- Auto Registrations In Europe Plunge 76% In April, The Largest Drop On Record
Auto Registrations In Europe Plunge 76% In April, The Largest Drop On Record
Tyler Durden
Fri, 05/22/2020 – 02:45The hits just keep on coming for the auto industry. Frozen amidst a global lockdown due to the coronavirus, auto sales and registrations data continues to be atrocious around the world and the industry that was mired in recession even before the pandemic became a problem continues to face odds that look insurmountable.
The latest batch of cheery optimism came out of Europe, where auto registrations plunged 76% in April. According to the European Automobile Manufacturers Association, the number of new cars sold fell from 1,143,046 to just 270,682 YOY.
The ACEA said: “The first full month with COVID-19 restrictions in place resulted in the strongest monthly drop in car demand since records began.”
The data was driven by each of the 27 EU markets recording double digit declines in April, with Italy and Spain spearheading the misery, posting losses of 97.6% and 96.5% respectively. Sales plunged 61.1% in Germany and France dealt with an 88.8% contraction in April. The U.K. also posted a sales drop of 97.3%, according to CNBC.
Sequentially, the numbers are worse than March, when new car sales fell 55%. It was in mid-March that most European countries instituted their lockdowns.
The global auto industry can only be best described as in the midst of imploding into itself right now. Just a couple of days ago, we reported the news that China NEV sales plunged 43% last month.
Last month we also reported that April was going to be the worst month on record for auto sales.
Earlier this month we noted how dealers were desperately turning to incentives to try and move inventory off their lots. The consequences of the shut down have been immense. Toyota reported a 54% sales decline in April, for example. Hyundai and Mazda reported drops of 39% and 45%, respectively.
Recall we also wrote last month that ships full of cars were being denied entry to ports in California due to the massive inventory glut. Such was the case on April 24 when a cargo of 2,000 Nissan SUVs was approaching the port of Los Angeles. They were told to drop anchor about a mile from the port and remain there.
John Felitto, a senior vice president for the U.S. unit of Norwegian shipping company Wallenius Wilhelmsen said:
“Dealers aren’t really accepting cars and fleet sales are down because rental-car and fleet operators aren’t taking delivery either. This is different from anything we’ve seen before. Everyone is full to the brim.”
“There are basically no sales,” we wrote about the auto industry heading into April. One automotive researcher said of the industry-wide crisis: “The whole world is turned upside down right now.”
- How The British Empire Created And Killed George Orwell
How The British Empire Created And Killed George Orwell
Tyler Durden
Fri, 05/22/2020 – 02:00Authored by Martin Sieff via The Strategic Culture Foundation,
The British Broadcasting Corporation (BBC), happily amplified by the Public Broadcasting System (PBS) in the United States which carries its World News, continues to pump out its regular dreck about the alleged economic chaos in Russia and the imagined miserable state of the Russian people.
It is all lies of course. Patrick Armstrong‘s authoritative regular updates including his reports on this website are a necessary corrective to such crude propaganda.
But amid all their countless fiascoes and failures in every other field (including the highest per capita death rate from COVID-19 in Europe, and one of the highest in the world) the British remain world leaders at managing global Fake News. As long as the tone remains restrained and dignified, literally any slander will be swallowed by the credulous and every foul scandal and shame can be confidently covered up.
None of this would have surprised the late, great George Orwell. It is fashionable these days to endlessly trot him out as a zombie (dead but alleged to be living – so that he cannot set the record straight himself) critic of Russia and all the other global news outlets outside the control of the New York and London plutocracies. And it is certainly true, that Orwell, whose hatred and fear of communism was very real, served before his death as an informer to MI-5, British domestic security.
But it was not the Soviet Union, Stalin’s show trials or his experiences with the Trotskyite POUM group in Barcelona and Catalonia during the Spanish Civil War that “made Orwell Orwell” as the Anglo-America Conventional Wisdom Narrative has it. It was his visceral loathing of the British Empire – compounded during World War II by his work for the BBC which he eventually gave up in disgust.
And it was his BBC experiences that gave Orwell the model for his unforgettable Ministry of Truth in his great classic “1984.”
George Orwell had worked in one of the greatest of all world centers of Fake News. And he knew it.
More profoundly, the great secret of George Orwell’s life has been hiding in plain sight for 70 years since he died. Orwell became a sadistic torturer in the service of the British Empire during his years in Burma, modern Myanmar. And as a fundamentally decent man, he was so disgusted by what he had done that he spent the rest of his life not just atoning but slowly and willfully committing suicide before his heartbreakingly premature death while still in his 40s.
The first important breakthrough in this fundamental reassessment of Orwell comes from one of the best books on him. “Finding George Orwell in Burma” was published in 2005 and written by “Emma Larkin”, a pseudonym for an outstanding American journalist in Asia whose identity I have long suspected to be an old friend and deeply respected colleague, and whose continued anonymity I respect.
“Larkin” took the trouble to travel widely in Burma during its repressive military dictatorship and her superb research reveals crucial truths about Orwell. According to his own writings and his deeply autobiographical novel “Burmese Days” Orwell loathed all his time as a British colonial policeman in Burma, modern Myanmar. The impression he systematically gives in that novel and in his classic essay “Shooting an Elephant” is of a bitterly lonely, alienated, deeply unhappy man, despised and even loathed by his fellow British colonialists throughout society and a ludicrous failure at his job.
This was not, however, the reality that “Larkin” uncovered. All surviving witnesses agreed that Orwell – Eric Blair as he then still was – remained held in high regard during his years in the colonial police service. He was a senior and efficient officer. Indeed it was precisely his knowledge of crime, vice, murder and the general underside of human society during his police colonial service while still in his 20s that gave him the street smarts, experience, and moral authority to see through all the countless lies of right and left, of American capitalists and British imperialists as well as European totalitarians for the rest of his life.
The second revelation to throw light on what Orwell had to do in those years comes from one of the most famous and horrifying scenes in “1984.” Indeed, almost nothing even in the memoirs of Nazi death camp survivors has anything like it: That is the scene where “O’Brien”, the secret police officer tortures the “hero” (if he can be called that) Winston Smith by locking his face to a cage in which a starving rat is ready to pounce and devour him if it is opened.
I remember thinking, when I was first exposed to the power of “1984” at my outstanding Northern Irish school, “What kind of mind could invent something as horrific as that?”) The answer was so obvious that I like everyone else missed it entirely.
Orwell did not “invent” or “come up” with the idea as a fictional plot device: It was just a routine interrogation technique used by the British colonial police in Burma, modern Myanmar. Orwell never “brilliantly” invented such a diabolical technique of torture as a literary device. He did not have to imagine it. It was routinely employed by himself and his colleagues. That was how and why the British Empire worked so well for so long. They knew what they were doing. And what they did was not nice at all.
A final step in my enlightenment about Orwell, whose writings I have revered all my life – and still do – was provided by our alarmingly brilliant elder daughter about a decade ago when she too was given “1984” to read as part of her school curriculum. Discussing it with her one day, I made some casual obvious remark that Orwell was in the novel as Winston Smith.
My American-raised teenager then naturally corrected me. “No, Dad, ” she said. “Orwell isn’t Winston, or he’s not just Winston. He’s O’Brien too. O’Brien actually likes Winston. He doesn’t want to torture him. He even admires him. But he does it because it’s his duty.”
She was right, of course.
But how could Orwell the great enemy of tyranny, lies and torture so identify with and understand so well the torturer? It was because he himself had been one.
“Emma Larkin’s” great book brings out that Orwell as a senior colonial police officer in the 1920s was a leading figure in a ruthless war waged by the British imperial authorities against drug and human trafficking crime cartels every bit as vicious and ruthless as those in modern Ukraine, Columbia and Mexico today. It was a “war on terror” where anything and everything was permitted to “get the job done.”
The young Eric Blair was so disgusted by the experience that when he returned home he abandoned the respectable middle class life style he had always enjoyed and became, not just an idealistic socialist as many in those days did, but a penniless, starving tramp. He even abandoned his name and very identity. He suffered a radical personality collapse: He killed Eric Blair. He became George Orwell.
Orwell’s early famous book “Down and Out in London and Paris” is a testament to how much he literally tortured and humiliated himself in those first years back from Burma. And for the rest of his life.
He ate miserably badly, was skinny and ravaged by tuberculosis and other health problems, smoked heavily and denied himself any decent medical care. His appearance was always abominable. His friend, the writer Malcolm Muggeridge speculated that Orwell wanted to remake himself as a caricature of a tramp.
The truth clearly was that Orwell never forgave himself for what he did as a young agent of empire in Burma. Even his literally suicidal decision to go to the most primitive, cold, wet and poverty-stricken corner of creation in a remote island off Scotland to finish “1984” in isolation before he died was consistent with the merciless punishments he had inflicted on himself all his life since leaving Burma.
The conclusion is clear: For all the intensity of George Orwell’s experiences in Spain, his passion for truth and integrity, his hatred of the abuse of power did not originate from his experiences in the Spanish Civil War. They all flowed directly from his own actions as an agent of the British Empire in Burma in the 1920s: Just as his creation of the Ministry of Truth flowed directly from his experience of working in the Belly of the Beast of the BBC in the early 1940s.
George Orwell spent more than 20 years slowly committing suicide because of the terrible crimes he committed as a torturer for the British Empire in Burma. We can therefore have no doubt what his horror and disgust would be at what the CIA did under President George W. Bush in its “Global War on Terror.” Also, Orwell would identify at once and without hesitation the real fake news flowing out of New York, Atlanta, Washington and London today, just as he did in the 1930s and 1940s.
Let us therefore reclaim and embrace The Real George Orwell: The cause of fighting to prevent a Third World War depends on it.
- Infected US Troops & Re-Emerging ISIS: Dueling 'Disinfo War' In Syria Turns Bizarre
Infected US Troops & Re-Emerging ISIS: Dueling ‘Disinfo War’ In Syria Turns Bizarre
Tyler Durden
Fri, 05/22/2020 – 01:00After the coronavirus pandmic gripped the globe and world headlines, the ‘information war’ in Syria and the broader Middle East took on a bizarre tone.
Starting late last month the Kremlin publicly charged that the Pentagon was keeping mum on a large-scale COVID-19 outbreak among the some one- to two-thousand American troops stationed in northeast Syria.
The suggestion was that infected troops would become super-spreaders among the Syrian population under US occupation. At the time the Russian Foreign Ministry issued the perhaps unsupported assertion, “We receive reports of explosive Coronavirus infection spread among the US servicemen and of these facts being kept mum on.”
US occupying forces in northeast syria, Getty Images Pundits in the West in turn said Russia was genning up a ‘virus scare’ meant to damage US credibility in the region and among the local population where it had a presence. But at the time the vast majority of cases among the US military were to be found in the US Navy, with zero official reports of the disease among US personnel in Syria.
The US Department slammed what it called Russia’s “disinformation campaign” in Syria to “exploit” the COVID-19 pandemic, according to a special briefing on the situation earlier this month.
“Russian disinformation claims that the United States or Western powers are the origin of the virus while instilling uncertainty about the international response,” US special envoy James Jeffrey said. “Through such tactics, Russia clearly signals it’s willing to take advantage of a global crisis in order to pursue its own destabilizing agenda without any regard for the human consequences.”
However, no doubt if there were an outbreak on American bases in Syria, where special forces are still assisting the Kurdish-led SDF in “securing” oil and gas fields, Pentagon brass would keep a lid on it for security concerns.
The Kremlin also warned that a “catastrophic” coronavirus outbreak could soon devastate refugee camps and prisons under US control in Syria, something which the UN and others have since voiced concern about.
How ISIS is exploiting the coronavirus pandemic https://t.co/U0kJPLUviS #FoxNews
— Hollie McKay (@holliesmckay) May 20, 2020
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“Washington bears full responsibility for the civilian population and provision for their humanitarian needs on territories under its control east of the Euphrates and in the south near al-Tanf, where the notorious Rukban camp for the internally displaced people is located,” a statement said last month.
Fast-forward a month. On Thursday the Russian Foreign Ministry in fresh attacks on US operations in Syria charged that the US is facilitating a new ISIS resurgence, after the terror group had long been driven to operate ‘underground’.
Interestingly Kremlin spokeswoman Maria Zakharova linked the COVID-19 pandemic to the Islamic State’s reemergence taking place right under Washington’s nose. “We monitor the deterioration of the situation in the non-government-controlled areas in north-eastern Syria. (ISIS) decided to take advantage of the conditions of the spread of the coronavirus and escalated their aggression,” she told a news conference Thursday.
ISIS file image via Homeland Security Today “Between 10 and 15 May alone, the terrorists carried out more than 20 attacks against Kurdish forces in the provinces of Deir Ezzor and Raqqa, killing more than 20 people and wounding more than 30 others.” She continued, “We were alerted by disturbing reports of the escape of seven ISIS elements from a prison at the Al-Hawl Camp for the displaced.”
She then pivoted to the US occupation in Syria’s North: “all these facts come as a new confirmation that the United States, which occupies areas beyond the Euphrates and its allies, does not pay attention to the population,” Zakharova said.
Syria is but the latest contested sphere where coronavirus has figured central in geopolitical calculations and an information war between the US and its rivals – China being first and top of the list where COVID-19’s origins has largely defined the debate.
- The Slippery Slope To Despotism: Paved With Lockdowns, Raids, & Forced Vaccinations
The Slippery Slope To Despotism: Paved With Lockdowns, Raids, & Forced Vaccinations
Tyler Durden
Fri, 05/22/2020 – 00:05Authored by John Whitehead via The Rutherford Institute,
“You have no right not to be vaccinated, you have no right not to wear a mask, you have no right to open up your business… And if you refuse to be vaccinated, the state has the power to literally take you to a doctor’s office and plunge a needle into your arm.”
– Alan Dershowitz, Harvard law professor
You have no rights.
That’s the lesson the government wants us to learn from this COVID-19 business.
Well, the government is wrong.
For years now, the powers-that-be—those politicians and bureaucrats who think like tyrants and act like petty dictators regardless of what party they belong to—have attempted to brainwash us into believing that we have no right to think for ourselves, make decisions about our health, protect our homes and families and businesses, act in our best interests, demand accountability and transparency from government, or generally operate as if we are in control of our own lives.
We have every right, and you know why? Because we were born free.
As the Declaration of Independence states, we are endowed by our Creator with certain inalienable rights—to life, liberty, property and the pursuit of happiness—that no government can take away from us.
Unfortunately, that hasn’t stopped the government from constantly trying to usurp our freedoms at every turn. Indeed, the nature of government is such that it invariably oversteps its limits, abuses its authority, and flexes its totalitarian muscles.
Take this COVID-19 crisis, for example.
What started out as an apparent effort to prevent a novel coronavirus from sickening the nation (and the world) has become yet another means by which world governments (including our own) can expand their powers, abuse their authority, and further oppress their constituents.
Until now, the police state has been more circumspect in its power grabs, but this latest state of emergency has brought the beast out of the shadows.
We are on a slippery slope to outright despotism.
This road we are traveling is paved with lockdowns, SWAT team raids, mass surveillance and forced vaccinations. It is littered with the debris of our First and Fourth Amendment freedoms.
This is what we have to look forward to in the months and years to come unless we can find some way to regain control over our runaway government.
The government has made no secret of its plans.
Just follow the money trail, and you’ll get a sense of what’s in store: more militarized police, more SWAT team raids, more surveillance, more lockdowns, more strong-armed tactics aimed at suppressing dissent and forcing us to comply with the government’s dictates.
It’s chilling to think about, but it’s not surprising.
We’ve been warned.
Remember that Pentagon training video created by the Army for U.S. Special Operations Command? The one that anticipates the future domestic political and social problems the government is grooming its armed forces to solve through the use of martial law?
The chilling five-minute training video, obtained by The Intercept through a FOIA request and made available online, paints a dystopian picture of the future bedeviled by “criminal networks,” “substandard infrastructure,” “religious and ethnic tensions,” “impoverishment, slums,” “open landfills, over-burdened sewers,” a “growing mass of unemployed,” and an urban landscape in which the prosperous economic elite must be protected from the impoverishment of the have nots.
But here’s the kicker: what they’re really talking about is martial law, packaged as a well-meaning and overriding concern for the nation’s security.
This COVID-19 crisis is pushing us that much closer to that dystopian vision becoming a present-day reality.
For starters, let’s talk about the COVID-19 stormtroopers, SWAT team raids and ongoing flare-ups of police brutality.
With millions of dollars in stimulus funds being directed towards policing agencies across the country, the federal government plans to fight this COVID-19 virus with riot gear, gas masks, ballistic helmets, drones, and hi-tech surveillance technology.
Indeed, although crime rates have fallen dramatically in the midst of this global COVID-19 lockdown, there’s been no relief from the brutality and violence of the American police state.
While the majority of the country has been social distancing under varying degrees of lockdowns, it’s been business as usual for the nation’s SWAT teams and police trained to shoot first and ask questions later.
In Kentucky, plain-clothed cops in unmarked cars used a battering ram to break down Breonna Taylor’s door and carry out a no-knock raid on her home after midnight. Fearing a home invasion, the 26-year-old emergency medical technician and her boyfriend—who had been in bed at the time of the invasion—called 911 and prepared to defend themselves. Taylor’s boyfriend shot one of the intruders—later identified as police—in the leg. Police fired at least 20 shots into the apartment and a neighboring home, killing Taylor. The drug dealer who was the target of the late-night raid lived 10 miles away and had already been arrested prior to the raid on Taylor’s home.
In Illinois, police opened fire in a subway station, shooting a 33-year-old man who allegedly resisted their attempts to tackle and arrest him for violating a city ordinance by passing between two cars of a moving train. Ariel Roman, a short-order cook, claimed he was suffering from an anxiety attack when he was “harassed, chased, tackled, pepper-sprayed, tasered and shot twice” by police.
In Maryland, police dispatched on a nuisance call to break up a crowd of neighborhood kids( half of them teenagers, and the other half youngsters around 4 and 5 years old) gathered in an apartment complex parking lot opened fire on a 29-year-old man seen exiting his car with a gun. An eyewitness claimed “the officer pointed a flashlight and his gun at the group immediately and began chasing and shooting a minute or two after getting out of the patrol car.” Police reportedly shot the man after he threw down his gun and ran in the opposite direction.
In Virginia, more than 80 local, state, and federal police agents risked spreading COVID-19 to “a highly vulnerable population” when they raided a low income, public housing community in an effort to crack down on six individuals suspected of selling, on average, $20 to $100 worth of drugs.
In Texas, a SWAT team backed up with a military tank Armored Personnel Carrier raided Big Daddy Zane’s Bar whose owner and patrons were staging a peaceful First and Second Amendment protest of the governor’s shutdown orders.
Police have even been called out to shut down churches, schools and public parks and beaches that have been found “in violation” of various lockdown orders.
Now there’s talk of mobilizing the military to deliver forced vaccinations, mass surveillance in order to carry out contact tracing, and heavy fines and jail time for those who dare to venture out without a mask, congregate in worship without the government’s blessing, or re-open their businesses without the government’s say-so.
There are rumblings that the Transportation Security Administration (TSA) will start thermal screenings to monitor passengers’ temperatures in coming weeks. This is in addition to the virtual strip searches that have become routine aspects of airport security.
Restaurants in parts of the country are being tasked with keeping daily logs of phone numbers, emails, and arrival times for everybody who participates in dine-services, with no mention of how long such records will be kept on file, with whom they will be shared, and under what circumstances.
With the help of Google and Nest cameras, hospitals are morphing into real-time surveillance centers with round-the-clock surveillance cameras monitoring traffic in patients’ rooms. Forget patient privacy, however. Google has a track record of sharing surveillance footage with police.
And then rounding out the power-grabs, the Senate just voted to give police access to web browsing data without a warrant, which would dramatically expand the government’s Patriot Act surveillance powers. The Senate also voted to give Attorney General William Barr the ability to look through the web browsing history of any American — including journalists, politicians, and political rivals — without a warrant, just by saying it is relevant to an investigation. If enacted, privacy experts warn that the new provisions threaten to undermine the free press by potentially preventing the media from exposing abuses of power or acting as a watchdog against political leaders.
If we haven’t already crossed over, we’re skating dangerously close to that line that keeps us on the functioning side of a constitutional republic. It won’t take much to push us over that edge into a full-blown banana republic.
In many ways, this is just more of the same heavy-handed tactics we’ve been seeing in recent years but with one major difference: this COVID-19 state of emergency has invested government officials (and those who view their lives as more valuable than ours) with a sanctimonious, self-righteous, arrogant, Big Brother Knows Best approach to top-down governing, and the fall-out can be seen far and wide.
It’s an ugly, self-serving mindset that views the needs, lives and rights of “we the people” as insignificant when compared to those in power.
That’s how someone who should know better such as Alan Dershowitz, a former Harvard law professor, can suggest that a free people—born in freedom, endowed by their Creator with inalienable rights, and living in a country birthed out of a revolutionary struggle for individual liberty—have no rights to economic freedom, to bodily integrity, or to refuse to comply with a government order with which they disagree.
According to Dershowitz, who has become little more than a legal apologist for the power elite, “You have no right not to be vaccinated, you have no right not to wear a mask, you have no right to open up your business… And if you refuse to be vaccinated, the state has the power to literally take you to a doctor’s office and plunge a needle into your arm.”
Dershowitz is wrong: while the courts may increasingly defer to the government’s brand of Nanny State authoritarianism, we still have rights.
The government may try to abridge those rights, it may refuse to recognize them, it may even attempt to declare martial law and nullify them, but it cannot litigate, legislate or forcefully eradicate them out of existence.
Up to now, we’ve been largely passive participants in this experiment in self-governance. Our inaction and inattention has left us at the mercy of power-hungry politicians, corrupt corporations and brutal, government-funded militias.
Wake up, America.
As I make clear in my book Battlefield America: The War on the American People, these ongoing violations of our rights—this attitude by the government that we have no rights—this tyrannical movement that is overtaking our constitutional republic and gaining in momentum and power by the minute—this incessant auction block in which government officials appointed to represent our best interests keep selling us out to the highest bidder—all of these betrayals scream for a response.
To quote the great Rod Serling: “If we don’t listen to that scream—and if we don’t respond to it—we may well wind up sitting amidst our own rubble, looking for the truck that hit us—or the bomb that pulverized us. Get the license number of whatever it was that destroyed the dream. And I think we will find that the vehicle was registered in our own name.”
- Oil Is Crashing After China's "Great Uncertainty" Statement
Oil Is Crashing After China’s “Great Uncertainty” Statement
Tyler Durden
Thu, 05/21/2020 – 23:46Although Beijing announced some new stimulus measures, it appears markets prefer to focus on the “great uncertainty” that Chinese officials see ahead (due to the coronavirus) leading to a decision to not release a target for economic growth has thrown the “v-shaped” recovery narrative out the window (for now).
“We have not set a specific target for economic growth this year,” Li said, speaking in the Great Hall of the People.
“This is because our country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the Covid-19 pandemic and the world economic and trade environment.”
WTI has crashed over 9%, with the July contract trading back down at a $30 handle…
And US futures are notably weaker with Nasdaq leading the drop…
The shifting away from a hard target for output growth breaks with decades of Communist Party planning habits and is an admission of the deep rupture that the disease has caused.
“The nascent demand recovery is still vulnerable, and the drop in prices today is an injection of reality,” said Victor Shum, vice president of energy consulting at IHS Markit in Singapore.
“China not giving a GDP target means they are not quite certain about the recovery yet.”
The question marks over China’s economy come as relations with the US deteriorate dramatically, clearly damaging the “v” or “u” shaped recovery narrative that has seemed to dominate both equity and oil markets in recent days.
- China Is Hoarding PPE Again As It Braces For COVID-19's "Second Wave"
China Is Hoarding PPE Again As It Braces For COVID-19’s “Second Wave”
Tyler Durden
Thu, 05/21/2020 – 23:45A while back, we reported on one notable US Intel leak claiming Beijing deliberately waited until Jan. 22 to warn the world about the possibility of a widespread outbreak (before that, Beijing insisted there was no evidence of human to human transmission, implying that this would likely be an isolated incident) so the CCP would have time to grab up all the PPE and other vital supplies.
That was why, when the tidal wave of infections finally hit in the US, a sudden and inexplicable shortage of PPE forced nurses and doctors in some of the most notorious hotspots – including NYC – to work without masks and gowns. Many used garbage bags, or used one disposable mask for a week or more.
Now, Fox News reports that the CCP appears to be gobbling up all the capacity once again as businessmen complain about suppliers warning about being unable to process new orders.
China’s Communist Party is again seizing factory lines churning out the world’s supply of medical safety gear — sparking fears the country is preparing for a second wave of the coronavirus, American traders in China told The Post.
New Yorker Moshe Malamud, who has done business in China for over two decades, was moving tens of millions of pieces of protective gear to the U.S. at the height of the crisis but said suppliers in recent weeks had been overwhelmed with orders from the Chinese government.
“I was placing a larger order with one of the bigger distributors and he tells me, ‘I can complete this order but after this we’ve been contracted by the Chinese government to produce 250 million gowns,’” said Malamud, who lived in China for a decade before founding aviation company M2Jets.
Thermometer makers have also been inundated with government orders.
He said he heard a similar story about another manufacturer making thermometers.
“We hear how China is up and running and the virus is past them, so I asked, ‘What are they ordering 250 million gowns for?’ and of course no one is talking.”
“I’ve been hearing this a lot from other manufacturing institutions that say, ‘We can give you a little bit, but basically we’re concentrated between now and the end of the summer manufacturing stuff for the Chinese government in anticipation of a second wave,'” he continued.
Last month, leading U.S. manufacturers of medical safety gear told the White House that China had prohibited them from exporting goods as the crisis mounted, a Post report revealed.
Beijing has already forced some 108 million Chinese in northeastern Jilin Province back under “partial lockdown” following another outbreak. They’re also carrying out a mass-testing campaign in Wuhan.
Although Dr. Anthony Fauci has repeatedly warned that the US should brace for a second wave of the virus, a second wave isn’t a foregone conclusion. As NYT opinion columnist Nicolas Kristof wrote in his column published in Thursday’s paper, “epidemiology is full of puzzles.” In 2003, the WHO feared a deadly resurgence of SARS that fall. But instead, the virus petered out. As Dr. Fauci explained once several months ago, we know little for certain about the virus, and because of this, it’s important to be prepared for the worst-case scenario.
And if the outbreak in Brazil continues to rage out of control, the possibility that Brazilians could reinfect the entire Western Hemisphere is looking increasingly plausible.
- We're All In This Together… But Not In The Way You Think
We’re All In This Together… But Not In The Way You Think
Tyler Durden
Thu, 05/21/2020 – 23:25Authored by Robert Blumen via The Mises Institute,
We are all in this together. No, by that I do not mean what Andrew Horney calls “all those cloyingly saccharine, feel-good public service announcements being delivered by famous faces on television and social media platforms, telling us “we’re all in this together.” We are all interdependent through the production of goods and services that constitutes the market order.
Some critics of the current crisis see it as yet another case of the rich getting one over on the rest of us. I will argue that this cannot be correct, because the rich as well as the poor (and the middle class) depend on the freedom to produce, and are all harmed by the lack of it.
Angelika Albaladejo writes, “The Rich Are Getting Richer,” citing a new report that “shows that some American billionaires are making substantial gains during the global health crisis.” Wilamette Week asks, “How Will the Rich Get Richer During the Pandemic-Fueled Economic Collapse?“
Israel Shamir in “Deep Pockets Love Lockdown” suggests that the rich do not like the widespread availability of travel:
No more travels for us. The very rich folks will regain their solitary possession of Venice, the Côte d’Azur, and all the other elite destinations so recently inundated by mass tourism. Once again they will have it as good as they had it in the 19th century. Travel is a luxury, and ordinary people do not deserve luxury. They tried to keep us away by making travel as unpleasant as possible with body searches, but it didn’t help. If this global pandemic doesn’t stop us, they are simply going to cut us off.
The greatest influence on everyone’s standard of living is the overall production of the society they live in. Under the current prohibitions, some businesses gain market share—a larger piece, but sliced from a much smaller pie. The rich, who enjoy and can afford luxury goods, depend on the productivity of all members of society for these goods. Those who can afford to fly first class, or perhaps in their own private planes, depend on the engineering advances from the mass production of airplanes that have reduced the cost and made private jets “affordable.” Time-shared private aviation costs in the low six figures.
High-end travelers rely on the proliferation of airports made possible by the masses of middle-class travel worldwide; on the sizable labor pool of skilled pilots with commercial air travel experience to fly their private planes; on the development of air traffic control through the management of millions of flights annually; and on the gradual improvements in air traffic control to improve air travel safety.
Fine hotels where the rich stay in suites exist nearly everywhere due to middle-class and business travel. International brands are able to bring quality hotels online and up to international standards quickly due to experience operating in many global markets, and they are able to staff new hotels with experienced managers from existing properties, where they have honed their skills.
The private chefs that the rich hire to cook for them emerged from a vast food service industry consisting of culinary schools and fine restaurants even in small- to mid-market cities, where chefs learn their craft. The ingredients are available because of demand to feed the millions. Restaurants are often funded by investors who either specialize in the restaurant sector or made their money in another business. The top-tier chefs who work privately for wealthy people have reached the top of a competitive pyramid through years of restaurant experience, travel, studying under other experienced chefs, and trying out different restaurant concepts to develop recipes and techniques. The Gordon Ramseys of the world stand atop a vast competitive pyramid of chefs.
The writers who suggest that the lockdown is another means for the rich to get richer, perhaps by buying up discounted assets in a financial panic and eventually monopolizing all commerce, lack an understanding of capital markets.
Financier and political advisor Bernard Baruch is reported to have gone to cash, to have shorted the US stock market in the late 1920s leading up to the crash of 1929, to have advised friends to do the same, and to have made millions on the trade. Kennedy family patriarch Joseph P. is reported to have done likewise, realizing that the market was at a top when shoeshine boys gave him stock tips.
Fortunes have been made by shorting bubbles before market crashes or buying up assets on the cheap in the aftermath—but does that benefit “the rich”? This ignores that for every Bernard Baruch who sold millions of dollars in assets there had to be another buyer who bought them near the top and suffered the losses that Baruch avoided.
Those who own most of the assets are by definition “the rich.” A rich person is someone whose property consists mostly of capital goods—directly owned, through businesses or through stocks and bonds, which are claims on capital goods. When Baruch wishes to sell $1 million in assets, which, as Dr. Evil has observed, used to be a lot of money, there must be a buyer who has that much cash on hand to pay for them. This buyer can only be another rich person, or an organization that represents a large number of individuals—a pension fund, a life insurance company.
Collectively all assets are at all times owned by someone. “The rich” as a whole can not exit asset ownership, because there is no external population of Martians who will take those assets off their hands (unless the Fed buys the entire stock and bond market, which I don’t rule out, and perhaps the Fed governors are from another planet).
Most of the world’s wealth is in capital goods; those who own the most of them are the rich. When markets are repriced—downward—the rich as a whole suffer most of the market value losses. Those who cashed out at the top benefit at the expense of those who held the assets on the way down. And anyone, at any size, who has cash finds that the purchasing power of their cash has gone up when measured in terms of assets. The position of small investors who have cash on hand improves relative to the rich when asset markets crash. Even those who do not invest in capital goods at all find their position improved in relative terms, because the ability of the rich to bid for consumption goods by offering capital goods has diminished.
At any moment in time, the upward or downward price movements in capital markets are a zero-sum game. But there is a more fundamental way in which we are interdependent. The capital goods underlying financial assets derive their market value from their role in the production of consumer goods. The value of a corporation is derived from consumer demand for its products. Many of the rich became so by starting a business that they still own which grew by satisfying consumer demand. Others have sold a business or inherited wealth which they try to preserve through the ownership (direct or indirect) of capital goods through financial assets.
And from where do consumers derive their ability to demand? We know from Say’s law that consumers demand by supplying their own production to the market. Everyone who works and produces a good or a service, by supplying it to the market, demands some other good or service. In the general glut debate, the proponents of Say’s law used it to show that because every instance of supply constitutes a demand, and vice versa, aggregate supply and aggregate demand are not only equal, but simply different ways of looking at the totality of transactions that occur in the market as a whole.
The demand that the rich depend on to support the valuation of their assets is largely not from other rich people demanding Cartier jewelry, Rolex watches, yachts, and custom basement wine cellars. It is largely from the mass market of consumers through division of labor, which provides the goods and services that we all depend on. The ability of the poor and middle classes to demand comes mostly from their wages, which they earn through their contribution to the production of a range of goods and services. Their supply in turn constitutes the demand for other—different—goods and services, which supports the valuations of businesses, and therefore financial assets.
And although the rich consume higher-quality goods and services than the rest of us, they depend equally on the flow of goods and services, the division of labor, and the development of new products. Although they may cherry-pick the best off the top, there has to be a chocolate sundae underneath to support the cherry.
Most mass consumer goods start out as luxury goods. Then, as the manufacturers work out the kinks and capital investment enables production at a larger scale, these goods become mass market goods. The 1987 movie Wall Street featured actor Michael Douglas in the role as a hedge fund titan. In one scene he is shown carrying what at the time passed for a mobile phone (a luxury good only available to the super rich) about the size of a large brick. When I have traveled in low- to middle-income countries (back in the days when we were allowed to travel more than one hundred yards from our residences), smartphones were ubiquitous. While it is true that the middle class and eventually low-income consumers benefit from the adoption of new products by the rich, the fall in these goods’ costs also makes the rich man’s dollar go further. Improvements in the design and function of the products through generations of products and mass production make better products available to all classes.
Even the government depends on the market, innovation, progress, and falling costs for its nefarious objectives. Governments would like to surveil us all—even more than they already do. According to the BBC News, “More than a million Australians have downloaded a coronavirus contact tracing app within hours of it being released by the government.” The plan is clear enough, but if no people can afford a modern mobile phone with GPS any longer and lack the ability to pay for their data plan, this effort might fall a bit short. The phone, the network, and the existence of either wifi or a mobile signal nearly everywhere are due to carriers’ vast capital investment and the dramatic fall in these technologies’ prices. We can all afford these things because of our participation in the market, producing other goods and services.
I will be the first to say that I do not understand why our insect overlords are attempting to damage social trust (through “snitch” portals) and to destroy our civilization itself through the prohibition of commerce, education, healthcare, athletics, professional sports, entertainment, dating and family formation, the arts, music, dining, family gatherings, religious observance, and all other forms of civilized life.
Nor can I explain the “mask hysteria” that is spreading like a highly contagious virus on social networking websites such as NextDoor.com.
Without an explanation that makes any sense, where does that leave us?
What keeps me up at night is that we have not yet seen the end game, and that when we do it may be worse than what anyone can imagine.
- Japanic! Tokyo Tourism Tumbles 99.9% In April
Japanic! Tokyo Tourism Tumbles 99.9% In April
Tyler Durden
Thu, 05/21/2020 – 23:05Japan saw an estimated 2,900 foreign travelers in April, down 99.9% from a year earlier, as COVID-19 travel restrictions and lockdowns left the once-booming tourism sector in a state of paralysis.
The drop in foreign visitors was the most significant percentage decline on record dating back to 1964, the Japan National Tourism Organization (JNTO) reported. It was the first time the monthly figure fell sub 10,000. The previous low for monthly foreign visitors was 17,543 set back in February 1964.
The reason for the sharp decline stems from the government’s restrictions on international travel following a surge in domestic virus cases and deaths. On April 3, entry restrictions for international travelers were applied to 100 countries, including China, the US, and Europe, resulting in a collapse of inbound travel that severely impacted the country’s tourism industry.
Before the pandemic, tourism in the country was increasing at healthy growth rates. Around 31.8 million people visited Japan in 2019, up 2.2% over the previous year. Japan had high aspirations to boost tourism to a record 40 million this year, but those estimates were crushed due to the now-postponed Tokyo Olympics that have been rescheduled for 2021.
Travel restrictions and shutdowns have found success in mitigating the spread of the virus, Prime Minister Shinzo Abe said on Thursday, adding that Japan could lift the state of emergency in Tokyo as early as next week, that is if virus infections can remain low. Emergencies were recently lifted in Osaka, Kyoto, and Hyogo because of a drop in confirmed cases.
Japan’s tourism industry is expected to remain in a slump throughout the year. The world’s third-largest economy dove into recession for the first time since 2015:
“The economy entered the coronavirus shock in a very weak position,” said Izumi Devalier, chief Japan economist at BofA, but “the real big ugly stuff is going to happen in the April, June print. It’s going to be three-quarters of very negative growth.”
Read: “Japan Exports Worst Since Financial Crisis; Korea Early May Export Data Just As Dire”
Abe, like other world leaders, is quickly trying to reopen his crashed economy and simultaneously contain the pathogen’s spread. This difficult task could ignite into a second virus wave later this year.
Japan’s low rate of testing for the virus suggests the scope of the outbreak is still yet to be known.
- Escobar: China Updates Its "Art Of (Hybrid) War"
Escobar: China Updates Its “Art Of (Hybrid) War”
Tyler Durden
Thu, 05/21/2020 – 22:45Authored by Pepe Escobar via The Asia Times,
In 1999, Qiao Liang, then a senior air force colonel in the People’s Liberation Army, and Wang Xiangsui, another senior colonel, caused a tremendous uproar with the publication of Unrestricted Warfare: China’s Master Plan to Destroy America.
Unrestricted Warfare was essentially the PLA’s manual for asymmetric warfare: an updating of Sun Tzu’s Art of War. At the time of original publication, with China still a long way from its current geopolitical and geo-economic clout, the book was conceived as laying out a defensive approach, far from the sensationalist “destroy America” added to the title for US publication in 2004.
Now the book is available in a new edition and Qiao Liang, as a retired general and director of the Council for Research on National Security, has resurfaced in a quite revealing interview originally published in the current edition of the Hong Kong-based magazine Zijing (Bauhinia).
General Qiao is not a Politburo member entitled to dictate official policy. But some analysts I talked with agree that the key points he makes in a personal capacity are quite revealing of PLA thinking. Let’s review some of the highlights.
Dancing with wolves
The bulk of his argument concentrates on the shortcomings of US manufacturing:
“How can the US today want to wage war against the biggest manufacturing power in the world while its own industry is hollowed out?”
An example, referring to Covid-19, is the capacity to produce ventilators:
“Out of over 1,400 pieces necessary for a ventilator, over 1,100 must be produced in China, including final assembly. That’s the US problem today. They have state of the art technology, but not the methods and production capacity. So they have to rely on Chinese production.”
General Qiao dismisses the possibility that Vietnam, the Philippines, Bangladesh, India and other Asian nations may replace China’s cheap workforce:
“Think about which of these countries has more skilled workers than China. What quantity of medium and high level human resources was produced in China in these past 30 years? Which country is educating over 100 million students at secondary and university levels? The energy of all these people is still far from being liberated for China’s economic development.”
He acknowledges US military power even in times of epidemic and economic difficulties is always capable of “interfering directly or indirectly in the Taiwan straits question” and finding an excuse to “block and sanction China and exclude it from the West.” He adds that, “as a producing country, we still cannot satisfy our manufacturing industry with our own resources and rely on our own markets to consume our products.”
In consequence, he argues, it’s a “good thing” for China to engage in the cause of reunification, “but it’s always a bad thing if it’s done at the wrong time. We can only act at the right time. We cannot allow our generation to commit the sin of interrupting the process of the Chinese nation’s renaissance.”
General Qiao counsels, “Don’t think that only territorial sovereignty is linked to the fundamental interests of a nation. Other kinds of sovereignty – economic, financial, defense, food, resources, biological and cultural sovereignty – are all linked to the interests and survival of nations and are components of national sovereignty.”
To arrest movement toward Taiwan’s independence, “apart from war, other options must be taken into consideration. We can think about the means to act in the immense gray zone between war and peace, and we can even think about more particular means, like launching military operations that will not lead to war, but may involve a moderate use of force.”
In a graphic formulation, General Qiao thinks that,
“if we have to dance with the wolves, we should not dance to the rhythm of the US. We should have our own rhythm, and even try to break their rhythm, to minimize its influence. If American power is brandishing its stick, it’s because it has fallen into a trap.”
In a nutshell, for General Qiao, “China first of all must show proof of strategic determination to solve the Taiwan question, and then strategic patience. Of course, the premise is that we should develop and maintain our strategic force to solve the Taiwan question by force at any moment.”
Gloves are off
Now compare General Qiao’s analysis with the by now obvious geopolitical and geo-economic fact that Beijing will respond tit for tat to any hybrid war tactics deployed by the United States government. The gloves are definitely off.
The gold standard expression has come in a no-holds barred Global Times editorial:
“We must be clear that coping with US suppression will be the key focus of China’s national strategy. We should enhance cooperation with most countries. The US is expected to contain China’s international front lines, and we must knock out this US plot and make China-US rivalry a process of US self-isolation.”
An inevitable corollary is that the all-out offensive to cripple Huawei will be counterpunched in kind, targeting Apple, Qualcom, Cisco and Boeing, even including “investigations or suspensions of their right to do business in China.”
So for all practical purposes, Beijing has now publicly unveiled its strategy to counteract US President Donald Trump’s “We could cut off the whole relationship” kind of assertions.
A toxic racism-meets-anti-communism matrix is responsible for the predominant anti-Chinese sentiment across the US, encompassing at least 66% of the whole population. Trump instinctively seized it – and repackaged it as his re-election campaign theme, fully approved by Steve Bannon.
The strategic objective is to go after China across the full spectrum. The tactical objective is to forge an anti-China front across the West: another instance of encirclement, hybrid war-style, focused on economic war.
This will imply a concerted offensive, trying to enforce embargoes and trying to block regional markets to Chinese companies. Lawfare will be the norm. Even freezing Chinese assets in the US is not a far-fetched proposition anymore.
Every possible Silk Road branch-out – on the energy front, ports, the Health Silk Road, digital interconnection – will be strategically targeted. Those who were dreaming that Covid-19 could be the ideal pretext for a new Yalta – uniting Trump, Xi and Putin – may rest in peace.
“Containment” will go into overdrive. A neat example is Admiral Philip Davidson – head of the Indo-Pacific Command – asking for $20 billion for a “robust military cordon” from California to Japan and down the Pacific Rim, complete with “highly survivable, precision-strike networks” along the Pacific Rim and “forward-based, rotational joint forces” to counteract the “renewed threat we face from great power competition.”
Davidson argues that, “without a valid and convincing conventional deterrent, China and Russia will be emboldened to take action in the region to supplant US interests.”
Watch People’s Congress
From the point of view of large swathes of the Global South, the current, extremely dangerous incandescence, or New Cold War, is mostly interpreted as the progressive ending of the Western coalition’s hegemony over the whole planet.
Still, scores of nations are being asked, bluntly, by the hegemon to position themselves once again in a “you’re with us or against us” global war on terror imperative.
At the annual session of the National People’s Congress, starting this Friday, we will see how China will be dealing with its top priority: to reorganize domestically after the pandemic.
For the first time in 35 years, Beijing will be forced to relinquish its economic growth targets. This also means that the objective of doubling GDP and per capita income by 2020 compared with 2010 will also be postponed.
What we should expect is absolute emphasis on domestic spending – and social stability – over a struggle to become a global leader, even if that’s not totally overlooked.
After all, President Xi Jinping made it clear earlier this week that a “Covid-19 vaccine development and deployment in China, when available,” won’t be subjected to Big Pharma logic, but “will be made a global public good. This will be China’s contribution to ensuring vaccine accessibility and affordability in developing countries.” The Global South is paying attention.
Internally, Beijing will boost support for state-owned enterprises that are strong in innovation and risk-taking. China always defies predictions by Western “experts.” For instance, exports rose 3.5% in April, when the experts were forecasting a decline of 15.7%. The trade surplus was $45.3 billion, when experts were forecasting only $6.3 billion.
Beijing seems to identify clearly the extending gap between a West, especially the US, that’s plunging into de facto New Great Depression territory with a China that’s about to rekindle economic growth. The center of gravity of global economic power keeps moving, inexorably, toward Asia.
Hybrid war? Bring it on.
- Social Distancing Revives Drive-In Movie Theaters In Post-COVID World
Social Distancing Revives Drive-In Movie Theaters In Post-COVID World
Tyler Durden
Thu, 05/21/2020 – 22:25In the 1950s, there were more than 4,000 drive-in movie theaters around the US. Now there’s less than 300 as America’s love affair with drive-ins died in recent decades. However, stop there, social distancing in a post-corona world could revive drive-ins as people keep their spaces while sitting in cars, watching a movie on a giant screen, which is much better than a crowded indoor theater where a COVID-19 carrier could infect everyone in the space.
We will revert our attention back to the US shortly, but first, drive-ins are becoming the next hottest thing in Dubai as traditional movie theaters remain closed. Reuters notes that the UAE has opened up an outside theater via VOX Cinemas that can accommodate up to 75 cars at a time.
Tickets cost $50 per vehicle with popcorn, snacks and drinks included.
“We keep our social distancing so it’s a brilliant idea in my opinion,” Porsche driver Xavier Libbrecht told Reuters during a showing Wednesday.
The drive-in is located on top of the Mall of the Emirates, a shopping mall in Dubai. The giant screen was erected under the peak of the mall’s indoor ski resort.
“Any excuse to get out the house during coronavirus times,” said Patrick, another moviegoer said on Wednesday.
“In the comfort of your own car you don’t have to worry about chewing too loud,” he added.
Back to the US, Google search trends for “drive-in movie theater near me” has erupted to a five year high at the same time lockdowns are easing across the country.
People, who are searching for drive-in movie locations the most, are located in states where partial reopenings are currently underway.
It’s obvious that most Americans will not step into a movie theater anytime soon, considering a second coronavirus wave could be in the makings later this year. So their next best option, with social distancing in mind, and the luxury of their automobile, is to do something their parents or grandparents did decades ago: go to drive-in theaters.
Short traditional movie theaters, long drive-in theaters in a post-corona world?
- How Fear, Groupthink Drove Unnecessary Global Lockdowns
How Fear, Groupthink Drove Unnecessary Global Lockdowns
Tyler Durden
Thu, 05/21/2020 – 22:05Submitted by Yinon, Weiss, a tech entrepreneur, US nilitary veteran and bioengineer, via RealClearPolitics,
In the face of a novel virus threat, China clamped down on its citizens. Academics used faulty information to build faulty models. Leaders relied on these faulty models. Dissenting views were suppressed. The media flamed fears and the world panicked.
That is the story of what may eventually be known as one of the biggest medical and economic blunders of all time. The collective failure of every Western nation, except one, to question groupthink will surely be studied by economists, doctors, and psychologists for decades to come.
Reliance on Faulty Models
To put things in perspective, the virus is now known to have an infection fatality rate for most people under 65 that is no more dangerous than driving 13 to 101 miles per day. Even by conservative estimates, the odds of COVID-19 death are roughly in line with existing baseline odds of dying in any given year.
Yet we put billions of young healthy people under house arrest, stopped cancer screenings, and sunk ourselves into the worst level of unemployment since the Great Depression. This from a virus that bears a survival rate of 99.99% if you are a healthy individual under 50 years old (1, 2).
New York City reached over a 25% infection rate and yet 99.98% of all people in the city under 45 survived, making it comparable to death rates by normal accidents.
But of course the whole linchpin of the lockdown argument is that it would have been even worse without such a step. Sweden never closed down borders, primary schools, restaurants, or businesses, and never mandated masks, yet 99.998% of all their people under 60 have survived and their hospitals were never overburdened.
Why did we lock down the majority of the population who were never at significant risk? What will be the collateral damage? That is what this series will explore.
Experts took a measured approach early on
In early February the World Health Organization said that travel bans were not necessary. On Feb. 17, just a month before the first U.S. lockdown, Dr. Anthony Fauci, the longtime director of the National Institute of Allergy and Infectious Diseases said that this new strain of coronavirus possessed “just minuscule” danger to the United States. In early March the U.S. surgeon general said that “masks are NOT effective in preventing [the] general public from catching coronavirus.” As late as March 9, the day Italy started its lockdown, Dr. Fauci did not encourage cancellation of “large gatherings in a place [even if] you have community spread,” calling it “a judgment call.” NBA games were still being played.
So how did we go from such a measured tone to locking up 97% of Americans in their homes seemingly overnight?
Enter faulty assumptions and faulty models
China concealed the extent of the viral outbreak, which, if you believed its data, led many scientists to believe that 2% to 5% of all infected patients would die. This turned out to be off by a factor of 10, but academic epidemiologists have a history of wildly-off-the-mark doomsday predictions.
The March 16 report by Imperial College epidemiologist Neil Ferguson is credited (or blamed) with causing the U.K. to lock down and contributing to the domino effect of global lockdowns. The model has since come under intense criticism for being “totally unreliable and a buggy mess.”
This is the same Neil Ferguson who in 2005 predicted 200 million could die from the bird flu. Total deaths over the last 15 years turned out to be 455. This is the same Neil Ferguson who in 2009 predicted that 65,000 people could die in the U.K. from the swine flu. The final number ended up around 392. Now, in 2020, he predicted that 500,000 British would die from coronavirus.
His deeply flawed model led the United States to fear over 2 million deaths and was used to justify locking down nearly the entire nation. Dr. Ferguson is a character of Shakespearean drama and tragedy. His March 17 presentation to British elites on the dire need to take action ironically may have infected Boris Johnson and other top British officials, as Mr. Ferguson himself tested positive for COVID-19 two days later. Then in May he resigned in disgrace after he broke his own quarantine rules to meet clandestinely with a married woman.
But I don’t place most of the blame on people like Ferguson. If you are a hammer everything looks like a nail. I blame government leaders for failing to surround themselves with diverse viewpoints and to think critically for themselves.
Politicians claim lockdowns were the cause of fewer deaths
It would be highly embarrassing to force citizens to quarantine themselves only to later admit it was all a colossal blunder, so it is easier for politicians and modelers to claim the lower death rates were based on the lockdowns themselves. It was a success!
But several inconvenient thorns keep bursting that narrative — and none larger than Sweden, the only Western country not to lock down its citizens. Sweden never closed borders, restaurants, businesses, or primary schools. The only legal action officials took was to ban events that entail crowds larger than 50 people.
One of the most well-known and respected models in the United States is from the Institute for Health Metrics and Evaluation and is commonly cited by the White House. Since the IHME model accounts for lockdowns and social distancing, or lack thereof, they should be validated by their predictions on Sweden.
Below is a screenshot of the IHME model for Sweden taken on May 3, along with actual results (black line). The model predicted up to 2,800 daily deaths within 11 days and a final death total as high as 75,000 if Sweden didn’t enact strict social distancing measures.
These were not complicated long-term projections; they were predicting what would happen in the next two weeks based on months of data. Yet the daily death peak was 75% lower than the baseline prediction and 96% lower than the worst-case prediction.
Not to be outdone, Uppsala University (the oldest university in Sweden) also presented a model that could have caused the Swedes to abandon course and lock down as the U.K. did. However, Sweden did not buckle. While the Uppsala University model predicted 90,000 deaths within a month, the actual result was around 3,500.
Besides deaths, there were also doomsday projections about hospital capacity, but those models also proved to be grotesquely exaggerated. On March 29, Columbia University projected a need for 136,000 hospital beds in New York City. The maximum ever used was under 12,000. At peak, New York City still had around 1 in 6 hospital beds open and around 1 in 10 ICU beds open. Hospitals had capacity, both in New York City and in Sweden.
While far below projections, Sweden’s short-term results are worse than Norway, Finland, and Denmark, but better than the U.K., France, Spain, Italy, and Belgium. Sweden likely also benefits from longer-term herd immunity, faster economic recovery, and fewer deaths from lockdown collateral damage.
Political leaders ignored early evidence when it conflicted with their models
There are those who say that we couldn’t have known these outcomes early on, so even if lockdowns were unjustified later they were still necessary early due to lack of information. That is plainly false. Italy’s alarming number of deaths fanned many of the early fears across the world, but by March 17 it was clear that the median age of Italian deaths was over 80 and that not a single person under 30 had died in that country. Furthermore, it was known that 99% of those who died had other existing illnesses.
A much more rational strategy would have been to lock down nursing homes and let young healthy people out to build immunity. Instead we did the opposite, we forced nursing homes to take COVID-19 patients and locked down young people.
There are now places like Santa Clara County in California, entering its third month of lockdown despite COVID-19 patients occupying less than 2% of hospital capacity and none on ventialtors. Yet there are 2 million county residents effectively under house arrest. Some doctors and nurses in the area had their pay cut by 20% so hospitals could avoid bankruptcy, reflecting perhaps the epitome of this senseless catastrophe.
There were, of course, people warning us all along. Among them was as John P.A. Ioannidis of Stanford University School of Medicine, who ranks among the world’s 100 most-cited scientists on Google Scholar. On that pivotal day of March 17 he released an essay titled “A fiasco in the making? As the coronavirus pandemic takes hold, we are making decisions without reliable data” — but it got little attention. Mainstream media was not interested in good news stories or dissenting views. The world instead marched lock step into its man-made calamity.
- "This Is The End Of Hong Kong": China Congress Announces Crackdown On Hong Kong With New "National Security" Law; Abandons GDP Target
“This Is The End Of Hong Kong”: China Congress Announces Crackdown On Hong Kong With New “National Security” Law; Abandons GDP Target
Tyler Durden
Thu, 05/21/2020 – 21:58With China’s ambitions toward Hong Kong having emerged as the top political fault line in recent days, the market was closely following the start of Friday’s National People’s Congress (NPC) where in addition to disclosures on Chinese political strategy, Beijing announces decisions on targets on GDP, CPI and fiscal deficit.
Which is why many were surprised when in the text of Premier Li Keqiang’s annual address, for the first time China abandoned its usual practice of setting a numerical target for economic growth this year due to the turmoil caused by the coronavirus pandemic.
“I would like to point out that we have not set a specific target for economic growth this year,” the report said, according to Bloomberg which saw a leaked version. “This is because our country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the Covid-19 pandemic and the world economic and trade environment.”
“We must re-double efforts to minimize the losses resulted from the virus.”
China’s Premier Li Keqiang says the #coronavirus epidemic has not come to an end yet and that the country must work to fulfill targets this year #两会 #TwoSessionspic.twitter.com/BVs9rRwXvj
— Bloomberg QuickTake (@QuickTake) May 22, 2020
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As Bloomberg adds, the shift away from a hard target for output growth not only breaks with decades of Communist Party planning habits, but is an admission of the deep rupture that the disease has caused in the world’s second-largest economy. With the growth outlook depending also on the efforts of trading partners to rein in the pandemic, the government is shifting its focus to employment and maintaining stability.
Chinese Premier Li Keqiang announces:
-China to abandon numerical GDP target
-Hong Kong security law to be perfected
-$1 trillion yuan of anti-virus bonds
-Plans to add 9 million urban jobs in 2020 https://t.co/t7124697NLhttps://t.co/nCv65xYbyk— Bloomberg (@business) May 22, 2020
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Among the various other economic goals disclosed by China, are:
- The addition of 9 million urban jobs; surveyed jobless rate around 6% (as we reported recently, the People’s Liberation Army is aggressively hiring all those who lost their jobs due to the pandemic, so at least China’s army will soon be absolutely massive)
- Plans 3.75 trillion Yuan of Special Local Govt Bonds in 2020 (a relatively modest number)
- Sell 1t yuan of anti-virus sovereign bonds in 2020 (even more modest)
- Deficit-to-GDP ratio this year is projected at more than 3.6% and the deficit increase is projected at 1 trillion yuan (about $141.6 billion) over last year (remember when China actually ran a budget deficit)
- China to work with U.S. to implement phase 1 trade deal (a noble goal, also one which will never happen)
- China sets 2020 CPI target at about 3.5% (China may have to launch another “pig ebola” virus to boost food inflation)
- China to use innovative monetary policy tools to finance real economy (so China will do QE as well?)
- China’s monetary stance unchanged; to make prudent monetary policy more flexible, appropriate
- China to use RRR cuts and interest rate cuts, relending
- China to guide money supply ‘significantly’ higher than 2019
- China targets more stable, high-quality imports, exports
- China to keep yuan at reasonable and equilibrium level
- China targets basic equilibrium in balance of payments
- China to cut taxes, fees by about 500b yuan this year
- China to asks large banks to boost lending to small firms by 40% (the US doesn’t hold a trademark on a debt bubble after all)
- China sees defense spending up 6.6% to 1.268 trillion yuan (see “China’s Military Seeks Bigger Budget Amid “Growing Threat Of US Conflict”“)
While none of the above was especially remarkable (with the exception of the hint at QE), the reason why stocks gave the report a thumbs down is because as Premier Li also said, China will safeguard national security in Hong Kong, i.e., China plans on expanding its crackdown on Hong Kong sovereignty, a step that comes one day after China announced dramatic plans to rein in dissent by writing a new law into the city’s charter, and just hours after the Senate passed a bill that will retaliate against China should it do precisely that, effectively ensuring an even further deterioration in US-Sino relations.
Specifically, the National People’s Congress confirmed plans to pass a bill establishing “an enforcement mechanism for ensuring national security” for Hong Kong, with Reuters adding that China’s draft Hong Kong legislation says Hong Kong “should finish enacting as soon as possible the regulations in basic law regarding national security” and that Hong Kong government and legal bodies should effectively prevent, stop and punish activities that endanger national security.
Chinese lawmakers were preparing to soon pass measures that would curb secession, sedition, foreign interference and terrorism in the former British colony, local media including the South China Morning Post reported Thursday, citing unidentified people.
“We will establish sound legal systems and enforcement mechanisms for safeguarding national security in the two special administrative regions, and see that the governments of the two regions fulfill their constitutional responsibilities,” Li said according to prepared remarks on Friday.
As Bloomberg adds, any attempt to impose security laws now could reignite the unrest that hammered the city’s economy last year and serve as a flash point amid broader U.S.-China tensions. Protesters urged democracy advocates to hold rallies across the city Thursday night, with one poster describing the moment as a “battle of life and death,” but mass demonstrations didn’t immediately materialize.
“This is the end of Hong Kong,” said Dennis Kwok, an opposition lawmaker representing the legal sector. “I foresee that the status of Hong Kong as an international city will be gone very soon.”
More importantly, we now have a timeline: the law is expected to pass China’s parliament before the end of its annual session May 28, so retail investors have about a week to ramping stocks higher before the trapdoor opens.
The legislation would still require several procedural steps including approval by the NPC’s decision-making Standing Committee, which could come as early as next month, the SCMP said. The move comes before citywide elections in September in which opposition members hoped to gain an unprecedented majority of the Legislative Council.
* * *
Although national security laws are required to be passed by Article 23 of the Basic Law, Hong Kong’s mini-constitution, successive governments have failed to pass them, with one effort in 2003 resulting in widespread street demonstrations. This new strategy could potentially allow authorities to skip the local legislative process, although the mechanics of how that would work remained unclear.
“It is absolutely necessary that the country’s top legislature fulfill its obligation to guarantee national security, by strengthening the legal framework with regard to Hong Kong,” the state-run China Daily said in a commentary. “There is nothing untoward in this as all countries attach the utmost significance to national security, and the introduction of such a law will safeguard the long-term stability and prosperity of Hong Kong.”
In addition to a more than 3% drop in Hong Kong stocks following the report of the imminent crackdown, three- and 12-month forwards on the Hong Kong dollar rose in New York trading, indicating traders expected more weakness ahead for the currency, which slipped the most in six weeks earlier in the day.
“The market is taking this news negatively for Hong Kong given the likely return of violent protest activities, higher risk for the U.S. to remove certain preferential terms for Hong Kong, such as the special tariff status, and risk-off sentiment,” said Becky Liu, head of China macro strategy at Standard Chartered Bank Ltd.
In addition to an imminent return of violent Hong Kong protests, China’s position sets up an election-year showdown with Trump, who has come under pressure in Washington to reconsider the special trading status before the city’s return to Chinese rule under a promise to maintain its liberal financial and political structure. Secretary of State Michael Pompeo has delayed an annual report on whether the city still enjoys a “high degree of autonomy” from Beijing, telling reporters Wednesday that he was “closely watching what’s going on there.”
On Thursday, Trump warned that the U.S. would respond to any move to curtail protests and democratic movements in Hong Kong: “I don’t know what it is because nobody knows yet,” Trump, speaking to reporters as he left the White House on Thursday, said about the possible Chinese actions. “If it happens, we’ll address that issue very strongly.” He didn’t elaborate.
Assuring that this will only get worse, much worse, a late Thursday tweet from Global Times editor in chief Hu Xijing said that “Hong Kong belongs to China, not the US. If senior officials in Washington are confused about this, President Trump’s granddaughter can tell them this common sense.”
Hong Kong belongs to China, not the US. If senior officials in Washington are confused about this, President Trump’s granddaughter can tell them this common sense. pic.twitter.com/b4ScMx77yV
— Hu Xijin 胡锡进 (@HuXijin_GT) May 22, 2020
https://platform.twitter.com/widgets.js
The climax came when late on Thursday, senators Chris Van Hollen (Democrat) and Pat Toomey (Republican) introduced legislation to punish Chinese entities involved in enforcing the proposed new security law in Hong Kong and penalize banks that do business with those entities. They acted in response to what they said was the Chinese Communist Party’s “brazen interference” in Hong Kong’s autonomy. Meanwhile, China has repeatedly stressed that the US should mind its own business and not mess in internal affairs, with Hong Kong considered one of them.
Perhaps this is a good time to reread the latest Dalio blog post on why a war between the US and China is now inevitable.
- "Completely Bonkers" – US Bike Sales Boom In Pandemic As Americans Hit Parks
“Completely Bonkers” – US Bike Sales Boom In Pandemic As Americans Hit Parks
Tyler Durden
Thu, 05/21/2020 – 21:45Bikes sales flourished during nationwide COVID-19 lockdowns, as people were confined to their homes and local communities for several months under government-enforced public health orders to flatten the pandemic curve.
During this time, tens of millions of folks were laid off and filed for initial claims, and the lucky ones were able to work at home, which resulted in an unprecedented collapse in fuel consumption as automobiles were not needed. Employed or unemployed, millions flocked to local parks and trails, as they reconnected with nature as a stress reliever.
Walking and jogging wasn’t enough for some, many ordered outdoor and stationary bikes online, and depending on local government restrictions, they were able to purchase ones at local retail shops.
Google search trend “bike shop near me” erupted to new decade highs during lockdowns.
Research firm The NPD Group found that US bike sales in March soared 50% YoY. They said stationary exercise bikes also saw increased sales. Overall, bike sales saw a 31% YoY jump over 1Q20.
Bike shop owners reported a surge in sales over the last several months, Morgan Lommele, PeopleForBikes director of state and local policy, told NPR News.
“We’re seeing families, individuals riding bikes in droves, more than we’ve seen over the last 20 years,” said Lommele
She said the best selling bikes were in a price range of $600 to $1,500.
Lommele said many bike shops experienced “record-level sales, record-level demand for service” in March and over the first quarter. With such an influx in demand, she said some shops experienced labor shortages as workers stayed home due to virus fears.
League of American Bicyclists said some state governments labeled bike shops as “essential” and were allowed to stay open during lockdowns.
With depleted supply, bike shops are now complaining about restocking, plus a massive cloud of uncertainty remains due to President Trump’s bicycle and bicycle parts 25% tariffs.
Lommele said tariffs “really harm our ability to provide a safe, low-cost product to Americans who want to ride bikes.”
In Springfield, Missouri, A & B Cycle’s Assistant Sales Manager Bryant Johnson said sales continued to spike through spring.
“It’s been completely bonkers,” Johnson told KY3 News. “It’s kind of unprecedented to be this low on stock of bikes.”
Johnson said people want to stay active during the stay-at-home-orders.
“People just sat around for so long, they’re getting bored,” he said.
Johnson said the backlog is so severe, bikes ordered today won’t arrive in the shop until fall.
We noted in late April that Peloton sales are booming, and their at-home classes experienced a record number of riders.
It only a took a pandemic to get America fit again.
- Watch: China Expert Warns Communist Regime Unlike Anything "Since The Third Reich"
Watch: China Expert Warns Communist Regime Unlike Anything “Since The Third Reich”
Tyler Durden
Thu, 05/21/2020 – 21:25Authored by Cabot Phillips via Campus Reform,
The FBI issued a PSA warning of the Chinese government’s intention to steal American medical research in its quest to find a cure for COVID-19.
The May 13 announcement came as mounting evidence continues to expose Chinese efforts to infiltrate America’s college campuses with the goal of stealing research and spreading propaganda.
Gordon Chang, an expert on United States-China relations, and author of The Coming China Collapse, spoke with Campus Reform Editor-in-Chief Cabot Phillips to break down what it all means and what must be done in response.
WATCH:
Pointing first to China’s response to COVID-19, Chang called out the attempt to place blame on other nations, saying “What we are seeing with the coronavirus is an attempt by the Chinese Communist Party to change the narrative around the entire world… the virus has an origin in Wuhan. Beijing has tried to change that, at times suggesting it came from the United States.”
“But also China has been trying to say they’ve had a near perfect response to the coronavirus and western countries have been failing… there’s an attempt to exert Chinese influence. One thing we’ve got to remember is Xi believes China is the world’s only sovereign state.”
Chang went on to point out how China has an extensive operation in place to steal American research, noting that “estimates put the annual theft of American intellectual property at somewhere between $150-600 billion a year.”
“Some of that actually takes place on American college campuses. China has bought a number of college professors, a number of them have been fingered by the FBI and they’re pending investigations, and Chinese students have been engaged in activities…for instance, downloading entire databases for China.”
Pointing out the danger in allowing the Chinese government a foothold on our campuses, Chang detailed how their Confucius Institutes “report in reality to the Communist Party’s United Front Work Department. That means these are attempts to subvert other countries. Why would China spend so much money on U.S. campuses? It’s not just because they want to teach the Chinese language. They want to put forth narratives and restrict what is said about China on American campuses.”
Pointing out the lack of reciprocity, he noted, “The U.S. is not permitted to have institutes like this in China. You don’t have a Lincoln Center or Roosevelt Institute… we know that propaganda is absolutely critical to totalitarian regimes.” In closing, Chang noted the impact political correctness has had on the failure of American colleges and universities to call out China’s infiltration efforts.
“What we’ve seen in the U.S. is political correctness gone wild in connection with coronavirus.. where any criticism of China is deemed to be xenophobic or creating racism against Chinese Americans. That’s absolutely wrong. You’ve got to remember that the Chinese regime is deeply racist with its Han nationalist ideology. This is something we haven’t quite seen since The Third Reich.
To say criticism of a racist regime is racist is absolutely wrong. People have serious concerns about China and we have to have the right to have open discussions about it without the name calling.”
- Washington State Loses "Hundreds Of Millions" To Nigerian Unemployment Claims Fraud Scheme
Washington State Loses “Hundreds Of Millions” To Nigerian Unemployment Claims Fraud Scheme
Tyler Durden
Thu, 05/21/2020 – 21:22Just when you thought the world has reached a level of peak absurdity, the Nigerian scheme makes a grand reappearance.
Washington state officials admitted losing “hundreds of millions of dollars” to an international fraud scheme, originating out of Nigeria, that robbed the state’s unemployment insurance system and could mean even longer delays for thousands of jobless workers still waiting for legitimate benefits.
As the Seattle Times reported, Suzi LeVine, commissioner of the state Employment Security Department (ESD), disclosed the staggering losses during a news conference Thursday afternoon. LeVine declined to specify how much money was stolen during the scam, which she said appears to be orchestrated out of Nigeria but she conceded that the amount was “orders of magnitude above” the $1.6 million that ESD reported losing to fraudsters in April.
While LeVine said state and law enforcement officials were working to recover as much of the stolen money as possible, she declined to say how much had been returned so far. She also said the ESD had taken “a number of steps” to prevent new fraudulent claims from being filed or paid but would not specify the steps to avoid alerting criminals.
Thursday’s disclosure helped explain the unusual surge in the number of new jobless claims filed last week in Washington, which as we showed this morning was the state with the highest weekly increase in claims.
On Wednesday, the state’s monthly employment report for April showed Washington with a seasonally adjusted unemployment rate of 15.4%, up from 5.1% in March. The national unemployment rate for April stood at 14.7%, seasonally adjusted.
For the week ending May 16, the ESD received 138,733 initial claims for unemployment insurance, a 26.8% increase over the prior week and one of the biggest weekly surges since the coronavirus crisis began. That sharp increase came as the number of initial jobless claims nationwide fell 9.2%, to 2.4 million, according to data released earlier in the day by the Labor Department.
Indeed, the surge in claims made Washington the state with the highest percentage of its civilian labor force filing unemployment claims – at 30.8%, according to an analysis by the Tax Foundation, a nonpartisan Washington, D.C., think tank. Nevada, the next-highest state, reported claims from 24.5% of its civilian workforce.
It now appears that many of those claims were fictitious and emanated from some computer in Nigeria.
The disclosure came as the state was already struggling to process an unprecedented wave of legitimate jobless claims amid one of the worst economic crises in U.S. history. Some additional delays in benefits payments to legitimate claimants are likely as the ESD subjects all claims to more scrutiny.
“This makes me the most angry, and the most upset — that we need to delay payments to Washingtonians who need the benefits,” LeVine said adding that “we need to also build in more time for analysis. So going forward, we want to set expectations that we will add an additional one to two days to our processing time.”
That delay follows a decision last Thursday to temporarily suspend benefit payments for two days. The delay came after the ESD disclosed that it had seen a surge in bogus claims reportedly filed by identity thieves who appeared to be targeting the extra-generous benefits available under federal pandemic relief legislation.
That same day, the Secret Service issued an alert describing Washington as the top target so far of a Nigerian fraud ring “exploiting the COVID-19 crisis to commit large-scale fraud against state unemployment insurance programs.”
It remains unclear how the fraudulent benefit payments made their way all the way to Nigeria.
- "It Felt Like A Death": 20% Of Illinois Restaurants Will Go Out Of Business In Coming Months
“It Felt Like A Death”: 20% Of Illinois Restaurants Will Go Out Of Business In Coming Months
Tyler Durden
Thu, 05/21/2020 – 21:05Last week we reported that as much as a quarter of US restaurants will go out of business due to the COVID-19 pandemic, according to a forecast by OpenTable, which reported that total restaurant reservations and walk-in customers have fallen 95% over the previous year ending May 13.
For restaurant owners in Illinois this dismal forecast is already coming true. According to CBS, Illinois restaurants – reeling in the coronavirus crisis – are doing anything they can to survive, and while many are trying to reinvent themselves, for others time to close shop. CBS cites a “frightening” number from the Illinois Restaurant Association: In spite of all the take out and delivery services they now offer, restaurant sales are down 80%, and thousands of restaurants are in jeopardy of never opening again.
“The restaurant industry, we’ve kind of alway been up against it anyways,” said Joe Frillman, owner of Daisies Restaurant. “The statistics are never in our favor to begin with.”
Once known for its dine in homemade pastas, the kitchen at Daisies in Logan Square has pivoted to pay the bills: “It’s all to go now, so the whole business model has changed,” said Frillman who debuted a new concept last weekend. His dining space became a farmer’s market with fresh produce,- meal kits and specialty products.
“We had over 150 people come out to support us,” he said. “I was kind of blown away. We didn’t really know what to expect.”
But for every hopeful moment like these, there are thousands of others from restaurants on the brink of closing. Jeanne Roeser, in business since 1996, was forced to close her two popular brunch destinations, Toast. Each sat only a handful of diners, and an eventual scaled back reopening didn’t add up.
“It felt like a death,” said Roeser, owner of Toast Restaurant. “It felt like going through the grieving process, which I still am. Any time I thought about it, and I looked at the prospects, it just, in my gut, didn’t feel like it was something that would be workable”
According to The Illinois Restaurant Association there were 25,851 restaurants operating in the state in March, and it estimates that 20%, or nearly 5,200 restaurants, will go out of business in the coming months because of COVID-19.
“I think it’s an undercount,” said Roeser.
“I think that’s generous,” said Frillman. “I think would be a best case scenario.”
“Independent restaurants bring wealth to the city, culturally, economically,” said Roeser.
For those whose livelihood is on the line, the push forward against the odds must go on: “It’s not whether or not you’re not going to make it,” said Frillman. “It’s you are always constantly doing whatever you can to make it.”
Alas, there’s an even more important number to keep in mind: About 600,000 people work in Illinois’ restaurant industry and about half have been laid off.
Restaurants find the prospect of resuming dine in service especially frustrating. Stay-at-home orders are expected to ease on May 29, with much of the state moving from stage two to stage three of Gov. JB Pritzker’s plan to reopen the state. That allows salons and health clubs to reopen with restrictions, but not restaurants for dine in. Owners argue theirs is a business accustomed to strict health protocols, and with social distancing and scaled back capacity they should be allowed to reopen at stage three.
- Fed Balance Sheet Rises Above $7 Trillion; Bond ETF Holdings Hit $1.8 Billion
Fed Balance Sheet Rises Above $7 Trillion; Bond ETF Holdings Hit $1.8 Billion
Tyler Durden
Thu, 05/21/2020 – 20:26After crossing back above the $4 trillion mark back in October 2019 in the aftermath of the JPMorgan repo bailout, also known as “No QE”, the Fed’s balance sheet is nearly double that amount a little over half a year later, with the Fed reporting in its latest H.4.1 report that as of May 20, 2020, its total assets rose above $7 trillion for the first time ever, an increase of $103 billion in the past week to $7,038 billion. Putting the increase in context, the Fed’s balance sheet hit $6 trillion on April 2.
The increase was mostly the result of a $79BN increase in settled MBS purchases as well as $32BN in Treasury purchases, while there was no change in the Fed’s holdings in its commercial paper facility.
While the Fed’s balance sheet is broadly expected to hit $12 trillion in the next 12 months, the fact that the expansion has slowed down substantially is a problem, especially after the Fed tapered its daily QE to just $6 billion last week, and JPMorgan expects it to further shrink to just $5 billion per day when the new schedule is published tomorrow.
This is a problem because the Treasury has some $3 trillion in debt issuance to go in the next 6 months, and one war or another, the Fed will have to aggressively ramp up its QE again, which as we discussed over the weekend, may mean another market crash “unexpectedly” happens in the coming weeks to provide cover to the Fed for the next massive QE expansion.
There was one surprise in the latest amount of Fed corporate ETF holdings, which can be found in the “Net portfolio holdings of Commercial Paper Funding Facility II, LLC” line time.
As a reminder, earlier today we laid out a BofA report according to which the Fed would disclose $2.5 billion in total bond ETF holdings, and which assumed that the Fed, which unveiled a total of $305MM in the one full day after the program was launched, would now have a $2.5 billion total in holdings. However, the actual number was notably lower at $1.8 billion, which means that in the past 5 work days, the Fed purchased $1.5 billion in ETFs, or $300MM per day, which appears to be the Fed’s now daily purchases of LQD (for those curious, the total assets of LQD are $48 billion).
Incidentally, judging by the sharp jump in LQD pricing, $300MM is more than enough to push this critical – for all future buybacks, not to mention anchor pillar for the US bond market – ETF back to near all-time highs.
And since nobody even jokes anymore that the Fed can one day reverse or even stop these operations, the bigger question is what will the Fed’s balance sheet be when it’s all said and done, an exercise which Deutsche Bank did earlier this week when it calculated that the maximum potential size of the Fed’s balance sheet is $130 trillion and will be hit as soon as the Fed owns… well, everything.
- Insolvent Illinois May Tap Into Fed's Emergency Muni Facility
Insolvent Illinois May Tap Into Fed’s Emergency Muni Facility
Tyler Durden
Thu, 05/21/2020 – 20:25Illinois is insolvent. So what’s new?
Well, the state’s fiscal situation was deteriorating well before the coronavirus pandemic. Traditional lenders have severed ties with the state as local officials struggle in muni bond markets to fund budgets, which has forced them to request funding assistance via the Federal Reserve’s new $500 billion Municipal Liquid Facility (MLF), reported Bloomberg.
The Fed laid out the process last week of how state and local governments can tap into MLF, a tool announced in April that will provide state and local governments affected by virus-related shutdowns, with ample amounts of liquidity as tax revenue collapses.
Carol Knowles, a spokeswoman for Illinois’ budget office, said state officials are drafting a “notice of interest” that will shortly be submitted to the Fed, the first step towards gaining access to MLF.
The move comes after the state suspended a short-term debt auction worth $1.2 billion several weeks ago. The proposed one-year notes were expected to fund state operations as cash flows reach dangerously low levels thanks to the economic fallout.
Once the notice of interest form is submitted, the MLF program will begin to participate in the bidding of Illinois debt. According to the NY Fed, the state is eligible to borrow about $9.7 billion under the program.
Kent Hiteshew, whom the Fed hired to supervise the MLF program, said the central bank is administering virtual meetings that would allow for the quick approval once states and local governments submit the forms.
“We should begin purchasing notes in the very near future,” Hiteshew said.
Even before the outbreak, Illinois had a massive unfunded pension liability problem and soaring budget deficits. As tax revenue collapses and the local economy has ground to a halt, the state’s bonds, rated one notch above junk, are at risk of downgrades.
We recently noted, the state is paying 5.65% on its 10-year bonds is now five times higher than the 1.13% costs AAA-rated states to borrow.
Illinois’ pension shortfalls are continuing to worsen with a visual below mapping out where trouble lurks in the state.
Many of Illinois pension funds are less than 50% funded — we’re assuming that number now is much worse.
Take, for example, the shortfall between Chicago police pension assets and pension liabilities, the gap is absolutely astonishing…
The state also has mounting unpaid bills, which currently stands around $7.5 billion. With recession deepening, don’t expect state officials to pay its bills anytime soon.
Steve Cortes, a conservative political commentator, recently told Fox News that Illinois politicians are using the virus crisis as a means to bailout decades of failed liberal policies. He said much of the instabilities in the state, such as unfunded pensions, existed well before the pandemic.
https://video.foxnews.com/v/embed.js?id=6152146821001&w=466&h=263Watch the latest video at foxnews.com
At this point, it appears the Fed via MLF will be giving the bankrupted state another lifeline, another can-kicking policy that will absolutely solve nothing but delay the recovery.
Of course, what Illinois’ liberal leaders really want is a bailout… not a loan. Don’t hold your breath
- Scientists Claim 'Medicinal Cannabis' Could Help Fight COVID-19
Scientists Claim ‘Medicinal Cannabis’ Could Help Fight COVID-19
Tyler Durden
Thu, 05/21/2020 – 20:05Ever since scientists reportedly explored the deterrent effects of nicotine in preventing the coronavirus, potheads probably figured it was only a matter of time until somebody did the same for marijuana.
Now, a team of researchers in Calgary told a local TV station that their research into local strains of marijuana shows “promise.”
The husband-and-wife team say they’ve been researching potential medicinal properties of marijuana for more than five years, but started to ‘pivot’ their research once the coronavirus came on the scene.
Olga and Igor Kovalchuk have been working with cannabis since 2015, using varieties from around the world to create new hybrids and develop extracts that demonstrate certain therapeutic properties.
“There’s a lot of documented information about cannabis in cancer, cannabis in inflammation, anxiety, obesity and what not,” says Igor. “When COVID-19 started, Olga had the idea to revisit our data, and see if we can utilize it for COVID.
“It was like a joker card, you know, coronavirus. It just mixes up everybody’s plans,” says Olga.
She says they started to examine the special proteins, or receptors, that the virus hijacks to enter the body, and they’ve now submitted a research paper studying the effects of medical cannabis on COVID-19.
“We were totally stunned at first, and then we were really happy,” says Olga.
Specifically, the researchers at the University of Lethbridge suspect that certain anti-inflammatory high-CBD cannabis extracts can help modulate the levels of the receptors in the mouth, lungs and intestinal cells, areas that are among the most vulnerable for coronavirus infection. Previous research has shown that some of these strains can “modulate” the activity of a receptor known as “ACE2”, which other researchers have shown might be a critical gateway for the virus.
One of the receptors, known as ACE2, has now been shown to be a key gateway, to how the COVID-19 virus enters the body.
“The virus has the capacity to bind to it, and pull it into the cell, almost like a doorway,” Olga says.
Other key receptors allow the virus to enter other cells more easily and multiply rapidly. But some cannabis extracts help to reduce inflammation and slow down the virus.“Imagine a cell being a large building,” says Igor. “Cannabinoids decrease the number of doors in the building by, say, 70 per cent, so it means the level of entry will be restricted. So, therefore, you have more chance to fight it.”
The early discoveries indicate the cannabis extracts could be used in inhalers, mouthwash and throat gargle products for both clinical practice and at-home treatment.The Kovalchuks haven’t tested the effects of smoking cannabis and say you won’t find any of these extracts at your local weed store.
“The key thing is not that any cannabis you would pick up at the store will do the trick,” says Olga.
They have now submitted a paper explaining their data and proposing a clinical trial. Unfortunately for smokers, the extracts that the two have been studying are extremely peculiar: they have very high concentrations of CBD, and extremely low levels of THC – the active ingredient in marijuana that produces the “high” in the user.
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