- Pandemic Exposes Liberalism's Free Trade, Open Borders Road To National Suicide
Pandemic Exposes Liberalism’s Free Trade, Open Borders Road To National Suicide
Authored by Martin Sieff via The Strategic Culture Foundation,
Open Borders and Free Trade induce national suicide slowly and gradually, without the victims waking up to what is going on until it is too late. But the coronavirus has brought home with global clarity that human societies need governments and regulated borders for their own survival.
The bottom line is clear, societies that have had open borders to previous major centers of infection and transmission, like Iran and Italy which kept open strong flows of people to and from China in the early stages of pandemic, suffered exceptionally badly.
Countries obsessed with maintaining liberal values and open borders like France, Germany, the United Kingdom and the U.S. also suffered disproportionately.
Countries that have allowed their domestic industry to decay have found they cannot now produce the crucial equipment they need, from respirators to gas masks. Countries with strong manufacturing bases like China, or with a prudent nationalist sense of preparing ahead for emergencies like Russia, have done far better. The shortage of respirators in Britain has become more than a national scandal: It is a national shame. That is another inexorable consequence of the pernicious doctrine of Free Trade.
I documented this history in some detail in my 2012 book “That Should Still Be Us“.
There, I showed how even the French Revolution of 1789 was in fact triggered by the catastrophic Free Trade Treaty that hapless King Louis XVI approved with England only three years before. It led immediately to the worst economic depression in French history which triggered revolution. In three years, liberal Free Trade succeeded in destroying a society that had flourished for a thousand years and the most powerful state Europe had known since the fall of the Roman Empire.
In his classic television series and accompanying book “How the Universe Changed”, the great British broadcaster and historian James Burke showed how the discipline of statistics was responsible for discovering the way the cholera bacteria spread through contaminated water in 19th Century London, then the largest urban area ever experienced.
Today, we see a similar pattern in the spread of the coronavirus: While half the counties in the United States remain so far virtually free of the virus, infections have soared in most major metropolitan areas, especially in so-called Sanctuary cities. Invariably these centers are ruled by liberal Democrats where illegal immigrants congregate. They are the places where the values and consequences of Free Trade and Open Borders most clearly flourish. And they ar ealso the places where the terrifying costs of those policies are most evident as well. The chickens have come home to roost.
Countries like Russia and China itself, which have reacted most quickly and decisively to shut down international and domestic travel, have been able to keep their numbers of infections and rates of spread down.
In Europe, by contrast, the impact of the virus has been appalling, The European Union has been as useless as New York City Mayor Bill de Blasio,. Pro-EU liberal national leaders like President Emmanuel Macron in France and the venerable Chancellor Angela Merkel in Germany (Berlin’s version of Nancy Pelosi) just sat back in bemused silence till it was too late. In Italy and Spain, the political splintering of societies has woefully added to the chaos.
This is in fact a very old lesson indeed: The ruling elites of the world should not have had to relearn it.
But for more than 225 years, the ruling elites of the West have mindlessly embraced Open Borders and Free Trade. Yet these have always been mere assertions of prejudice and mindless faith: They have never been proven to be true in any scientific manner.
Instead, when we look at the factual evidence of economic history over the past two centuries, it has always been the case that developing industrial societies which protect their manufactures behind strong tariff barriers flourish with enormous foreign trade and balance of payments surpluses. Then the living standards of their people soar.
In contrast, free market societies too powerless, or just too plain dumb to protect their economic borders get swamped by cheap manufactures and their domestic industries get decimated. This was the case with liberal free market Britain caught between the rising Protectionist powers of the United States, Japan and Germany for the next century.
It has been true for the decline of American industry since the 1950s, the more the United States embraced global free trade, the more its own domestic manufactures and their dependent populations suffered. This never bothered the liberal intellectual elites of the East and West Coast at all. It still doesn’t. Having inflicted lasting ruin and despair on hundreds of millions of people for generations, they despise their victims as “deplorables” for crying out in pain and seeking to end the disastrous policies.
Russia suffered the full horrors of the merciless laissez-faire, unregulated Free Market policies of the liberal West in the 1990s. Boris Yeltsin never woke up to the catastrophe that Bill Clinton and Larry Summers were inflicting on his country. Over the past two decades, Russia’s recovery from that Abyss under President Vladimir Putin has been miraculous. National social responsibility has succeeded where the crazed, simplistic theories of Adam Smith, David Ricardo and Ayn Rand all palpably failed.
The coronavirus pandemic therefore should serve as a wake up call to the peoples of the West, what Thomas Jefferson memorably called “A Fire Bell in the Night.” They need to start following Russia’s examples of self reliance, prudent preparation and maintaining strong borders.
The ravages of Liberalism – its Open Borders and Free Markets – have already stripped the West of all its defenses, social, demographic, industrial and economic.
The West is out of time: The Audit of Pandemic has been taken, and the reckoning is now due.
Tyler Durden
Sun, 04/26/2020 – 00:00 - Unprecedented Pace Of Corporate Debt Issuance Has Crippled Corporate Fundamentals
Unprecedented Pace Of Corporate Debt Issuance Has Crippled Corporate Fundamentals
When the Fed breached a monetary taboo even Ben Bernanke did not violate when Jerome Powell announced last month he would buy investment grade bonds, it was clear that the Fed’s only solution to avoiding the bursting of the corporate debt bubble was to make it even bigger. And sure enough, the Fed’s explicit backstop of the bond market has meant the supply of IG bonds has set a record pace in 2020. According to Morgan Stanley, IG supply has totaled $693 billion through mid-April, up a staggering 63% y/y…
… with $435 billion pricing since the beginning of March alone. March supply set an all-time record at $264 billion, breaking the prior record by over $80 billion and a further $170 billion in the first half of April. To put that in perspective, the March total surpasses the prior record for the busiest month (January 2017) by over $80 billion. Issuance just in the first half of April already ranks in the top five busiest months on record. Four of the top 10 busiest weeks on record have occurred since the beginning of March, with the week of March 30 ranking as the busiest ever, at $118 billion of issuance.
All to say that this was truly an unprecedented pace. Year-to-date through April 17, total supply of $693 billion is tracking 63% ahead of last year.
And confirming what we said a month ago in “Bond Market Tears In Two“, issuance has been heavily skewed toward high-quality issuers, with issuance rated “A” making up 57% of supply from the beginning of March onwards, for obvious reasons: these are the bonds that will find a willing buyer in the Fed via Blackrock’s purchases of the LQD ETF. Drilling down, consumer Discretionary companies have raised the most new debt financing when combined with revolver draws.
Of course, the Fed’s enabling of this epic bond bubble burst would have been impossible without the coronavirus crisis: the pandemic has produced an unprecedented market shock, with issuers experiencing an extremely sharp drop in earnings, without clarity on when the economy will begin to recover. Indeed, IG issuers have tapped financing wherever possible, including drawing on revolvers. Through April 20, IG issuers had tapped $134 billion in revolvers, putting combined bond issuance and revolver draws at $568 billion since the beginning of March.
And while trends in the use of those proceeds point to companies using debt issuance to shore up liquidity, the IG issuance momentum has been so powerful, companies have been using corporate bonds to refi some of the revolver draws in recent weeks, as we reported last week.
So while it is obvious by now that the Fed’s actions have triggered a tidal wave of new corporate debt issuance, one which will make the corporate sector scream for a bailout during the next, even bigger crisis, and the Fed will gladly bend over backwards yet again, what is perhaps more interesting is the fact that IG issuance tends to spike before or right at the
start of a recession, according to Morgan Stanley.Looking at the period right before the early 2000s recession, trailing three-month issuance spiked in the same quarter that the recession started (1Q01). Similarly, issuance rose in the first-half of the recession surrounding the global financial crisis (peaking in 2Q08). As shown in the next two charts, in both instances issuance from “problem” sectors rose – Telecom in the early 2000s and Financials during the crisis. In the early 2000s recession, Consumer Discretionary issuance also rose sharply in the first quarter. However, in both cases, issuance did slow meaningfully from the peak for the remainder of the downturn, before returning to a more normal run-rate as the economy recovered.
All of which leads us to the last question: what impact will all this issuance have on corporate fundamentals? Net of maturities, calls,and tenders, Morgan Stanley estimates net bond issuance for 2020 YTD to be about $400 billion. Including the draws that IG issuers have made on their revolvers, net issuance rises to ~$535 billion. To estimate how this level of issuance could impact leverage, the bank then takes its usual subset of US, non-financial companies in the IG index with publicly available data,and extrapolate from 4Q19 fundamentals. Across this subset of ~375 companies, net issuance has totaled about $314 billion when including revolver draws. These issuers had median leverage of 2.38x at the end of 2019.
Assuming flat EBITDA, the increase in debt alone could push gross leverage +0.13x higher. However, a severe shock to the EBITDA of these companies is now assured. As such, incorporating shocks to LTM EBITDA of 10-25% shows leverage could increase by +0.41x, to nearly 1.0x year. Overall, these results suggest that leverage peaks during or after a recession when earnings fall.
In summary, leverage is likely to rise across sectors.
The Consumer sectors could see the largest increase in leverage, followed by Materials and Industrials sectors. Health Care is the least impacted sector, with significantly less net issuance YTD than the others.
And so, as companies flood the market with new debt, they plant the seeds of their own overlevered demise, because while the Fed has made it frightfully easy for IG corporations to issue an unprecedented amount of debt, by doing so it has merely doomed even the most solid credits to a painful day of reckoning, one where they will have more net debt than ever, effectively assuring another avalanche of downgrades – many straight to junk – either in the current crisis, should its duration persist beyond worst case estimates, or in the next one, when the Fed will have no choice but to buy all the outstanding corporate debt.
Tyler Durden
Sat, 04/25/2020 – 23:33 - Visualizing How COVID-19 Has Impacted Media Consumption, By Generation
Visualizing How COVID-19 Has Impacted Media Consumption, By Generation
As the coronavirus outbreak continues to wreak havoc across the globe, people’s time that would have otherwise been spent perusing malls or going to live events, is now being spent on the sofa.
During this period of pandemic-induced social isolation, Visual Capitalist’s Katie Jones notes it’s no surprise that people are consuming vast amounts of media. Today’s graphics use data from a Global Web Index report to explore how people have increased their media consumption as a result of the outbreak, and how it differs across each generation.
More Time to Kill
Global Web Index found that over 80% of consumers in the U.S. and UK say they consume more content since the outbreak, with broadcast TV and online videos (YouTube, TikTok) being the primary mediums across all generations and genders.
Unsurprisingly, 68% of consumers are seeking out pandemic updates online over any other activity. Gen Zers however, have other plans, as they are the only generation more likely to be listening to music than searching for news.
Overall, younger generations are more likely to entertain themselves by playing games on their mobile or computer. Millennials also stand out as the foodie generation, as they are the most likely to be searching for cooking recipes or reading up on healthy eating.
Leaning on a Pillar of Trust
Across the board, consumers view the World Health Organization (WHO) as the most trusted source of information for any COVID-19 related updates.
This isn’t true everywhere on a regional basis, however. For example, while U.S. consumers trust WHO the most, UK consumers view their government as their most trusted news source overall.
Trust in information shared on social media is higher than word of mouth from friends and family, and even foreign government websites. That said, it is lower than information shared on the radio or news websites.
The Need for Pandemic Positivity
While staying abreast of pandemic updates is important, ultimately, a positive mindset and the ability to switch off will help people cope better day-to-day.
Therefore, it seems reasonable that people are more inclined to invest in new subscription services since they have been in isolation, with almost one-third of Gen Zers considering purchasing Netflix, followed by Disney+.
Understandably, people are becoming increasingly worried about how much time they are dedicating to their screens. However, research suggests that screen time itself is no cause for concern. Rather, it’s the content we choose to consume that could have a significant impact our psychological well-being.
Perhaps most intriguingly, the TV shows and movies that are increasing in popularity on Netflix are about pandemics – which could signify the need for people to fictionalize the chaos we find ourselves in.
Regardless of what type of content we are consuming, the fact is that every generation is relying on their devices during this pandemic to inform and distract more than ever before, creating a huge opportunity for media companies to engage a captive audience.
Tyler Durden
Sat, 04/25/2020 – 23:30 - Twitter CEO Unveils Feature To "Editorialize" Trump's Tweets As Election Looms
Twitter CEO Unveils Feature To “Editorialize” Trump’s Tweets As Election Looms
Authored by Cindy Harper via ReclaimTheNet.org,
A handful of companies are controlling the majority of the world’s conversations, subtly introducing rules to close the gap of what ideas they find acceptable and slowly edging out those they don’t.
One of the most prominent ways that tech companies have been doing that, of late, is the result of realizing that they get ample media support and can stay in the good graces of legacy media outlets when they censor content for being “misinformation.”
The guise of protecting the world from “misinformation” is fast becoming the easiest justification for censorship online right now.
Twitter has been one of those companies most accused of negatively impacting the public conversation and pushing for censorship.
Twitter CEO Jack Dorsey talked about this in a livestream with Showtime hosts Desus Nice and The Kid Mero.
“Misleading information is like the challenge of our industry right now,” Dorsey said in the Periscoped stream.
The hosts were eager to discuss what Dorsey had in mind for punishing those who say things that is deemed to be “misinformation.”
The example they gave is, what would happen if President Trump tweeted “potentially harmful” statements about the coronavirus?
Dorsey responded that “labeling would come in really handy,” and talked about Twitter’s recent policy announcement that is aimed to tackle the tweets of public leaders.
“When it’s broadcast on television, you have no ability to talk back,” Dorsey said, and while you may not think it based on Twitter’s recent actions, the ability for users to comment and disagree is an important part of Twitter, Dorsey at least says he believes.
Dorsey said that instead of removing the tweets of world leaders, Twitter will instead introduce an “interstitial.”
“Anything that we can do to interstitial a lot of this and provide context that is credible and might show a disagreement or a debate around the topic, I think, would be helpful,” Dorsey said.
“The team is working on a great experiment to do just that, that we hope to launch as quickly as possible to give people a broader context for a particular tweet… I think we’ll disarm a bunch of it.”
The details are sparse so far but it appears that Dorsey plans to introduce a feature that comes in when Twitter finds a statement that a world leader makes and wants to challenge it.
In other words, Twitter feels brave enough to place some kind of editorialized interstitial between a world leader and the reader, that alters the way the reader perceives the tweet.
Dorsey said that Twitter’s number one focus right now is dealing with misinformation.
“The ability to create deep fakes is moving much faster and with much higher quality than the ability to detect it. So this is going to be a race, just like security is. You can never build a perfect system. You just have to be 10 steps ahead of the attackers,” he said during the stream.
It could end up being similar to the way Facebook has decided it wants to fact-check certain statements on the platform – and has been putting an overlay on content with a link to a fact-check.
It’s worth mentioning that Facebook’s fact-check has several times in the last month alone, “debunked” something that turned out to actually be true – so Twitter, if it too decides to play this game, must be feeling pretty confident they’re going to get it right.
Or, perhaps, they’re just happy to brazenly wield the power anyway.
Tyler Durden
Sat, 04/25/2020 – 23:00 - Singapore Man Jailed For 6 Weeks After Violating Quarantine Over "Irresistible Urge" For Pork Soup
Singapore Man Jailed For 6 Weeks After Violating Quarantine Over “Irresistible Urge” For Pork Soup
Sometimes, you just want a bowl of pork soup, or bak kut teh, as it’s called in Singapore. And sometimes, that is an itch that overrides all common sense until you can scratch it accordingly.
Nobody knows this better than Alan Tham Xiang Shen of Singapore, who pleaded guilty on April 16 to violating a Stay-at-Home (SAH) order to fulfill an “irresistible urge” for the soup. In doing so, he was charged with an offense under the country’s Infectious Diseases Act, according to The Straits Times.
Senior District Judge Ong Hian Sun called his violation of the order “socially reprehensible”, before handing him down a 6 week sentence.
Tham arrived in Singapore from Myanmar on March 23 and was directed via SAH order to stay home at all times until April 6. He also signed a slip to acknowledge he had received the order. But instead of going home on the date he was given the order, he instead met up with his girlfriend and went to a foodcourt at Terminal 3 of Changi Airport. They then hired a private car to take them to a money changer and then to Tham’s house.
About two hours later – after who knows what – the couple had worked up an appetite, so they boarded a bus and went out to get the soup. The couple posted about the meal on social media. They then went to a supermarket, and finally went home.
On March 25, Tham was paid a visit from the Immigration and Checkpoints Authority who informed him that he did not go straight home after the order was issued to him on the 23rd.
Despite being found not to have the virus, Deputy Public Prosecutor Kenneth Chin recommended 10 to 12 weeks jail for Tham. Chin’s office said that the law is there “to prohibit socially irresponsible conduct regardless of whether any person is infected by the offender or not”.
Tham’s lawyers asked for either a maximum fine of $10,000 or two weeks jail. They argued that the SAH did not specify he had to go directly home after receiving it.
“The SAH does not impose any movement restrictions before going home, such as you must take away your meal and are not allowed to eat at the food outlet itself,” his lawyer argued, as only a lawyer can do.
But the judge didn’t see it that way and sentenced Tham to 6 weeks of hard time. He is expected to surrender himself at the State Courts on April 30 to begin serving his time.
All for bowl of pork soup.
Tyler Durden
Sat, 04/25/2020 – 22:30 - What War Between The US & Iran Could Look Like
What War Between The US & Iran Could Look Like
The US-Iranian standoff in the Persian Gulf has once again entered an acute phase...
On April 22, US President Donald Trump announced that he had ordered the US Navy to “shoot down and destroy” Iranian gunboats that follow or harass US ships. In response, Commander-in-chief of the Islamic Revolution Guards Corps, Major General Hossein Salami declared on April 23 that Iran will provide a swift, “decisive” and “effective” response to US forces if they threaten Iranian “vessels or warships”.
One of the reasons behind the escalation is the consistent and strengthening anti-Iranian rhetoric of the White House as a part of Trump’s presidential campaign. Another driving force of the US actions is likely the sharpening global economic crisis and the turmoil on the energy market that has led to the dramatic collapse of oil prices. Indeed, a new conflict in the Persian Gulf could theoretically return the oil prices to $50-60 per barrel.
In the current situation, Iran is not interested in an escalation of the conflict with the United States. The escalation could, however, be instigated by the US military:
-
A warship or a group of warships could enter Iranian territorial waters;
-
A US military aircraft could violate Iranian airspace;
-
US forces could block for Iran the civilian maritime traffic through the Strait of Hormuz, or detain an Iranian oil tanker;
-
Warships of the US Navy could imitate an attack on an Iranian submarine;
Iranian forces would have to respond to such a provocation. Thus, a military confrontation could start. After initiating a localized military incident, the White House would accuse Iran of aggressive actions against US forces and the US navy could carry out a demonstrative missile strike on a target or several targets inside Iran. Such an attack would prompt an Iranian response that would involve both its regular and irregular warfare capabilities.
The IRGC Navy doctrine reflects irregular warfare principles that include the use of surprise, deception, speed, flexibility and adaptability, decentralization and highly mobile and maneuverable units, all of which are used at sea. These include hit-and-run style surprise attacks or the amassing of large numbers of means and measures to overwhelm the enemies’ defenses. In this scenario the employed naval forces might be described as a mosquito-like swarm of small boats using their size and maneuverability to track and hunt down enemy warships.
The IRGCN’s mosquito-fleet concept enables rapid formation of tactical groups of small crafts to carry out a surprise strike at any given time from different directions in a particular area of the offshore zone. Such groups can deploy in attack formation immediately prior to reaching the area of the attack.
Crafts from the formation reach their assault line position either independently or in small groups. This is the way the Iranian Navy would employ the swarm concept. It is important to note the high motivation and ideological training of the mariners involved, who well understand the high level of threat to them personally in the event of the employment of this tactical scheme. IRGCN personnel are motivated and ready to accomplish any feat to defend their homeland. This factor (the high motivation of the personnel) makes a mosquito-fleet armed with missile, torpedo and anti-air weapons especially dangerous to naval forces of the US.
The aircraft carriers and large warships of the US naval group would become the main priority target of the Iranian response. In the event that the Iranian attack succeeds, the US would have to carry out a massive strike on Iranian infrastructure objects or political and military command centers. Tehran would have either to accept their defeat in this limited confrontation or to respond with another attack on US forces in the region.
Current US military doctrine dictates the prior employment of mobile interoperable forces, unmanned and robotized systems, as well as massive strikes with high precision weapons in conjunction with the maximum usage of electronic warfare and information warfare. If the confrontation develops further the US would be forced to conduct a limited landing operation on key parts of the Iranian coast. The success of such a limited operation under the likely condition of a strong Iranian military response is improbable. Furthermore, the move would be hampered by the weak psychological condition of US service members caused by current developments inside the US.
The US military would have to either retreat or venture on to a large-scale military operation in the Persian Gulf region. If the number of forces involved does not allow Washington to deliver a devastating blow to Iran within 1-2 weeks, China or Russia could intervene in some form likely turning the military standoff into a frozen conflict.
It is likely that despite all difficulties, the US would be able to create an occupation zone inside Iran, likely in the coastal area near the Strait of Hormuz.
The Iranian oil trade would be fully blocked and the US shale industry would be rescued. At the same time, Washington would have to deal with a permanent insurgency in the occupied area.
Another possible scenario is the defeat of the United States in this limited conflict because of significant losses in warships, aviation and service members of the involved interoperable forces.
In this case, US influence in the region would be drastically undermined and the White House would start drawing up plans of revenge.
Tyler Durden
Sat, 04/25/2020 – 22:00 -
- Even Warren Buffett's Portfolio Isn't "Immune" To The COVID-19 Shutdown
Even Warren Buffett’s Portfolio Isn’t “Immune” To The COVID-19 Shutdown
When Warren Buffett has been mentioned over the last 2 months, it’s been in the context of wondering when he’s going to deploy some of the $128 billion in (depreciating) cash he has sitting around. So far, he has yet to do that.
At the same time, Berkshire’s portfolio has hardly been immune to the coronavirus shutdown. Names like See’s Candies and Precision Castparts are all taking hits as the global economy grinds to a halt. Buffett’s portfolio was on a run rate of churning out more than $20 billion in profit annually. That number is likely to come under pressure, according to Bloomberg.
“We’ve got a few businesses, small ones, we won’t reopen when this is over,” Charlie Munger said of the portfolio.
While Buffett was able to navigate 2008 with his rock solid balance sheet and diversification, there has been little said from Berkshire about the recent financial crisis.
Buffett’s companies are undeniably tethered to the overall economy. See’s Candies, for instance, has furloughed its retail workers. Justin Brands shut down its outlets in Missouri. BNSF will likely report a decline in rail traffic. Precision Castparts temporarily halted some of its operations in April. Lawrence Cunningham, a professor at George Washington University Law School said: “There’s no fortress that’s immune to that right now.”
Some of Buffett’s names, like Geico and Lubrizol have been able to weather most of the storm. Geico is dealing with fewer accidents as a result of less driving and Lubrizol said social distancing and work-from-home measures have become customary. Lubrizol has not cut any of its workers.
CEO Eric Schnur said: “It’s nowhere near business as usual, of course. But keeping people safe in a potentially unsafe situation is something we think about every day whether or not there’s a coronavirus pandemic.”
Buffett has promised in the past that Berkshire would “forever remain a financial fortress”. But investors have been left wondering exactly what that means in terms of Buffett potentially deploying capital going forward. Berkshire underperformed the S&P 500 during the last bull market and people are wondering if Buffett will take advantage of the recent pullback (if you can even call it that) in valuations.
Buffett did exceptionally well during the 2008 crisis after making preferred stock/warrant deals with names like Bank of America and Goldman Sachs. Munger said the company is proceeding with caution. Berkshire is set to report earnings in May, which could shed some light into the company’s capital allocation strategies.
Buffett said in his 2017 shareholder letter: “Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do.”
Shareholder Thomas Russo said simply of Buffett: “He’s patient. One of the best features is that he is able to see opportunities broadly.”
Tyler Durden
Sat, 04/25/2020 – 21:30 - China Continues To Flood The World With Defective Medical Supplies
China Continues To Flood The World With Defective Medical Supplies
Authored by Soeren Kern via The Gatestone Institute,
More than a dozen countries on four continents recently disclosed problems with Chinese-made coronavirus tests and personal protective equipment. The problems range from test kits tainted with the coronavirus to medical garments contaminated with insects. Defective Chinese face masks, purchased by Spain’s Ministry of Health, were distributed to hospitals and nursing homes across the country, and more than 100 healthcare workers who used them tested positive for Covid-19.
A shipment from China of 8.6 million protective face masks and 150 tons of sanitary equipment arrives at Paris-Vatry Airport in France, on April 19, 2020. (Photo by Francois Nascimbeni/AFP via Getty Images)
Gatestone Institute recently reported that millions of pieces of medical equipment purchased from China by European governments to combat the coronavirus pandemic are defective and unusable.
Since that report, more than a dozen countries on four continents have disclosed problems with Chinese-made coronavirus tests and personal protective equipment. The problems range from test kits tainted with the coronavirus to medical garments contaminated with insects.
Chinese authorities have refused to take responsibility for the defective equipment and in many instances have cast blame on the countries that purchased the material. They have also called on nations of the world to stop “politicizing” the problem — at the same time that Chinese President Xi Jinping and his Communist Party have sought to leverage the pandemic to assert a claim to global leadership.
Spain, the epicenter of the coronavirus crisis in Europe, has experienced the greatest number of problems with medical equipment purchased from China.
After the epidemic hit Spain, the Spanish government purchased medical supplies from China in the amount of €432 million ($470 million). Chinese vendors demanded they be paid up front before making any deliveries. It now appears that much of the material being supplied by China is substandard.
In late March, for instance, the Spanish Ministry of Health revealed that more than a half million coronavirus tests it had purchased from a Chinese vendor were defective. The tests, manufactured by Shenzhen Bioeasy Biotechnology, a company based in China’s Guangdong Province, had an accurate detection rate of less than 30%. Bioeasy had claimed, in writing, that its tests had an accurate detection rate of 92%.
After the swindle made international headlines, Bioeasy agreed to replace the tests. On April 21, however, the Spanish newspaper El País reported that all 640,000 replacement tests were also useless. The Spanish government is now seeking a refund.
The Chinese Embassy in Madrid blamed the Spanish government for purchasing the tests from an unauthorized vendor. Bioeasy, apparently, does not have a license to sell coronavirus tests. Spain, however, has also reported problems with material purchased from vendors that are authorized by the Chinese government.
On April 15, Spain’s Ministry of Health recalled 350,000 so-called FFP2 masks after laboratory tests determined that they were substandard. The defective masks were manufactured by Garry Galaxy Biotechnology, a company included on the Chinese government’s list of approved manufacturers of personal protective equipment. FFP2 masks are required to filter at least 94% of aerosols, but those delivered to Spain filtered only between 71% and 82% of aerosols.
The defective masks were purchased by the Spanish Ministry of Health and distributed to hospitals and nursing homes across the country. After the defective masks were recalled, more than a hundred healthcare workers who had used them tested positive for coronavirus disease (Covid-19).
In the northeastern Spanish region of Catalonia, local health officials on April 18 recalled 180,000 Covid-19 antibody tests — also known as serological tests — because of their low rate of detection. The tests, produced by the Chinese manufacturer Guangzhou Wondfo Biotech, were purchased by the central government in Madrid and distributed to regional health authorities to detect Covid-19 in two priority groups: healthcare personnel and elderly people in nursing homes. The Wondfo tests reportedly gave negative results to people who had previously tested positive for Covid-19, and also failed to distinguish between two types of antibodies, including those that confer immunity.
In the eastern city of Alicante, the General Hospital recalled 640 disposable medical garments after one of the boxes from China contained cockroaches. The hospital said that it had received a total of 3,000 garments in 75 boxes and that it found two insects inside one of the boxes. It added that given the shortage of medical supplies, the garments would be sterilized, not destroyed.
Other countries — in Europe and beyond — have also criticized the quality of Chinese medical supplies:
-
Australia. On April 1, the Australian Broadcasting Corporation (ABC) reported that the Australian Border Force (ABF) had seized nearly one million Chinese-made faulty face masks and other protective clothing that was exported to Australia to help halt the spread of coronavirus. The material was valued at A$1.2 million (US$760,000). “We started seeing this stuff arriving roughly three weeks ago when news of the pandemic was really taking off,” an ABF official told ABC. “The dodgy material is coming via air cargo because there is a backlog of sea freight at Australian ports.”
-
Austria. On April 6, the Ministry of Economic Affairs confirmed that 500,000 masks ordered from China for use in South Tyrol were “completely unusable” because they did not meet safety standards: “The result of the quality control check showed that the masks do not meet an FFP standard. When putting on the masks, it is impossible to obtain a tight fit in the area of the chin and cheeks.” Minister of Economics Margarete Schramböck complained that international providers of the urgently needed FFP2 and FFP3 masks had not delivered the required quality in nine out of ten cases. On April 9, Austrian media reported that the defective mask problem was far greater than initially thought. The Austrian Red Cross ordered 20 million masks from the same Chinese manufacturer that made the defective masks for South Tyrol.
-
Belgium. On March 31, the University Hospital of Leuven rejected a shipment of 3,000 masks from China because the equipment was substandard.
-
Canada. On April 7, the City of Toronto recalled more than 60,000 surgical masks made in China. The masks, valued at more than $200,000, were provided to staff at long-term care facilities. Toronto health authorities were investigating whether caregivers were exposed to Covid-19 while wearing the equipment. The masks represented around 50% of Toronto’s inventory of surgical masks, according to Matthew Pegg, Toronto’s fire chief and general manager of emergency management.
-
Czech Republic. On March 23, the Czech news site iRozhlas reported that 300,000 coronavirus test kits delivered by China had an error rate of 80%. The Czech Ministry of Interior had paid $2.1 million for the defective kits.
-
Finland. On April 10, the Managing Director of Finland’s National Emergency Supply Agency, Tomi Lounema, resigned after he admitted to spending €10 million ($11 million) on defective protective equipment from China.
-
Georgia. On March 27, Health Minister Ekaterine Tikaradze cancelled an order for 200,000 coronavirus tests manufactured by the China-based Shenzhen Bioeasy Biotechnology Company. The move came after Spain reported that 640,000 tests that it purchased from the company were defective. She said: “Georgia had a contract with this company, but today it has been canceled. The money has not been transferred. We are negotiating with another company and at first, they will send two thousand tests. If the reliability of those is approved by us, we will purchase an additional quantity.”
-
India. On April 16, the Mumbai-based Economic Times reported that 50,000 pieces of personal protective equipment donated by China were defective and unusable.
-
Ireland. On April 6, the Health Service Executive (HSE) revealed that a large portion of the €200 million delivery of personal protective equipment supplied by China was found to be unusable for health care workers. The HSE told the Chinese company responsible for the delivery that unless the quality of the equipment being sent is guaranteed, there will not be any more deals between the two nations with regards to PPE. The government said that it was seeking a refund.
-
Malaysia. On April 16, Malaysian authorities approved the use of coronavirus test kits from South Korea after similar kits from China were found to be defective. A senior official in the Ministry of Health, Noor Hisham Abdullah, said that the accuracy of the Chinese tests was “not very good.” He expressed optimism over the South Korean tests: “Now that we have a test kit that is fast, portable and is cheap, that will make the difference.”
-
Netherlands. On March 28, the Netherlands recalled 1.3 million face masks produced in China because they did not meet the minimum safety standards for medical personnel. The so-called KN95 masks are a less expensive Chinese alternative to the American-standard N95 mask, which currently is in short supply around the world. The KN95 does not fit on the face as tightly as the N95, thus potentially exposing medical personnel to the coronavirus.
-
Philippines. On March 29, the Department of Health apologized for comments it made a day earlier that two batches of coronavirus test kits provided by China were substandard. Undersecretary for Health Maria Rosario Vergeire had said that kits made by Chinese manufacturers BGI Group and Sansure Biotech were only 40% accurate in diagnosing Covid-19 and that some of them would have to be discarded. The Chinese Embassy in Manila rejected those accusations and claimed that the kits complied with standards established by the World Health Organization. “The Chinese Embassy firmly rejects any irresponsible remarks and any attempts to undermine our cooperation in this regard,” a spokesman tweeted.
-
Slovakia. On April 1, Prime Minister Igor Matovič disclosed that more than a million coronavirus tests supplied by China for a cash payment of €15 million ($16 million) were inaccurate and unable to detect Covid-19. “We have a ton of tests and no use for them,” he said. “They should just be thrown straight into the Danube.” China accused Slovakian medical personnel of using the tests incorrectly.
-
Turkey. On March 27, Health Minister Fahrettin Koca said that Turkey had tried Chinese-made coronavirus tests but authorities “weren’t happy about them.” Professor Ateş Kara, a member of the Turkish Health Ministry’s coronavirus task force, added that the batch of testing kits were only 30 to 35% accurate: “We have tried them. They don’t work. Spain has made a huge mistake by using them.”
-
United Kingdom. On April 6, the London-based newspaper The Times reported that 17.5 million coronavirus antibody tests supplied by China were defective. The Chinese manufacturers of the tests blamed British officials and politicians for misunderstanding or exaggerating the utility of the tests. The British government, which reportedly paid at least $20 million (£16 million) for the tests, said that it was seeking a refund. Meanwhile, other coronavirus tests destined for the UK were found to be tainted with coronavirus.
-
United States. On April 17, the director of the Missouri Department of Public Safety, Sandy Karsten, revealed that 3.9 million KN95 masks manufactured in China were defective. The State of Missouri had signed a $16.5 million contract with an unidentified vendor for the masks and paid half in advance. The vendor is refusing to return the $8.25 million. Missouri Governor Mike Parson said: “We got cheated here in this state and we are going to go out there and try to get our money back and hold people accountable.” In neighboring Illinois, Governor J.B. Pritzker said that the state had spent $17 million on KN95 masks that may be unusable: “You know things come in shipments of a million — you can’t go through one mask at a time and so you try to take samples from the shipments that come in, make sure you got what you are paying for.” In Washington State, 12,000 coronavirus testing kits produced in China were recalled after some of them were found to be contaminated with the coronavirus.
On March 30, China urged European countries not to “politicize” concerns about the quality of medical supplies from China. “Problems should be properly solved based on facts, not political interpretations,” Foreign Ministry spokeswoman Hua Chunying said.
On April 1, the Chinese government reversed course and announced that it was increasing its oversight of exports of coronavirus test kits made in China. Chinese exporters of coronavirus tests must now obtain a certificate from the National Medical Products Administration (NMPA) in order to be cleared by China’s customs agency.
On April 16, the Wall Street Journal reported that millions of pieces of medical equipment destined for the United States were being held in warehouses in China due to the new export restrictions imposed by the Chinese government. “We appreciate the efforts to ensure quality control,” the U.S. State Department said. “But we do not want this to serve as an obstacle for the timely export of important supplies.”
U.S. Senator Kelly Loeffler from Georgia accused China of holding up shipments of test kits: “Testing is core to opening our country back up. I’m concerned that China’s holding up test kits. They’re playing games with trade policy to prevent us, the United States, from getting the testing that we need.”
The coronavirus pandemic has exposed the flaws of globalization by laying bare how the West has allowed itself to become dangerously dependent on Communist China for the supply of essential health care and medical products.
Andrew Michta, Dean of the College of International and Security Studies at the George C. Marshall European Center for Security Studies, explained:
“The Wuhan Virus and the attendant misery that the Chinese communist state has unleashed upon the world (very much including its own people) has laid bare a core structural flaw in the assumptions underpinning globalization. It turns out that the radical interweaving of markets — which was supposed to lead to the ‘complex interdependence’ that international relations theorists have been predicting for the better part of the century would lead to an increase in global stability… has instead created an inherently fragile and teetering structure that is exacerbating uncertainty in a time of crisis….
“If there is any good to come from the devastating impact on our nation of this pandemic brought about by the Chinese communist regime through its malice and incompetence, it will be the likely demise of enthusiasm for globalization as we know it across the West. After three decades of intellectual gymnastics aimed at convincing Americans that the off-shoring of manufacturing and the attendant deindustrialization of the country are good for us, the time has come for a reckoning.
“Since the end of the Cold War, Western elites seem to have been in thrall to the idea that various ‘natural forces’ in the economy and politics were propelling us forward to a digitally interconnected brave new world, one in which traditional considerations of national interest, national economic policy, national security, and national culture would soon be eclipsed by an emergent peaceful global reality. This virus crisis is a wake-up call, and while some argue we are waking up too late to effectively counter current trends, my money is on the ability of the American people to rally in a crisis and on the resilience of Western democratic institutions.
“Today, while battling the Wuhan Virus consumes the attention of our government agencies and health care systems, we should not lose sight of the foundational strategic challenge confronting the West in the emerging post-globalization era: We are in a long twilight competition with the Chinese communist regime, a struggle we cannot escape, whether we like it or not. Now is the time to wake up, develop a new strategy for victory, and to move forward.”
Tyler Durden
Sat, 04/25/2020 – 21:00 -
- Goldman Was Furiously Buying Mortgage Bonds In The Days Before The Fed's Massive Bailout
Goldman Was Furiously Buying Mortgage Bonds In The Days Before The Fed’s Massive Bailout
Goldman Sachs had itself one of those patented bouts of good luck that you only see on Wall Street – for one reason or another.
The investment banking giant reportedly was in the market buying up mortgage bonds during the panic selling that hit markets last month, ostensibly before the Fed came out and said they were going to backstop every industry and every market.
The bet has “certainly made money since the Federal Reserve unveiled massive stimulus turning a crash into a rally,” according to Bloomberg.
Goldman was buying mortgage backed securities from funds that were deleveraging and were being forced to sell. Goldman charged a fee for helping other banks and funds exit their positions, as the bank was offering other parties in distress a quick way to free up cash and “escape margin calls”.
Goldman was able to stock its coffers because of how leveraged the mortgage bond market is. Sharp drops in asset values lead to quick margin calls and forced liquidations. The move was so sharp over the last two months that some margin calls couldn’t be met, resulting in several REITs asking counterparties for forbearance agreements.
Goldman swears that all it was doing was making a market and that it would have been able to find buyers for the bonds in relatively short order. The only question is whether or not they thought that “buyer” would be the Fed.
Goldman Sachs said in a statement: “Making markets — buying from or selling to our clients — is the core activity of our Global Markets division, and we do it regardless of markets conditions. We had no advance knowledge of any of the facilities the Fed announced and assumed risk when we bought securities from clients during this period.”
For now, the bet just looks to have been “well timed”. The Fed stepped in soon thereafter and calmed the markets when it committed to buying unlimited amounts of Treasury bonds and mortgage securities. Goldman, in turn, sold some notes to the Fed.
One Bloomberg index shows theses mortgage bonds rising 3% over the last month. A Markit iBoxx benchmark of non-agency securities rose 14%.
Goldman also reportedly executed several large trades with key clients and approached several other structured credit hedge funds to seek out trades. The bank has seen a trading increase of about 75% as of early April.
Tyler Durden
Sat, 04/25/2020 – 20:30 - More From The "New Normal" (In 50 'Darker' Headlines)
More From The “New Normal” (In 50 ‘Darker’ Headlines)
Despite the concise, well-intentioned and unavoidably ubiquitous nature of our previous Message, it seems some are still withholding their consent for necessary change.
Though all our Responsible Media Outlets are doing their duty, it appears some members of the public do not yet understand the reality of our situation. More distressing are the efforts of a Criminal Minority to misrepresent Policy, subvert The Message and engage in dangerous questions.
We hope the following collection – once again compiled by the good citizens at the Consent Factory – makes the nature of this new reality quite clear to all those who aren’t yet aware their lives will never be the same.
Remember, resisting the new normal will endanger your life.
One area of concern is that the powers detailed under the bill, as published, remain in force for two years … among the most draconian possible powers is for police, public health and immigration officers to detain people suspected of having Covid-19.”
UK’s emergency coronavirus bill ‘will put vulnerable at risk’, The Guardian (23rd March 2020)
People who intentionally spread the coronavirus could face criminal charges under federal terrorism laws, the Justice Department’s No. 2 official said Tuesday […] “Threats or attempts to use COVID-19 as a weapon against Americans will not be tolerated.””
Those who intentionally spread coronavirus could be charged as terrorists, Politico, (24th March 2020)
A police force has defended using a drone camera to shame people into not driving into a national park during the lockdown, while another force said it was introducing roadblocks to stop drivers heading to tourist hotspots.”
UK police use drones and roadblocks to enforce lockdown, The Guardian, (26th March 2020)
Humberside Police has created an online reporting portal where people can send details of those not following social distancing rules.”
Humberside police creates online report portal for people not social distancing, ITV news (26th March 2020)
An Austin, Texas based technology company is launching ‘artificially intelligent thermal cameras’ that it claims will be able to detect fevers in people, and in turn send an alert that they may be carrying the coronavirus.”
Surveillance Company Says It’s Deploying ‘Coronavirus-Detecting’ Cameras in US, VICE, (18th March 2020)
As the jogger struggled with police, screaming for help, she was filmed by residents who had absolutely zero sympathy for her plight. ‘What’s not fair is that you go out running, you bloody idiot!’, shouted the woman apparently filming the encounter.”
Coronavirus lockdown: Jogger resists arrest in Spain and is abused by onlookers, AS.com, (21st March 2020)
Gordon Brown has urged world leaders to create a temporary form of global government to tackle the Covid-19 pandemic … involving world leaders, health experts and international organisations that would have executive powers to coordinate the response.”
Gordon Brown calls for global government to tackle coronavirus, The Guardian, (26th March 2020)
South African police enforcing a coronavirus lockdown have fired rubber bullets towards hundreds of shoppers queueing outside a supermarket in Johannesburg … the police used whips to get the shoppers to observe social distancing rules.”
South African police fire rubber bullets at shoppers amid lockdown, The Guardian, (28th March 2020)
President Trump said Saturday he may announce later in the day a federally mandated quarantine on the New York metro region, placing “enforceable” travel restrictions on people planning to leave the New York tri-state area because of the coronavirus.”
U.S. coronavirus-related deaths double in two days, The Washington Post, (March 28th 2020)
Rhode Island police began stopping cars with New York plates Friday. On Saturday, the National Guard will help them conduct house-to-house searches to find people who traveled from New York and demand 14 days of self-quarantine.”
Rhode Island Police to Hunt Down New Yorkers Seeking Refuge, Bloomberg, (27th March 2020)
A Police force has had a surge in calls from people reporting neighbours for “going out for a second run” and “gathering in their back gardens.” … “We are getting (dozens of) calls from people who say ‘I want you to come and arrest them’.
Coronavirus: Exercise rule-breakers spark surge in police calls, BBC News, (26th March 2020)
Police with batons and guns have moved in to protect supermarkets on the Italian island of Sicily after reports of looting by locals who could no longer afford food.”
‘We have to eat’: Sicilian police crackdown on locals looting supermarkets, The Local, (29th March 2020)
The National Guard will be deployed to enforce a mile-radius coronavirus “containment area” in overwhelmed New Rochelle … the National Guard will enforce the mandated closure of ‘large gathering areas’ — including schools and houses of worship.”
National Guard deployed to NY community with nation’s ‘largest cluster’ of coronavirus, New York Post, (10th March 2020)
New York City residents who break social distancing rules will be subject to fines up to $500, Mayor de Blasio said Sunday … he also announced that NYPD and MTA workers would do checks of subway cars and force riders off cars that are too crowded.”
New Yorkers who break social distancing rules will now face fines up to $500, Politico, 29th March 2020)
Anyone who leaves their house without a reasonable excuse could spend up to 6 months in prison and face an $11,000 fine under a directive [that] gives police sweeping power to enforce restrictions designed to limit the spread of coronavirus in Australia.”
Six months in jail, $11,000 fine for leaving home without a ‘reasonable excuse’, Sydney Morning Herald, (31st March 2020)
A coronavirus app that alerts people if they have recently been in contact with someone testing positive for the virus “could play a critical role” in limiting lockdowns … but the academics say no-one should be forced to enroll – at least initially.’
Coronavirus: UK considers virus-tracing app to ease lockdown, BBC News, (3st March 2020)
As coronavirus lockdowns have been expanded globally, police across the world have been given licence to control behaviour in a way that would normally be extreme even for an authoritarian state.”
Teargas, beatings and bleach: the most extreme Covid-19 lockdown controls around the world, The Guardian, (1st April 2020)
It is likely that we are not heading towards a general deconfinement in one go and for everyone,” Prime Minister Philippe told parliament … the interior minister noted 359,000 fines for violating the lockdown had been issued since lockdown began.”
French PM warns lockdown will not be lifted ‘in one go’, France24, (1st April 2020)
Philippine President Rodrigo Duterte has warned he would order the country’s police and military to shoot dead anyone “who creates trouble” during a month-long lockdown of the island of Luzon enforced to halt the spread of the coronavirus.’
‘Shoot them dead’: Duterte warns against violating lockdown, Al Jazeera, (2nd April 2020)
French interior minister Christophe Castaner warned that “roadblocks would be set up on major highways and axes and extra police, gendarmes or soldiers dispatched to train stations and airports to verify the documents of anyone stopped out and about.”‘
Confirmed cases pass 1 million – as it happened, The Guardian, (2nd April 2020)
Around the world, police forces are testing how far to go in punishing ordinary behavior.”
How Far Should Police Go in Enforcing Coronavirus Lockdowns?, New York Times (2nd April 2020)
Western governments aiming to relax restrictions on movement are turning to unprecedented surveillance to track people infected with the new coronavirus and identify those with whom they have been in contact.”
U.S. and Europe Turn to Phone-Tracking Strategies to Slow Spread of Coronavirus, Wall Street Journal, (3rd April 2020)
If a person becomes infected, the app will automatically send a push notification to anyone they have crossed paths with in the past two weeks, to warn them of the risk of infection.”
Privacy-mad Germany turns to app to track coronavirus spread, The Local, (2nd April 2020)
Google will use its mammoth collection of mobile location data to measure whether people across the globe are following government directives …”
Google wielding its vast troves of phone-tracking data in virus fight, Politico, (4th April 2020)
A 70-year-old township man was arrested twice on Saturday after police alleged he tried to enter two different Wawa convenience stores without a mask and became belligerent … he was charged with second-degree terroristic threats during an emergency.”
Coronavirus NJ: Unmasked Toms River man, 70, arrested twice in one day at Wawa stores, app.com, (13th April 2020)
Residents in Riverside County, CA, are now required to wear face coverings and could face a fine of $1,000 per violation per day if the mandate is ignored. ‘This is a valid order and enforceable by fine, imprisonment or both,’ said Sheriff Chad Bianco.”
CALIFORNIA COUNTY FINING RESIDENTS $1,000 FOR NOT WEARING FACE MASKS IN PUBLIC, Newsweek, (7th April 2020)
A family claimed a 500-mile round Lake District trip was acceptable if they wore masks and gloves, police said. The family were criticised as “absolute idiots” and called “clowns” after the force posted about it on Twitter.’
Coronavirus: Police stop family on 500-mile Lake District trip, BBC News, (14th April 2020)
A woman in Victoria says she was left feeling “heartbroken” and like a criminal after uniformed police officers carrying weapons interrupted her father’s funeral over the Easter long weekend to enforce social distancing rules.’
‘Totally disrespectful’: police interrupt funeral while enforcing social distancing rules over Easter weekend, The Guardian, (13th April 2020)
The coronavirus pandemic has led to an unprecedented global surge in digital surveillance, researchers and privacy advocates around the world have said, with billions of people facing enhanced monitoring that may prove difficult to roll back.’
Growth in surveillance may be hard to scale back after pandemic, experts say, The Guardian, (14th April 2020)
Protesters rallied to reopen North Carolina … at least one was arrested. “You are in violation of the executive order,” said police. “You are posing a risk to public health. If you do not disperse, you will be taken and processed at Wake County jail.”
Protesters rally for NC to reopen. One woman arrested for violating governor’s order., New Observer, (14th April 2020)
Officers have become public health police, breaking up crowds at stores … the department has mobilized the Citywide All-Out Task Force, which is usually assembled to flood high-crime areas and other assignments.”
New Role for New York Police: Breaking Up Crowds at Trader Joe’s, New York Times, (14th April 2020)
A South Australian couple was hit with a hefty fine from cops for nonessential travel amid the pandemic after the pair posted vacation snaps from 2019 on Facebook … the couple was warned that if they ‘posted any more photos,’ they would “be arrested.”
Couple mistakenly fined for posting old vacation photos during coronavirus lockdown, New York Post, (14th April 2020)
Attorney Beate Bahner challenged Germany’s coronavirus regulations in the Constitutional Court and failed. Now she has been taken to a psychiatric facility.”
Coronavirus: Anwältin Beate Bahner will gegen Verordnung klagen – und landet selbst vor Gericht, Heidelberg24.com, (24th April 2020)
Ms Bahner submitted a 36-page urgent motion to the Constitutional Court regarding the unlawfulness of all 16 German federal states’ Coronavirus measures … [her] interview for “incitement to commit criminal acts” is scheduled for Wednesday 15 April.
Coronavirus lockdown: German lawyer detained for opposition, UK Column, (14th April 2020)
Police in Berlin broke up a large birthday gathering in the early hours of Monday … a 16-year-old girl was celebrating with 31 other people … all 32 party attendees [are] being investigated for criminal offenses.”
Berlin police bust 16th birthday party amid coronavirus lockdown, DW, (13th April 2020)
Extraordinary times require extraordinary measures and it is about protecting the public.”
Federal government open to new law to fight pandemic misinformation, CBC.com, 15th April 2020)
The UK’s health secretary, Matt Hancock, has suggested “something like an immunity certificate or a wristband” in the future.’
Coronavirus: Could biometric ID cards offer the UK a lockdown exit strategy?, Sky News, (10th April 2020)
Attempting to issue some kind of immunity certificate to millions of Americans would be unprecedented.”
What are ‘immunity passports’ and could they help us end the coronavirus lockdown?, The Hill, (10th April 2020)
The COVID-19 Credentials Initiative (CCI) is working on a digital certificate, [that] lets individuals prove (and request proof from others) they’ve recovered from the novel coronavirus or have received a vaccination, once one is available.”
COVID-19 ‘Immunity Passport’ Unites 60 Firms on Self-Sovereign ID Project, coindesk.com, (13th April 2020)
[T]he drones use computer vision systems to monitor temperatures and heart and respiratory rates of people from above and single out people sneezing or coughing … Draganfly also sees a possible security use around borders or critical infrastructure.”
‘Pandemic drones’ could single people out in a crowd for coughing, sneezing, or running a temperature, Business Insider, (11th April 2020)
Mobile phone tracking software could be compulsory if not enough Australians voluntarily download the application to help in coronavirus case tracing.”
Coronavirus: Mobile tracking app could be compulsory, Morrison says, 9 News, (17th April 2020)
The three-page document, entitled “what constitutes a reasonable excuse to leave the place where you live”, is designed to help police enforce the emergency restrictions that came into effect three weeks ago and are set to be extended.’
Coronavirus lockdown: Police guidelines give ‘reasonable excuses’ to go out, BBC News, (16th April 2020)
[T]here is a danger that these new, often highly invasive, measures will become the norm around the world …”
Compulsory selfies and contact-tracing: Authorities everywhere are using smartphones to track the coronavirus, Business Insider (14th April 2020)
Norway unveiled its Smittestop app, which will notify users if they have been less than 2 metres from an infected person for more than 15 minutes. “To get back to a more normal life … we all have to make an effort and use this app,” PM Solberg said. […] Developers in several European countries are working on similar apps to inform people quickly when they have been in contact with someone who is infected with the virus, as part of a pan-European privacy-preserving proximity tracing (Pepp-PT) initiative.
Coronavirus ‘under control’ in Germany, as some countries plan to relax lockdowns, The Guardian, (17th April 2020)
Officials say they routinely saw people visit the skatepark, even children accompanied by their parents, according to the San Clemente Times … city officials followed in the footsteps of other cities and filled the skatepark with 37 tons of sand.”
Coronavirus: San Clemente Fills Skatepark With 37 Tons Of Sand After Skaters Ignore ‘No Trespassing’ Signs, CBS Local, (17th April 2020)
In one [Michigan] county, anyone deemed a ‘carrier and health threat’ can be detained by police and taken to an Involuntary Isolation Facility.”
Michigan judge authorizes arresting people on suspicion of COVID-19 illness, Life Site News, (16th April 2020)
Technology firms are processing confidential UK patient information in a data-mining operation […] Palantir, founded by rightwing billionaire Peter Thiel, is working with Faculty, a UK artificial intelligence startup, to consolidate government databases.”
UK government using confidential patient data in coronavirus response, The Guardian, (12th April 2020)
‘Imagine an America divided into two classes […] “It will be a frightening schism,” a World Health Organization special envoy on Covid-19 predicted. “Those with antibodies will be able to travel and work, and the rest will be discriminated against.”’
The Coronavirus in America: The Year Ahead, The New York Times, 18th April 2020
Riots have broken out in Paris amid anger over police ‘heavy-handed’ treatment of ethnic minorities during the coronavirus lockdown.”
Riots break out in Paris amid anger at police ‘heavy-handed’ treatment of minorities during lockdown, The Daily Mail, (20th April 2020)
… law enforcers have killed 18 people in Nigeria since lockdowns began on 30 March. Coronavirus has killed 12 people, according to health ministry data.”
Coronavirus: Security forces kill more Nigerians than Covid-19, BBC News, (16th April 2020)
We call upon the degenerate few to cease endangering our new social order.
REMEMBER TO REPORT ANYONE DISPERSING ON ENDORSING MISINFORMATION OR CRITICISING THE STATE
The world is different now. Unfettered expression is a luxury of the pre-Covid society. Doubt is the weapon of the virus spreader.
Pro-Infection propaganda will not be tolerated.
Have a nice day.
Tyler Durden
Sat, 04/25/2020 – 20:00 - In 2020 Oil-Exporters' Income Will Plunge By Over $1 Trillion, Forcing Widespread Stock Liquidations
In 2020 Oil-Exporters’ Income Will Plunge By Over $1 Trillion, Forcing Widespread Stock Liquidations
While any other time the plunge of WTI prices into negative territory last Monday would have been the story of the year, the fact that the financial press has already moved on and is focusing on whatever 100-sigma event du jour has hit, merely shows just how insane 2020 has been as a decade of central planning slowly comes unglued thanks to a black
swanbat trigger that has shut down the global economy and cash flows while keeping stocks just shy of all time highs.However, before we relegate the historic oil move that sent the May WTI future as low as -$40 on Monday to the dustbin of history, there are some critical considerations that have to be considered, namely what are the implications of much lower oil prices this year for other asset classes? To address this question we will revisit some prior analyses on the shifts in flows and incomes resulting from oil price changes, especially those looking at the consequences stemming from the collapse of petrodollar mercantilism in 2016 when oil exporting nations saw their oil-linked income crater.
By itself the decline in oil prices is generating a big shift in flows and incomes across the world, albeit – at least for now – smaller than the previous big shift seen between 2014 and 2016. According to JPMorgan calculations, oil consumers had spent around $2.2tr in 2019 on crude and related products with an average oil price of $64 per barrel, and in 2020 they are likely to spend less than half of that, i.e. around $1tr with an average oil price of $34 and an assumed big reduction in demand.
This represents a hit to oil producing countries’ incomes of $1.1tr, or 1.4% of global GDP, from the combined effects of an income transfer from the oil price declines and a hit to oil demand. In contrast, in 2014, oil consumers had spent $3.4tr on crude and related products with an average oil price of $100 per barrel, and in 2016 they had spent less than half of that, i.e. $1.6tr with an average oil price of $45 per barrel during 2016. In other words there was a bigger $1.8tr or 2.2% of global GDP income transfer between oil consumers and oil producers between 2014 and 2016.
As we discussed extensively in 2016, the massive and abrupt loss of income for oil producers during the 2015/2016 OPEC crisis had an profound impact on their behavior, especially on their saving and spending. As JPM’s Nick Panigirtzoglou writes, oil exporting countries, i.e. the countries which on net export oil (Middle East, Norway, Russia, African and LatAm), had received $1.6tr from their oil exports in 2014 and saw their oil revenue being more than halved to $770bn in 2016.
These oil exporters’ revenues are typically recycled via two channels: via imports of goods and services from the rest of the world and via accumulation of financial assets mostly through SWFs and FX reserves. And since all of these transactions are mediated via the US Dollar, the resulting cycle has been known as the petrodollar mechanism (or petrodollar mercantilism), one which helped cement the dollar’s role as the global reserve currency.
Some more stats via JPMorgan: In 2014, around 84% or $1.34tr of the $1.6tr oil revenue was recycled via imports and the remaining 16% or $260bn was recycled via SWFs and FX reserves, mostly SWFs. In 2016, 117% or $900bn of the $770bn of oil exporters’ revenues was recycled via imports of goods and services from the rest of the world, $130bn of which was funded by SWF and FX reserve decumulation.
So, between 2014 and 2016, there was not only a substantial $440bn decline in spending of goods and services by oil exporters, but also a similar decline in SWF and FX reserve accumulation. The implications for SWF/FX reserve manager asset purchases were dramatic: previous equity and bond purchases via the SWF and FX reserve managers’ vehicles of oil exporters during 2014 turned into outright sales during 2015 and 2016 as shown in Figure 4.
Well, get ready for round 2.
In 2019 oil exporting countries received around $1.1tr from their oil exports and are likely to see their revenue halved this year. Their imports of goods and services from the rest of the world would certainly decline also, but by a lot less given their already low level after severe declines during 2015 and 2016.
As a result, JPMorgan now expects that these oil exporting countries would have to sell almost $300bn of SWFs and FX reserves, or issue significant amounts of debt to fund a shortfall in oil revenues, this year to prevent their imports from falling below the $800bn level. This implies significant selling of both bonds and equities as shown in the chart above for various scenarios/assumptions about the average oil price for this year.
Said otherwise, not only will stock buybacks tumble by as much as 50% (according to Goldman and JPM estimates), but there will likely be roughly $200 billion in forced equity selling this year.
As Panigirtzoglou explains further, the impact from oil income shifts should also be felt in oil companies’ financial and capital investment. Consider that oil companies had spent close to $600bn on capital equipment in 2014, falling to $410bn in 2015 and $280bn in 2016, and then recovering to around $300bn in 2017/2018 and $330bn in 2019. JPM projects at least 20% decline in 2020 to $260bn or lower, a number that is even more aggressive than a similar forecast from Goldman Sachs, which as we noted last week, expect a roughly expects an $200BN drop in capex and a $850BN plunge in overall corporate cash spending.
As a tangent, it is easier to cut share buybacks as financial investment than capital investment. The Oil and Gas industry had spent $57bn on share buybacks in 2013, but since then buybacks were muted, averaging below $30bn per year in the years after up until 2017. The previous long retrenchment in oil companies share buybacks started reversing in 2018 by share buybacks rising to around $74bn before moderating to $65bn in 2019. It is hardly surprising that JPMorgan projects that share buybacks by oil companies will evaporate this year, thus implying a drag of around $65bn for equity markets relative to last year.
What about the flows emanating from oil consumers (i.e., the benefit from lower oil prices)? On previous occasions JPM had noted that the previous $1.8tr windfall seen between 2014 and 2016 was most likely equally split between the residential sector, the industrial sector and the transportation sector. These economic agents had spent a portion of their total $1.1tr oil expenditure windfall eventually but with a lag, meaning that most of that windfall was saved during 2015/2016. These savings most likely took the form of bank deposits which eventually supported bond markets via the banking system deploying these excess deposits into bond markets. As a result, the oil income windfall to oil consuming industries had likely created a bullish flow into fixed income during 2015 and 2016, bigger in size than the fixed income flows resulting from the decumulation of SWF/FX reserves of oil exporting countries during these two years.
However, according to the JPM strategist, these positive bond flow dynamics emanating from oil consumers are unlikely to be repeated in the current conjuncture given the severe cash flow disruption and declines in incomes and with the transportation sector in crisis. But even if these positive bond flow dynamics were to materialize, they would have been less significant relative to 2015/2016 given the current backdrop of unlimited central bank QE.
In summary, the decline in oil prices creates a negative flow for equity markets this year via SWF decumulation and reduced share buybacks by oil companies. That said, the material negative equity flow impulse associated with the latest unwind of petrodollar recycling, is in JPM’s view of secondary importance and is outweighed in size by other institutional or retail investor equity flows, which according to the bank are likely to increase by more than $3 trillion during the last three quarters of 2020 vs. the first quarter. Here, we disagree violently with JPM as the last thing the vast majority of the population – and even the wealthiest 0.1% – will care about is putting their money in the market when they have no idea if they will have a job or what the future holds. Needless to say, if JPMorgan is wrong and this $3 trillion in incremental purchases from institutional and retail sources fails to materialize, the bank’s forecast for new all time highs in early 2021 will be a dream that is as clogged as any pipe heading into Cushing.
Tyler Durden
Sat, 04/25/2020 – 19:30 - "This Is The Final Leg": Hugh Hendry Takes A Break From Retirement To Reveal His Latest Market Thoughts
“This Is The Final Leg”: Hugh Hendry Takes A Break From Retirement To Reveal His Latest Market Thoughts
In September 2017, Hugh Hendry stunned the world when, out of the blue one of the best investors of his generation shut down his hedge fund Eclectica (his farewell letter can be found is here) disgusted with how broken and impossible to navigate capital markets had become as a result of central bank intervention and retired to the warm embrace of St Barts, even though it was clear he still had much left to say about the investing process.
And so, after keeping a low profile for nearly three years, overnight the contrarian investor penned a lengthy tweetstorm from his his brand new twitter account, touching on all the latest market development and laying out some of his latest investing ideas. Below, we have aggregated his thoughts for the benefit of all those curious what the Scotsman thinks about when he is not pursuing his retirement interests which according to this twitter profile include “luxury real-estate, mentoring, and paddle-surfing.”
Never one to disappoint, Hendry reverts to his macro roots, discussing the fate of gold and the dollar in the helicopter money regime, what it would take for the S&P to hit 10,000, whether the entire VIX regime is now inverted due to central bank backstops, and asks the “two key questions”: are we transcending from a bull market in fear to a bull market in WTF!? And will QE infinity differ from its previous vintages by driving risk asset volatility levels higher??
Hendry also touches on an old favorite topic, namely hyperinflation, a thesis which he thinks “needs stock prices to fall further and vol to rise in the conventional manner.” But his most topical observation is what are the core criteria that will allow MMT – i.e., that fusion of the Fed and Treasury known as “helicopter money”…
you can print as many dollars as you damn well please, as long as the yield curve doesn’t steepen and the dollar doesn’t rally precipitously…you’re good to go and MMT is dope.
… as the alternative is game over. As usual, his stream of consciousness answers, right or wrong, are fascinating.
The full stream is reproduced below:
I have spent last few weeks reminiscing about the launch of The Eclectica Fund way back in 2002. Our principal objective back then was to secure the flexibility of a macro mandate to capture the emerging bull market in gold. The chart is not vol. adjusted but provides context.
It’s remarkable how little time i allocated to the trade. We did make 50pc in the first calendar year, 2003, but then retreated as it traded flat vs the total return from the SPX 2004/6. But I do kick myself at missing the final explosive moves to the all time high 2009/12.
I’ve had a long sabbatical. If you remember my mantra from 2005 became, “if you fear inflation, buy bonds!” The reasoning being that gold would lack an explosive pulse higher without first an economic calamnity. 2008 proved our thesis and our bond-like positioning hit jackpot.
Today however, “if you fear inflation then you should buy more gold”. It is simple. The Fed is trying to debase the $ to help the economy. Will it help? Maybe. Will it help the stock market? Probably. Will it help gold? Definitely. This is the final leg that i envisaged in 2002.
So gold’s got your back. My only grumble is that it reverts to a short volatility asset at the most inopportune moments like October 2008. Many good men, myself included, then missed the real action. So don’t underestimate the emotional energy you’re gonna need to hold onto this.
I say this because unusual things are happening and I’m saying “what if the bull market in fear has peaked and we find ourselves in a bull market of WTF!?” I traded at start of April a long Aug / Short Oct Vix. I’m small offside. But a 12pc equity rally and vol is up! WTF!?
I’m fomenting the idea that negative interest rates beget negative oil prices beget negative volatility. The causation is of course totally false but its a cute thing to say nevertheless. Let’s see if i can do better?
The probabilities are high that gold proves rewarding as long as you can carry it for the duration of the journey. If you are willing to accept lower, much lower probabilities, then maybe there are even better trades that are insanely convex and have no counterparty risk.
What I want to say is that 2 universal truths might be in the process of changing or flipping around. First, that option skew might change – deep OTM equity puts are typically 2x more expensive than their call equivalents; always have been but not ordained to stay that way. I think today’s policy response could create the opposite dynamic. Difficult trade to structure selling deep OTM SPX puts to buy 2x more calls without risking bankruptcy. Sure trade at cash SPX 1700 but naked and have to experience the nightmare of every point below 1700…no way
I traded this in Japan in 2013 Sold deep OTM Nikkei put, bought an even deeper OTM put, sold an ATM call spread and bought 15pc OTM call. Or at least I think i did. But the older vintages of QE encouraged volatility to fall, not rise, and we never burst through the inertia.
The trade was therefore before its time but I am probably one of the few risk managers anywhere with the experience of running a big options/futures book that was seeking higher equity prices and higher volatility – just ask all the Japanese vol traders that I enriched…
Second, I think the futures curve for VIX is going to trade in backwardation; that the carry from short selling future volatility versus spot to a gullible public that was only too willing to pay almost anything to protect themselves against the next deflationary event has gone.
The key questions: are we transcending from a bull market in fear to a bull market in WTF!? And will QE infinity differ from its previous vintages by driving risk asset volatility levels higher??
The key is the dollar. It is to the Fed what the punitive gold reparations of the 1920 Paris Peace Accord were to the German Reichsbank and German stock prices. Which is to say that the Fed are going to have to issue many more trillions of dollars to stop the USD moving higher.
We were wrong. All of us. It was never going to be about soulless creditors rolling over and simply enriching debtors via paying them higher and higher wages like Henry Ford. No; changes, BIG changes, in major price regimes always begin with currency debasements.
And, remember that the dollar short is ALWAYS the largest short position. Foreign mismatching of dollar asset/liabilities is always the imperative justification to devalue the dollar to bail-out the rest-of-the-world and it always sets the stage for risk asset prices to recover.
It’s just that a 35% fall from the highs of the greatest bull market ever has precipitated c. $8trillion in global fiscal response and probably 5x that in its monetary equivalent if we consider swap lines etc with not a day passing where that figure seems like an understatement. And then you look at the charts and to quote Raoul Pal, who else cause he seems omnipresent, but the blinking dollar hasn’t blinked; not an inch, its barely sold off at all…that’s downright frightening.
And so here is where it gets really cookie for I believe you can’t forecast a risk recovery that witnesses the SPX reclaim its all time high. No. If that’s your mindset you have to imagine 2x or why not 3x? The SPX at 10,000 now that is a WTF idea!?
And I’m tiring now but I just don’t see that outcome materialising unless we see another profound, I want to say debilitating, decline in the SPX below 1700. That’s why I don’t like the gold trade on its own without some kind of long vol trade to cushion if not enrich the journey.
So maybe sell dollar cross or treasury vol as these are the naval plimsoll lines of MMT: you can print as many dollars as you damn well please, as long as the yield curve doesn’t steepen and the dollar doesn’t rally precipitously…you’re good to go and MMT is dope.
So we know the critical lines, the levels that absolutely must not be crossed, they, the authorities, and us, we all know it. The Fed has to, and will do, everything in its powers to flatten the yield curve and prevent the dollar appreciating from here.
And the consequences of their actions will be to becalm volatility in these assets making them a good source to fund, in the first instance, equity volatility, as I think the hyperinflation thesis needs stock prices to fall further and vol to rise in the conventional manner.
But should this happen I would want to buy those incredibly cheap Dec 21 3000 calls and forget about funding via selling OTM puts; but I’m getting way to far ahead of myself…you see what confinement does?
Hendry concludes with some “regional” observations, including what Hendry’s “macro volatility trade at World’s End for years” has been, and which nonetheless are just as interesting:
Where are all the customers’ yachts? I got to tell you that they seem to be en-route to St Barts. No cases of the virus in over a month on the island and from my vantage point, over-looking the sea, there isn’t a day that passes without another mega yacht sailing past my house.
The island is hard, almost impossible, to reach, unless you can charter a boat or your very own private jet. But where else would you rather stay if money is no option? The island is on the same time zone as NYC and it has the holy trinity of no debt, no taxes and no crime,
And you can still finance the purchase of properties here with 20 year €uro loans fixed for less than 2%! That’s not going to last forever…St Barts has been my macro volatility trade at World’s End for years
Like my German industrialist forefathers – I have no German ancestry ! although my name is derived from the German word hug meaning heart, mind and spirit – but markets, bankers and investors are always slow to recognise a transition to higher prices caused by currency debasement/
When i was younger i read all those stories of international investors – the smart ones – hoovering up hard, cash producing German assets, funded by bankers who severely underestimated the potential for increases in interest rates that would make their loan books worthless…
Yet here we are 100 years later and my friend, who works in a restaurant, just secured 1.35PC fixed for 20 years! These loans are sure to become worthless as the pendulum finally swings from the creditor to the debtor community. Maybe we’re all bank robbers now…WTF!!
Still want more? Then listen to the following 12 minute podcast Hendry recorded last week, and where every sentence seems to seep with nostalgia for the Scott’s glory investing days.
Who knows, maybe if the market remains volatile enough, Hugh will come emergy from retirement for another try?
Tyler Durden
Sat, 04/25/2020 – 19:04 - 'Capitalism' On Life Support… Time For A Cure
‘Capitalism’ On Life Support… Time For A Cure
Via The Strategic Culture Foundation,
The Covid-19 pandemic is unleashing obscene bailouts of Western industries and companies, as well as lifelines for billionaire business magnates.
It is grotesque that millions of workers are being laid off by corporations which are in turn receiving taxpayer funds. Many of these corporations have stashed trillions of dollars away in tax havens and have contributed zero to the public treasury. Yet they are being bailed out due to shutdowns in the economy over the Covid-19 crisis.
Why aren’t the banks and corporations being forced by governments to pay for their workers on sick leave or in lockdown?
It’s because the governments are bought and paid-for servants of the top one per cent. Some political leaders are the embodiment of the one per cent, like Donald Trump and senior members of the U.S. Congress.
The biggest orgy of funny money is seen in the U.S. where the Trump administration and Congress have approved the printing of trillions of dollars to prop up corporations and banks. Meanwhile crumbs are being thrown at millions of workers and their families.
In just five weeks, unemployment has hit a staggering 26.4 million people in the U.S. – and that’s the official figure. The real level is doubtless much higher. It is reported that the job losses have wiped out all the employment gains made over the past decade since the last financial crisis in 2008. As with the present crisis, the U.S. government arranged trillion-dollar bailouts for banks and industries back in 2008-2009. It didn’t last long until the next binge.
In truth is this is a familiar pattern over the past century where the economy is continually salvaged from ruin by the government at the expense of ordinary workers, small businesses and taxpayers.
The recurring rescue is proof that the system of private capital and supposed free markets is a myth.
The system typically privatizes profit for an elite while socializing the losses for the mass of people. It has always been a version of “socialism for the rich”.
In the distant past the salvaging of broken-down capitalism was at least conducted with a certain degree of democratization and social progress. In the New Deal era of Roosevelt in the 1930s at least government intervention went a long way to restoring workers and their rights, despite bitter opposition from capitalists. Over recent decades, however, the rescuing of capitalism has seen an ever-increasing emphasis on plying money and loans to corporations and investors while ordinary workers are neglected. This process of embezzlement reached new heights in the 2008 crash. Now under Trump the larceny has become legendary. It should be underscored though that the corruption has bipartisan endorsement from Republicans and Democrats. They are really one party beholden to big business.
As Eric Zuesse commented in an-depth analysis published in our journal this week, the Covid-19 “top-down bailout” in the U.S. will result in even more social inequality and ultimately more dysfunction in the American economy going forward.
“The outcome will therefore be economic collapse, and perhaps even revolution,” notes Zuesse.
It is indisputable that capitalism is a failed system both in the U.S. and Europe. The Covid-19 pandemic and its disastrous social impact of sickness and deaths shows that such an economy cannot organize societies based on satisfying human needs. Instead, it functions to continually enrich the already wealthy while creating ever-greater numbers of impoverished and deprived. This chronic polarization of wealth has been pointed out by many critics of capitalism, including Karl Marx, and more contemporaneously by progressive economists like Richard Wolff and Thomas Picketty.
It is fair to describe corporate capitalism (or socialism for the rich) as a pathology which produces many other pathologies, including deprivation, crime, insecurity, ecological damage, militarism, imperialism and ultimately war.
Ironically, a virus is exposing the pathological system. And it is, inevitably, forcing a cure to arise.
It’s time to abolish the parasitical system and implement something more civilized, effective, sustainable and democratic. That is the task of people organized to fight for their interests. The delusion of bailing out a failed and sick system must be shaken off once and for all.
Tyler Durden
Sat, 04/25/2020 – 19:00 - Every Landlord Needs To See This Shocking Chart Before May 1st
Every Landlord Needs To See This Shocking Chart Before May 1st
Last week we identified a potential rent strike brewing among the working poor in New York City. Many of these folks are planning to skip out on May 01’s rent payment to their landlords:
“With so many New Yorkers unable to pay rent for the foreseeable future, the current crisis is unsustainable and demands action,” Housing Justice for All and New York Communities for Change said in a recent statement. “Many tenants have no ability to pay rent, and landlords can’t collect rent from tenants who are broke.”
Lena Melendez, a rent strike activist, said landlords “have gotten taken care of” by the government, suggesting that poor people who are quarantined in their apartments or homes do not need to pay rent because they have no money.
And of course, the virus pandemic, triggering mass quarantines and economic depression, has exposed America’s second housing crisis. We recently noted that as many as 30% of Americans with home loans – about 15 million households – could stop paying if lockdowns continued through summer.
What’s more important at the moment is that landlords expecting May’s rent next week could be for a rude awakening. Mostly because “rent strike” searches across the internet have exploded in April.
Many of the searches surged in Oregon, New York, Washington, Colorado, and Vermont.
When it comes to subregions, Monterey-Salinas, California; Boise, Idaho; Lansing, Michigan; Savannah, Georgia; and Lexington, Kentucky, saw increased “rent strike” searches over the month.
And so it begins? Rent strikes across America? Or maybe at least starting in New York City first?
Tyler Durden
Sat, 04/25/2020 – 18:30 - An Egregious Statistical Horror Story
An Egregious Statistical Horror Story
Authored by George Gilder via The American Institute for Economic Research,
With the latest reports of plummeting death rates from all causes, this crisis is over. The pandemic of doom erupted as a panic of pols and is now a comedy of Mash-minded med admins and stooges, covering their ifs, ands, and butts with ever more morbid and distorted statistics.
The crisis now will hit the politicians and political Doctor Faucis who gullibly accepted and trumpeted what statistician William Briggs calls “the most colossal and costly blown forecast of all time.”
An egregious statistical horror story of millions of projected deaths, suffused with incense and lugubrious accents from Imperial College of London to Harvard School of Public Health, prompted the pols to impose a vandalistic lockdown on the economy. It would have been an outrage even if the assumptions were not wildly astronomically wrong.
Flattening the curve was always a fool’s errand that widened the damage.
President Trump had better take notice. He will soon own this gigantic botch of policy and leadership. No one will notice that his opponents urged even more panicky blunders.
The latest figures on overall death rates from all causes show no increase at all. Deaths are lower than in 2019, 2018, 2017 and 2015, slightly higher than in 2016. Any upward bias is imparted by population growth.
Now writing a book on the crisis with bestselling author Jay Richards, Briggs concludes:
“Since pneumonia deaths are up, yet all deaths are down, it must mean people are being recorded as dying from other things at smaller rates than usual.”
Deaths from other causes are simply being ascribed to the coronavirus.
As usual every year, deaths began trending downward in January. It’s an annual pattern. Look it up. Since the lockdown began in mid-March, the politicians cannot claim that their policies had anything to do with the declining death rate.
A global study published in Israel by Professor Isaac Ben-Israel, chairman of the Israeli Space Agency and Council on Research and Development, shows that “the spread of the coronavirus declines to almost zero after 70 days—no matter where it strikes, and no matter what measures governments impose to try to thwart it.”
In fact, by impeding herd immunity, particularly among students and other non-susceptible young people, the lockdown in the U.S. has prolonged and exacerbated the medical problem. As Briggs concludes, “People need to get out into virus-killing sunshine and germicidal air.”
This flu like all previous viral flues will give way only to herd immunity, whether through natural propagation of an extremely infectious pathogen, or through the success of one of the hundreds of vaccine projects.
No evidence indicates that this flu was exceptionally dangerous. On March 20th, the French published a major controlled study that shows no excess mortality at all from coronavirus compared to other flues. SARS and Mers were both much more lethal and did not occasion what Briggs’ reader “Uncle Dave” described as “taking a hammer and sickle to the economy.”
We now know that the crisis was a comedy of errors.
The Chinese let it get going in the raw bat markets of Wuhan. But together with the Koreans, the Chinese dithered and demurred and allowed six weeks of rampant propagation to create herd immunity before they began locking everyone up.
Therefore, the Chinese and Koreans were among the first to recover.
The Italians scared everybody with their haphazard health system and smoking fogies.
Crammed together in subways and tenements, the New Yorkers registered a brief blip of extreme cases.
Intubations and ventilators turned out not to help (80 percent died).
This sowed fear and frustration among medical personnel slow to see that the problem was impaired hemogloblin in the blood rather than lung damage.
The New York media piled on with panic, with bogus reports of rising deaths. “Coronavirus deaths” soared by assuming that people dying with the virus were dying from it and then by ascribing to the coronavirus other deaths among people with symptoms of pulmonary distress, even without being tested.
Now jacking up the case rate will be further pointless testing. As Briggs points out,
“Fauci is calling for ‘tripling’ of testing, which can only boost these dailies [case totals]. And make it seem like there’s a genuine increase occurring. Oh my! The daily reported cases are up! It must mean the disease is spreading!
“No. It could also mean, and probably does given all the other evidence we now have from sampling, that the disease was already there, and we just now have measured it.”
The death rate rises with further reclassification of pneumonia and other pulmonary deaths. When we reach herd immunity, and nearly everyone has the antigen, nearly all deaths can be chalked up to COVID19. Hey, it will be Quod Erat Demonstrandum for the panic mongers.
In a fascinating open letter to German Prime Minister Angela Merkel, epidemiologist Mihai Grigoriu concludes that with the French study, corroborated by findings from a Stanford antibody seroprevalence study in Santa Clara county, “the case for extreme measures collapses like a house of cards.” Grigoriu says that since the virus has already spread widely in the general population, efforts to stop further spread are both futile and destructive.
So let’s stop pretending that our policies have been rational and need to be phased out, as if they once had a purpose. They should be reversed summarily and acknowledged to be a mistake, perpetrated by statisticians with erroneous computer models.
Perhaps then we can learn from this experience with the flaws of expertise not to shut down the economy again for the totally bogus “crisis” of climate change.
Tyler Durden
Sat, 04/25/2020 – 18:00 - "They've Got To Feed Their Children" – Cash-Strapped Businesses Reopen In Georgia As 16 States Join Push To End Lockdowns
“They’ve Got To Feed Their Children” – Cash-Strapped Businesses Reopen In Georgia As 16 States Join Push To End Lockdowns
Across the US, 16 states are moving to reopen more nonessential businesses as thousands protest around the country demanding that the country be reopened now, even as governors like Andrew Cuomo advise that a recent slowdown in deaths and diagnoses suggests the lockdown is working well.
Of these, Georgia has emerged as the most aggressive, with Gov. Brian Kemp allowing the first ‘nonessential’ businesses – a group including salons, bowling allies, tattoo parlors and gyms – to reopen. Even President Trump is now denying that he supported Kemp’s plan, a disavowal that was reportedly news to Kemp.
Mayors from the across state have warned residents that it’s too soon to return to some semblance of normal, and have urged businesses to remain close, and people to remain indoors. In many areas, as the Washington Post reported Saturday, businesses appear to be following this advice.
And even the businesses that have opened aren’t operating at anything approaching full capacity, employees don masks and take other steps to ensure social distancing is maintained.
Atlanta Mayor Keisha Lance Bottoms appeared on CNN to clear up the “confusion” that she was was putting her voters’ lives at risk: Instead, she said that businesses and individuals should ignore Kemp’s order, adding that “nothing has changed.”
She declared that the 37% increase in Georgia’s mortality rate over the last week is a clear indication that the state ‘isn’t ready’ to reopen.
“We are not on the other side of this,” Bottoms said. “It’s like we are in a tunnel, and rather than walking straight toward the light, we’re spinning around in circles. We’ll never get to the light if we don’t continue to do what we’ve done thus far, and that’s to separate ourselves socially from one another.”
In Waycross, the county seat of Ware County, one salon owner told WaPo that the only people working on Friday and Saturday were those who absolutely needed to.
Only a handful of the 18 hairdressers who work at Salon Cheveux came in on Friday. They donned masks, spaced their workstations apart and screened inbound customers by phone with the dedication of hospital admission nurses: Any fever recently? Or contact with someone sick? Can you wear a mask?
It was the first day businesses reopened in Georgia, which is moving faster than any other state to ease restrictions amid the novel coronavirus pandemic. As a result, Georgia has become a flash point in the battle over whether it is time to remove the shutdown orders that have kept much of the country indoors.
Jamie McQuaig glanced at the two cosmetologists, clad in masks, coloring customers’ hair and wondered whether coming back to work was the right decision for her family, her salon or her state.
“I do feel like it’s too soon, but it will probably always feel like it’s too soon because we’re all scared of the virus,” she said. The nation’s response to the pandemic has left many in her shop with difficult choices. “The ones that are going back to work right now are the ones that have got to. They’ve got to feed their children. They’ve got to pay their mortgage.”
Local officials in one particularly hard hit county have been begging Kemp to carve out an exemption for them, but he has so far refused.
If he doesn’t, those ‘hot spots’ could swiftly reinfect the entire state. In Albany, Georgia, a small city with an extraordinarily high number of cases per capita, the mayor, Bo Dorough said he continues to warn residents to stay inside and practice social distancing.
The worst outbreak in the state is still raging in Dougherty County, where Albany is located. The county has a population of about 88,000, and the Georgia Department of Health has reported 1,465 confirmed cases of the virus and 108 deaths as of Friday evening. That means more than 1% of the county’s population is currently infected.
For a time, Dougherty County had the unwelcome distinction of having one of the highest number of per capita cases in the country.
The virus ripped across the county after two widely attended funerals. One attendee, a 67-year-old man, who was at both funerals, later tested positive, setting off what’s called the “domino effect,” according to CNN.
Those Georgians who are returning to work have apparently accepted that they’re guinea pigs in a great national experiment with incredibly high stakes.
After weeks of unemployment, often with uneven government help, some said they were happy to be earning paychecks but worry about the ultimate costs of abandoning isolation too soon, according to the Washington Post.
But they won’t be the only ones for long. Tennessee’s governor has said he will allow many businesses to reopen after his shelter-in-place order expires next week. The governor of South Carolina has already said he will allow some retail stores to reopen this week. People have been walking on the beaches near Jacksonville, Fla., for a week, and on Friday, Iowa and Mississippi became the latest states to announce plans to reopen.
As of Saturday, there were nearly 4,500 confirmed in Iowa, and yet, Gov. Kim Reynolds has said she will consider reopening more businesses, while reversing a ban on hospitals performing non-essential surgeries. And in Mississippi, which has more than 5,400 confirmed Covid-19 cases, Gov. Tate Reeves has traded the4 state’s lockdown order for a “safer-at-home” order, which will remain in effect for two weeks, beginning Monday.
Across Georgia, more than 22,000 people have tested positive and nearly 900 have died. The state has tested < 1% of its residents.
Trump was correct when he said on Thursday that Georgia hasn’t met the benchmarks released by the White House. They include a downward trajectory of confirmed cases over 14 days.
Here’s a map of the US breaking down what various states are planning, courtesy of the NYT:
The big question looking ahead: Will Georgia’s decision make the state look like Sweden, or Wuhan?
Because it’s extremely likely that it’ll be one, or the other.
Tyler Durden
Sat, 04/25/2020 – 17:35 - Global Coronavirus Deaths Top 200k: Live Updates
Global Coronavirus Deaths Top 200k: Live Updates
Summary:
- WHO warns against “immunity passports”
- Global case total nears 2.8 million, deaths near 200k
- Brussels relaxes rules on state financing for companies
- Global Times editor continues to dunk on the president
- US death toll passes 50k while total cases passes 900k
- Trump admin decides against participating in global vaccine and drug initiative organized by the WHO
- 107-year-old Spanish woman who survived Spanish flu also beat coronavirus
- Oregon finds its distancing measures may have prevented 70k infections
- New York reports 437 deaths as Cuomo signs order to start testing in pharmacies
- UK deaths surpass 20k
- Trump slams WSJ editorial board
- Global single-day deaths declined for third-straight day on Friday
- Internet traffic is up 20% across Europe and US as lockdowns drag on
- Spain sees promising decline in deaths
- Former UK Chancellor urges gov’t to share plan for reopening with the people
* * *
Update (1615ET): Illinois just reported its latest numbers:
- ILLINOIS REPORTS 80 ADDITIONAL CORONAVIRUS DEATHS TO TOTAL OF 1,874 – STATE OFFICIAL
Update (1540ET): After Spain reported yet another batch of promising numbers suggesting Europe’s deadliest outbreak is truly waning, PM Pedro Sanchez announced Saturday that his government would loosen the lockdown to allow for more outdoor exercise by May 2 if the numbers continue to fall.
Meanwhile, a Spanish woman who who is 107 years old and reportedly survived the Spanish flu in 1918 has now also beaten the coronvirus in the latest example of a centenarian being infected and surviving.
The Spanish Flu was known to also infect children and infants – something that scientists aren’t sure about in regards to the coronavirus. Actually, research continues to try and determine if closing schools is worthwhile in terms of the disruptive impact it has on the economy.
SPAIN: 107 year old woman Ana del Valle, who beat the Spanish flu back in 1918, has now also beaten a coronavirus infection.
— The Spectator Index (@spectatorindex) April 25, 2020
https://platform.twitter.com/widgets.js
And in the latest report about young people either exhibiting strange reactions to the virus, or facing strange and sometimes lethal afflictions that have little to do with the cardiovascular system, WaPo says that a surprising number of COVID-19 patients in their 30s and 40s have been dying of strokes.
* * *
Update (1400ET): In the latest global milestone, the number of coronavirus deaths has surpassed 200k.
Meanwhile, GT editor Hu Xijin continues to dunk on the president.
Frankly I began doubting about US’ capacity to control the pandemic. There’ve been no severe COVID-19 patients in Wuhan, can NYC achieve this within 2020? But President Trump can still be so optimistic and talk up his performance despite over 1000 daily death toll. Interesting. pic.twitter.com/FzkLfWSM8Z
— Hu Xijin 胡锡进 (@HuXijin_GT) April 25, 2020
https://platform.twitter.com/widgets.js
* * *
Update (1345ET): In a decision that will undoubtedly outrage liberals, the US has decided against taking part in a global initiative on Friday to speed the development, production and distribution of drugs and vaccines against COVID-19, a spokesman for the U.S. mission in Geneva told Reuters.
“There will be no U.S. official participation,” he said in an email reply to a query. “We look forward to learning more about this initiative in support of international cooperation to develop a vaccine for COVID-19 as soon as possible.”
In other news, for every American European with cabin fever, this is what Causeway Bay in Hong Kong looked like on Saturday.
Causeway Bay, HK, Saturday at 4pm. Probably marginally fewer people than a normal Saturday, but honestly without the masks you wouldn’t know anything was going on. pic.twitter.com/YLOv39co9h
— Mike Brrrrrd (@Birdyword) April 25, 2020
https://platform.twitter.com/widgets.js
* * *
Update (1340ET): The UK Department of Health and Social Care just released the latest figures from the battle against COVID-19, confirming what was widely expected: The UK has become the latest country to see its death toll surpass 20k as another 813 deaths, bringing the total to 20,380. All told, the UK has reported 149,554 cases.
As of 9am 25 April, 640,792 tests have concluded, with 28,760 tests on 24 April.
517,836 people have been tested of which 148,377 tested positive.
As of 5pm on 24 April, of those hospitalised in the UK who tested positive for coronavirus, 20,319 have sadly died. pic.twitter.com/5HLhOFWdlu
— Department of Health and Social Care (@DHSCgovuk) April 25, 2020
https://platform.twitter.com/widgets.js
As one FT reporter explains, roughly 150 of these deaths occurred before April 6, but are only just now being counted.
Update: Today the DHSC announced 813 deaths, but 156 of the English deaths happened before April 6 for which we already have good data.
This is quite a problem for updating, so I have recalibrated the model and it now gives slightly lower estimates.
1/
— Chris Giles (@ChrisGiles_) April 25, 2020
https://platform.twitter.com/widgets.js
A cautious estimate of the total number of UK excess deaths linked to coronavirus stands today at
42,700
The profile of the virus path now matches the date of death rather than date of announcement
2/
— Chris Giles (@ChrisGiles_) April 25, 2020
https://platform.twitter.com/widgets.js
A cautious estimate of the total number of UK excess deaths linked to coronavirus stands today at
42,700
The profile of the virus path now matches the date of death rather than date of announcement
2/
— Chris Giles (@ChrisGiles_) April 25, 2020
https://platform.twitter.com/widgets.js
The daily profile looks like this now and no longer has the weekend effect.
There are 3 phases to this chart. Up to 6 Apr – it is calibrated to match ONS escess death data (assumed to be true)
— Chris Giles (@ChrisGiles_) April 25, 2020
https://platform.twitter.com/widgets.js
Watch the latest coronavirus presser below:
WATCH LIVE: #coronavirus press conference (25 April 2020)
Speakers:
🔵 @patel4witham, Home Secretary
🔵 Prof Stephen Powis, @NHSEngland
🔵 Lynne Owens, @NCA_UK https://t.co/pIfRli9Fwq— UK Prime Minister (@10DowningStreet) April 25, 2020
https://platform.twitter.com/widgets.js
During the briefing, Home Secretary Priti Patel described the country’s latest grim milestone as “deeply tragic and moving moment” and warned that “we are not out of the woods yet.” The Home Secretary also used the daily press briefing at Downing Street to warn criminals that “our outstanding police and law enforcement agencies are absolutely on to you.”
* * *
Update (1220ET): As Italians everywhere celebrate italy’s “Liberation Day” – the date of the Italians’ victory over fascism – the Civil Protection Service reports another decline in new cases and deaths. The total number of confirmed cases in Italy climbed to 195,351 on Friday, up +1,22%, or 2,357, roughly even with the average pace from the last few days, while the death toll climbed 1.6% to 26,384 after breaking above the 25k mark a day earlier.
The number of hospitalizations, and the number of patients in intensive care, both continued to fall, with the number of patients listed as officially recovered once again nearly equaling the number of day yesterday.
In Washington, President Trump has apparently taken umbrage with a recent WSJ editorial that failed to make it completely clear that Trump did not approve of the governor’s decision to reopen.
If the Wall Street Journal “Editorial” writers had called, as they should have, they would have easily found that I was “NOT happy with the Georgia Governor on Tuesday night.” You said the opposite, and got it wrong as you often do!
— Donald J. Trump (@realDonaldTrump) April 25, 2020
https://platform.twitter.com/widgets.js
Something that was news to the governor when Trump first said it Thursday night.
* * *
Update (1200ET): New York Governor Andrew Cuomo started his Saturday press briefing by announcing his plans to sign an executive order allowing independent pharmacists to carry out coronavirus tests, making New York State the first in the country to embrace technology and protocols allowing more tests to be conducted outside hospital and clinical care settings.
It’s all part of Cuomo’s attempt to implement mass surveillance testing in the state, a long-term strategy to keep numbers down.
Cuomo also reported 437 deaths over the last 24 hours, a slight increase over the prior day, but still in keeping with the recent trend of fewer than 500 deaths per day, roughly half the level from the ‘peak’ earlier this month.
- NEW YORK GOVERNOR CUOMO SAYS TO SIGN EXECUTIVE ORDER ALLOWING INDEPENDENT PHARMACISTS TO CONDUCT CORONAVIRUS TESTS
- NEW YORK STATEWIDE TOTAL CORONAVIRUS HOSPITALIZATIONS FALL TO SAME LEVEL AS 21 DAYS AGO – GOVERNOR CUOMO
- NEW YORK STATEWIDE CORONAVIRUS DEATHS RISE BY 437 ON APRIL 24, VS INCREASE OF 422 A DAY EARLIER – GOVERNOR CUOMO
- NEW YORK NEW COVID-19 HOSPITAL PATIENTS HAS FALLEN TO ABOUT 1,100 PER DAY, VS AROUND 1,300 PREVIOUSLY
- NEW YORK GOVERNOR SAYS TO EXPAND TESTING CRITERIA TO INCLUDE MORE NEW YORKERS, STARTING WITH FIRST RESPONDERS AND OTHER ESSENTIAL WORKERS
Hospitalizations also continued to decline, as capacity increased to its highest level in 3 weeks.
Watch Cuomo live:
Holding a briefing with updates on #Coronavirus. Watch Live: https://t.co/Pvn8R9Hniz
— Andrew Cuomo (@NYGovCuomo) April 25, 2020
https://platform.twitter.com/widgets.js
* * *
Bill Gates might want to rethink his decision to firmly defend the WHO against President Trump’s decision to defund the organization – technically an arm of the UN – over allegations that it aided China’s initial dissembling about the virus.
Gates and others have loudly cheered the expansion of surveillance methods to aid in efforts like ‘contact tracing’ and other advanced techniques to try and track who may or may not have been exposed to the virus. Many proponents of civil liberties, meanwhile, have argued that some of the more extreme measures in play offer little benefit in exchange for such a dramatic expansion of the security state.
One of this movement’s favorite proposals is the “immunity passport”, which would, in theory, allow those who are theoretically immune go about their lives while everybody else remains stuck inside.
In an announcement early Saturday in Europe, the WHO warned members against issuing so-called “immunity passports”, essentially a document allowing individuals who test positive for coronavirus antibodies to return to work. The organization explained that – as we’ve noted numerous times over the past few months – there’s no actual evidence that patients with antibodies – including those who’ve recovered from the virus, a group that includes at least 800,000 people – will be immune to reinfection.
“There is currently no evidence that people who have recovered from Covid-19 and have antibodies are protected from a second infection,” the WHO said. The health agency said it is reviewing the evidence on whether people who recover from Covid-19 become immune, but that there are no studies on whether the presence of antibodies indicates immunity in humans. It said giving people who have antibodies special rights to travel or work “may therefore increase the risks of continued transmission.”
Of course, that’s bad news for everybody who hoped that ‘anitbody testing’ would save us from the ‘rona.
Meanwhile, the number of confirmed coronavirus cases continues to expand at a roughly steady pace. Thankfully, the surge in daily fatalities observed over the past 2 weeks has finally begun to subside.
The FT reports that the worldwide COVID-19 death toll has risen by 6,182 on Friday to stand at 182,690. This is the third consecutive day where the number of new deaths has been lower than the previous day.
Still, if this pace of expansion continues, we should expect to see the global total pass the 3 million mark by Tuesday, if not earlier. Public health authorities from around the world reported 105,825 new cases yesterday, bringing the total to 2.76 million, according to data from Worldometers.
The global death toll is rapidly approaching 200k, with the US is responsible for 25% of them. As businesses in Georgia continue to reopen, the White House is debating a new legal liability shield for American businesses to prevent them from being sued over the coronavirus.
In the US, the number of deaths passed 50k on Friday while the case total passed 900k early Saturday, leaving the country well on the way to the 1 million case mark. The US would be the first country to report 1 million confirmed cases.
In Brussels, bureaucrats have rushed to relax state aid rules, and regulators have approved a series of multi-billion-euro schemes to allow member states to extend financing to companies – in some cases via direct equity injections – to help them weather the pandemic. Although leaders of both factions have told reporters that important progress was made at Thursday’s virtual summit to work out the details of a massive pan-European relief program to help the worst-hit governments in the bloc. As one might expect, German and a handful of wealthy northern states have gotten into an intense disagreement with the poorer, worst-hit southern states (Spain, Italy joined in this instance by Emmanuel Macron’s France) over how the program should be financed, and whether the loans should come in the form of loans, or outright grants.
As the country with the highest mortality rate in Europe, Spain has eased its lockdown measures only slightly, while warning that the current target date to begin reopening is May 9. But in a promising bit of news, the country reported fewer than 400 fatalities for the second consecutive day on Saturday (the count was accurate as of 9pm Madrid Time Friday) while the spread of new cases has also slowed.
Across Europe and the US, Internet traffic is up 20%, according to the FT and Media analytics group ComScore, which measured the number of unique page views and compared it with an “average” benchmark across several key markets.
With no end to a strict national lockdown in sight, millions of Britons are starting to get a little squirrely. To try to assuage these anxieties, former UK Chancellor Philip Hammond has suggested that No. 10 share its plan for reopening the economy with the public.
“The reality is that we have to start reopening the economy but we have to do it living with Covid,” Mr Hammond told BBC’s Today. “We can’t wait until a vaccine is developed… and rolled out across the population. The economy won’t survive that long.”
Now that the pace of new cases and deaths has slowed, it’s clear that lockdowns and social distancing measures are pretty effective at slowing the virus’s spread, which – remember – is the whole point of this: Eventually, scientists say, much of the global population will be exposed to this virus. It’s just a question of whether that’s going to happen over a few years, or a few months. In the latest positive indication, Oregon health officials have found that their state’s aggressive social distancing measures may have prevented more than 70,000 cases since early March.
Tyler Durden
Sat, 04/25/2020 – 17:25 - How Shutdowns Will Keep Killing The Economy, Even When They're Over
How Shutdowns Will Keep Killing The Economy, Even When They’re Over
Authored by Ryan McMaken via The Mises Institute,
Imagine what it is like right now to plan for the future as a business owner. The owner doesn’t know if he or she will even be allowed to be open for business two weeks from now, or a month from now.
Indeed, politicians and their unelected (and unaccountable) health advisors keep insisting that they might elect to close down businesses or impose new restrictions on large portions of the economy at any time.
The uncertainly associated with all this is immense. Consider some examples: thanks to moratoria on evictions in many cities, renters who can’t pay rent — thanks in part to government-forced lockdowns — can stay in their rental units indefinitely. Landlords have no idea when they will next be able to actually collect revenues again from paying customers. Meanwhile, “elective” healthcare services like eye care and dental care have been deemed “unessential” by bureaucrats and governors in many states. These offices will be closed and collecting little-to-no revenue. Restaurants, of course, aren’t permitted to do business beyond take-out service in places with lockdowns. (Although these restaurants still have to pay rent for their dining rooms.)
Even beyond the short term, business owners have no way to plan. If a business owner is allowed to actually conduct business during the summertime this year, it may still be that politicians will later elect to shut businesses whenever it is decided the risk of spreading viruses demands another “shutdown.” We’re even told this could go on for years.
One would have to be impressively naive and deeply ignorant about how businesses work to think that commerce, investment, and entrepreneurship would just continue as usual under these conditions. In reality, the threat of a government-mandated lockdown hanging over the heads of countless business owners and entrepreneurs will mean there will be far less willingness and ability to invest in businesses, offer products and services, or employ people.
The Problem with Regime Uncertainty
This problem has a name: “regime uncertainty.” Economic historian Robert Higgs defines it as “a pervasive lack of confidence among investors in their ability to foresee the extent to which future government actions will alter their private-property rights.”
Broadly understood, of course, “investing” isn’t just a matter of people putting money in mutual funds or buying municipal bonds. “Investors” are people who buy and manage apartment buildings. Investors include doctors and dentists who invest enormous amounts of time and money into a private healthcare office. Investors are people who put their life savings into starting a new restaurant or tavern.
As Higgs has shown, when the legal environment and property rights can be so radically altered so quickly, economic growth slows and economic depressions are drawn out and made worse.
Specifically, Higgs has illustrated that regime uncertainty was a significant factor in making the Great Depression such a long and unpleasant affair. The Roosevelt administration’s numerous and enormous changes to the legal regime — through new taxes, regulations, and labor laws — made the Depression far worse than it needed to be. Higgs explains how thanks to a multitude of state interventions during the Depression:
the Roosevelt administration “abruptly and dramatically altered the institutional framework within which private business decisions were made, not just once but several times” … with the result that regime uncertainty was heightened and recovery substantially retarded.
As one investor at the time observed:
Uncertainty rules the tax situation, the labor situation, the monetary situation, and practically every legal condition under which industry must operate. Are taxes to go higher, lower or stay where they are? We don’t know. Is labor to be union or nonunion?… Are we to have inflation or deflation, more government spending or less?… Are new restrictions to be placed on capital, new limits on profits?… It is impossible to even guess at the answers.
The result was “the New Deal prolonged the Great Depression by creating an extraordinarily high degree of regime uncertainty in the minds of investors.”
The recovery was slowed, of course, because investing, building businesses, and engaging in innovation became far riskier and unpredictable thanks to the chances that governments might once again impose draconian new restrictions on businesses. This changed the calculus completely.
Regime Uncertainty vs. Regular Uncertainty
Admittedly, even in a laissez-faire policy regime, it is more difficult for investors to calculate risk and future conditions when consumers and employees become far more fearful about an outbreak of disease. But, as Brendan Brown notes, private firms are likely to adjust quickly to attempt to address the needs of consumers who may now demand less crowded rooms and more “precautions.” Uncertainty is always a problem for investors and entrepreneurs. But regime uncertainty is worse because it limits the ability of property owners to adapt. Regime uncertainty also tends to be done in a haphazard and arbitrary way across a multitude of markets.
Consumers will still drive some owners out of business because consumers constantly change their demands and values. On a whim, consumers may decide to spend their money elsewhere. But in an unhampered market, businesses and investors can learn from watching others, plan for the future in their specific markets, and adjust accordingly. Unlike governments in the business of ruling by decree, investors and business owners seek to serve as wide a swath of the public as possible.
But this sort of flexibility is destroyed when governments impose lockdowns. There is no learning and no adjusting. Statewide lockdowns don’t take into account diversity in health, demographics, and market conditions. Instead economic activity is halted in a one-size-fits-all fashion based on what politicians — not consumers, mind you — deem to be “essential.” Even worse, changes can be be quickly imposed by a small handful of policymakers without public debate or consultation. There is no time for businesses to adjust.
This is far worse than any ordinary market shock.
Wall Street vs. Main Street, Again
Ultimately, this process will also accelerate wealth inequality by contributing to the further financialization of the economy. Thanks to the maximization of the “too big to fail” narrative at the Fed and in Washington, the financial sector continues to grow as the safe go-to place for investment. Why invest in community businesses and small medical firms when it is much lower risk to invest in a bank or a financial firm that’s sure to be bailed out? The constant threat of forced shutdowns makes this risk assessment even more stark: non-financial firms can be shut down and destroyed at any time. But Wall Street will be bailed out.
Since the financial sector employs a relatively small number of people, this shutdown-bailout dichotomy means employment will suffer. It means the working class and the middle class will suffer. It means people with sizable Wall Street portfolios will benefit while Main Street businesses go bankrupt.
But even Wall Street will eventually suffer because an economy cannot survive on bailouts forever. At some point, people have to produce actual goods and services. This requires capital. It requires planning. It requires many things that arbitrary shutdowns make far more difficult to find.
Tyler Durden
Sat, 04/25/2020 – 17:10 - "It's '08 All Over Again" – Carl Icahn Warns Investors "Be Extremely Careful"
“It’s ’08 All Over Again” – Carl Icahn Warns Investors “Be Extremely Careful”
Some people are intentionally hoarding toilet paper; others are stockpiling hand sanitizers and masks; and the glut of oil around world grows concerningly higher day after day. But, while stock markets rebound by the most ever (after their fastest collapse ever), there is (at least) one billionaire investor who is not buying it and instead is hoarding something else in readiness for what comes next…
In an insightful (and unusual for mainstream business media) interview with Bloomberg TV, Carl Icahn isn’t buying stocks right now. He’s hoarding cash, shorting commercial real estate and preparing for COVID-19 to wreak more havoc.
This is a time to be “extremely careful,” Icahn said in an interview Friday on Bloomberg Television.
The 84-year-old’s reasoning is simple – and terrifying for the average commission-raker and asset-gatherer – having traded through every stock-market crash since the Great Depression, the future is just too unpredictable for the S&P 500 to be trading at almost 20 times next 12m earnings estimates…
“You cannot really justify that multiple,” Icahn said.
“Short-term, you may have some big downdrafts.”
Source: Bloomberg
Unlike Boeing, IBM, and, the airlines, and cruise lines, the veteran investors hasn’t blown through his cash in recent years chasing dreams, he has instead been preparing and building cash positions – what he says he always keeps for “a stormy day.”
His thesis is straight forward – he disagrees with the market’s apparent belief that we will ‘return to normal’ sometime soon and everything that was will be again.
Having donated over $200 million to the medical school at Mount Sinai Hospital in New York, the 1980s corporate raider says he has been talking to “some of the smartest guys in this area” and formed an opinion of the virus that doesn’t leave him optimistic.
He’s concerned about recurrences of infection and believes the economy will reopen in “spurts.”
“It’s not like turning on a spigot,” he said.
However, there are opportunities amid the carnage as Icahn took advantage of the recent collapse in crude oil prices with a secondary trade, as Bloomberg details:
Because refiner CVR constantly needs oil to supply its two refineries, Icahn realized he could use it to profit from the frenzy. He said he instructed the Sugar Land, Texas-based company to make space in its storage tanks and put in orders for 1 million to 2 million barrels at negative prices he doesn’t expect ever to see again.
We made some money on it,” Icahn said in an interview Friday with Bloomberg Television.
“We did get a fair amount.”
You’ll never see that again in history,” Icahn said.
But, while that opportunistic position was quickly taken advantage of, Icahn’s largest position is a multibillion bet he initiated in mid-2019 against the CMBX 6, an index of commercial real estate mortgage-backed securities that should be very familiar to ZeroHedge readers:
Back in March 2017, a bearish trade emerged which quickly gained popularity on Wall Street, and promptly received the moniker “The Next Big Short.”
As we reported at the time, similar to the run-up to the housing debacle, a small number of bearish funds were positioning to profit from a “retail apocalypse” that could spur a wave of defaults. Their target: securities backed not by subprime mortgages, but by loans taken out by beleaguered mall and shopping center operators which had fallen victim to the Amazon juggernaut. And as bad news piled up for anchor chains like Macy’s and J.C. Penney, bearish bets against commercial mortgage-backed securities kept rising.
The trade was simple: shorting malls by going long default risk via CMBX 6 (BBB- or BB) or otherwise shorting the CMBS complex. For those who have not read our previous reports (here, here, here, here, here, here and here) on the second Big Short, here is a brief rundown via the Journal:
each side of the trade is speculating on the direction of an index, called CMBX 6, which tracks the value of 25 commercial-mortgage-backed securities, or CMBS. The index has grabbed investor attention because it has significant exposure to loans made in 2012 to malls that lately have been running into difficulties. Bulls profit when the index rises and shorts make money when it falls.
The various CMBX series are shown in the chart below, with the notorious CMBX 6 most notable for its substantial, 40% exposure to retail properties.
One of the firms that had put on the “Big Short 2” trade back in late 2016 was hedge fund Alder Hill Management – an outfit started by protégés of hedge-fund billionaire David Tepper – which ramped up wagers against the mall bonds. Alder Hill joined other traders which in early 2017 bought a net $985 million contracts that targeted the two riskiest types of CMBS.
“These malls are dying, and we see very limited prospect of a turnaround in performance,” said a January 2017 report from Alder Hill, which began shorting the securities.
“We expect 2017 to be a tipping point.”
Alas, Alder Hill was wrong, because while the deluge of retail bankruptcies…
… and mall vacancies accelerated since then, hitting an all time high in 2019…
… not only was 2017 not a tipping point, but the trade failed to generate the kinds of desired mass defaults that the shorters were betting on, while the negative carry associated with the short hurt many of those who were hoping for quick riches.
One of them was investing legend Carl Icahn who as we reported last November, emerged as one of the big fans of the “Big Short 2“, although as even he found out, CMBX was a very painful short as it was not reflecting fundamentals, but merely the overall euphoria sweeping the market and record Fed bubble (very much like most other shorts in the past decade). The result was what we said four months ago was “tens if not hundreds of millions in losses so far” for the storied corporate raider.
That said, while Carl Icahn was far from shutting down his family office because one particular trade has gone against him, this trade put him on a collision course with two of the largest money managers, including Putnam Investments and AllianceBernstein, which for the past few years had a bullish view on malls and had taken the other side of the Big Short/CMBX trade, the WSJ reports. This face-off, in the words of Dan McNamara a principal at the NY-based MP Securitized Credit Partners, was “the biggest battle in the mortgage bond market today” adding that the showdown is the talk of this corner of the bond market, where more than $10 billion of potential profits are at stake on an obscure index.
However, as they say, good things come to those who wait, and are willing to shoulder big losses as they wait for a massive payoffs, and for the likes of Carl Icahn, McNamara and others who were short the CMBX, payday has just arrived.
Behold the CMBX as it stands now:
That, in the parlance of our times, is what traders call a “jackpot.”
The epic crash in the CMBX 6 BBB (the junk-rated BB tranche has fallen 25% in the past fortnight) meant all those shorts who for years suffered the slings and stones of outrageous margin calls but held on to this “big short”, are about to get very rich (and in the case of Icahn, even richer) it has also means the pain is just starting for all those “superstar” funds on the other side of the trade who were long CMBX over the past few years, collecting pennies and clipping coupons in front of a P&L mauling steamroller.
One of them, as noted above, is mutual fund giant AllianceBernstein, which has suffered massive paper losses on the trade, amid soaring fears that the coronavirus pandemic is the straw on the camel’s back that will finally cripple US shopping malls whose debt is now expected to default en masse.
According to the FT, more than two dozen funds managed by AllianceBernstein have sold over $4 billion worth of CMBX protection to the likes of Icahn. One among them is AllianceBernstein’s $29 billion American Income Portfolio, which is down 15% since the beginning of March, having written $1.9bn of protection on CMBX 6, while some of the group’s smaller funds have higher concentrations.
The trade reflected AB’s conviction that American malls are “evolving, not dying,” as the firm put it last October, in a paper entitled “The Real Story Behind the CMBX. 6: Debunking the Next ‘Big Short’” (reader can get some cheap laughs courtesy of Brian Philips, AB’s CRE Credit Research Director, at this link).
Hilariously, that paper quietly “disappeared” from AllianceBernstein’s website, but magically reappeared on Friday, shortly after the Financial Times asked about it.
“We definitely still like this,” said Gershon Distenfeld, AllianceBernstein’s co-head of fixed income. “You can expect this will be on the potential list of things we might buy [more of].”
Sure, quadruple down, why not. Meanwhile, one of America’s biggest mall operators, Simon Property Group, has closed all its US properties until March 29, and it is unclear not only when it will reopen but what viable tenants it will still have that are able and willing to pay rent. For a broader perspective on what Simon has to look forward to when it reopens, read “Widespread Panic” Hits Commercial Property Markets: Deals Implode, Renters Disappear, Businesses Shut Down”.
Good luck on the quadruple down – as Icahn notes of the “mall short” – the more the pandemic slows economic activity and drives consumers to shop online, the greater the chances that some of those loans will default.
“It’s ‘08 all over again,” Icahn said, likening the trade to wagers that paid off massively when subprime mortgage debt collapsed more than a decade ago.
In which case, as we noted at the very beginning, Icahn’s warning to investors to be “extremely careful” would seem very timely.
Tyler Durden
Sat, 04/25/2020 – 16:45
Digest powered by RSS Digest
Saving...