who test positive don’t show symptoms. As well, infection rates are lower for individuals below the age of 19, which is similar to SARS and MERS (COVID-19’s sister viruses).
According to the WHO’s COVID-19 mission in China, only 8.1% of cases were 20-somethings, 1.2% were teens, and 0.9% were 9 or younger. As of the study date February 20th, 78% of the cases reported were ages 30 to 69. The WHO hypothesizes this is for a biological reason and isn’t related to lifestyle or exposure.
“Even when we looked at households, we did not find a single example of a child bringing the infection into the household and transmitting to the parents. It was the other way around. And the children tend to have a mild disease,” said Van Kerkhove.
According to a WSJ article, children have a near-zero chance of becoming ill. They are more likely to get normal flu than COVID-19.
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A World Health Organization report on China concluded that cases of Covid-19 in children were “relatively rare and mild.” Among cases in people under age 19, only 2.5% developed severe disease while 0.2% developed critical disease. Among nearly 6,300 Covid-19 cases reported by the Korea Centers for Disease Control & Prevention on March 8, there were no reported deaths in anyone under 30. Only 0.7% of infections were in children under 9 and 4.6% of cases were in those ages 10 to 19 years old
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Only 2% of the patients in a review of nearly 45,000 confirmed Covid-19 cases in China were children, and there were no reported deaths in children under 10, according to a study published in JAMA last month. (In contrast, there have been 136 pediatric deaths from influenza in the U.S. this flu season.)
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About 8% of cases were in people in their 20s. Those 10 to 19 years old accounted for 1% of cases and those under 10 also accounted for only 1%.
However even if children and teens are not suffering severe symptoms themselves, they may “shed” large amounts of virus and may do so for many days, says James Campbell, a professor of pediatrics at the University of Maryland School of Medicine.
Children had a virus in their secretions for six to 22 days or an average of 12 days. “Shedding virus doesn’t always mean you’re able to transmit the virus”, he notes. It is still important to consider that prolonged shedding of high viral loads from children is still a risky combination within the home since the majority of transmission occurs within a home-like confined environment.
A strong, but unknown viral effect
While the true viral capacity is unknown at this moment, it is theorized that COVID-19 is more than the seasonal flu but less than other viruses. The average number of people to which a single infected person will transmit the virus, or Ro, range from as low as 1.5 to a high of 3.0
Newer analysis suggests that this viral rate is declining. According to Nobel Laureate and biophysicist Michael Levitt, the infection rate is declining –
“Every coronavirus patient in China infected on average 2.2 people a day — spelling exponential growth that can only lead to disaster. But then it started dropping, and the number of new daily infections is now close to zero.” He compared it to interest rates again: “even if the interest rate keeps dropping, you still make money. The sum you invested does not lessen, it just grows more slowly. When discussing diseases, it frightens people a lot because they keep hearing about new cases every day. But the fact that the infection rate is slowing down means the end of the pandemic is near.”
What about asymptomatic spread?
The majority of cases see symptoms within a few days, not two weeks as originally believed.
On true asymptomatic spread, the data is still unclear but increasingly unlikely. Two studies point to a low infection rate from pre-symptomatic and asymptomatic individuals. One study said 10% of infections come from people who don’t show symptoms, yet. Another WHO study reported 1.2% of confirmed cases were truly asymptomatic. Several studies confirming asymptotic spread have ended up disproven. It is important to note there is a difference between “never showing symptoms” and “pre-symptomatic” and the media is promoting an unproven narrative. Almost all people end up in the latter camp within five days, almost never the former. It is very unlikely for individuals with COVID-19 to never show symptoms. WHO and CDC claim that asymptomatic spread isn’t a concern and quite rare.
Iceland is leading the global in testing its entire population of ~300,000 for asymptomatic spread, not just those that show symptoms. They randomly tested 1,800 citizens who don’t show symptoms and, as far as they knew, were not exposed to positive individuals. Of this sample, only 19 tested positive for COVID-19, or 1.1% of the sample.
Obviously, this type of viral spread is the most concerning; however based on the level of media attention and the global size of positive infections, it seems more probable we keep looking for a COVID-19 viral trait that doesn’t exist.
Another way of looking at virality and asymptotic spread is the number of flight attendants, airport staff, or pilots that have tested positive for COVID-19. Out of the thousands of flights since November 2019, only a handful of airport and airline staff have tested positive (such as AA pilot, some BA staff, and several TSA employees).
Outside of medical and hospital staff, these individuals are in greatest contact with infected persons in confined spaces. Despite having no protective gear and most likely these people were asymptomatic, airline and airport staff aren’t likely to catch COVID-19 compared to the rest of the population. Those employed in the travel sector are infected at a lower rate than the general population or healthcare workers.
“We still believe, looking at the data, that the force of infection here, the major driver, is people who are symptomatic, unwell, and transmitting to others along the human-to-human route,” Dr. Mike Ryan of WHO Emergencies Program.
If the symptoms are so close to other less fatal coronaviruses, what is the positivity rate of those tested?
93% of people who think they are positive aren’t
Looking at the success in S. Korea and Singapore, the important tool in our war chest is measurement. If we are concerned about the general non-infected population, what is the probability those who show symptoms actually test positive? What is the chance that the cough from your neighbor is COVID-19? This “conversion rate” will show whether or not you have a cold (another coronavirus) or heading to isolation for two weeks. Global data shows that ~95% of people who are tested aren’t positive. The positivity rate varies by country.
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UK: 7,132 concluded tests, of which 13 positive (0.2% positivity rate).
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UK: 48,492 tests, of which 1,950 (4.0% positivity rate)
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Italy: 9,462 tests, of which 470 positive (at least 5.0% positivity rate).
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Italy: 3,300 tests, of which 99 positive (3.0% positivity rate)
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Iceland: 3,787 tests, of which 218 positive (5.7% positive rate)
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France: 762 tests, of which 17 positive, 179 awaiting results (at least 2.2% positivity rate).
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Austria: 321 tests, of which 2 positive, awaiting results: unknown (at least 0.6% positivity rate).
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South Korea: 66,652 tests with 1766 positives 25,568 awaiting results (4.3% positivity rate).
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United States: 445 concluded tests, of which 14 positive (3.1% positivity rate).
In the US, drive-thru testing facilities are being deployed around the nation. Gov. Cuomo of NY released initial data from their drive-thru testing. Out of the 600~ that was tested in a single day, ~7% were positive. Tested individuals actively show symptoms and present a doctor’s note. This result is similar to public tracking on US nationwide positivity rate.
University of Oxford’s Our World in Data attempts to track public reporting on individuals tested vs positive cases of COVID-19. For the US, it estimates 14.25% of those tested are positive.
Last week, the US was significantly behind in testing, near the bottom of all countries worldwide. As of March 20th, a week later, the US is much closer to other G8 and European countries, but there is a long way to go.
Based on the initial results and the results from other countries, the total number of positive COVID-19 cases will increase as testing increases, but the fatality rate will continue to fall and the severity case mix will fall.
In general, the size of the US population infected with COVID-19 will be much smaller than originally estimated as most symptomatic individuals aren’t positive. 93% — 99% have other conditions.
Globally, the US has a long way to go to catch up in testing. As testing expands, the total number of cases will increase, but the mild to severe case ratio will decline dramatically.
1% of cases will be severe
Looking at the whole funnel from top to bottom, ~1% of everyone who is tested for COVID-19 with the US will have a severe case that will require a hospital visit or long-term admission.
Globally, 80–85% of all cases are mild. These will not require a hospital visit and home-based treatment/ no treatment is effective.
As of mid-March, the US has a significantly lower case severity rate than other countries. Our current severe caseload is similar to South Korea. This data has been spotty in the past; however, lower severity is reflected in the US COVID-19 fatality rates (addressed later).
Early reports from CDC, suggest that 12% of COVID-19 cases need some form of hospitalization, which is lower than the projected severity rate of 20%, with 80% being mild cases.
For context, this year’s flu season has led to at least 17 million medical visits and 370,000 hospitalizations (0.1%) out of 30–50 million infections. Recalling that only comparing aggregate total cases isn’t helpful, breaking down active cases on a per-capita basis paints a different picture on severity. This is data as of March 20th, 2020.
Declining fatality rate
As the US continues to expand testing, the case fatality rate will decline over the next few weeks. There is little doubt that serious and fatal cases of COVID-19 are being properly recorded. What is unclear is the total size of mild cases. WHO originally estimated a case fatality rate of 4% at the beginning of the outbreak but revised estimates downward 2.3% — 3% for all age groups. CDC estimates 0.5% — 3%, however stresses that closer to 1% is more probable. Dr. Paul Auwaerter estimated 0.5% — 2%, leaning towards the lower end. A paper released on March 19th analyzed a wider data set from China and lowered the fatality rate to 1.4%. This won’t be clear for the US until we see the broader population that is positive but with mild cases. With little doubt, the fatality rate and severity rate will decline as more people are tested and more mild cases are counted.
Higher fatality rates in China, Iran, and Italy are more likely associated with a sudden shock to the healthcare system unable to address demands and doesn’t accurately reflect viral fatality rates. As COVID-19 spread throughout China, the fatality rate drastically fell outside of Hubei. This was attributed to the outbreak slowing spreading to several provinces with low infection rates.
John P.A. Ioannidis is professor of medicine, of epidemiology and population health, of biomedical data science, and of statistics at Stanford University and co-director of Stanford’s Meta-Research Innovation Center recently wrote about fatality rates and how our current instrumentation is leading to faulty policy solutions:
“The one situation where an entire, closed population was tested was the Diamond Princess cruise ship and its quarantine passengers. The case fatality rate there was 1.0%, but this was a largely elderly population, in which the death rate from Covid-19 is much higher.
Projecting the Diamond Princess mortality rate onto the age structure of the U.S. population, the death rate among people infected with Covid-19 would be 0.125%. But since this estimate is based on extremely thin data — there were just seven deaths among the 700 infected passengers and crew — the real death rate could stretch from five times lower (0.025%) to five times higher (0.625%). It is also possible that some of the passengers who were infected might die later, and that tourists may have different frequencies of chronic diseases — a risk factor for worse outcomes with SARS-CoV-2 infection — than the general population. Adding these extra sources of uncertainty…”
“Reasonable estimates for the case fatality ratio in the general U.S. population vary from 0.05% to 1%.”
Looking at the US fatality, the fatality rate is drastically declining as the number of cases increases, halving every four or five days. The fatality rate will eventually level off and plateau as the US case-mix becomes apparent.
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4.06% March 8 (22 deaths of 541 cases)
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3.69% March 9 (26 of 704)
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3.01% March 10 (30 of 994)
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2.95% March 11 (38 of 1,295)
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2.52% March 12 (42 of 1,695)
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2.27% March 13 (49 of 2,247)
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1.93% March 14 (57 of 2,954)
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1.84% March 15 (68 of 3,680)
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1.90% March 16 (86 of 4,503)
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1.76% March 17 (109 of 6,196)
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1.66% March 18 (150 of 9,003)
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1.51% March 19th (208 of 13,789)
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1.32% March 20th (256 of 19,383)
Source: Worldometers.info
Mapped against other countries, our fatality rate and case-mix are following a similar pattern to South Korea which is a good sign, a supposed model of how to manage COVID-19.
Here are deaths weighted by the total number of cases as of March 20th, 2020. Ranked by the total number of cases, our death rate is closer to South Korea’s than Spain’s or Italy’s.
The initial higher fatality rate for the US is trending much lower than originally estimated.
A study of about half deaths within the US (154 of 264), almost all fit a similar demographic profile as the other global ~11,000 fatalities.
Another analysis by Nature, comparing the fatality rate (since revised down) and infectious rate of COVID-19 to other illnesses. COVID-19 is now within range of its other sisters of less potent coronaviruses.
As the global health community continues to gather and report data, the claim that “COVID-19 isn’t just like the flu” (though still severe) is looking less credible as fatality rates continue to decline and measuring of mild cases increases.
It is important to consider case-mix when looking at fatality rates. The fatality rate is significantly higher for patients with an underlying condition.
The fatality rates by underling condition mimics the rise in the average fatality rate with those with underlying conditions who get the seasonal flu.
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Pneumonia and influenza: 1.53% — 1.93%
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Chronic lower respiratory disease: 1.48% — 1.93%
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All respiratory causes: 3.04% — 4.14%
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Heart disease: 3.21% — 4.4%
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Cancer: 0.68% — 1.05%
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Diabetes: 0.26% — 0.39%
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For all underlying conditions: 10.17% — 13.67%.
Comparing case-mix across countries with a wide range of fatality (China and Italy) and those with low fatality rates (S. Korea) reveals a stark difference in age; therefore, underlying conditions also vary significantly across countries. These two factors contribute the most to a country’s fatality rate.
Source: Goldman Sachs
Divided by most at risk and low risk, Italy had significantly more cases of high at-risk patients than Germany or Korea
Source: https://medium.com/@andreasbackhausab/coronavirus-why-its-so-deadly-in-italy-c4200a15a7bf
Based on an initial CDC study of 2,449 COVID-19 cases (almost half of current US cases have missing demographic data), the United States case-mix looks more like S. Korea and Germany rather than China or Italy. Approximately 69% of COVID-19 cases are in the lower at-risk population of under 65, while 31% are older than 65 higher risk population.
This suggests the US will experience a declining fatality rate; however, the US has over 100 million adults with underlying and chronic illnesses that will negatively impact our fatality rate.
An older population skew within the infected population explains most of the disparity in fatality rates between high and low countries. According to a study of the fatalities of COVID-19 cases in Italy, 99% of all deaths had an underlying pathology. Only 0.8% had no underlying condition.
Most of those infected in Italy were over the age of 60, but the median age of a fatality was 80. All of Italy’s fatality under the age of 40 were males with serious pre-existing medical conditions.
This doesn’t factor in a wide variance in healthcare capacity, such as hospital beds per 1,000 citizens which could affect health outcomes; however, this doesn’t seem to be highly correlated with fatality rates at this moment.
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S. Korea — 11.5
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Germany — 8.3
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China — 4.2
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Italy — 3.4
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United States — 2.9
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Singapore — 2.4
So what should we do?
The first rule of medicine is to do no harm.
Local governments and politicians are inflicting massive harm and disruption with little evidence to support their draconian edicts. Every local government is in a mimetic race to one-up each other in authoritarian city ordinances to show us who has more “abundance of caution”. Politicians are competing, not on more evidence or more COVID-19 cures but more caution. As unemployment rises and families feel unbearably burdened already, they feel pressure to “fix” the situation they created with even more radical and “creative” policy solutions. This only creates more problems and an even larger snowball effect. The first place to start is to stop killing the patient and focus on what works.
Start with basic hygiene
The most effective means to reduce spread is basic hygiene. Most American’s don’t wash their hands enough and aren’t aware of how to actually wash your hands. Masks aren’t particularly effective if you touch your eyes with infected hands. Ask businesses and public places to freely distribute disinfectant wipes and hand sanitizer to the customers and patrons. If you get sick or feel sick, stay home. These are basic rules for preventing illness that doesn’t require trillions of dollars.
More data
The best examples of defeating COVID-19 requires lots of data. We are very behind in measuring our population and the impact of the virus but this has turned a corner the last few days. The swift change in direction should be applauded. Private companies are quickly developing and deploying tests, much faster than CDC could ever imagine. The inclusion of private businesses in developing solutions is creative and admirable. Data will calm nerves and allow us to utilize more evidence in our strategy. Once we have proper measurement implemented (the ability to test hundreds every day in a given metro), let’s add even more data into that funnel — reopen public life.
Open schools
Closing schools is counterproductive. The economic cost for closing schools in the U.S. for four weeks could cost between $10 and $47 billion dollars (0.1–0.3% of GDP) and lead to a reduction of 6% to 19% in key health care personnel.
CDC’s guidance on closing schools specifically for COVID-19 –
Available modeling data indicate that early, short to medium closures do not impact the epi curve of COVID-19 or available health care measures (e.g., hospitalizations). There may be some impact of much longer closures (8 weeks, 20 weeks) further into community spread, but that modeling also shows that other mitigation efforts (e.g., handwashing, home isolation) have more impact on both spread of disease and health care measures. In other countries, those places who closed school (e.g., Hong Kong) have not had more success in reducing spread than those that did not (e.g., Singapore).
Based on transmission evidence children are more likely to catch COVID-19 in the home than at school. As well, they are more likely to expose older vulnerable adults as multi-generational homes are more common. As well, the school provides a single point of testing a large population for a possible infection in the home to prevent community spread.
Open up public spaces
With such little evidence of prolific community spread and our guiding healthcare institutions reporting the same results, shuttering the local economy is a distraction and arbitrary with limited accretive gain outside of greatly annoying millions and bankrupting hundreds of businesses. The data is overwhelming at this point that community-based spread and airborne transmission is not a threat. We don’t have significant examples of spreading through restaurants or gyms. When you consider the environment COVID-19 prefers, isolating every family in their home is a perfect situation for infection and transmission among other family members. Evidence from South Korea and Singapore shows that it is completely possible and preferred to continue on with life while making accommodations that are data-driven, such as social distancing and regular temperature checks.
Support business and productivity
The data shows that the overwhelming majority of the working population will not be personally impacted, both individually or their children. This is an unnecessary burden that is distracting resources and energy away from those who need it the most. By preventing Americans from being productive and specializing at what they do best (their vocation), we are pulling resources towards unproductive tasks and damaging the economy. We will need money for this fight.
At this rate, we will spend more money on “shelter-in-place” than if we completely rebuilt our acute care and emergency capacity.
Source: https://www.macrobond.com/posts/blog-central-banks-go-big-covi-19-market-crash-crisis/
Americans won’t have the freedom to go help those who get sick, volunteer their time at a hospital, or give generously to a charity. Instead, big government came barrelling in like a bull in a china shop claiming they could solve COVID-19. The same government that continued to not test incoming passengers from Europe and who couldn’t manufacture enough test kits with two months’ notice.
Let Americans be free to be a part of the solution, calling us to a higher civic duty to help those most in need and protect the vulnerable. Not sitting in isolation like losers.
People fear what the government will do, not an infection
Rampant hoarding and a volatile stock market aren’t being driven by COVID-19. An overwhelming majority of American’s don’t believe they will be infected. Rather hoarding behavior strongly demonstrates an irrational hysteria, from purchasing infective household masks to buying toilet paper in the troves. This fear is being driven by government action, fearing what the government will do next. In South Korea, most citizens didn’t fear infection but the government and public shaming. By presenting a consistent and clear plan that is targeted and specific to those who need the most help will reduce the volatility and hysteria. A sign the logic behind these government actions aren’t widely accepted, nor believed as rational by the American people is the existence itself of the volatility and hysteria. Over three-fourths of Americans are scared not of COVID-19 but what it is doing to our society.
In CDC’s worst-case scenario, CDC expects more than 150–200 million infections within the US. This estimate is hundreds of times bigger than China’s infection rate (30% of our population compared to 0.006% in China). Does that really sound plausible to you? China has a sub-par healthcare system, attempted to suppress the news about COVID-19 early on, a lack of transparency, an authoritarian government, and millions of Chinese traveling for the Lunar Festival at the height of the outbreak. In the US, we have a significant lead time, several therapies proving successful, transparency, a top tier healthcare system, a democratic government, and media providing ample accountability.
Infection isn’t our primary risk at this point.
Expand medical capacity
COVID-19 is a significant medical threat that needs to be tackled, both finding a cure and limiting spread; however, some would argue that a country’s authoritarian response to COVID-19 helped stop the spread. Probably not. In South Korea and Taiwan, I can go to the gym and eat at a restaurant which is more than I can say about San Francisco and New York, despite a significantly lower caseload on a per-capita basis.
None of the countries the global health authorities admire for their approach issued “shelter-in-place” orders, rather they used data, measurement,and promoted common sense self-hygiene.
Does stopping air travel have a greater impact than closing all restaurants? Does closing schools reduce the infection rate by 10%? Not one policymaker has offered evidence of any of these approaches. Typically, the argument given is “out of an abundance of caution”. I didn’t know there was such a law. Let’s be frank, these acts are emotionally driven by fear, not evidence-based thinking in the process of destroying people’s lives overnight. While all of these decisions are made by elites isolated in their castles of power and ego, the shock is utterly devastating Main Street.
A friend who runs a guy will run out of cash in a few weeks. A friend who is a pastor let go of half of his staff as donations fell by 60%. A waitress at my favorite breakfast place told me her family will have no income in a few days as they force the closure of restaurants. While political elites twiddle their thumbs with models and projections based on faulty assumptions, people’s lives are being destroyed with Marxian vigor. The best compromise elites can come up with is $2,000.
Does it make more sense for us to pay a tax to expand medical capacity quickly or pay the cost to our whole nation of a recession? Take the example of closing schools which will easily cost our economy $50 billion. For that single unanimous totalitarian act, we could have built 50 hospitals with 500+ beds per hospital.
Eliminate arcane certificate of need and expand acute medical capacity to support possible higher healthcare utilization this season.
Don’t let them forget it and vote
These days are precarious as Governors float the idea of martial law for not following “social distancing”, as well as they liked while they violate those same rules on national TV. Remember this tone is for a virus that has impacted 0.004% of our population. Imagine if this was a truly existential threat to our Republic.
The COVID-19 hysteria is pushing aside our protections as individual citizens and permanently harming our free, tolerant, open civil society. Data is data. Facts are facts. We should be focused on resolving COVID-19 with continued testing, measuring, and be vigilant about protecting those with underlying conditions and the elderly from exposure. We are blessed in one way, there is an election in November. Never forget what happened and vote.
You may ask yourself. Who is this guy? Who is this author? I’m a nobody. That is also the point. The average American feels utterly powerless right now. I’m an individual American who sees his community and loved ones being decimated without given a choice, without empathy, and while the media cheers on with high ratings.
When this is all over, look for massive confirmation bias and pyrrhic celebration by elites. There will be vain cheering in the halls of power as Main Street sits in pieces. Expect no apology, that would be political suicide. Rather, expect to be given a Jedi mind trick of “I’m the government and I helped.”
The health of the State will be even stronger with more Americans dependent on welfare, another trillion stimulus filled with pork for powerful friends, and a bailout for companies that charged us $200 change fees for nearly a decade. Washington DC will be fine. New York will still have all of the money in the world. Our communities will be left with nothing but a shadow of the longest bull market in the history of our country.
Tyler Durden
Sat, 03/21/2020 – 19:40 -
- Trump Rages Against Buybacks, But It Was His Policies That Unleashed The Buyback Tsunami
Trump Rages Against Buybacks, But It Was His Policies That Unleashed The Buyback Tsunami
There is a distinct irony in Trump raging at company executives for announcing and executing trillions in buybacks in the past few years, most of which were accompanied by a tremendous increase in debt particularly in the lowest rated investment grade space and which now threatens to crash the entire US credit market: it was Trump’s tax policies that unleashed the wave of buybacks in the first place!
In recent days, amid the broad populist outcry against companies – such as Boeing and most US airline companies – that feasted on buybacks for years, sending their stock price and total debt to all time highs, only to demand a taxpayer buyback now that they actually need the liquidity, liquidity they would have had access to if only they had invested for a rainy day instead of making their shareholders richer by repurchasing stock, President Trump has taken the lead in the blowback against buybacks when on Thursday he said that he would not oppose barring companies that receive federal assistance during the coronavirus pandemic from conducting stock buybacks.
“It takes many, many people in this case to tango, but as far as I’m concerned conditions like that would be okay with me,” Trump said during a White House press conference adding that “he was never happy with that.“
“We don’t want that,” President Trump tells @jonkarl when asked if he guarantees that that billions going to help industries amid coronavirus won’t go to executive bonuses or stock buybacks.
“Conditions like that would be OK with me,” Trump adds. https://t.co/VheMc9r6tJ pic.twitter.com/8XkZczKl2K
— ABC News (@ABC) March 19, 2020
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In the meantime, many US companies scrambling to preserve cash, have already “generously” announced they would halt buybacks, such as most US banks, although in light of the current economic environment that has seen much of the US economy grind to a halt with banks such as Goldman now expecting an unprecedented 24% drop in Q2 GDP – nearly double the peak hit during the Great Depression – the reality is that most companies have no choice but to cut back on anything but absolutely critical spending to keep the lights on. Spending on buybacks and dividends certainly is not included here.
Sensing the shift in public mood which may preclude a bailout, the CEOs of the largest US airlines asked Congress Saturday for urgent help, and used the veiled threat of laying off thousands of workers among the industry’s 750,000 employees if their demands are not met.
“Unless worker payroll protection grants are passed immediately, many of us will be forced to take draconian measures such as furloughs,” the CEOs said in a letter to leaders of both houses of Congress distributed by the Airlines for America trade group. “The breadth and immediacy of the need to act cannot be overstated,” it said. “It is urgent and unprecedented.”
Airlines for America represents American Airlines, United Airlines, Delta Air Lines and Southwest Airlines as well as shippers FedEx and UPS.
“On behalf of 750,000 airline professionals and our nation’s airlines, we respectfully request Congress to continue to move expeditiously to pass a bipartisan proposal that includes a combination of worker payroll protection grants, loans and loan guarantees and tax measures. Time is running out.”
The signatories appeared to be trying, in part, to counter recent negative publicity over reports that in recent years the airlines, while taking in billions in profits, used stock buybacks and other measures to reward shareholders rather than putting money into workers’ salaries or a rainy-day fund.
President Donald Trump seemed to allude to those reports during Saturday’s White House briefing on the coronavirus, saying of plans to help US companies, “I want money to be used for workers and keeping businesses open, not buybacks.
“I am strongly recommending a buyback exclusion. You cannot buy back your stock. You can’t take a billion dollars of the money and buy back your stock.”
Ah, but just four years ago you told them something totally different…
In late 2016, when the first glimpse of Trump’s tax plan emerged and when we learned that it would also include a foreign profit repatriation holiday allowing companies to bring back fund held offshore at a nominal tax rate, we wrote in article titled “How The S&P 500 Will Spend $2.6 Trillion In Cash Next Year” and said “Hint: Mostly On Stock Buybacks.“
While the Trump administration’s contention was that companies would use this newly repatriated cash mostly on buybacks, R&D and hiring, we countered by warning that “stocks buybacks will account for the largest share of cash use by S&P 500 companies.” Furthermore, we used a Goldman projection that predicted that “of the $2.6 trillion in total cash spent by companies [in 2017], the largest bucket, or 30% of the total, will be on stock buybacks; this is the highest portion of corporate cash allocated to buybacks since 2007.“
In trying to explain to the Trump administration what this meant, we also said that “it goes without saying, that as more cash is allocated to shareholder payouts (buybacks, dividends), less goes to CapEx, and economic growth.“
Alas, none of this was a consideration for the Trump admin at the time, when “President-elect Trump and House Republicans both expressed support for a one-time tax on untaxed foreign profits. In their “blueprint” of potential tax reform, House Republicans proposed an 8.75% tax on permanently reinvested overseas cash and a 3.5% tax on other untaxed foreign earnings. Mr. Trump also proposed similar tax reform during his Presidential election campaign.”
We then concluded by predicting precisely what would happen in the subsequent 3 years, and culminate with the current crisis in which buybacks are demonized even though for the past 3 years repurchasing their stock is all most CFOs and Treasurers did to boost their stock price, to wit:
In short, absent a formal directive from the Trump administration on explicit “use of repatriation proceeds”, which curbs or outright limits the $1,200 billion or so in estimated repatriated proceeds, from being spent on buybacks… there will be virtually no benefit to the broader economy, and instead corporate shareholders will once again reap the benefits as they have for the past 7 years, a time in which they levered up their companies to all-time highs, with the vast majority of the newly raised debt used to fund, drumroll, buybacks.
We were right, because what happened then can only be described as an unprecedented shareholder-friendly bonanza, with companies splurging on buybacks and dividend like never before, and as we repeatedly warned, this would end in tears as companies for the first time since the financial crisis spent more on buybacks and dividends than they actually earned…
… yet which nobody dared to object to because as we showed last September, the sole buyer of US stocks were corporate buybacks, not institutions or retail investors, all of whom sold to the companies buying back their own shares, in the process lifting the S&P to all time highs.
And, it goes without saying, that as more and more companies joined the fray, with tech firms mostly responsible for the latest buyback push in recent years due to having the biggest balance sheet capacity to issue new debt as well as the cleanest cash flow…
… corporate cash plunged – as it was mostly used to buyback stocks which would life the stock price and allow management’s equity-linked options to vest deep in the money – even as the company’s debt soared, raising the prospects of a catastrophic outcome if and when a “black swan” event occurred.
Well the black swan is now here, and in retrospect, instead of spending trillions on buybacks, companies should have saved that money for when they truly needed it – such as an economic or financial crisis. But no, managements rushed to buyback record amounts of stock at the all time highs, as we pointed out last October…
… a spending spree that was funded mostly by – drumroll – debt…
… and not just any debt, but the debt most in danger of sparking a wholesale junk bond crisis and which would then become a wholesale credit crisis: the BBB rated future “fallen angels”:
And the biggest irony: corporate insiders such as CEOs and board members were selling stock hand over fist to their own companies, as they knew very well what was coming next.
In short, it is these same insiders that sold near record amounts of stock that now demand bailouts.
It is these same companies that levered up astronomically and pursued in record buybacks that now demand bailouts.
But in retrospect, none of this would have been able if Trump had not set the precedent he did back in late 2016 when he effectively gave companies the green light to unleash a buyback tsunami by allowing them to repatriate trillions in offshore cash without any guidance what to spend it on, and to nobody’s shock, they didn’t spent it on growth, or even deleveraging, they spent it on pushing up their own stock price.
And since the interests of management, shareholders and Trump were all aligned – there is a reason why Trump took tremendous delight in pointing out every time the market hit an all time high which was mostly possible due to buybacks, just as there is a reason Trump pressured the Fed to cut rates, as that would allow companies to issue even more debt at ultra low rates and use the proceeds to buyback stocks – everyone, EVERYONE, was delighted by this record buybacks spree.
Now, the party is over, and the fingerpointing and the blame games have begun.
But before Trump slams those “greedy” corporate CEOs for doing merely what capitalism said was in their best interest, he should look in the mirror and consider who greenlighted this entire stock repurchasing bonanza.
And since he won’t, here is some more advice, almost four years after we predicted to the dot that all of this would happen: do not bailout everyone as that would be the end of any last shred of capitalism as we know it. Instead, either force companies to sell stock to procure liquidity – you know, buybacks in reverse – or allow the US bankruptcy process to work.
Yes, Chapter 11 is an amazing tool, one which allows companies to continue operating without having to pursue mass layoffs, while restructuring their liabilities and kicking out the existing equityholders who should get nothing, handing over the company instead to the bondholders. A leaner, meaner company, with no debt, one which would be far more viable in the world once the coronavirus panic fades away. As for those companies that don’t survive, well they should go out of business: thanks to the Fed there is now a record amount of zombie companies and “disruptors” that have no chance in hell of ever making a profit…
… corporations that should never have existed had it not been for the Fed’s insane monetary policies of the past decade.
Let those companies that should fail, fail, and let capital finally find more productive uses than being forced to keep zombies alive and repurchasing the stock of companies that burn through billions in cash every year.
Alas, this will never happen and just like in 2008 when the bailout of the banking sector set the blueprints for every future crisis, the government and the Fed will pursue a wholesale bailout of everyone as even the smartest financial advisors on Wall Street now (predictably) urge, because it’s the least painful (at least for now) and most politically self-serving thing to do.
And then, in ten years, when the entire fiat system finally implodes in a world drowning in meaningless “money” filled with zombie companies where nobody makes a profit any more, and where every dollar in profit and quadrillions more in debt are used to repurchase the handful of stocks that still are traded, we will have one final “I told you so” moment.
Tyler Durden
Sat, 03/21/2020 – 19:15 - Italy Goes Full "Wuhan", Orders Most Restrictive Lockdown Yet, As Global Case Total Passes 300k: Live Updates
Italy Goes Full “Wuhan”, Orders Most Restrictive Lockdown Yet, As Global Case Total Passes 300k: Live Updates
Summary:
- Massive surge in number of deaths and cases in UK, Germany, Spain, Italy, and France
- New York, New Jersey deaths, cases accelerate
- Italy goes under full lockdown
- Rikers outbreak worsens: 21 inmates
- NY Gov Cuomo: “months, not weeks” to control virus
- Ukraine declares total quarantine
- Belgium sees 25% jump in cases
- Saudi Arabia reports 10% spike
- German gov’t ends years of fiscal restraint with 365 billion euro aid package
- NYC airspace closed after positive Air Traffic Controller test
- NJ declares full state lockdown; “will take action” for people not following precautions
- FDA authorizes first 45-minute COVID-19 test
- US Fiscal Aid package around $2 trillion (10% of GDP), Kudlow
- Officials increasingly calling for the cancellation of the Tokyo Olympics
* * *
Update (0940ET): After one of his aides tested positive, VP Pence was tested, and as it turns out, has tested negative, along with his wife, Karen Pence.
In other news, as New York emerges as America’s premier hot spot, the situation on Riker’s Island, the nation’s second-largest prison system, is growing increasingly dire. According to information from the city’s Board of Correction, 21 Rikers inmates, 12 jail employees and five correctional health workers have tested positive for COVID-19, up from just 8 the day before.
Already, one worker at the complex has died. Just like the prison outbreaks in China, the virus spread rapidly from workers on the periphery to the corrections officers to the prisoners. According to the New York Times, It started with a jails investigator in an office three miles from Rikers Island. Then, a correction officer at a security checkpoint near the entrance to the jail complex got it. Hours later, it was an inmate in a crowded housing unit.
Within days, the investigator had died and three more correction officers and two other staff members had tested positive for the coronavirus, confirming fears that the highly contagious disease had arrived in the nation’s second-largest jail system, endangering 5,300 inmates and twice as many guards.On Thursday, the jail system’s chief physician, Ross MacDonald, took to Twitter with a warning: “A storm is coming.”
Civilian employees in the prison system were ordered to remain home for two weeks to limit the number of people entering the prisons. More controversially, visits by friends and family have been suspended, something that the inmates aren’t exactly thrilled about.
Let’s hope they don’t react like some prisoners in Italy did.
* * *
Update (1835ET): Even after threatening Italians in some areas with serious criminal penalties for violating their stringent quarantine orders, it seems Italy’s coronavirus containment efforts have failed.
After reporting another shocking jump in deaths, the Italian government has gone full “Wuhan”, ordering a complete shutdown of industrial production for 15 days.
In a speech delivered just before midnight on Saturday in Rome, Prime Minister Giuseppe Conte announced that he is ordering ALL non-essential businesses to be closed, and for Italians to stay home.
These measures are slightly more restrictive than the current measures, which allow Italians more freedom to move about their towns and communities. They will also likely result in a much larger economic hit, as Italy’s industrial stalwarts are forced to pause operation.
And just like that, an entire country – 60 million Italians – is now under ‘shelter in place.’
Elsewhere, as Middle Eastern countries escalate their crackdowns, Kuwait announced that it would start imposing a curfew between 5pm and 4am due to what the government called “non-compliance with Ministry of Health’s instructions to stay indoors.” Meanwhile, the UAE has closed beaches and parks for two weeks.
As the number of confirmed cases in Europe and North America soar, the total global case total has surpassed 300k on Saturday.
Finally, an interesting snippet from the FT: Researchers on multiple continents say an usual symptom has emerged in the majority of Covid-19 patients: a loss of the sense of smell.
* * *
Update (1510ET): Across Europe on Saturday, deaths accorded to COVID-19 soared, with Italy reporting a record 793 deaths on Friday, and Spain reporting another 300 cases, bringing their totals to 4,825 and 1,326.
The UK also reported another string of deaths, as millions await a lockdown order on London, while hospitals and intensive care units in Italy and Spain are struggling to cope, despite some Madrid hotels being temporarily converted and of the Fair of Madrid, the capital’s main exhibition space.
As we’ve mentioned before, now is a good time for coffinmakers and funeral homes in Italy.
Italy pic.twitter.com/8RASmqzA5L
— Jack Posobiec 中国通 (@JackPosobiec) March 21, 2020
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But these weren’t the only states seeing a spike. The total number of cases of coronavirus in Belgium rose by over 500 in 24 hours, a 25% jump bringing its total number to 2,815. The government also reported deaths had risen to 67, an increase of 30 over the same time period. According to the FT, a spokesman for the Belgian government’s crisis center advised people to establish a clear daily routine to avoid mental health issues.
In Ukraine, Arsen Avakov, the country’s interior affairs minister, called for a nationwide “total full quarantine,” warning that strict lockdowns and possibly martial law would soon be declared to stop the spread of the virus.
As we mentioned earlier, Germany is set to abandon six years of fiscal restraint with a blow-out budget designed to save its economy from the brutal effects of the coronavirus pandemic of €356 billion .
Even Saudi Arabia saw a 10% spike in cases announced on Saturday, with 48 new cases confirmed, bringing the total number in KSA to 392.
* * *
Update (1415ET): Just as Gov. Cuomo hinted earlier this week, New Jersey Gov. Phil Murphy has signed an executive order mandating that all non-essential workers living in the state stay home.
Meanwhile, a group of European countries have reported new figures, including Spain, which announced that more than 5,000 new cases and ~300 new deaths were confirmed over the past day, increasing the total number of cases in the country by 25% to 24,926, according to the Spanish Ministry of Health.
The death toll in the country is at 1,326.
Germany confirmed that it has agreed to take on over €150 billion of new debt as part of a €350 billion package of emergency measures to save its economy from the brutal effects of the coronavirus pandemic.
More devastating figures were released from Italy on Saturday, including announcing 793 new deaths, the highest total yet, bringing its total to 4,825, well above China’s total, and the latest in a grim string of records that has so far tracked the worst fears of epidemiologists. In total, more than 53,578 cases have been confirmed.
UK today saw total deaths reach 233 as the number of cases soared by more than 1000 to 5,015 from 3,983 on Friday. Italy was at that death figure on March 7. The UK patients were aged between 41 and 94 years old and all had underlying health conditions, according to NHS England. Earlier, two more deaths were recorded in Wales, bringing its total to five, and another death in Scotland, taking the number to seven. Northern Ireland has recorded one death.
Finally, France also just reported the biggest daily jump in covid cases, which soared by 1,847 to 14,459, while the number of deaths spiked the most yet, or 112 to 562 overnight.
Meanwhile, in Asia, Bangkok, Thailand’s capital, imposed a partial shutdown from Sunday as the number of confirmed cases surged past 400 with a rising number of people in critical condition. Malls in Bangkok will be closed, and shops offering food and essential services will be among the few allowed to remain open, Bangkok Governor Aswin Kwanmuang said during a press briefing on Saturday. The restrictions will begin Sunday, and continue until at least April 12, he said.
* * *
(1230ET): New cases are being reported out of New York State and NYC are being reported faster than we can keep up, as the state ramps up testing.
NYC officials just announced that the total number of confirmed cases in the city has climbed to 7,530. An hour ago, Gov. Cuomo put the number at 6,211.
By our count, this puts the new total cases in New York State at 11,675.
Last night, de Blasio described NYC as the “epicenter” of the US outbreak.
New York City has 5,151 confirmed cases of COVID-19, Mayor de Blasio announced, and said the largest U.S. city is now the epicenter of the crisis. Follow latest updates here: https://t.co/1S9iYGfKZK pic.twitter.com/u4FPfOxHBf
— Reuters (@Reuters) March 21, 2020
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* * *
Update (1145ET): During Saturday’s press briefing, New York Gov. Andrew Cuomo made clear that he wasn’t waiting around for the military and FEMA to solve his state’s problems.
After announcing new restrictions that closed all “non-essential” businesses and threatened fines and other punishments for any “non-essential” New York workers who violate his ‘stay at home’ order (though, of course, certain activities like buying food, medication and doctors appointments will be permitted).
As state’s scramble to follow President Trump’s advice to try and acquire equipment through their own supply chains, Cuomo revealed that New York State had ordered 6,000 ventilators.
He also announced that he would be traveling around the state on Saturday with state workers looking for appropriate staging areas for the Army Corp of Engineers, which is preparing to renovate buildings to prepare more space for COVID-19 patients.
With a federal cost-sharing rate of 75%, New York State will be able to dole emergency funds out to counties, towns and cities, as well as the state’s Native American tribes. Nonprofits working in the state can also receive money if they meet certain criteria. Part of the money will pay for ‘crisis counseling’ for New Yorkers who are psychologically or physically impacted by the crisis.
As Cuomo’s press conference was ending, the state reported another 3,254 new cases of the virus, bringing its total to 10,356, making New York State the first in the US to pass 10,000.
Here’s a video from Cuomo’s press briefing:
Holding a briefing with updates on #Coronavirus. WATCH LIVE: https://t.co/uSqQdxYRUQ
— Andrew Cuomo (@NYGovCuomo) March 21, 2020
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In addition to ordering all nonessential businesses to cease operating outside the home, Cuomo ordered all people over 70 or with underlying health conditions to avoid public transportation and stay home except for solitary exercise.
* * *
For nearly a week now, New York Gov. Andrew Cuomo has been begging the White House or the Pentagon to send in the Army Corp of Engineers to quickly transform existing businesses into coronavirus hospitals where patients from the impending surge can be isolated and treated.
If the state doesn’t quickly make up for its twin shortages of hospital beds and medical equipment, Cuomo warned, it could lead to thousands of preventable deaths.
Now, a few days after President Trump and Defense Secretary Mark Esper dispatched a Navy hospital ship to New York to help with the outbreak, President Donald Trump formally approved FEMA aid to the state late Friday night after declaring New York the nation’s first “major disaster area” since the start of the national outbreak.
Billions of dollars in emergency funding are now available to help combat the outbreak in the state, FEMA said in a statement.
“Federal funding is also available to state, tribal, and eligible local governments and certain private nonprofit organizations on a cost-sharing basis for emergency protective measures,” FEMA said in a statement.
President Trump’s national emergency declaration earlier this month activated FEMA, and made a pot of $42 billion in disaster-relief funds available.
The decision comes after New York City Mayor Bill de Blasio claimed that his city has become the epicenter of the national outbreak, as public health authorities in the city counted at least one coronavirus-linked death per hour on Friday.
Between just 10 am and 6 pm, 14 people in NYC died from the virus, raising the death toll in America’s largest city to 43. It was the first time NYC’s daily death toll hit double-digits.
NYC Health Commissioner Dr. Oxiris Barbot warned on Saturday morning that double-digit increases in deaths may become the new normal for New Yorkers, for at least a time.
“I wouldn’t be surprised if we get to a day when we have double-digits new people dying every day,” she said at a City Hall press conference Friday afternoon.
“With more and more cases confirmed here each day, it’s imperative that the federal government does everything within its power to stem the spread of the deadly coronavirus.”
In another rare moment of political unity, Senate Minority Leader Chuck Schumer praised the president’s decision.
Pres. Trump just approved a major disaster declaration for New York to fight coronavirus.
Sen. @GillibrandNY and I pushed for this!
FEMA needs to get to work NOW to open these MANY billions in direct aid for New York and individuals to help save lives and protect public health.
— Chuck Schumer (@SenSchumer) March 20, 2020
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Yesterday, Cuomo ordered 100% of the state’s workforce to stay home, effective Sunday evening. Only essential businesses are allowed to stay open. And that’s not a request, that’s an order.
“These are not helpful hints…they will be enforced,” as Cuomo said during his Friday press conference, as we reported.
The latest data show 8,299 confirmed cases in New York State. And as the state runs out of hospital beds and precious ventilators, Trump is sending in the military, which is now working on plans to takeover hotels, college dormitories and sports arenas and turn them into ICU-like medical facilities, as the Daily Mail reports.
According to the latest federal data, at least 19,624 people have been diagnosed with the virus, and at least 260 deaths have been recorded. So far, 147 people have recovered. Globally, there have been at least 275,000 diagnosed cases and more than 11,000 coronavirus-related deaths.
With billions in federal funding flowing into New York, Trump’s decision to declare New York a “major disaster” will open up money available to eligible local and tribal governments and even nonprofits who meet the criteria, so long as they operate in areas affected by COVID-19 in New York State.
Initially, it seemed like the outbreak was developing in the suburbs,
Public health officials in New York State were gripped with anxiety earlier this month as a cluster of cases was confirmed in New Rochelle, including the town’s “patient zero”, a lawyer who commuted into Manhattan into his wife, also a lawyer. Both contracted the virus, kicking off a wave of infections in a Jewish community in and around New Rochelle.
Now, it appears swift action in wealthy Westchester County has brought the outbreak under control (or so it seems, at least).
The bigger problem now is an outbreak in Jewish communities in Brooklyn, based in the neighborhoods of Williamsburg and Borough Park. The clusters, though so far not explicitly acknowledged as such by the state, appear to be the biggest centers of infection in the city. De Blasio even admitted that Brooklyn is seeing the worst of the outbreak.
Switzerland reported another batch of new cases, bringing its total to 6,100 infections and 56 deaths.
As the global panic deepens, and the number of cases continues to multiply at an alarming rate, more officials are calling for the 2020 Tokyo Games to be postponed – an unprecedented event that would probably rattle confidence in global markets, at least momentarily, as the world grapples with the unprecedented situation at hand. The IOC chief rebutted these calls again Saturday morning, according to reports in the Japanese press, but it definitely makes one wonder: If things keep getting worse, how much longer can they hold off?
Tyler Durden
Sat, 03/21/2020 – 18:55 - The Lockdown Of America Begins
The Lockdown Of America Begins
Authored by Daisy Luther via The Organic Prepper blog,
On Thursday night, Governor Gavin Newsome took unprecedented action and locked down the entire state of California. The following day, Governor Andrew Cuomo locked down the state of New York and Gov. J.B. Pritzker locked down the state of Illinois.
Today, as of the time of publication, 70 million Americans are in mandatory isolation at home in the hopes of stopping – or at least slowing down – the Covid-19 virus that is beginning to spread exponentially across the country.
Borders between the US, Canada, and Mexico have also been closed by mutual consent between the three governments.
While this may be necessary to curb the virus so as not to overwhelm the medical system, many Americans are feeling distinctly uneasy about their movements being restricted. Especially worrisome is the idea of the National Guard being brought in to enforce the lockdowns, as has been discussed. Somewhere, there’s a fine line between maintaining our constitutional rights and the need to stop a global pandemic.
What do the lockdowns entail?
In all three states, non-essential businesses will be closed and residents have been ordered to stay in their homes unless they must leave for “vital reasons.” Many of our largest cities are encompassed in the lockdown: New York City, Chicago, Los Angelos, San Francisco, and San Diego.
All sorts of euphemisms are being used for the situation. Cuomo prefers to call this a “pause.” California is referring to this as “safer at home.” And Illinois is calling it “shelter in place.”
But for all the nice-sounding words, it is what it is: a lockdown on a massive scale.
California
The most populous state in the country with 40 million residents, on March 19th, California was the first to lock down entirely and the situation will remain in effect “indefinitely.”
“We’re going to keep the grocery stores open,” he said. “We’re going to make sure that you’re getting critical medical supplies. You can still take your kids outside, practicing common sense and social distancing. You can still walk your dog, you can still pick up food at one of our distribution centers, at a restaurant, at a drive-thru — all those things we will still be able to do.” (source)
Newsom is confident that Californians will be cooperative.
The order will not be enforced by law enforcement, he added.
“I don’t believe the people of California need to be told through law enforcement that it’s appropriate just to home-isolate, protect themselves,” Newsom said. “We are confident that the people of the state of California will abide by it and do the right thing.” (source)
However, Newsom instructed the National Guard to be on alert and has activated about “500 guard personnel to help with humanitarian work and food distribution.”
New York
Interestingly, only 3 days before locking down the state, Cuomo said that the effort would be ineffective.
In New York, where coronavirus has killed 32 people, Gov. Andrew Cuomo said he has no plans to impose a statewide mandate.
“My job is to make sure that the state has a coordinated plan and it works everywhere,” he said this week. “I don’t think shelter-in-place really works.” (source)However, on March 20th, the day after California locked down, he changed his mind, saying, “I want to be able to say to the people of New York — I did everything we could do. And if everything we do saves just one life, I’ll be happy.”
“No, this is not life as usual,” New York Gov. Andrew Cuomo said as the death toll in the U.S. topped 200, with at least 35 in his state. “Accept it and realize it and deal with it.” (source)
Cuomo has banned all businesses except grocery stores, hospitals, laundromats, gas stations, veterinarians, and doctor’s offices. Restaurants can operate on a take-out or delivery basis. Residents can go outside to walk their dogs or exercise but must maintain a 6-foot distance from others.
And breaking the rules will have consequences.
“These provisions will be enforced,” Mr. Cuomo said at a briefing in Albany. “These are not helpful hints.” (source)
In New York City, police officers will patrol and begin giving out warnings on Sunday evening.
Police Commissioner Dermot Shea said summonses and arrests would be issued as a “last resort.” (source)
The state of New York has a population of close to 20 million people.
Illinois
In Illinois, Governor JB Pritzker instituted a “stay at home” order which will begin today, March 21st, and remain in effect until April 8.
Pritzker has said that no matter how tight the lockdown becomes, “interstate highways, gas stations, grocery stores and pharmacies would remain open.” He asked people to keep this in mind when stocking up.
“There is no need to run out and hoard food, gas and medicine,” the governor said Thursday. “Buy what you need within reason. There is enough to go around, as long as you do not hoard.” (source)
Although Pritzker activated the National Guard earlier in the week, he says that they will not be taking quarantine enforcement roles.
Instead, 60 service members will be deployed to establish drive-up testing sites, help with food delivery to disadvantaged families impacted by school closures and possibly prepare closed hospitals to reopen.
The vast majority of currently activated troops are health care professionals — doctors, nurses, medical technicians — who would not be tapped for an law-enforcement assignment. (source)
Illinois has a population of about 12.6 million people.
Where and when will the lockdowns spread?
Other states already have strict rules in place but are not quite “locked down.” Maryland was the first state to order “drastic actions.” Pennsylvania has closed down all non-essential businesses. Hoboken, New Jersey has instituted curfews. It’s really only a matter of time before this spreads across the country, whether by state mandates or on the federal level.
Last week, I wrote an article about when the lockdowns would occur based on the patterns established by China and Italy. The first lockdowns occurred right on cue, on the 19th and 20th.
We have already had some small regional lockdowns and people in quarantine after traveling, but the quarantining of large groups of people has not yet occurred in the US. YET. We are on day 50 since the initial case was diagnosed in the United States. However, the first case of community spread was on February 26, and this may be a more important marker than the first case in a country the size of ours. “Community spread” means the illness was not contracted through traceable means, like a family member with the virus or travel history to places where the illness was running rampant. So if we’re counting from the first day of community spread, the US is on day 15.
If massive lockdowns are occurring on about day 22-23 in other countries, that means we may have 7-8 days before we see major lockdowns and quarantines here. That would put us at March 19th or 20th. We may see some early lockdowns of cities or regions where the virus is rapidly spreading like Seattle and New York City. The lockdowns in other countries expanded in about a week to encompass greater geographic areas and larger numbers of people. This would put us at approximately March 26-27th. (source)
So if this pattern still holds true, we may see many more regional lockdowns coming within the next 5 or 6 days.
States that already have restrictions in place, like Maryland, Pennsylvania, and New Jersey are likely to increase those restrictions next. Places with a large exponential spread like Washington state are also likely to mandate lockdowns.
Is a national lockdown in the works?
It depends on who you ask.
President Trump has said as recently as yesterday that he doesn’t think that there will be a need for a national lockdown.
Despite approval for the states’ actions, Trump said he does not think a national lockdown order will be needed, adding that other areas don’t have the same hotspots as California, New York and Washington.
“We are working with the governors, and I don’t think we’ll ever find it necessary,” he said. (source)
On the other hand, Dr. Anthony Fauci, the infectious disease expert for the National Coronavirus Task Force, has said for at least a week he believes stronger measures need to be taken and that he’d like to see a “dramatic reduction in activity” to curb the spread of the virus.
Asked by CNN’s Brianna Keilar on “State of the Union” if he’d like a “national lockdown” where people are being told they need to stay home and out of restaurants and bars, Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Disease, said he’d “like to see a dramatic diminution of the personal interaction that we see” in those places.
“Whatever it takes to do that, that’s what I’d like to see,” Fauci added. (source)
Given the speedy turnaround made by Governor Cuomo, it is certainly not impossible that we might see a lockdown mandated at the federal level. If you aren’t yet prepared for what this entails, check out this article and this PDF guide that is specific to the Covid-19 pandemic. If supplies are low in your area, you may be able to find some ideas for substitutes here. And finally, this article has some advice on how to prep for potential lockdown without spending any more money.
The National Guard has been activated in many states and other Guard members are on “enhanced readiness” status. But don’t worry, all the governors assure us that they’re only there to help dispense supplies, not to enforce lockdowns.
Numerous sources have reported being given “federal travel papers” over the past 48 hours. People working in food delivery, the medical field, distribution, and grocery stores have said under cover of anonymity that they’ve received papers from their employers to “show to the police” if they’re stopped during their travel to and from work.
Whether our country is turning into one in which authority figures demand to see your “papers” remains to be seen.
Tyler Durden
Sat, 03/21/2020 – 18:25 - "Rolling Natural Disaster" – COVID-19 Supply Chain Shock Could Trigger Global Depression
“Rolling Natural Disaster” – COVID-19 Supply Chain Shock Could Trigger Global Depression
Evidence of creaking global supply chains is fast emerging, at risk of triggering the next global depression amid the COVID-19 pandemic.
A supply chain crisis that began earlier this year, one that we warned from the very start, has now spread across Asia to the Middle East to Europe, and now to the Americas.
“This is kind of a rolling natural disaster,” said Ethan Harris, head of global economic research at Bank of America. “In terms of the impact on global production, the shutdown outside of China will likely become bigger than the impact from China.”
Harris warned that the shock to global supply chains is deep and broad and could easily last through the next quarter. He estimates that factory shutdowns in many regions could last until May.
He describes a twin shock, one where a supply chain shock has been combined with a demand shock, culminating into a perfect storm, will likely tip many countries into recession, if not depression during the second quarter.
Bloomberg piecemeals current supply chain disruptions seen across the world:
Apple has had the most exposure to a China shutdown, with manufacturing plants in the country still operating well below full capacity in late March. Virus-related closings have hammered several of the company’s key suppliers operating in South Korea, Italy, Germany, and Malaysia.
In late January, Freeport-McMoRan’s CEO Richard Adkerson warned that the virus outbreak in China is a “real black swan event” for the global economy. The company’s mining operations in Peru have recently been halted. Other mining facilities in Chile, Canada, and Mongolia have also been shuttered.
Across Europe, Airbus and Volkswagen AG have closed production plants amid severe virus outbreaks in Italy, Spain, Germany, France, Switzerland, and the UK. Major transportation networks on the continent have come to a standstill as nonessential travel has been banned in many regions.
Europe’s car industry has been absolutely devastated by virus disruptions in China and elsewhere.
Germany’s Schaeffler Group, a major supplier for European carmakers, announced this week that it would reduce hours for thousands of employees and slash production.
“As we have to reduce production in our plants in the light of the crisis, it was important to us that flexible solutions be quickly established,” said Juergen Wechsler, who represents Schaeffler workers for union IG Metall.
Across the Atlantic, we noted as early as the start of March, that China’s supply chain meltdown reached US West Coast ports and was about to unleash economic doom on “the greatest economy ever.” Several weeks later, GDP estimates for the second quarter are apocalyptic via JPM’s chief economist Michael Feroli, expecting an unprecedented -14%, a drop the kinds of which have never before been seen.
As the US economy grinds to a halt, General Motors Co., Ford Motor Co., and Fiat Chrysler Automobiles NV are shutting down plants, resulting in steel and aluminum manufacturers to reduce capacity as well.
“We have ships loading steel in Europe next week headed for the US, but will there be shipments beyond that with industry shutting down?” Anton Posner, CEO of supply-chain management and consulting company Mercury Resources, asked. “Who’s going to hold inventory if there’s no consumption?”
As creaking supply chains are seen across the world, the second quarter will most likely be one of the biggest crashes in economic data the world has ever seen.
Tyler Durden
Sat, 03/21/2020 – 18:00 - The Luxury Of Apocalypticism
The Luxury Of Apocalypticism
Authored by Brendan O’Neill via Spiked-Online.com,
The elites want us to panic about Covid-19 – we must absolutely refuse to do so…
People’s refusal to panic has been a great source of frustration for the establishment in recent years.
‘The planet is burning’, they lie, in relation to climate change, and yet we do not weep or wail or even pay very much attention. ‘I want you to panic’, instructs the newest mouthpiece of green apocalypticism, Greta Thunberg, and yet most of us refuse to do so. A No Deal Brexit would unleash economic mayhem, racist pogroms and even a pandemic of super-gonorrhoea, they squealed, incessantly, like millenarian preachers balking at the imminent arrival of the lightning bolt of final judgement, and yet we didn’t flinch. We went to work. We went home. We still supported Brexit.
Our skittish elites have been so baffled, infuriated in fact, by our calm response to their hysterical warnings that they have invented pathologies to explain our unacceptable behaviour. The therapeutic language of ‘denialism’ is used to explain the masses’ refusal to fret over climate change. Environmentalists write articles on ‘the psychology of climate-change denial’, on ‘the self-deception and mass denial’ coursing through this society that refuses to flatter or engage with the hysteria of the eco-elites. Likewise, the refusal of voters to succumb to the dire, hollow warnings of the ferociously anti-Brexit wing of the establishment was interpreted by self-styled experts as a psychological disorder.
‘[This is] people taking action for essentially psychological reasons, irrespective of the economic cost’, said one professor.
How curious.
In the past it was hysteria that was seen as a malady of the mind. Now it is the reluctance to kowtow to hysteria, the preference for calm discussion over panic and dread, that is treated as a malady. Today, it is those who prefer reason over rashness, whether on climate change or Brexit, who are judged to be disordered. According to the new elites, their apocalypticism is normal, while our calm democratic commitment to a political project, such as Brexit, or our desire to treat pollution as a practical problem rather than as a swirling, cloudy hint of nature’s coming fury with man’s hubris and destructiveness, is mad, deranged, in need of treatment. Their End Times nervousness is good; our faith in moral reason is bad.
This strange, fascinating tension between the apocalypticism of the intellectual and cultural elites and the scepticism of ordinary people is coming into play in the Covid-19 crisis. Of course, Covid-19 is very different to both No Deal Brexit and climate change. It is a serious medical and social crisis. In contrast, the idea that leaving the EU without a deal would be the greatest crisis to befall Britain since the Luftwaffe dropped its deadly cargo on us was nothing more than political propaganda invented from pure cloth. And the notion that climate change is an End Times event, rather than a practical problem that can be solved with tech, especially the rollout of nuclear power, is little more than the prejudice of Malthusian elites who view the very project of modernity as an intemperate expression of speciesist supremacy by mankind.
Covid-19, on the other hand, is a real and pressing crisis. It poses a profound challenge to humankind. It requires seriousness and action to limit the number of deaths and to mitigate the economic and social costs of both the disease itself and of our strategies for dealing with it. But what ties Covid-19 to the other fashionable apocalypses of our nervous elites, including the green apocalypse and the Brexit apocalypse, is the interpretation of it through the language and ideology of the elites’ pre-existing dread, their pre-existing cultural skittishness and moral disarray. Predictably, and depressingly, Covid-19 has been folded into their narrative of horror, into their permanent state of cultural distress, and this is making the task of facing it down even harder.
The media are at the forefront of stirring up apocalyptic dread over Covid-19. In Europe, there is also a performative apocalypticism in some of the more extreme clampdowns on everyday life and social engagement by the political authorities, in particular in Italy, Spain and France. Many governments seem to be driven less by a reasoned, evidence-fuelled strategy of limiting both the spread of the disease and the disorganisation of economic life, than by an urge to be seen to be taking action. They seem motivated more by an instinct to perform the role of worriers about apocalypse, for the benefit of the dread-ridden cultural elites, rather than by the responsibility to behave as true moral leaders who might galvanise the public in a collective mission against illness and a concerted effort to protect economic life.
A key problem with this performative apocalypticism is that it fails to think through the consequences of its actions. So obsessed are today’s fashionable doom-predictors with offsetting what they see as the horrendous consequences of human behaviour – whether it’s our polluting activities or our wrong-headed voting habits – that they fail to factor in the consequences of their own agenda of fear. Greens rarely think about the devastating consequences of their anti-growth agenda on under-developed parts of the world. The Remainer elite seemed utterly impervious to warnings that their irrational contempt for the Leave vote threatened the standing of democracy itself. And likewise, the performative warriors against Covid-19 seem far too cavalier about the longer-term economic, social and political consequences of what they are doing.
First, there is the potential health consequences. Is suppression of the disease really better than mitigation? The suppression of disease preferred by China, in very authoritarian terms, or by Italy and France, in less authoritarian terms, may look successful in the short term, but the possibility of the disease’s return, in an even more virulent form, is very real. Likewise, entire economies of everyday life have been devastated already by the severity of government action in Europe. Hundreds of thousands of people in Italy and Ireland have lost their jobs already, in the night-time, hotel and entertainment sectors in particular. That is a social and health cost, too: job loss can lead to the loss of one’s home, the breakdown of one’s marriage, and to a palpable and destructive feeling of social expediency. As to keeping elderly people indoors for months on end, as is now being proposed in the UK, it is perfectly legitimate to ask whether this poses an even greater threat to our older citizens’ sense of personal and social wellbeing than their taking their chances with a disease that is not a death sentence for older people (though it impacts on them harder than it does on the young).
The point is, there is such a thing as doing too little and also such a thing as doing too much. Doing too little against Covid-19 would be perverse and nihilistic. Society ought to devote a huge amount of resources, even if they must be commandeered from the private sector, to the protection of human life. But doing too much, or acting under the pressure to act rather than under the aim of coherently fighting disease and protecting people’s livelihoods, is potentially destructive, too. People need jobs, security, meaning, connection. They need a sense of worth, a sense of social solidarity, a sense of belonging. To threaten those things as part of a performative ‘war’ against what ought to be treated as a health challenge rather than as an End Times event would be self-defeating and utterly antithetical to the broader aim of protecting our societies from this novel new threat. To decimate the stuff of human life in the name of saving human life is a questionable moral approach.
That the practical challenge posed by this new sickness has been collapsed into the elites’ pre-existing culture of misanthropic dread is clear from some of the commentary on Covid-19. The language of ‘war’ gives Covid-19 a sentience it of course does not deserve, accentuating the idea that this is not just an illness but a fin-de-siècle menace. This illness is being interpreted as a warning. It has been speedily refashioned as a metaphor for our weakness in the face of nature. It ‘has come to tell us that we are not the kings of the world’, says one headline. This malady is blowback for ‘our foolishness, our rapacity’, says Fintan O’Toole. We must now ‘learn the humility of survivors’, he says, cynically using this crisis to seek to diminish the presumed specialness of humankind. ‘Coronavirus is an indictment of our way of life’, says a headline in the Washington Post, echoing the way that natural phenomena are constantly weaponised by apocalyptic greens to serve as judgements against the temerity of the modernising human race.
Here, we cut to the heart of the apocalyptic mindset of the modern elites. Their dread over natural calamities or novel new illnesses is not driven by the actual facts about these things, far less by the desire to overcome them through the deployment of human expertise and scientific discovery. Rather, it speaks to their pre-existing moral disorientation, their deep loss of faith in the human project itself. It is their downbeat cultural convictions that draws them to apocalypticism as surely as a light draws in moths. In her essay on the AIDS panic of the late 1980s, when that sexually transmitted disease was likewise imagined as a portent of civiliational doom, Susan Sontag talked about the West’s widespread ‘sense of cultural distress or failure’ that leads it to search incessantly for an ‘apocalyptic scenario’ and for ‘fantasies of doom’. There is a ‘striking readiness of so many to envisage the most far-reaching of catastrophes’, she wrote. It wasn’t so much ‘Apocalypse Now’, said Sontag, as ‘Apocalypse From Now On’.
How perspicacious that was. From AIDS to climate change, from swine flu to Covid-19, it has been one apocalyptic scenario after another. The irony is that the elites who readily envisage catastrophe think they are showing how seriously they take genuine social and medical challenges, such as Covid-19. In truth, they demonstrate the opposite. They confirm that they have absolved themselves of the reason and focus required for confronting threats to our society. It isn’t their apocalypticism that captures the human urge to solve genuine problems – it is our anti-apocalypticism, our calmness, our insistence that resources and attention be devoted to genuine challenges without disrupting people’s lives or the economic health of our societies.
‘I want you to panic’, they say. But we don’t. And we shouldn’t. Apocalypticism is a luxury of the new elites for whom crises are often little more than opportunities for the expression of their decadent disdain for modern society. To the rest of us, apocalypticism is a profound problem. It threatens to spread fear in our communities, it causes us to lose our jobs, it mitigates against economic growth, and it harms democracy itself.
Resisting the apocalypticism of the comfortable doom-mongers who rule over us is unquestionably the first step to challenging Covid-19 and preserving society for the decades after this illness has wreaked its disgraceful impact.
Tyler Durden
Sat, 03/21/2020 – 17:35 - Watch How A Coronavirus Test Is Administered: "Awful, I Wish There Was A Better Way"
Watch How A Coronavirus Test Is Administered: “Awful, I Wish There Was A Better Way”
The below videos of coronavirus tests being administered could be the most immediately convincing reason for every American to self-isolate and dramatically limit their potential exposure.
When earlier this week when President Trump was asked about his own experience being tested after potential exposure via the Brazilian presidential delegation’s March 7 visit to Mar-a-Lago, Trump said candidly it’s “not something I want to do every day.”
But many will certainly see the remarks as significantly understated, given the test requires a no doubt deeply unpleasant ten seconds or more swab deep inside a person’s nasal cavity (sometimes multiple swabs are done).
At this point over 100,000 have now been tested across the US, with over 18,500 confirmed for the virus.
The test is done with a nasopharyngeal swab, which is inserted into a patient’s nose, twisted around and then removed quickly.
For a particularly unpleasant and disturbing description, see the following:
It “felt like I was being stabbed in the brain,” one TikTok user wrote in a caption of a video showing her getting tested in her car. “It’s awful. I’m sorry,” the health-care worker who administered the test says. “I wish there was a better way to do it.”
2020: the year we all make tik toks of our drive-thru coronavirus nasal swab tests pic.twitter.com/nuwKyScVpE
— Tim Hogan (@timjhogan) March 18, 2020
https://platform.twitter.com/widgets.js
Though it’s actually similar to a standard Flu test, also unpleasant, the swab goes much deeper into the nose and it appears almost down the throat.
Watching the myriad of videos of tests now appearing on social media could be the surest way to convince most Americans to temporarily stay indoors and avoid non-essential trips to public spaces.
Tyler Durden
Sat, 03/21/2020 – 17:10 - The Debt Brake Finally Breaks: "Austere" Germany To Issue €356BN In New Debt, Amounting To 10% Of GDP
The Debt Brake Finally Breaks: “Austere” Germany To Issue €356BN In New Debt, Amounting To 10% Of GDP
On the same day that Larry Kudlow hinted that the US fiscal stimulus has now grown in size to $2 trillion, or around 10% of US GDP, Germany’s fascination with a balanced budget, aka the “black zero” brought about by the country’s bitter memories of Weimar hyperinflation, ended with a whimper when Angela Merkel announced on Saturday that Germany would issue or guarantee debt amounting to €356 billion as part of the country’s emergency response to fight the coronavirus.
The amount, which is equivalent to to 10% of the country’s GDP, is similar in size to China’s fiscal response during the global financial crisis, which at the time was 9.7% of China’s GDP.
Finance minister Olaf Scholz will also present the German cabinet with plans to create a new €500bn bailout fund to rescue companies hit by the outbreak, according to three people familiar with the plans.
The anchor of the fiscal stimulus package will be over €150bn in new debt issuance as part of what the FT dubbed a “sweeping package of emergency measures to save its economy from the brutal effects of the coronavirus pandemic”, in what amounts to a radical break with the strict “black zero” fiscal policies of the past for which Germany had earned the nickname of the “austere” ruler of the Eurozone, and which helped push German debt to record low yields.
At a cabinet meeting on Monday, Scholz will present plans for a €156bn supplementary budget for 2020 and a new €100bn economic stabilisation fund, which will be known in German as the WSF, that can take direct equity stakes in impaired companies, an analog of which will soon be introduced in the US as well as part of the impending bailout of the airline/hotel/restaurant/movie theater sector. It will also be equipped with €400bn in state guarantees to underwrite the debts of companies affected by the turmoil, bringing its total firepower to €500bn.
Finally, Scholz also plans a €100bn government loan to the state development bank, KfW, which has been empowered to provide unlimited cash to businesses struggling with the fallout from the pandemic. Taken together, the supplementary budget, plus the €100BN for the WSF and the €100BN loan to the KfW amount to €356BN — or about 10% of Germany’s GDP.
According to the FT, the WSF will be in effect be a “reactivation” of Soffin, a government-backed vehicle set up in 2009 to bail out troubled banks. Soffin currently manages the government’s 15.6% stake in Commerzbank, which it is still holding since the bank’s rescue during the global financial crisis 12 years ago. We can only wonder what crap this fund will hold in another 12 years.
The massive bailout fund, which will not only underwrite companies’ debts but also recapitalize those experiencing financial difficulties due to the coronavirus turmoil, effectively paving the way for a wave of partial state takeovers.
Just as the government helped the banks after the collapse of Lehman Brothers, “we are now prepared to provide equity for the real economy,” Scholz told German radio on Friday. The state had to help companies “that employ an incredible number of men and women and which all of a sudden have no business.”
In effect, what Germany is doing is unleashing a massive quasi nationalization of every industry, with the hope of preserving businesses and avoiding a firesale of insolvent assets, and as such the WSF could presage an extraordinary intervention by the state in the private sector. “We will not allow a bargain sale of German economic and industrial interests,” economic affairs minister Peter Altmaier said on Friday. “There should be no taboos. Temporary state aid for a limited period, up to and including shareholdings and takeovers, must be possible.”
While it is now officially dead, Germany’s addiction to the “schwarze Null” and aversion to new debt was facing mounting criticism even in the month before the coronavirus pandemic first struck: for months, leading economists both at home and abroad have been urging the government to take advantage of low interest rates to take on new debt and invest in Germany’s crumbling infrastructure.
Yet since the full scale of the outbreak became clear, Merkel has stressed that the survival of the German economy was a far bigger priority to her than her commitment to the black zero.
“We’re doing whatever is necessary,” she said on March 11. “And we won’t be asking every day what it means for our deficit.”
In addition to passing the supplementary budget and setting up the WSF, on Monday German ministers will meet to loosen one of the country’s most important fiscal rules — the constitutional debt brake. Introduced in 2009, it limits any new government borrowing to just 0.35 per cent of GDP, adjusted for the economic cycle. But exceptions are allowed, and the constitution says the Bundestag can relax the debt brake when the country is hit by emergencies such as natural catastrophes that “significantly impact the government’s fiscal position.” Coronavirus is a clear example of such an eventuality. A Bundestag vote will then come in the days following.
“This essentially paves the way for unlimited borrowing,” said one of the people familiar with Mr Scholz’s plans. He said it fitted with the European Central Bank’s announcement last week that it would buy an extra €750bn of bonds in a bid to calm markets thrown into turmoil by the pandemic. “The ECB’s message to the EU member states was clear,” he said. “Fill your boots with debt.”
The good news is that thanks to its austere ways, in recent yearsGermany managed to bring its debt-to-GDP ratio to below 60%, while France is stuck around 99%, and Italy is at the forefront with 134.8%. “Even a few weeks ago people were saying we’d gone too far, that we were too focused on husbanding our resources,” Mr Scholz said on Friday. “Now you can see we acted correctly.”
Jens Weidmann, head of the Bundesbank and a member of the ECB’s governing council, and also a vocal proponent of living within one’s means , said that until recently there had been “passionate debate” in Germany about the wisdom of sound public finances. “Now we can see very clearly: it was exactly right that Germany consolidated its budget when the economy was doing well,” he told Die Welt on Saturday. “Now we have the latitude to deal with this crisis. Our starting position is advantageous.”
There is just one potential snag: the bond market is notoriously fickle, and while German yields plunged when the country had no intention of taking advantage of the unprecedented demand for its debt, it is only when plans change and Germany will now clearly splurge and have to fund these massive new bailouts with hundreds of billions in new debt, that yields will finally soar. Already the yield on the 10Y Bund has soared from -0.9% to -0.2% in just the past two weeks.
One can only imagine what happens when Germany – poster child for monetary prudence – starts the moneycopter. Or another way of saying it: the MMTers got what they wanted. Let’s see now if the bond market will allow them to execute their plans – absent central banks monetizing every last bond – or if the bond vigilantes which we taken for dead years ago, were only hibernating.
Tyler Durden
Sat, 03/21/2020 – 16:53 - Divided, Distracted, Downtrodden: The Social And Political Reality In America Today
Divided, Distracted, Downtrodden: The Social And Political Reality In America Today
Authored by W.J.Astore via Bracing Views blog,
The American people are being kept divided, distracted, and downtrodden. Divisions are usually based on race and class. Racial tensions and discrimination exist, of course, but they are also exploited to divide people. Just look at the current debate on the Confederate flag flying in Charleston, South Carolina, with Republican presidential candidates refusing to take a stand against it as a way of appeasing their (White) radical activist base. Class divisions are constantly exploited to turn the middle class, or those who fancy themselves to be in the middle class, against the working poor.
The intent is to blame the “greedy” poor (especially those on welfare or food stamps), rather than the greedy rich, for America’s problems. That American CEOs of top companies earn 300 times more than ordinary workers scarcely draws comment, since the rich supposedly “deserve” their money. Indeed, in the prosperity Gospel favored by some Christians, lots of money is seen as a sign of God’s favor.
As people are kept divided by race, class, and other “hot button” issues (abortion and guns, for example), they are kept distracted by insatiable consumerism and incessant entertainment. People are told they can have it all, that they “deserve it” (a new car, a bigger home, and so on), that they should indulge their wants. On HGTV and similar channels, people go shopping for new homes, carrying a long list of “must haves” with them. I “must have” a three-car garage, a pool, a media room, surround sound, and so on. Just tell me what mortgage I can afford, even if it puts me deeply in debt.
As consumerism runs rampant, people are kept further distracted by a mainstream media that provides info-tainment rather than news. Ultimately, the media exists to sell product; indeed, it is product itself. No news is aired that will disturb the financial bottom line, that will threaten the corporations that run the media networks, that will undermine the privileged and the powerful.
The people, kept divided and distracted, are further rendered powerless by being kept downtrodden. Education is often of poor quality and focused on reciting rote answers to standardized tests. Various forms of debt (student loan debt, credit card debt, debt from health care and prescription drugs costs, and so on) work to keep the people downtrodden. Even workers with good jobs and decent benefits are worried. Worried that if they lose their jobs, they lose their health care. So much of personal status and identity, as well as your ability to navigate American society, is based on your position. For many it’s lose your job, lose your life, as you’re consumed by debt you can’t repay.
Divided, distracted, and downtrodden: It’s a recipe for the end of democracy in America. But it also serves as a roadmap to recovery. To reinvigorate our democracy, we must fight against divisiveness, we must put distractions behind us, and we must organize to fight for the rights of the people, rights like a better education for all, less debt (a college education that’s largely free, better health care for everyone, and far less emphasis on consumerism as a sign of personal and societal health and wealth), and improved benefits for the workers of America, who form the backbone of our nation.
We can’t wait for the politicians. Most of them are already co-opted by the moneyed interests. Meaningful change will have to come from us. That is, after all, the way democracy is supposed to work.
Tyler Durden
Sat, 03/21/2020 – 16:45
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