Authored by Tony Small, Morgan Stanley strategist
Core and headline inflation data in the euro area finished 2019 above the ECB’s forecasts, as seasonally adjusted measures of underlying inflation climbed to their highest levels since 2013. Many leading indicators suggest that the upside evident in underlying inflation at the end of last year could continue in 2020. Early January commentary from multiple ECB officials suggests that optimism is slowly building within the Governing Council.
Despite the near-term improvement and cautious optimism from some within the ECB, markets remain decidedly sceptical that the move is sustainable. The ECB’s preferred market-based measure, the five-year five-year euro inflation swap, remains stuck near 1.3% (below seasonally adjusted underlying measures for only the second time since the GFC).
And according to Bloomberg, median and average forecaster expectations for end-2020 euro area GDP growth, CPI and 10-year Bund yields stand at or near 18-month lows.
Now we know you’re probably saying to yourself, not another euro area reflation story. We get it, we promise – but give us a few to make our case.
We think there’s a real possibility in 2020 that the markets’ expectations for a rebound in euro area growth and a steady move higher in core inflation measures may prove too pessimistic. This could lead markets to reassess everything – from bank stocks to the outright levels of both inflation breakevens and Bund yields and finally the ECB’s current monetary policy stance.
Over the last couple of years, core inflation has been running well below what existing levels of wage growth and the European Commission future price expectation series for the consumer, services, retail and construction sectors would normally imply. At the same time, a softer manufacturing sector has offset resilient domestic demand and services inflation, but some of that drag may be starting to subside.
In recent months our European and global economics teams have been highlighting the stabilisation and improvement in euro area manufacturing PMIs, upside data surprises across many regions of the globe and an acceleration in European soft data indicators, particularly in Germany, where the latest ZEW expectations survey rose to its highest level since 2015 and the manufacturing and services PMIs surprised strongly to the upside in January.
The better-than-expected data, especially in the euro area, have prompted our European economists to note potential upside risks to their forecast for just a soft rebound in euro area growth in 2020. Importantly, they’re not alone.
The account of the ECB Governing Council’s December 2019 monetary policy meeting had perhaps the most cautiously optimistic tone beneath the surface that we’ve seen in the last couple of years. Members highlighted the reduced uncertainty associated with geopolitical and trade tensions, a significant reduction in euro area recession probabilities, a notable rise in euro area surprise indices and a “solid upward move in underlying inflation” (when excluding volatile package holiday prices in the euro area’s largest economy and measures incorporating the cost of owner-occupied housing, which aren’t included in the Harmonised Index of Consumer Prices). At the recent January 2020 Governing Council meeting, the cautious optimism continued, as the ECB softened its assessment of downside risks to growth from "somewhat less pronounced" to "less pronounced".
Many of our strategy teams at Morgan Stanley have embraced the idea that markets may be priced for too much pessimism in Europe. Our European equity strategists turned positive on European and UK equities in 4Q19, our European bank strategists initiated a high-conviction overweight on the SX7E banks index towards the end of 2019, and our cross-asset strategy team sees greater value in European equities relative to US equities. Finally, we on the European rates strategy team have been biased towards higher Bund yields since the end of 3Q19.
We realise that many investors will look askance at the idea of European reflation given how often it has failed to materialise. Something to keep in the back of one’s mind, however, is that a new wave of leaders has emerged across the continent, with non-traditional attitudes towards fiscal spending and a strong desire to thoughtfully and thoroughly consider issues including climate change, a banking union and broader euro area fiscal integration.
Policies like the European Commission’s Green New Deal could lead to a wave of investment, lifting Europe’s productivity, potential GDP and nominal growth and inflation. In the meantime, there just may be some signs that euro area reflation is finally on its way.
Former President Barack Obama told Sen. Tim Kaine (D-VA) during the 2016 election that Donald Trump is a 'fascist' who must be kept out of the White House.
The statement, made while Obama's DOJ was using spies to surveil the Trump campaign in the Russiagate scandal, is claimed by Kaine in an upcoming documentary about Hillary Clinton, according to CBS News.
Kaine, Clinton's running mate on the Democratic ticket, recounts the call during an exchange with Clinton that was caught on camera in 2016. Kaine's wife, Anne Holton, was also present.
"President Obama called me last night and said: 'Tim, remember, this is no time to be a purist. You've got to keep a fascist out of the White House,'" Kaine says before adding with a laugh that Obama "knows me and he knows that I could tend to err."
Clinton replies, nodding, "I echo that sentiment."
She then puts her hands to her chest and says, "But that's really — the weight of our responsibility is so huge." -CBS News
The clip is featured in an episode of the four-part Hulu documentary called "Hillary," which premiered on Saturday at the Sundance Film Festival in Park City, Utah. The docuseries chronicles Clinton's early life, her rise to power, and her political career.
CBS notes that Obama has rarely attacked Trump in public since leaving office, and the 'fascist' comment goes far beyond anything he said in public during the campaign - when he said at the 2016 DNC convention that "homegrown demagogues" were threatening American values.
Obama has also criticized the Trump administration for pulling out of the Paris climate accords, as well as Trump for the way he uses social media - suggesting that world leaders should avoid it.
"The presidency is like drinking out of a fire hose – you can’t absorb that information yourself," Obama said in Septermber. "You can make sure you have a team that is distilling info as effectively as possible so you can get a basic framework for what the problem is."
"The other thing that’s helpful is not watching TV or reading social media," he said, adding. "Those are two things I’d advise, if you’re president, not to do."
Spying on incoming political opponents, meanwhile, is just fine apparently.
This week, while you were busy working, Jamie Dimon, CEO of JP Morgan Chase, took time out from rubbing elbows with fellow movers and shakers at the World Economic Forum in Davos, Switzerland, to share his trepidations:
“The only thing I have trepidation about is negative interest rates, QE, and the diversion between stock prices and bond prices and yield and stuff like that...
I think it’s very hard for central banks to forever make up for bad policy elsewhere, that puts them in a trap. We’re a little bit in that trap today with rates so low around the world.”
Though Dimon, in what we presume was an inadvertent omission, failed to share that his firm may have recently walked the Federal Reserve into an elaborate policy trap. Now the Fed’s stuck. JP Morgan’s thrown away the keys. And Dimon’s reaped a significant windfall.
If you recall, between Monday night and Tuesday morning September 16/17 the overnight repurchase agreement (repo) rate hit 10 percent. Short-term liquidity markets essentially broke. The Fed had to intervene in the repo market, via overnight repo operations, to push the repo rate back below 2 percent.
Since then, overnight repo operations by the Fed have become a near daily occurrence. What’s more, these daily operations have ballooned to the order of up to $120 billion and are being maintained indefinitely.
On Tuesday, for example, the Fed created $90.8 billion out of thin air. Of this, $58.6 billion was added to the overnight repo. The remaining $32.2 billion was added to the 14-day repo. Then, on Thursday, the Fed created another $74.2 billion out of thin air. Of this, $44.15 billion was added to the overnight repo, and the remaining $30 billion was added to the 14-day repo.
What exactly triggered the September 16/17 repo rate spike is unclear. Did a large bank or hedge fund not have sufficient high quality collateral, which then froze them out of the repo market?
One theory is that JP Morgan had a hand in it. Here CCN shares the abstract thinking of DataDash founder Nicholas Merten:
“According to Merten, JP Morgan ‘predominantly caused’ the repo market surge in September. The financial giant pulled out $130 billion from the overnight lending market. The sudden drop in reserves drove the overnight lending rate to soar to 10 percent.
“At this point, the Fed had a choice. They could have stay away from the repo market and watch interest rates skyrocket while stocks crash. Or they could step in, supply liquidity and keep things humming. We know how it panned out.
“JP Morgan wins twice in this situation. First, they have the liquidity to initiate a large buyback scheme. While pumping shares, they could dole out handsome dividends to attract more investors. The result is a surge in stock price.
“Second, the bank [JP Morgan] forced the central bank [the Fed] to fund hedge funds and keep their over-leveraged positions open. As long as these hedge funds have access to liquidity, the extended bull market will likely continue. In other words, the Fed (through hedge funds) is helping drive up the price of JP Morgan (NYSE:JPM) shares.
“Since September, JPM’s stock price has gone from $107.32 to 136.84, a gain of over 27 percent. That number is nearly twice of what the S&P 500 gained in the same time period.”
Was this mere coincidence? Was this an elaborate trap? We’ll let you decide.
Regardless, the Fed’s now trapped...and there’s no safe way out. Here’s why...
The Fed, through its repo madness program, has supplied financial markets – including big banks like JP Morgan – with mass liquidity. But that’s not all. The Fed’s also supplied financial markets with a highly tenuous assumption:
The Fed will never allow the lack of liquidity of a major debtor to become an insolvency crisis that contracts the money supply.
This assumption, without question, will be proven false at the worst possible time.
The repo market, as we understand it, is where big banks and hedge funds conduct countless interlocking transactions, totaling as much as $3 trillion in debt being financed each and every day. However, the repo market’s massive size and complex web of lending agreements makes it inherently fragile. Everything works just great…until suddenly something breaks…
All it takes is the failure of a big bank or hedge fund to meet its commitments and the whole complex web of agreements comes undone. In short, a liquidity crisis could quickly contract credit with far reaching implications. Namely, rapid deflation.
Thus, to counteract the prospect of a liquidity crisis and deflationary credit crisis the Fed must inflate the money supply. But it can’t inflate too fast. And it can’t inflate too slow. Like piloting a lunar module, the Fed must throttle and thrust the money supply just right.
For example, as noted above, on Thursday the Fed spread $74.2 billion between the overnight repo and the 14-day repo. But get this... net liquidity declined. Because of past operations expiring, outstanding short-term Fed liquidity injections fell by $10 billion.
How long will it take before the Fed makes a mistake, and repo rates shoot to the moon followed by a deflationary credit crisis?
More than likely, the Fed will error on the side of supplying excess liquidity. But if the Fed overcompensates, consumer prices will quickly hyperinflate out of orbit.
Such are the impulses of lunar Fed policy under repo madness.
A viral video, reposted on Twitter 48 hours ago, has more than 800k views and reveals an urgent message from a Wuhan nurse, who claims more than 90,000 people in China have been infected with the fast-spreading coronavirus.
An unverified translation of the nurse, posted by @purplelovehime, has been retweeted more than 13.7k times since Saturday, states: "I am Jin Wei. I am currently inside the Wuhan outbreak region, Han Hou area. I would like to describe the condition inside the Hubei province, as well as the outbreak situation in the entire China. Currently, there are already 90,000 cases of pneumonia contraction."
"What is the rate of contraction? If one person contracted this disease and is not properly quarantined and treated, this I individual will infect 14 people that came in contact with him. That is a significant multiplier. During the spring festival, in our culture, families like to get together, dine together. But this is unlike any other years. I hope that people can stay home, do not gather, and do not visit families. There is a spring festival every year. If everyone can stay safe, you can always get together later," the unverified translation of the nurse said.
The translation went on to say that medical supplies from bio suits, medical masks, goggles, and gloves "are in great shortages."
I just received an urgent new video uploaded by the Chinese doctor from the #coronavirus quarantine zone in Wuhan. I need your help with translation and it’s very important we get it right before it goes out to major media outlets. I’m posting it in 3 parts. (1 of 3) pic.twitter.com/qNxuP3tXuG— Max Howroute▫️ (@howroute) January 24, 2020
The nurse, in an emotional plea, said everyone in Wuhan and surrounding cities to "not go out! Stay home!"
The translation ended with the nurse delivering some "very bad news:"
"The coronavirus has mutated. It is now a second-generation virus. When it was still in its first generation, we were still able to treat this… However, after the last mutation, it became deadly… The rate of infection are now increasing exponentially. So please remember do not go out, do not visit people, do not gather in a group, do not have dinner party."
We noted on Sunday that about 5 million residents had already left Wuhan before the lockdown started. This could suggest that many people carrying the coronavirus, during the incubation period, could spread the virus without them evening knowing it.
"From observations, the virus is capable of transmission even during the incubation period," said Ma Xiaowei, the minister in charge of China's National Health Commission (NHC), adding that the incubation period lasted from one to 14 days. "Some patients have normal temperatures, and there are many milder cases. There are hidden carriers," Ma said.
China has already closed off 17 cities and locked down tens of millions of people to prevent further transmission of the virus. Any attempt to limit the spread has likely failed.
Submitted by Eric Peters, CIO of One River Asset Management
"One man’s debt is another man’s asset,” said the CIO, lifting his palms evenly, bringing them into perfect balance. “The weight of one is perfectly offset by that of the other.” So in theory, it should not matter how large either grows. “But debt creates asymmetric behavior between borrower and lender,” he explained. “When the economy comes under stress, borrowers are forced to retrench, and lenders must then choose whether to fill the economic void left by that adjustment.” By repairing their balance sheets, the borrowers do additional economic damage.
"Lenders tend to wait and see how things shake out before stepping in,” continued the CIO. Central banks provide stimulus to lure them back. “Therefore, the higher the debt level in an economy, the more susceptible it becomes to catastrophic failure and the less responsive it is to stimulus.” So central bankers must work harder. “But by doing so, they slow the necessary adjustments in parts of the economy where balance sheets are unsustainable. And this incentivizes leveraging up in places where balance sheets are strong – creating new excess.”
"In a global financial system, these dynamics spill across borders,” he said. 10yr German bunds yield -0.34%. Greeks pay +1.28% to borrow for 10yrs (40bps less than the US). Tesla market capitalization is $102bln. “This is good for the short-term performance of asset prices and economic growth, but down the line, it makes the financial system more prone to catastrophe.” And less responsive to stimulus.
"In each downturn, central bankers must step in more and more aggressively. The process is reflexive and ultimately leads to a Minsky extreme."
"Financial markets have capitulated to the secular stagnation narrative,” said the CIO, high atop his prodigious pile. “And in so doing, they have tethered themselves to the wrong inevitabilities – to low interest rates forever, to asymmetric central bank reaction functions, to a negative bond-equity correlation,” he added, peering into the distance. "And now a financial system which is structurally intolerant of inflation faces a political-economy regime change which makes inflation an imperative."
Seeking to escape the 1970s inflation, policymakers inadvertently engineered an equally powerful deflation machine. The 2001 ascension of China into the WTO global trading system - combined with decades of Moore’s Law compounding our computational speeds - amplified the machine’s deflationary force.
"From the S&P 500 peak in 1972 to the 1974 trough, a 60:40 stock bond portfolio lost 60% of its nominal value.” In real terms, it lost 70%. There was no V-shaped recovery that quickly returned portfolios new highs.
"Are we on the cusp of economic regime change and wealth destruction not seen since those dramatic years in the 1970s?" he asked. In the distance, Britain’s politicians readied their plans for an impressive fiscal stimulus. The Americans fought over how to best expand their current 4.5% deficit (with unemployment at levels last seen in the late-1960s and with the economy running above capacity). Will Republicans introduce new tax cuts and infrastructure spending? Or will Democrats expand entitlements on a scale not seen since the 1960s Great Society programs? Or launch a Green New Deal? Both?
"It does not take a wild imagination to see where this comes from – a shift in regime with government spending directly financed by central banks, secure in the belief that their deflationary machine will grant them license," he said. "Today the climate is deflationary to be sure. But the machine is being dismantled. The instability inherent in one extremity can easily swing to the opposite. And such a shift is not merely possible, or even likely, it is inevitable."
Over the weekend, there were numerous media reports published in hopes of easing fears that the coronavirus spread was uncontained, and informing the general public just how seriously China takes its quarantine of no less than 17 cities and roughly 60 million people. Take this report from AFP, according to which Police at a roadblock on the outskirts of Wuhan turned away cars trying to leave the virus-stricken epicenter on Saturday, as other anxious residents trapped inside spent the Lunar New Year stocking up on masks and medical supplies.
"Authorities have prevented anyone from leaving Wuhan, the city of 11 million people at the heart of the viral outbreak which has so far infected nearly 1,300 people and killed 41 others" AFP writes adding that its reporters saw "a steady trickle of cars approaching the roadblocks around 20 kilometres (12 miles) east of the city centre on Saturday morning, only for police in fluorescent jackets wearing masks to tell them to turn around."
The barricade, at one of the tolls for highways exiting the city, was blocked with red and yellow plastic barriers and cones.
"Nobody can leave," a policeman told AFP.
Yet, but... there is just one problem: the much needed quarantine and lockdown were far too late, because as Wuhan's mayor Zhou Xianwang revealed on Sunday during a press conference, about 5 million residents had already left Wuhan before the lockdown because of the deadly coronavirus epidemic and the Spring Festival holiday. As the SCMP reports, many of Wuhan's residents had already left the city for the holiday, while others rushed out after the lockdown was announced on Wednesday night.
As a result, only 9 million people were remaining in the city after the lockdown, with roughly a third of it, including countless cases of coronavirus, having already spread across China.
Due to the Chinese Lunar New Year and the #WuhanCoronavirus, more than 5 million people left Wuhan and 9 million people remain in the city which is under lockdown: Wuhan mayor pic.twitter.com/hi2NwsHmou— Global Times (@globaltimesnews) January 26, 2020
Meanwhile, in Chinese health officials warned the virus’ ability to spread was getting stronger, and in the worst possible news for China, Ma Xiaowei, the minister in charge of China’s National Health Commission (NHC), told a press conference that battling the outbreak had become especially complicated, after it was discovered that the new virus could be transmitted even during incubation period, which did not happen with Sars (severe acute respiratory syndrome).
In other words, as many as tens if not hundreds of thousands of Coronavirus carriers quietly fled, and may have infected as many as 3-4 other people each, depending on the R0 of the virus.
“From observations, the virus is capable of transmission even during incubation period,” Ma said, adding that the incubation period lasted from one to 14 days. “Some patients have normal temperatures and there are many milder cases. There are hidden carriers,” he said.
As for the piece de resistance, Ma said also that the virus had adapted to humans and appeared to have become more transmissible: "There are signs showing the virus is becoming more transmissible. These walking ‘contagious agents’ [hidden carriers] make controlling the outbreak a lot more difficult."
Even China's authorities sounds like they are giving up: Li Bin, deputy minister of the NHC said the authorities that the severe measures they had taken to control the spread of the virus – such as issuing travel bans and locking down cities – would at least delay the peak and “buy time to combat the next stage of the outbreak”, according to SCMP.
Yes, China is already bracing for "the next stage of the outbreak."
To help tackle the epidemic, which has closed off 17 cities, Ma said that 2,360 military and civilian doctors and nurses had been sent to Wuhan, the city in which the outbreak was first detected at the end of last month. As the pressure has mounted on the city’s hospitals, the medical system has moved ever closer to collapse.
Many people who developed feverish symptoms were turned away by hospitals earlier in the week because there were not enough beds, local residents said earlier. Medical practitioners are also running seriously short of protective kits and are being forced to recycle goggles and masks. Ma said 2,400 hospital beds had been added in Wuhan, and the government was planning to add 5,000 more over the next three days.
Wang Jiangping, China’s vice-minister of industry and information technology, said China had the capacity to produce a maximum of 30,000 protective outfits per day, but that was less than a third of what was needed in Hubei.
Meanwhile, the hunt for the real source of the pandemic continues. China imposed a nationwide ban on wildlife trade on Sunday, as the outbreak was originally suspecteded to have originated at a seafood market in Wuhan, which also sold wild animals. However, a research paper published by medical journal The Lancet on Saturday said the first confirmed case of the viral infection was a person who had not been to that market.
Which begs the question we asked on Saturday: Did China Steal Coronavirus From Canada And Weaponize It?
Update (1600ET): According to TMZ, Bryant's daughter Gianna was aboard and perished in the crash near Las Virgenes Rd. and Willow Glen St. around 10 a.m, behind the home of Kourtney Kardashian. ESPN reports that they were on their way to a basketball game.
Bryant is survived by his wife Vanessa and their three other daughters, Natalia, Bianca and newborn Capri.
President Trump has offered his condolences on Sunday.
Reports are that basketball great Kobe Bryant and three others have been killed in a helicopter crash in California. That is terrible news!— Donald J. Trump (@realDonaldTrump) January 26, 2020
Meanwhile, it appears that Bryant's helicopter was in a holding pattern before crashing.
Flight path of N72EX, the S-76 owned by Island Express, that crashed this morning with #Kobe It appears the helicopter flew a holding pattern before proceeding to what would soon be its tragic fate. pic.twitter.com/zl4H969IU3— Bob Randall (@roosterjames) January 26, 2020
Update (1540ET): Just hours after the crash, false rumors are already being reported as facts. Reports that all of Bryant's four daughters were with him in the helicopter have been confirmed to be untrue.
Whoever “reported” Kobe’s daughters were with him should be ashamed. No way do you run something like that out there unless you have it 100 percent confirmed— Paul Zeise (@PaulZeise) January 26, 2020
This is why journalists need to confirm their information with multiple sources instead of just running with whatever somebody tells them.
* * *
TMZ has confirmed that basketball legend Kobe Bryant - one of the biggest sports stars in the world - died Sunday morning in a helicopter crash over Calabasas, a tiny city in LA County known as a haven for celebrities. He was 41.
Though many online wished that news of his death was fake or some kind of sick joke...
TMZ said Kobe Bryant died in a Helicopter crash. I’m calling bull shit on this Fake news pic.twitter.com/3vH21lMxaZ— Gutta Ball (@Larellj) January 26, 2020
...several local news outlets have confirmed the story.
The cause of the crash is under investigation.
Per TMZ, Kobe has famously used a helicopter to travel for years, even when he was still playing with the LA Lakers. He was known for commuting from his home in Newport Beach to the Staples Center in his Sikorsky S-76 chopper. Kobe was traveling with at least three other people in his private chopper when it went down.
Local news reported that Malibu deputies responded to what appears to be the scene of the crash, though both TMZ and the LA County Police Twitter feed described the crash as occurring over Calabasas. The tweets didn't name any of the victims.
The LA Times confirmed that the crash happened at around 10 am PT (1 pm ET). The crash ignited a brush fire that made it nearly impossible for rescue personnel to reach the aircraft. They also confirmed that the model of the chopper was a Sikorsky S-76, the same model as Kobe's private chopper.
Many have turned to Bryant's twitter account, hoping he'll fire off a tweet letting the world know it was just a hoax. But his last tweet, sent 16 hours ago (before this morning's crash), praises Lebron James, the new star of Bryant's old team, the Lakers. Bryant was a huge part of what made the Lakers one of the most dominant franchises in the NBA. On Saturday, James passed Bryant on the NBA's all-time scoring list.
Continuing to move the game forward @KingJames. Much respect my brother 💪🏾 #33644— Kobe Bryant (@kobebryant) January 26, 2020
Bryant is survived by his wife Vanessa, and their four daughters, Gianna, Natalia and Bianca and their newborn Capri.
2020 has been one incredibly strange year - and it's still January.
Sen. Chris Murphy (D-CT) said on Saturday that it's "certainly possible" that some Senate Democrats will vote to acquit President Donald Trump following his impeachment trial, according to Politico.
"I don’t have any reason to think there are Democrats that aren’t with us on procedural votes," Murphy told reporters, adding "It’s certainly possible there are Democrats that are going to vote no on one of the articles, two of the articles. And I don’t have a sense where everybody is on the articles. We haven’t talked about it."
"Schumer may know," added Murphy, "but nobody has done public or private whipping on this."
Sen. Chris Murphy said Saturday morning that Democrats are likely to be united on a key procedural vote on calling witnesses next week, though he acknowledged that not all 47 Democrats are guaranteed to vote to convict the president.
The Connecticut Democrat said that Minority Leader Chuck Schumer and other party leaders aren’t whipping senators on the question of the final verdict. Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) are considered the most likely senators to be mulling possible acquittal votes. -Politico
In December, Sen. David Perdue (R-GA) said that there may be multiple Senate Democrats who may vote to exonerate Trump, telling Politico "I think we might have a couple," adding "I don’t want to speculate on who — obviously that puts too much pressure on them — but I really think we have people on both sides that are trying to get to a reasonable, nonpartisan answer.
Senate Majority Leader Mitch McConnell suggested the same in a December interview with Fox News, saying "It wouldn't surprise me if we got one or two Democrats. It looks to me over in the House, the Republicans seem to be solid and the Democrats seem to be divided."
As the numbers of infected and dead soar exponentially this weekend, with the deadly coronavirus spreading to multiple nations and seemingly very much not "contained," early trading in markets suggest, as Bloomberg macro strategist Mark Cudmore details below, that this 'black swan' event is exposing the fragilities, and vulnerability, of financial markets that long ago de-tethered from any fundamental underpinning.
USDJPY is tumbling in early trading, implying a 400-point drop in Dow futures...
And Aussie fell to six-week lows.
Markets are driven by narratives, and the virus outbreak that has now spread in four continents is finding investors at a particularly vulnerable time, with valuations in many risk assets arguably stretched and volatility near record lows.
Without speculating how the novel coronavirus situation will evolve from here, it already has enough features to prompt severe risk aversion in the week ahead. It has now spread globally and Chinese authorities said Sunday that the transmission is increasing. With signs that the disease may be infectious long before symptoms show, the situation could deteriorate further in coming days as more cases emerge.
Less than two weeks ago in this column, I argued that only a black swan event would see expensive stock markets correct lower, since there was no obvious negative catalyst on the horizon. This outbreak has the potential to be that kind of event.
The key reason why this catalyst will matter where geopolitical scares such as Middle East conflict or North Korea missile tests do not, is that it’s front and center with the retail investor. Films such as Outbreak and Contagion have shown that fear of a viral outbreak is something that plays deep in the general population. It’s an easily accessible and understandable phobia that can strike closer to home than conflicts playing out far away.
The shutdown of major parts of the Chinese economy -- China is already mulling to extend the Lunar New Year holiday to prevent the spread of the virus, while restaurants and other public spaces are closed, transport is blocked, and public events canceled -- at a normally prime consumption period will not only hurt domestic growth, but the knock-on impact will be felt globally. After all, China is the growth engine for many economies.
News of the virus’s spread hit as volatility across assets had dipped to fresh lows and with many markets, from equities to credit, trading at historically extreme valuations. Investors have made good money and now have a solid reason to take profit.
Fed quietly pivoting from injecting $1 trillion into the economy in crusade against global warming to injecting $1 trillion into economy in crusade against coronavirus— zerohedge (@zerohedge) January 24, 2020
The game plan for most traders won’t be sophisticated. It doesn’t need to be. It’ll be about cutting back on risk and deleveraging. Previously outperforming assets will now suffer even if the direct economic link isn’t obvious.
The signs of classic risk aversion were already evident in the markets on Friday after more cases were reported in the U.S. Stocks gave in and havens such as Treasuries, gold and the yen are suddenly in position for potential breakouts. Technicals will matter more from here until nuances return in the market. These could be in the form of a potential response from central banks to any signs of faltering economic growth.
EUR/JPY closed below its 4-month trendline on Friday; it’s likely to make fresh 3-month lows below 119.25 within days. Gold had its second-highest close in more than six years; the intraday peak over the same period at $1611.42 is the next level that could be taken out soon. After the 10-year Treasury yield Friday fell to the lowest level since early November, traders will be eyeing last September’s low near 1.40%.
While this may all sound very pessimistic, history has shown that a subsequent market recovery from such events is V-shaped and sudden. How soon that happens though will depend on how long the uncertainty lasts before the outbreak is contained and fears of a global pandemic subside. It’s clear we’re still at least a few days away from that upturn in sentiment, and potentially a few weeks.
Just 48 hours after left-wing billionaire George Soros accused Facebook of helping to "reelect Trump" so that "Trump will protect Facebook," Hillary Clinton parroted the same talking point at the Sundance Film Festival in Park City, Utah.
Clinton was in town to promote a four-part viewing of her new Hulu docu-series, "Hillary," when she told The Atlantic that Facebook CEO Mark Zuckerberg is an "authoritarian" who "intend[s] to reelect Trump."
She described the company's decision to allow a slowed-down video of House Speaker Nancy Pelosi (D-CA) to remain on the platform as "Trumpian."
"I said, ‘Why are you guys keeping this up? This is blatantly false. Your competitors have taken it down. And their response was, 'We think our users can make up their own minds,'" Clinton told the magazine, adding that Facebook is "not just going to reelect Trump, but intend[s] to reelect Trump."
“They have, in my view, contorted themselves into making arguments about freedom of speech and censorship,” Clinton alleged, the Atlantic reported, “which they are hanging on to because it’s in their commercial interests.”
"I feel like you’re negotiating with a foreign power sometimes," Clinton said of her conversations "at the highest levels" of Facebook, adding "This is a global company that has huge influence in ways that we’re only beginning to understand."
Soros, meanwhile, said at Davos: "Facebook will work to re-elect Trump and Trump will protect Facebook," adding "It makes me very concerned about the outcome of 2020."
Facebook responded to the accusation, telling Politico, "This is just plain wrong."
In other words, Trump can't win elections because he's that good -- he's only winning because "Authoritarian" Mark Zuckerberg is allowing gullable Americans to be misled by fake news, or so the narrative goes.
As noted last week, there have only been a few points over the previous 25-years where the market has been so overbought, extended, and bullishly optimistic. To wit:
“This is particularly the case given how extreme positioning by both institutions and individual investors has become. With investor cash and bearish positions, at extreme lows, with prices extremely extended, a reversion to the mean is likely and could lean toward to the 10% range.”
Importantly, this was the repeated message over the last few weeks as the Federal Reserve’s “repo” operations continue to fuel the market’s non-stop advance. As Howard Marks once quipped:
“Being right, but early, is the same as being wrong.”
Clearly, we were early in reducing some of our long-equity exposure in portfolios two weeks ago, but we tend to lean toward the adage; “you never go broke taking profits.” We remain comfortable with our positioning, given the imbalance of risk and reward currently.
Friday, the market had its first real sell-off since early December. As shown in the chart below, the only other times were in early October before the Fed launched its current “Not QE” program. To put this into some context, since 1970, the market has averaged two 1% declines per month or about every 9-trading days. Since October 2nd, 2018, there have been ZERO days consisting of a 1% decline. Assuming historical averages apply, there should have been nine such events of a 1% decline, or more, by now.
While the media was quick to blame the “coronavirus” in China as the cause for concern, the reality is the markets just needed a reason to sell. As shown in the chart below, the market is so extremely extended, the sell-off barely failed to register.
There are two critical points to take away from the chart above:
Notice both the overbought/sold indicator (top) and price momentum (bottom) are pegged at market extremes. The previous peak in both indicators was in January 2018.
More importantly, from the 2016 low to the “blow-off” January 2018 high, the market had a 50% Fibonacci retracement. A similar correction from the December 2018 lows to the recent high would correspond with the January 2018 highs.
In other words, a somewhat typical 15% correction from such an extended, overbought, and bullish position would wipe out 100% of the 2019 gains.
I know, I know.
Such a correction can’t happen because the Fed is expanding its balance sheet. That is true, except the balance sheet expansion is beginning to slow. As recently noted by BMO (courtesy of Zerohedge):
“BMO expects the monthly sizes of $60 billion, or $30 billion post assumed taper, would be composed of both bills and short coupons, ‘helping to reduce expected pressure in the bill market.'”
BMO is correct in its analysis; the Fed will convert its short-term bill purchases into longer-term notes to maintain the balance sheet at a higher level. However, maintaining the size of the balance sheet, and expanding it are two entirely different things. Moreover, the market has already been incorporating this reduction in liquidity in their positioning as noted by sharply falling bond yields.
“Bond prices rallied last week, again, and are testing downtrend resistance. For now bonds remain in a bearish channel, suggesting higher yields (lower prices) are still likely short-term. I suspect we are going to get some economic turmoil sooner, rather than later, which will lead to a correction in the equity markets and an uptick in bond prices.”
As noted above, with stocks extremely extended, all participants needed was an excuse to “sell.” With a “risk-off” event materializing, the rotation from “risk” to “safety” was completed. The sharp push higher in the stock/bond ratio also suggested a correction was forthcoming.
If we are correct, the Fed will begin to taper their purchases and move to stabilize its balance sheet, which will leave the market “starved for liquidity.” If economic and earnings growth remains weak, such will lead to concerns over current valuations, making that 10-15% correction more likely.
While we certainly have no intention of “Fighting the Fed,” do not dismiss changes to the balance sheet given its close correlation to the rise in equity prices as discussed last week. (Note the decline in the balance sheet which foretold of this week’s sell-off)
“On Oct. 11, the central bank announced it would begin purchasing $60 billion of Treasury bills a month to keep control over short-term rates. The magnitude of the purchases resembles the quantitative easing program the Fed conducted during and after the financial crisis.”
“The increase in the Fed’s balance sheet has been in near lockstep with the stock market’s climb. The balance sheet has expanded 10% since October, while the S&P 500 shot up 12%, including notching its best fourth quarter since 2013.” – CNBC
Given the extreme extension of the markets currently, it is quite likely we will see some more corrective action over the next week.
In other words, it may not be the time to “buy the dip,” just yet.
There is currently much hope that the economy is about to emerge from its sluggish growth over the past couple of quarters to support lofty earnings expectations and, potentially, a rise in corporate profitability. As noted previously, the last time the S&P 500 was this deviated from a period of “flat” corporate profit growth was from 1995-1999.
There are a few indicators which, by their very nature, should be signaling a surge in economic activity if there was indeed going to be one. Copper, energy prices, commodities in general, and the Baltic Dry index, should all be rising if economic activity is indeed beginning to recover.
Not surprisingly, as the “trade deal” was agreed to, we DID see a pickup in commodity prices, which was reflected in the stronger economic reports as of late. However, while the media is crowing that “reflation is on the horizon,” the commodity complex is suggesting that whatever bump there was from the “trade deal,” is now over.
If economic data doesn’t significantly improve, the risk to further corporate profit weakness is of concern. It also puts extremely optimistic projections for S&P earnings through 2020 and 2021 at risk. (Estimates for 2020 have already collapsed, and 2021 is lower than initial 2020 estimates.)
Pay attention to the amount of risk in your portfolio. It will matter more than you think and always at the worst possible time.
While that is hard to believe, just remember its happened twice before.
We noted last week how worldwide and U.S. internet searches for "virus mask" and "n95 masks" have exponentially increased as the deadly coronavirus spreads across the world.
Our report from Friday confirmed virus masks and hand sanitizers were in short supply across China, Hong Kong, Taiwan, Macao, Japan, South Korea, and other regional countries.
A Japanese seller on Amazon marked up a pack of 50 N95 Disposable Respirators to $638, a 16x price increase from a suggested retail price of around $40.
Short supplies aren't just across Asia. New reports suggest a run on virus masks has already begun across the U.S.
Search trends for "N95 mask" started to pick up around January 13, and have soared since January 20, as the spread of coronavirus has become uncontrollable across the world.
Americans in nearly every state are googling where to buy N95 masks, including search-related queries for "n95 mask walmart" and "n95 mask home depot."
With three confirmed cases in California, Washington state, and Illinois, along with dozens of suspected cases, masks have been selling out across the country since Thursday.
A simple google search of your local Home Depot or Lowe's will reveal the N95 mask hoarding has begun.
Amazon sellers in the U.S. have already been hit by a run on N95 masks. The buying started early last week, and since then, many sellers have sold out. Remaining sellers have jacked up prices nearly 400%.
One Twitter user said, "Anyone I know on twitter that has a surplus of surgical masks or N95-compliant masks? I have a feeling it'll be necessary soon, but it's all sold out on amazon or incredibly overpriced :/"
Anyone I know on twitter that has a surplus of surgical masks or N95-compliant masks? I have a feeling it'll be necessary soon, but it's all sold out on amazon or incredibly overpriced :/ pic.twitter.com/WuAPG1Z7oM— 𝖩𝖺𝖼𝗄𝗒 梁 (@jjackyliang) January 26, 2020
Another said, "Top 3 results for "n95 masks" are all sold out on amazon now. If you haven't already purchased a mask to reduce your chances of dying in this global pandemic from 4% down to 0.01%, why not? #CoronaOutbreak #coronavirus.”
Top 3 results for "n95 masks" are all sold out on amazon now.— B. Machiavelli (@machiavelli_b) January 25, 2020
If you haven't already purchased a mask to reduce your chances of dying in this global pandemic from 4% down to 0.01%, why not? #CoronaOutbreak #coronavirus pic.twitter.com/pXTPtuQY8Y
The CEO of Binance tweeted, "All N95 masks in China, Japan and surrounding regions are sold out. We bought 8000+ medical masks but also having difficulties sending them to Wuhan. If you know of logistics channels that still work, please do share."
All N95 masks in China, Japan and surrounding regions are sold out. We bought 8000+ medical masks but also having difficulties sending them to Wuhan. If you know of logistics channels that still work, please do share. https://t.co/AkSMT2qIYE— CZ Binance (@cz_binance) January 26, 2020
@TradeTraders said, "Home Depot Canada N95 masks all sold out."
@ag_trader said, "crazy anecdote i just heard about... a lot of the Chicagoland Home depots, Menards ..even Sherwin Williams paint stores are sold out of the N95 masks! Chinese relatives here are buying them all up by the 100s, and shipping back to China.'
crazy anecdote i just heard about... a lot of the Chicagoland Home depots, Menards ..even Sherwin Williams paint stores are sold out of the N95 masks!— AGTrader (@ag_trader) January 24, 2020
Chinese relatives here are buying them all up by the 100s, and shipping back to China.
@drugscirclejerk said, "my local home depot is sold out of the 15 and 20 count packs of n95 respirators boston staying vigilant."
my local home depot is sold out of the 15 and 20 count packs of n95 respirators boston staying vigilant— carter (@drugscirclejerk) January 24, 2020
The Thatdealguy on RedFlagDeals.com said, "You can now buy N95 masks at Costco. HURRY AND BUY THEM BEFORE THE HOARDERS BUY IT. There are many Chinese shipping companies bought all the stock at Richmond location and selling it for $3-$5 per mask Regular costs = $18 per 20 masks. (1 box)."
He also said, "Amazon = sold out Walmart= sold out Staples = sold out Canadian Tire = sold out Pharmacy stores = sold out Shoppers Drug Mart = sold out London Drugs = sold out."
A working hypothesis of Jonathan Read, a U.K. expert on the transmission and evolutionary dynamics of infectious diseases, has warned the spread of coronavirus could reach hundreds of thousands of people in the coming weeks. This would mean the evolution of the virus is far from contained and likely to worsen, which would mean N95 masks are a hot commodity.
Tether is now supporting a gold-backed stablecoin, Tether Gold (XAU₮), according to a Jan. 23 press release. One token represents ownership of one troy fine ounce of physical gold, currently worth approximately $1,550.
The new product is available as an ERC-20 token on the Ethereum blockchain, as well as a TRC20 token on Tron (TRX).
The funds are said to be backed by physical gold held in a “Switzerland vault,” the press release reads. According to Tether, its gold offering is the only product among its competition that does not charge custody fees.
Tether has also invited all exchanges wishing to support the new token to contact the company. Blockchain information for the Ethereum contract shows that there is currently an outstanding supply of almost 4,000 tokens, which would be equivalent to a $6.2 million market capitalization.
Bitfinex has already launched XAUT trading, with one quarter of the ERC-20 supply having been moved to Bitfinex. As a closely-affiliated company to Tether, it was expected for Bitfinex to be the first to offer the new token.
Plans for commodity-backed Tethers were in full swing since at least September 2019.
Tether has often been criticized for its opaque reserve management, with one high-profile class action lawsuit alleging that the company used this to manipulate the market in 2017.
A caravan of Central American migrants was stopped in its tracks last week by the Mexican National Guard, which arrested migrants as they crossed the river at the border town of Tecun Uman and hauled them off to a detention center in the nearby city of Tapachula.
"I can see that these caravans are no longer going to pass," said 56-year-old Mexican street merchant Miguel Ángel Vázquez, who has seen throngs of migrants stream past his front door while making the northbound journey to the United States southern border.
On Thursday, migrants and Mexican national guard troops faced off on a rural highway in the far-southern Mexican city of Frontera Hidalgo - across from the river border between Mexico and Guatemala that hundreds of mostly-Honduran migrants crossed before dawn.
After walking for hours before stopping at the crossroads where Vázquez's food stand lies, hundreds of national guard troops advanced their lines to within 100 yards of the migrants. Following a brief negotiation, members of the caravan knelt to the ground, chanting "we want to pass."
The national guardsmen instead advanced on the group, banging their plastic shields with batons as they shoved and pepper sprayed the migrants in a massive round-up. In total, around 800 migrants were detained.
This morning when Mexican officials closed the Tecun Uman entry so that caravanerxs could not enter Mexico. pic.twitter.com/jWuJYrjC05— Tapachula Migrant Solidarity (@SolXxtap) January 18, 2020
On Friday, just six or so national guard troops stood watch as things returned to normal. Locals reported that the disruption made crossing the river as part of their daily routine "tough." The international bridge between the countries reopened at 5 a.m. on Friday, allowing cars and motorcycles to cross freely.
Across the river in Tecun Uman, Guatemala, a field where migrants had stationed for several days before crossing into Mexico Thursday at dawn, was empty and cordoned off with yellow tape.
Neighbor Luis Cáceres, 60, said some of the migrants had been camping in his yard.
He said he too is struggling to get enough work as a laborer, and he empathizes with their decisions to flee poverty and violence.
Cáceres too tried once to emigrate to the United States but only made it as far as Arriaga before turning back, frightened after spending nights sleeping outdoors among snakes and scorpions.
“How you suffer on those trips,” he said. -AP
While Mexico had long-ignored migrant caravans heading towards the United States, pressure from President Trump - which included threats of tariffs, resulted in President Andrés Manuel López Obrador cracking down on the migrant groups.
"I have information that the National Guard has acted well," said Obrador on Friday following a briefing by Foreign Affairs Secretary Marcelo Ebrard. "He told us there had not been injured, had not been wounded, that the problem has been resolved well."
Sen. Elizabeth Warren (D-Mass.) defended her plan to pay off college loans after being confronted by a father in Iowa in an exchange that went viral.
Senator Elizabeth Warren is confronted by a father who worked double shifts to pay for his daughters education and wants to know if he will get his money back. pic.twitter.com/t2GGbAnG08— Eddie Donovan (@EddieDonovan) January 21, 2020
The father approached Warren, a leading Democratic presidential contender, after a campaign event in Grimes.
“My daughter’s getting out of school, I saved all my money, so she doesn’t have any student debt. Am I going to get my money back?” the man asked Warren.
“Of course not,” Warren replied.
“So, we end up paying for people who didn’t save any money, then those who did the right thing get screwed,” the father told her.
He then described a friend who makes more money but didn’t save up while he worked double shifts to save up to pay for his daughter’s college.
The father became upset, accusing Warren of laughing.
“We did the right thing and we get screwed,” he added before walking off.
In an appearance on “CBS This Morning” on Friday, Warren was asked about the exchange.
Last night, a father who saved for his daughter’s college education approached @SenWarren and challenged her proposed student loan forgiveness plan.@TonyDokoupil asks the senator for her response: pic.twitter.com/jLUXPqChC6— CBS This Morning (@CBSThisMorning) January 24, 2020
“Look, we build a future going forward by making it better. By that same logic what would we have done? Not started Social Security because we didn’t start it last week for you or last month for you,” Warren said.
Pressed on whether she was saying “tough luck” to people like the father, she said “No.” She then recounted how she got to go to college despite coming from a poor family.
“There was a $50 a semester option for me. I was able to go to college and become a public school teacher because America had invested in a $50 a semester option for me. Today that’s not available,” she said.
“We don’t build an America by saddling our kids with debt. We build an America by saying we’re going to open up those opportunities for kids to be able to get an education without getting crushed by student loan debt.”
Sen. Elizabeth Warren (D-Mass.) campaigns in Des Moines, Iowa on Jan. 19, 2020. (Spencer Platt/Getty Images)
One of Warren’s plans is to cancel student loans. According to her website, on her first day as president she would cancel student loan debt as well as give free tuition to public colleges and technical schools and ban for-profit colleges from getting aid from the federal government.
“I’ll direct the Secretary of Education to use their authority to begin to compromise and modify federal student loans consistent with my plan to cancel up to $50,000 in debt for 95% of student loan borrowers (about 42 million people),” Warren wrote.
“I’ll also direct the Secretary of Education to use every existing authority available to rein in the for-profit college industry, crack down on predatory student lending, and combat the racial disparities in our higher education system.”
Sounds an awful lot like the dad above is right those that did the "right thing" are gonna get "screwed."
Italians in Emiglia Romagna and Calabria are heading to the polls on Sunday to vote in critical local elections that could dramatically shift the balance of power in the Italian government, and possibly trigger the collapse of a fragile ruling coalition already showing signs of strain.
The candidate of the League-led center-right coalition is expected to win handily in Calabria, a stronghold in the conservative south, but if the League candidate manages to win the governorship in Emilia-Romagna, it would be a huge step for League leader Matteo Salvini as he plots his political comeback and seeks his revenge on his former partners, the Five Star Movement. For months, opinion polls have consistently shown that the far-right, anti-migrant League is the most popular political party in the country.
Readers outside Italy may or may not remember the circumstances surrounding the collapse of the last Italian government over the summer, but in any case, here's a quick refresher. After weeks of intrigue, then-Five Star leader Luigi Di Maio outflanked League leader Matteo Salvini, his fellow co-deputy PM, and managed to form a new ruling coalition led by Five Star and the center-left Democratic Party, while banishing Salvini - whose decision to dissolve the government to try and rid himself of his Five-Star partners backfired in a big way - to the opposition.
Unfortunately for Di Maio, since Five Star Movement's entire raison d'etre is based in the populist backlash to the technocratic political hacks who have been blamed for running Italy's economy into the ground, the deal with the PD was a political liability from the very start, and has proved unpopular among supporters of both parties.
Courtesy of ANSA
But Salvini swore that he would end up back on top. During the ensuing months, Salvini relentlessly campaigning around the country, but especially in Emiglia Romagna, a region that is recognized as the birthplace of Italian socialism, and in contemporary times has been dominated by the center left.
The League triumphed in the region during the EU parliamentary elections in May, becoming the leading party with 34% of the vote to the PD's 31%, and Salvini led the party to another historic upset in Umbria three months ago.
Lucia Bonaccini, the League candidate for governor of Emilia-Romagna, and Salvini
Sunday's vote is being held one day after Di Maio resigned on Wednesday to try and stave off a crisis of leadership within the party. But if the PD loses control of Emilia-Romagna, its leadership might conclude that the partnership with Five Star is politically doomed, and that it would be better off abandoning the alliance, which would thrust the Italian government back into chaos.
If the government is dissolved and no new coalition can be formed, Italians will again head to the polls for another national vote.
"If the PD were to lose another regional bastion after Umbria three months ago, it may conclude that it would have more to lose from staying in alliance with the ever-weaker M5S than from risking new elections," Berenberg Economics said on Friday via Al Jazeera.
Salvini has been non-stop campaigning in the region, posting videos of him eating regional delicacies like Parma ham and Parmesan cheese, prompting some to accuse him of overshadowing the League's gubernatorial candidate, Lucia Borgonzoni. On Saturday, Salvini pushed the envelope even further by tweeting through the campaign's 'blackout' period.
On Sunday, he tweeted a video of Borgonzoni casting her ballot and urged supporters to get out and vote.
Grande @BorgonzoniPres! Forza Amici— Matteo Salvini (@matteosalvinimi) January 26, 2020
emiliani e romagnoli, c’è tempo fino alle 23, non fatevi sfuggire questa occasione di regalare un sorriso alla vostra Regione e a tutti gli italiani 🇮🇹 #oggivotoLega #BorgonzoniPresidente https://t.co/8np4ktEXUQ
The last opinion polls published before the pre-election media blackout showed Salvini's anti-immigrant, anti-European League neck-and-neck with the PD.
Italy, Tecnè poll:— Europe Elects (@EuropeElects) January 22, 2020
PD-S&D: 20% (+1)
+/- vs. 10-17 Jan. '20
Fieldwork: 19-20 January 2020
Sample size: 1,000
➤ https://t.co/yZmKw0FzEV pic.twitter.com/7hFTrk9yVv
ANSA reports that as of noon in Italy (6 am in New York), turnout in both regions was higher than the last round of local votes in November 2014. But polls don't close in the regional votes until 11 pm in Rome (about 5 pm in New York).
Of course, the vote should have important implications for Italian markets, and the euro. And if the League candidate wins both races, we suspect bondholders won't be happy.
Owning gold is a way to get out of this “debt trap”, but governments don’t want you to own gold, especially in Germany
Germans, like Indians and Chinese, love their gold - although their reasons for buying and keeping bullion are somewhat different.
In China and India, gold jewelry is a status symbol - a sign of wealth and success. In Germany, owning gold bars and coins, maybe a 24-karat necklace or two, is a means of preserving wealth, especially in times of war or economic crisis, something never far from Germans’ minds, considering their history.
Indeed the “war guilt” Germans experience over the atrocities of Nazi Germany is accompanied by fears that their government could again lose control of fiat money, as the Weimar Republic did in the 1920s, leading to devastating hyper-inflation.
In India “a marriage is not a marriage without gold.” Indians find it auspicious to be-gift gold jewelry during the Diwali festival, which begins in October, and wedding season. Gold-shopping for the bride is thought to bring good fortune and invoke the blessings of a Hindu goddess. At nearly 20 million weddings a year, Indians’ annual demand for the precious metal exceeds 514 tonnes. Easy to see why the country’s private gold holdings are the largest in the world, a mind-boggling 24,000 tonnes. (almost as much as the world’s top 10 central bank holdings combined)
However in 2016 China overtook India as the world’s top buyer of gold jewelry. The country’s growing throng of affluent consumers is driving demand for gold rings, bracelets and necklaces, especially in January and February when many Chinese purchase gold jewelry as gifts for Chinese New Year. According to McKinsey & Company, by 2025 China will represent up to 44% of the global luxury jewelry market.
While the populations of China and India are known for liking physical gold, Germany flies under the radar. An astounding +26 million Germans have investments in gold bars and coins. In fact far more Germans have savings in physical gold than in the stock market - a statistic hard to imagine in the United States or Canada.
According to a recent survey by the Research Center for Financial Services on behalf of Reisebank, Germans currently own 8,918 tonnes of gold worth 330 billion euros (USD$367.5 billion), just over half (55% or 4,925 tonnes) in bars and coins.
Gold fans may also be surprised to know that Germany’s central bank is loaded up with more bullion than any other’s, except for the United States, 3,366.8 tonnes versus 8,133.5t held by the US Treasury, most of which is in Fort Knox, Kentucky.
A four-year plan to repatriate 674 tonnes of German gold held at the Banque de France and the Federal Reserve of New York was completed in 2017.
Yet these facts and figures indicating strong gold buy-in are incongruous with a new German law that severely limits the anonymity of citizens’ gold purchases. In this article we are asking, “Why are Germans lining up for gold?”
Until January 1, 2020, the maximum amount of gold an individual could purchase in Germany, without disclosing personal information, was €10,000. However in response to a European Union directive targeted at money laundering and terrorist financing, the German government set a new, far lower limit of €2,000.
The wholly predictable result? Panic gold buying, with long lines of customers queuing up outside the country’s precious metals shops and gold dealer showrooms, during the last days of December.
“We are currently being overrun,” Börse Online, Germany’s leading investor magazine, quoted the managing director at Degussa Edelmetalle, one of Germany’s biggest gold dealers, regarding the situation. “The queues go up into the street.” The other large trader, Pro Aurum, reported a tripling of normal order volumes.
The legion of gold buyers, of course, were there to purchase under €10,000 worth of gold, in anonymous transactions that don’t require identity checks, before the new rule kicked in on Jan. 1, 2020. Their rightly justified fear was that passing on one’s information to the seller, then on to the government, would allow the government to, if it wished, confiscate their gold, as has been done several times historically, detailed further down in the article.
There are a few interesting points to make about this legislation.
The first is, why did they even bother to include precious metals? The fifth EU Money Laundering Directive, introduced by the EU in 2018, set out new requirements to prevent money from being laundered and used to finance terrorist groups. A laudable goal, it was directed at over-the-counter transactions known in German as “Tafelgeschäfte”, where the customer purchases an investment or security in physical form, such as bearer bonds, an equity security with attached dividend coupons, or precious metals bars and coins.
EU member states are given flexibility in how they implement EU directives. Yet despite the directive not saying anything about precious metals, in November 2019 the German parliament, the Bundestag, passed a law that lowered the threshold where precious metals can be bought without identify checks (aka anonymous transactions) from €10,000 to €2,000. This now includes purchases of the popular 1-oz gold coin.
A second point concerns the timing of the legislation. Just three years ago, in 2017, the Bundestag changed the threshold from €15,000 to €10,000 - suggesting the German government is moving very rapidly to increase the transparency of gold transactions.
The last point is the most interesting: Why? According to the 2019 bill,
“The findings of the national risk analysis have shown that, especially in the area of gold trading, heavy cash transactions are taking place just below the current threshold for identification obligations of 10,000 euros… The threshold of EUR 2,000 envisaged in the draft law aims to prevent or significantly limit this bypass trade.”
The problem here is that, when questioned by German parliamentary deputies about the law and asked to provide evidence for it, the government either claimed to have no knowledge, or deferred responsibility to the Länder (provinces).
For example, it could not say what is the annual volume of precious metals trading in Germany, how many people living in Germany bought precious metals using anonymous cash transactions, or what was the annual volume of cash transactions for precious metals.
The question that really exposed the government’s lie - that it is targeting precious metals for money laundering - was “In how many reporting or criminal cases was there a reference to precious metals?
Data recorded by the Central Office for Financial Transaction Investigations (FIU) found that of 137,097 suspicious transactions reported to the FIU, only 239 cases related to precious metals - ie. 0.17%! And of these 239 cases, only four involved amounts below the €10,000 threshold.
The upshot? There is no evidence that over-the-counter cash purchases of precious metals have anything to do with money laundering in Germany.
So why would the government lie? There must be some other reason to target small gold purchases - ridiculously, even buying a 1-oz gold coin in Germany will now trigger an identity check. Bullion dealers are required to keep a record of all transactions over €2,000, for five years, and must by law surrender them if asked to by the authorities.
While we cannot know the answer, we have a few theories:
The government thinks the German economy is in trouble due to excessive savings.
The government is creating an information base for later gold confiscation.
The government doesn’t want its citizens to own gold because their financial/ personal information can’t be easily tracked.
Taking each in turn, we find Germany’s central bank taking extreme measures to kickstart economic growth which slumped to a six-year low in 2019. The anemic 0.6% growth rate was due to a number of factors including a slowdown in its normally booming auto sector. Car production last year fell to its lowest in nearly a quarter century; layoffs have occurred. The country’s economy expanded at the slowest rate since 2013, the height of the eurozone’s debt crisis, dragged down by a manufacturing contraction of 3.6%.
Negative interest rates were introduced to provide an incentive for financial institutions to lend more money, but the tactic hasn’t worked. Economists expect growth this year to barely budge.
“The next decade will be a decade of underperformance, and people may once again start talking about Germany as the sick man of Europe,” the Wall Street Journal quotes Joerg Kraemer, chief economist at Commerzbank in Frankfurt.
One of the biggest problems is consumer spending, or to be more precise, the lack of. In the United States, Canada and other developed nations, close to zero and negative interest rates have fueled consumer and business spending, along with investment in the stock market. Not so in Germany, where citizens have shunned growth-bearing assets like real estate and stocks, preferring to sock their savings away in deposit accounts (and gold).
According to the OECD, Germans save 11% of their disposable income compared with less than 7% in the US. Another article in the Wall Street Journal states:
Last year, German households added €108.7 billion to their bank accounts, more than any time since the euro was introduced, according to Deutsche Bank research. Cash and bank deposits, at €2.5 trillion, make up 40% of Germans’ financial assets, according to Bundesbank data.
And while saving for a rainy day sounds prudent, it’s not making Germans any richer. With a median household income of €61,000 (USD$67,000), Germans are the least likely of all European to own their own homes.
In November consumer sentiment in Europe’s largest economy fell to the lowest level since November 2016, as Chancellor Chancellor Angela Merkel’s coalition of conservatives and Social Democrats (SPD) resists calls for a stimulus package to kickstart the largest economy in Europe.
Could this ingrained mindset of low spending and high savings among Germans be influencing the government’s latest foray into regulating precious metals trading? It certainly appears likely. If gold and silver buyers are made to offer up their personal information when making a bullion/ jewelry purchase, they might, instead of saving euros, consider spending that disposable income, which would help the ailing economy.
The second rationale for the rule change might be that the German government wants to make it easier to track people’s gold purchases in case they need/ want it. There are several historical instances of this happening, including in Germany. In 1939, $97 million worth of gold belonging to Czechoslovakia was stolen by Nazi Germany when its army invaded Prague.
On April 5, 1933, President Franklin Roosevelt signed an executive order criminalizing the possession of gold. Americans were required to deliver their gold bars, coins and certificates to the Federal Reserve in exchange for $20 per ounce. The limitation on gold ownership wasn’t repealed until 1974 by President Gerald Ford.
Other countries have appealed to their populace in times of crisis, to give their gold to the government. In 1935, when Italy was mired in recession, Benito Mussolini passed the “Gold for the Fatherland” initiative. Some 35 tonnes of jewelry and coins was collected then melted down, turned into gold bars, then distributed to national banks. Those who donated were given a steel wristband that read “Gold for the Fatherland”.
In 1997 during the Asian financial crisis, South Korea asked citizens to donate gold to help pay back a $58 million bailout package from the IMF. Appealing to South Koreans’ national pride and sense of shame for accepting a foreign bailout, nearly 3.5 million people, almost a quarter of the population, donated 226 tonnes valued at $2.2 billion. People’s gold necklaces, coins, bars, trinkets, statuettes, medals, pendants and military insignias were promptly melted into gold bars that helped pay off the IMF loan in 2001, three years ahead of schedule.
Our third theory on why Germany wants to limit gold ownership through lowering the anonymous transaction threshold is a little conspiratorial, but nothing we’re about to share is untrue. It can all be fact-checked, and we invite you to do so.
Since the 1970s and ‘80s, the banking system has become reliant on debit and credit cards. Many years ago I wrote an article titled ‘Ignorance is a Temporary Condition’ that explained how the switch from cash to credit has resulted in over-spending and high levels of consumer indebtedness. While the figures in the article are dated, its salient points still ring true, and bear repeating:
In the early 1970s, a nationwide electronic funds transfer system was envisioned. The system would use individualized electronic identification cards and digitized bank accounts with merchants connected to them by telecommunication links.
But it wasn’t until the 1990s that credit and debit card use really caught fire.
Is going cashless a good thing? Not for most people, we tend to spend more when we buy things with a credit or debit card instead of cash:
“Drazen Prelec and Duncan Simester reported studies on this topic in a 2001 issue of Marketing Letters. In one study, they told that randomly selected participants in the study would be offered the opportunity to purchase tickets to an actual professional basketball game that had just sold out. These tickets were highly desirable. Participants were told either that they would have to pay in cash or that they would have to pay by credit card. They were asked how much they would be willing to pay for these tickets. Those who were told they would have to pay by credit card were willing to pay over twice as much on average as those who were told that they would have to pay by cash.”
Art Markman, Ph.D., Psychologytoday.com
Paying with cash, actually pulling the money from a wallet or purse is a vivid enough action to elicit a negative, and in some consumers a mildly painful, psychological reaction that’s absent when either a credit or debit card transaction takes place.
Along with incentivizing card holders to spend freely, inconsequentially, the inception of debit cards provided banks, businesses and government agencies with an endless trail of data from which to track card holders’ spending habits. It was the beginning of the surveillance state around which George Orwell constructed his book ‘1984’.
Indeed, governments are constantly implementing new ways of restricting the use of cash and invading citizens’ privacy.
A 2019 article in creditcards.com describes how owning a credit card is like having “an electronic bug in your wallet.” That’s because each time a purchase is made on debit or credit, a record of that transaction is logged into a database collected by the credit card issuer.
Banks use this data to determine a card-holders credit-worthiness, giving them information on raising credit card interest rates or reducing credit limits.
Mining card issuers’ data also gives banks a means of fraud detection, turning over information to law enforcement, and the most insidious - marketing. According to the article this is done by tracking the “merchant marketing code” (MCC), a four-digit number that denotes the type of business. MCCs can be used for example to restrict health-care spending on health care-related credit cards, or to prevent employees from abusing company credit cards.
The purchasing information is used to build a spending profile of the cardholder which is either used by the card issuer, say to up-sell the cardholder with additional banking products, or is sold to advertising firms, which bombard the cardholder with digital advertising.
In this day and age of smartphones, banks have also reportedly started tracking customers’ cell phone locations in order to crack down on fraud - ie. if a transaction takes place away from a cardholder’s phone, there is a higher likelihood the purchase is fraudulent. The benefit of reducing fraud and its associated costs to credit card companies must be weighed against the invasion of privacy that occurs knowing that your bank is aware where you are and what you are buying at any given moment.
Gold purchasers go “off the grid” in that they are independent of this type of invasive surveillance. It makes sense then that the German government, likely pressured by the banks, would take steps to restrict gold ownership.
There’s also the idea that banks, and governments, like consumers to be in debt. In the US consumer spending accounts for 70% of the economy, so increasing spending in as many ways as possible clearly benefits the government, both in terms of higher revenue from sales taxes, and stimulating the economy through purchases of more goods and services.
Governments reward mortgage holders by allowing them to deduct mortgage interest on their taxes. Businesses that take out loans to purchase equipment for “capital improvements” can also take a tax deduction from the interest.
Also consider, the Federal Reserve favors inflation to deflation, because higher prices, and spending, mean the economy is growing.
Spending more on credit cards, and mortgages, of course is great for banks and other financial institutions, which collect more in interest and payments.
The 2008-09 financial crisis boiled down to a crisis of mortgage debt, with deregulated banks accepting too many loans from high-risk homeowners who should never have been granted these loans.
In North America particularly we have become a society of spenders and debtors, mentored by the worst role model one can imagine, the US government which currently has a national debt of $23 trillion and counting.
Owning gold is a way to get out of this “debt trap”, but governments don’t want you to own gold. They prefer you to invest in the stock market, in real estate, to make all your purchases on debit or credit because these transactions are trackable. You are trackable. The last thing the government wants is a bunch of gold bugs running around “off-grid” especially during tough economic times, when they could be shopping instead of tying up their money in gold bars and coins.
Perhaps this explains why the Germans have fired the first shot in the coming war on gold.
Nancy Packes Inc., an online real estate data services covering the five boroughs of New York City and all residential transactions, reports that nearly half of all new condo units built after 2015 in Manhattan, or about 3,695 of 7,727 apartments, remain unsold.
Despite trillions of dollars printed by global central banks and hundreds of rate cuts since 2015 – Manhattan condos have been unappealing to the wealthy elite and unaffordable to the typical New Yorker.
Also, a confluence of macroeconomic headwinds, as well as SALT deduction caps and transfer taxes, cooled the market even further.
"The extraordinary oddity of the current cycle is that the real estate market has decoupled from the national economy and local economy, where job growth has been steady, and stock market values have been reaching new highs," according to the report.
As it turns out, the stock market isn't the real economy. Developers hooked on low-interest rates overbuilt across the borough with the average sale price more than doubling since 2011.
The report warned about the luxury condo glut with limited buyers willing to purchase homes at prices that have far outpaced wages.
There's even a shadow inventory that lurks on the sidelines, with any market improvement, developers will dispose units into the market - this could produce overhead resistance for years to come.
"You never had this kind of supply in these price ranges," Gary Barnett, the president and founder of Extell Development, who builds luxury condos in the city, told The New York Times.
"The $5 million to $10 million market is hammered — there's way too much of it," Barnett warned. He said developers are now starting to realize the market is oversaturated with limited buyers at these high prices.
The Atlantic notes that developers bet huge on Russian oligarchs, Chinese moguls, Saudi royalty, and Latin American millionaires to soak up the luxury condo supply.
"But the Chinese economy slowed, while declining oil prices dampened the demand for pieds-à-terre among Russian and Middle Eastern zillionaires," The Atlantic said.
With immigration trends lower, a stronger dollar, protectionism, and the U.S. Treasury cracking down on international real estate laundering schemes -- foreign demand for luxury pads in the city has dried up in the last several years.
So, the question remains -- what policies or fundamental shifts in the economy can speed up the purchases of all those unsold Manhattan condos?
It's only a matter of time before one developer, holding an excessive amount of unsold Manhattan condos , is slapped with a crash crunch that would result in the dumping of units on the market at a steep discount would trigger an avalanche in prices.
The alleged masterful Brexit negotiator, Michel Barnier, failed his primary mission. Yet he's still the EU's negotiator.
Revealing words from Michel Barnier in 2016, quoted in @LePoint. "I would have succeeded in my task if, in the end, the deal is so hard on the British that they’ll prefer staying in the EU.” https://t.co/G7aw0RAAjF pic.twitter.com/XNn22Aeqkc— Owen Paterson (@OwenPaterson) January 19, 2019
"I would have succeeded in my task if, in the end, the deal is so hard on the British that they’ll prefer staying in the EU.”
Instead, Boris Johnson was elected in a landslide. Yet, Barnier still has his job. He remains the EU's top negotiator for working out a comprehensive trade deal with the UK.
Matthew Lynn at the Telegraph says Barnier was a total failure in his role as chief Brexit negotiator, and we can expect the same on trade.
Over the last few weeks, Michel Barnier has been issuing a constant stream of demands, edicts and ultimatums over everything that Britain will have to agree to before it will be offered a trade deal with the European Union.
The demands are, by any measure, extraordinary. You or I might think a trade agreement between two geographically close entities, with complete regulatory alignment, was a fairly simply thing to agree. We allow the EU countries to sell pretty much whatever we feel like buying from them, subject to health and safety laws, exempt from any quotas and tariffs. And in exchange they do the same for us. Beyond that, there shouldn’t be a great deal to talk about.
To Barnier, however, it is something very different. The EU trades quite happily with China, or Vietnam, or Chile, regardless of how workers are treated, but it won’t be able to trade with Britain unless it has the right to control working hours, labour laws, tax and industrial policy.
The important point, however, is surely this. The EU seems intent on repeating the mistakes of the first phase of Brexit all over again.
In many ways that is typical of the EU’s failings. Nobody is elected, there is no oversight of the competence of officials, and no way of replacing them if they are not doing a good job. Barnier was appointed to the post of Brexit negotiator by Jean-Claude Juncker, and then kept on by his successor to work on the trade agreement, but there has been no review of how competent he has been, or whether his has successfully protected the EU’s strategic and economic interests.
Yes, Barnier failed. But how much of it was extraordinarily bad luck?
Had Theresa May said my deal or no deal, the UK would have been trapped in a moronic (for the UK) customs union.
At any point in time, Jeremy Corbyn may have had enough brains to give May her deal. It was in his best interest to do so.
France finally had enough. Macron got in bed with Johnson. Few called this, but I did.
Johnson negotiated a deal with Ireland. Again few thought this was possible, but I was one of the few.
The critical points are actually one and two.
I called this right from the beginning, but I sure had Theresa May wrong. She clearly did not want to leave. If she had an ounce of brains she could have forced her horrid deal through.
Instead we had a fiasco of extension after extension. May made political mistake after mistake.
People blame bad luck when their analysis is wrong. They have a tendency to believe they are skilled when they get things right.
This is my opinion in retrospect: OK, I got this right, but perhaps I was lucky and Barnier was unlucky.
It really did take an amazing sequence of events.
But, that is what happens when you gamble.
I called it correct, but maybe I was lucky.
The EU screwed over Cameron. Had the EU tossed any kind of bone to prime minister Cameron, the referendum would not have passed.
Had Barnier not tried to completely screw the UK, a poor deal for the UK would have been the outcome.
Had May not been incompetent, there would have been a deal.
Barnier had the odds in his favor because he knew Theresa May was in his pocket. But instead of going for a sure thing, he put on the screws.
"The important point, however, is surely this. The EU seems intent on repeating the mistakes of the first phase of Brexit all over again."
But I called this one long ago.
Johnson will not give in on a fishing deal because he can't. He needs that leverage over Scotland.
Similarly, Johnson cannot give in to ceding rights to the European Court of Justice, so he won't.
The EU can either agree to a deal or not. Germany in particular is sweating blood.
So, I expect a deal or at least an agreement to make a deal. For WTO purposes, an agreement is sufficient. There is no need to work out all the details now.
If not, the EU is more screwed than the UK, my position all along.
Barnier was not bluffing before (he just took a calculated gamble that lost), but he is bluffing now.
Update (11:54 am EST.): Yesterday it was the U.S. and Russia arranging charter flights to evacuate their citizens from the epidemic-stricken Chinese city of Wuhan.
Now Thailand has four Lockheed C-130 Hercules transport planes on standby to airlift its citizens from the city as the coronavirus outbreak spreads uncontrollably, reported the Bangkok Post.
Royal Thai Air Force Chief Maanat Wongwat told the Post that four C-130s, carrying medical teams, students, and medical professionals, are ready to take off from the Chinese city.
"The air force is ready" to evacuate its citizens, Wongwat said.
Evacuations from the city are already underway for the U.S., France, and Japan, as confirmed cases in China could exceed over 3,000 by the end of the weekend.
Thailand's evacuation plan also comes as a quarter-million people across China could be infected with the deadly disease in the next several weeks.
At the moment, four countries have initiated evacuation plans for their citizens trapped in Wuhan.
* * *
A new report from The Wall Street Journal indicates the U.S. government is preparing an emergency charter flight to evacuate Americans from the epidemic-stricken Chinese city of Wuhan.
The operation comes after the death toll jumped 60% on Friday night to 41, with more than 1,400 confirmed infections.
China has restricted travel for 46 million people across 16 cities as the death toll surges, and the spread becomes uncontrollable.
New cases were also reported in Europe and Australia on Friday night.
In the U.S., there are 63 suspected cases, with at least three confirmed, with two reported so far in Illinois and California, and two suspected in Minnesota.
The Journal said about 1,000 Americans reside in Wuhan, but the official number has yet to be confirmed.
U.S. officials have contacted known Americans in the region with an offer for a seat on a Boeing 767 jet that holds approximately 230 people.
Confirmed passengers already include diplomats from the U.S. Consulate Wuhan as well as their families.
The Journal noted that medical personnel would be on the plane to examine passengers for potential cases of the deadly virus.
The emergency evacuation is planned for Sunday, but limited details were given on where the plane would land in the U.S.
A U.S. official told The Journal that additional emergency evacuation operations would be conducted in the coming days, which would include the bussing of Americans from the outbreak zone to other cities for outbound flights to the U.S.
Russia is also planning emergency evacuations of its citizens from Wuhan and Hubei province, reported RIA news agency on Saturday.
Emergency evacuations are coming at a time when upwards of 250,000 Chinese could contract the deadly virus in the next ten days, said Jonathan Read, a U.K. expert on the transmission and evolutionary dynamics of infectious diseases.
Evacuations by the U.S. are likely in response to Read's warning that suggests the outbreak could exponentially increase in the next several weeks.
The global economy is faced with a synchronized slowdown as central bank ammunition to fight the next global recession is limited.
Monetary authorities across the world have slashed interest rates 80 times over the last 12 months and printed upwards of $1 trillion over four months to counter the slowdown.
The only apparent solution central bankers have offered is a liquidity-fueled massive stock market melt-up across the world that rivals the end years of the Dot Com bubble (and the liquidity-fueled meltup around Y2K). These unelected officials have also provided forward guidance on how an epic V-shape recovery in the real economy is imminent.
The only problem today that market watchers like ourselves have noticed – is that traditional monetary policy has had a challenging time stimulating growth in developed and emerging economies.
Data from Netherlands Bureau for Economic Policy Analysis (CPB) showed Friday that global trade volume continued to contract in November, marking one of the most extended stretches of negative growth since the end of the financial crisis.
According to CPB, world trade slipped 0.60% in November over the prior quarter and was down 1.1% compared to the same month a year ago.
November was the sixth month of straight of declines on a Y/Y basis, the longest stretch since right after the 2008 financial crisis.
World trade has dropped sharply from 3.4% in November 2018.
However, there was some good news; the rate of contraction has slowed from a -2% pace seen in October, which was the quickest rate of decline since a decade ago.
And while hope is high that the so-called 'trade deal' will lift all boats, data shows that the global economy has continued slowing into 2020 as the Baltic Exchange's main sea freight index has crashed 70% in the last four months, the biggest down moves since 2008.
Additionally, earlier this week, the IMF downgraded its forecast for global GDP for 2020 and 2021, its sixth straight reduction, although in a sliver of optimism, global GDP in 2020 is now expected to post a modest rebound from 2.9% to 3.3%, (down from 3.4% in October) and to 3.4% in 2021 (down from 3.6%) as the IMF said, "there are now tentative signs that global growth may be stabilizing, though at subdued levels."
Before Davos this week, the World Economic Forum (WEF) President Borge Brende warned the world is "faced with a synchronized slowdown in the global economy. And we're also faced with a situation where the ammunition that we have to fight a potential global recession is more limited."
Last week, the UN published its annual report that warned the global economy recorded its lowest growth in a decade in 2019, falling to 2.3% as a result of the U.S. and China trade war and sharp pullbacks in investment.
The report warns of slowbalisation will define the global economy in the early 2020s. Growth is expected to pick up slightly across the world from 2.3% last year to 2.5% in 2020, but that depends on the effectiveness of monetary policy and if all trade disputes can be resolved.
And on top of everyone warning about a decelerating global economy in 2020, the market's most important pillars of support - buybacks – are declining.
If the global economy fails to rebound in a V-shape fashion in early 2020, asset manages and leverage funds, who've already priced in a massive recovery by bidding stocks to record highs, could soon see a repricing of growth that would ultimately lead to a blowoff top in stocks.
Along with a continued global slowdown, a deadly virus outbreak could derail consumer spending habits across Asia that would ultimately weigh on global trade.
Most epidemics were a buying opportunity for bulls...
But given the level of excess-liquidity and extreme over-valuation today, this time could indeed be different.
The Swedish welfare state has often been praised by the left in the United States. After the migration crisis of 2015, however, when Sweden was flooded by Syrian refugee claimants, Sweden is now facing a welfare crisis that threatens the entire Swedish welfare state model.
Sweden had 9.7 million inhabitants in 2015, before it received 162,000 asylum seekers. 70% of those asylum seekers came from Syria, Afghanistan and Iraq. 70% of those asylum seekers were also men. The migration crisis created an unsustainable financial and social situation that caused the Swedish political establishment to rethink its stance on asylum migration, which, until then, had been extremely liberal.
Asylum migration has continued, nevertheless. Between 2016 and 2018, more than 70,000 additional migrants have applied for asylum in Sweden, and more than 105,000 asylum migrants have been granted asylum.
There is a demographic impact from migration that affects Sweden's national and cultural identity, as well as the crushing economic impact on Sweden's welfare state.
The demographic impact can be seen in cities such as Sweden's third-largest city, Malmö, where people of foreign background (foreign-born or both parents born abroad) have increased from 31.9% of the population in 2002, to 45.9% of the population in 2018. There are already three Swedish municipalities where the majority of the population has a foreign background: Botkyrka, Södertälje and Haparanda. The question then becomes how to integrate foreigners if the majority of the people in a city are of a foreign background. 51% of the elementary school students in Malmö are either foreign born or both of whose parents are foreign born. Within a generation, Sweden's third-largest city will have a population in which the majority of people are of foreign background. How will integrating immigrants take place then, and which group will be integrated into which?
Integrating migrants into Swedish society has been a failure, a situation that both experts and politicians agree on. In March 2018, 58% of registered unemployed persons were born outside Sweden, even though the group's share of the population is only 23%. In 2018, the unemployment rate for foreign-born Swedes was 15.4%, while unemployment for Swedes born in Sweden was 3.8%.
The EBO Law (Lagen om eget boende - "Independent Living Act") permits asylum seekers to settle anywhere in the country. Migrants often settle in areas where other migrants already have settled, partly because of the low housing prices in those areas and partly because it is easier for migrants to network there. This process both reinforces segregation and creates migrant enclaves in Sweden.
A large influx of migrants combined with a failed integration policy has created cultural consequences in which Swedish culture is both undergoing rapid change and having its identity challenged. In many areas where migrants are in the majority, there is no way to maintain Swedish culture because the population has a culture distinctly different from Sweden's culture. This results, among other things, in changes in the language and in which holidays are publicly observed.
Several established Swedish media outlets published articles in June glorifying Eid-al-fitr, the holiday that ends the Islamic fasting month of Ramadan. Well-known companies in Sweden, such as Arla Foods, ICA and COOP, published recipes on their websites for the holiday. Several voices have already suggested that Eid-al-fitr, a Muslim holiday, should be a national holiday in Sweden. These voices have come from the Social Democrats and the Church of Sweden, two institutions that have great influence in Swedish society. Even though Eid-al-fitr has not become a national holiday, yet, several municipalities choose to celebrate it.
As long as Sweden has existed as a nation, the bond to its ancestral neighbor, Finland, has been strong and Finnish has been the second most popular language here. In 2018, the linguist Mikael Parkvall noted that Arabic is now the second most popular language in Sweden. At the same time, many children born in Sweden learn Swedish so poorly that they cannot speak it properly, because there is not enough Swedish spoken in some preschools and grade schools. This change is unfolding at a rapid pace.
It is not just Swedish society that will look radically different within a decade. The Swedish welfare state, which has been the hallmark of the Swedish state known around the world, is also changing or possibly even being phased out.
The calculations underpinning Sweden's welfare state are based on the assumption of a majority of adults employed full-time, who pay income tax to the state. What the state receives needs to be greater than what it pays out in the form of various welfare benefits and transfer payments. When a large number of people who receive welfare benefits cannot find employment or are not willing to work, there is a crisis. This is exactly what has happened in Sweden with its liberal immigration policy.
An example highlighted in Swedish media is Filipstad, a municipality with more than 10,000 inhabitants. There, the proportion of residents with a foreign background has increased from 8.5 % in 2002 to 22.7 % in 2018. Between 2012 and 2018, the domestic-born group decreased by 640 individuals, while the foreign-born group increased by 963. Those who move out of Filipstad are Swedish-born and of working age. At the same time, Filipstad's City Manager, Claes Hultgren, is concerned that the newly arrived migrants do not have the necessary skills to enter the labor market. The consequence for municipalities such as Filipstad, is that they then must make cutbacks in the welfare services that the municipality has a responsibility to supply.
Filipstad is not the only municipality to suffer from cutbacks. According to a report from the association Sweden's Municipalities and Regions (SKR), in 2023, there will be a deficit of 43 billion Swedish kronor (approximately $4.6 billion) in municipal and regional operations if costs increase in line with the population growth and the state does not add more resources than already planned.
The Social Democratic municipal commissioner in Strömsund, a Swedish municipality with 11,699 inhabitants, warned:
"All costs are borne by the municipalities. We have never had such low unemployment in the municipality among native-born, yet, we are on our knees, and the explanation is that we also never had such high unemployment among foreign-born. And they end up in welfare, which in practice is now, for many, life-long support."
Charlotta Mellander, Professor of Economics at Jönköping International Business School, noted the following about the municipalities' economic crisis:
"This is not something that happened overnight, but the municipalities' finances have been eroded for a long time. But something that has affected the situation is the refugee reception in 2015, where, from the beginning, the municipalities that received the most had poor conditions in terms of a labor market and integration. And that has made the situation even tougher."
At the beginning of this new decade, because of excessive migration and failed integration policies, Sweden faces radical cultural and economic changes that will fundamentally change the country.
There is ongoing Islamization in parts of Sweden and how much this Islamization will affect Swedish society is something that is influenced by the political decisions that will be made during the 2020s.
Will asylum immigration to Sweden from Muslim countries continue? Will Swedish authorities continue to support Islamic culture with tax funds? Will the immigrants adopt Swedish culture, or will the failed integration approach continue and the Swedes increasingly adopt the Islamic culture?
There are major conflicts between these two cultures, so the expansion of the Islamic culture in Sweden will doubtless create unrest of various kinds. Today, there are more contradictions between Islamic culture and Swedish culture than commonalities. Segregation is strong and mosques have been involved in scandals several times due to cultural conflicts between Islam and Swedish values.
The new decade will therefore be both unstable and decisive for Sweden, and contain major political, cultural and economic changes inescapably taking place.
5th US Coronavirus infection confirmed by CDC in 4 states (AZ, CA, IL, WA)
CDC calls the virus an "emerging public health threat," adding that the threat is "serious."
2082 cases, 56 Official deaths
Incubation is asymptomatic, contagious, and can be as long as 14 days
5M may have left Wuhan for Lunar New Year
1st case was Dec 1 NOT Dec 31 so infect pop may be much bigger
US, Russia, Thailand begin plans for evacuation
Premier Li Keqiang charged with leading government's task force
3 Beijing hospitals using AIDS drugs to treat virus
* * *
Update (1510ET): CDC reports that a fifth infection has been confirmed in the US (in Arizona), calling the coronavirus an "emerging public health threat," says threat is "serious."
CDC is closely monitoring an outbreak of respiratory illness caused by a novel (new) coronavirus (termed "2019-nCoV") that was first detected in Wuhan City, Hubei Province, China and which continues to expand. Chinese health officials have reported more than a thousand infections with 2019-nCoV in China, including outside of Hubei Province. Infections with 2019-nCoV also are being reported in a growing number of international locations, including the United States, where 5 cases in travelers from Wuhan have been confirmed in four states (AZ, CA, IL, WA) as of January 26, 2020.
Source and Spread of the Virus
Chinese health authorities were the first to post the full genome of the 2019-nCoV in GenBank El , the NIH genetic sequence database, and in the Global Initiative on Sharing All Influenza Data (GISAID Z ) portal, an action which has facilitated detection of this virus. On January 24, 2020, CDC posted in GenBank the full genome of the 2019-nCoV virus detected in the first U.S. patient from Washington state. The virus Chinese health authorities were the first to post the full genome of the 2019-nCoV in GenBank El , the NIH genetic sequence database, and in the Global Initiative on Sharing All Influenza Data (GISAID Cl ) portal, an action which has facilitated detection of this virus. On January 24, 2020, CDC posted in GenBank the full genome of the 2019-nCoV virus detected in the first U.S. patient from Washington state. The virus genetic sequence from the patient in Washington is nearly identical to the sequences posted from China. The available sequences suggest a likely single, recent emergence from a virus related to bat coronaviruses and the SARS coronavirus. The available sequence information does not provide any information about severity of associated illness or transmissibility of the virus.
Early on, many of the patients in the outbreak in Wuhan, China reportedly had some link to a large seafood and animal market, suggesting animal-to-person spread. However, a growing number of patients reportedly have not had exposure to animal markets, and there is evidence that person-to-person spread is occurring. At this time, it's unclear how easily or sustainably this virus is spreading between people. Learn what is known about the spread of newly emerged coronaviruses.
Both MERS and SARS have been known to cause severe illness in people. The complete clinical picture with regard to 2019-nCoV is still not fully clear. Reported illnesses have ranged from infected people with little to no symptoms to people being severely ill and dying. Learn more about the symptoms associated with 2019- nCoV.
There are ongoing investigations to learn more. This is a rapidly evolving situation and information will be updated as it becomes available.
Outbreaks of novel virus infections among people are always of public health concern. The risk from these outbreaks depends on characteristics of the virus, including whether and how well it spreads between people, the severity of resulting illness, and the medical or other measures available to control the impact of the virus (for example, vaccine or treatment medications).
Investigations are ongoing to learn more, but person-to-person spread of 2019-nCoV is occurring. Chinese officials report that sustained person-to-person spread in the community is occurring in China. Person-to-person spread in the United States has not yet been detected, but it's likely to occur to some extent. It's important to note that person-to-person spread can happen on a continuum. Some viruses are highly contagious (like measles), while other viruses are less so. It's important to know this in order to better assess the risk posed by this virus. While CDC considers this is a very serious public health threat, based on current information, the immediate health risk from 2019-nCoV to the general American public is considered low at this time. Nevertheless, CDC is taking proactive preparedness precautions.
CDC recommends getting vaccinated, taking everyday preventive actions to stop the spread of germs, and taking flu antivirals if prescribed.
And the poiliticking has begun...
Sen. Schumer: "All CDC has to do is declare the coronavirus an emergency and that will spring up to to $85 million that's immediately available... to prevent the spread." pic.twitter.com/XSjoZIIV30— The Hill (@thehill) January 26, 2020
* * *
Update (1400ET): It's official: The Wuhan coronavirus has arrived in America's second-largest city. The LA County Department of Public Health just confirmed what is now the fourth case discovered in the US.
JUST IN: The Los Angeles County Department of Public Health has confirmed the first case of the novel coronavirus in Los Angeles County. https://t.co/SfssMUv8BU— CBS Los Angeles (@CBSLA) January 26, 2020
As we noted earlier, California has dozens of suspected cases, many of which have been tested and cleared. But some still remain. We suspect this won't be the last case in Cali (they've already confirmed 2, this one and a case in nearby Orange County). The virus has also been discovered in Illinois and Washington state. State health officials told CBS Los Angeles that the individual recently traveled to Wuhan, and is receiving 'appropriate care' at a local hospital.
Remember when Trump said the Chinese had things 'under control'?
Oh and one more thing before we go: The other day we joked that China's decision to send hundreds of PLA 'medics' to help stabilize the situation in Wuhan was code for placing the PLA in charge and declaring de facto martial law.
Well, guess what"
Communists - they're not as full of surprises as they used to be.
Every time there's a problem it's 'send in the tanks'...
* * *
Update (1240ET): Just as we expected, the outbreak-related news out of China went from bad to worse on Sunday, as Wuhan's Mayor not only informed the public that he suspects the number of cases in the city to increase by a considerable margin (as we mentioned below), but also that some 5 million residents of Wuhan - roughly half of the city's population - had already left the city before the quarantine was fully implemented. Some left early last week for the lunar new year holiday, while others fled after learning about Beijing's plans to cut off the city from the outside world (except for the flow of personnel and supplies needed to fight the outbreak).
Anybody who tries to leave Wuhan on Sunday will find the roads blocked and guards ordering them to turn back.
The barricade, at one of the tolls for highways exiting the city, was blocked with red and yellow plastic barriers and cones.
"Nobody can leave," a policeman told AFP.
But that's far from the only disturbing news to emerge in the past few hours.
To try and assuage citizens' frustration about the virus overshadowing the LNY holiday, Beijng announced an extension of the holiday. That should take a bigger bite out of China's GDP as factories, offices and government services will remain shuttered - but ideally China's battered travel and tourism industry might be able to make up for some of the hit. As we noted earlier, Suzhou, a factory hub, was the first city to announce a holiday-like shutdown of industry until Feb. 8. China's top transportation official confirmed on Sunday that travel has plummeted for the holiday. On Saturday, overall transportation dropped by 28.8% from the same day last year. Railway transportation fell by 41.5%, roads 25% and passenger flights 41.6%.
After the third case was confirmed in California on Sunday, health officials in Virginia have announced that three patients suspected to have contracted the virus are under observation, according to Fox. More alarmingly, a student at Connecticut's Wesleyan University is being monitored for the virus after reporting a fever and a cough. Though it has yet to be confirmed, this underscores the difficulty in stopping the spread of the virus to the US, as Chinese students return to their American schools for the new semester, as the Hartford Courant reports. More suspected cases have been reported in California and Texas (though the Texas cases have mostly been cleared). University officials at Wesleyan said they've been in touch with everyone that the sick student - whose name was not released - has been in contact with.
In a sign that the WHO is facing pressure to finally declare the outbreak a global health emergency (which it declined to do last week), WHO Director-General Tedros said in a tweet that he was on his way to Beijing to "confer" with top Chinese officials and health experts about the outbreak. Underlining the gravity of the situation, President Xi has placed his No. 2, Premier Li Keqiang, to lead the team monitoring the coronavirus as the outbreak worsens.
On Sunday, Ma Xiaowei, China's National Health Commission, revealed that the incubation period for the virus is around 10 days - though the shortest case was 1 day, and longest 14 - and, more importantly, that those who have contracted the virus might be contagious before symptoms emerge. That wasn't the case for the SARS outbreak in 2003, and it will make the virus much more difficult to contain. Ma added that there are signs the virus is adapting to spread even more quickly from human to human, per the SCMP.
Ma Xiaowei, the minister in charge of China’s National Health Commission (NHC), told a press conference that battling the outbreak was complicated, particularly as it had been discovered that the new virus could be transmitted even during incubation period, which did not happen with Sars (severe acute respiratory syndrome).
"From observations, the virus is capable of transmission even during incubation period,” Ma said, adding that the incubation period lasted from one to 14 days.
"Some patients have normal temperatures and there are many milder cases. There are hidden carriers," he said.
Ma said also that the virus had adapted to humans and appeared to have become more transmissible.
"There are signs showing the virus is becoming more transmissible. These walking ‘contagious agents’ [hidden carriers] make controlling the outbreak a lot more difficult."
The authorities had also not ruled out the possibility of the virus mutating in the future, he said, which meant it could spread to different age groups.
To date, most of the people infected are in the 40-60 age range, health officials said earlier.
SARS had an incubation period of 2-7 days, and was not infectious during that time. And it still killed more than 800 people after infecting more than 8,000 around the world.
Circling back to the mad rush to leave Wuhan, while the city has 11 million official residents, it also hosts millions more guest workers, noted CNBC's Eunice Yoon. Interestingly, as more cities declared travel bans on Sunday, Shantou, a city in Guangdong Province, overturned its decision, saying it will monitor people, vehicles and ships entering and city, but said there will be no travel restrictions on buses, ride-shares, and taxis. Yoon speculated that the city pulled the plan after being contacted by senior party officials so as not to set a "every-town-for-itself" precedent.
Interesting reversal by Shantou in Guangdong Province. City sent new notice overturning previous decision. Now says will monitor people, vehicles, ships entering city but no travel restrictions. All taxi, car hailing, buses to operate normally. Vehicles only need disinfection.— Eunice Yoon (@onlyyoontv) January 26, 2020
My guess is top Chinese officials realized the potential domino effect Shantou’s decision could have— triggering a possible “every-town-for-itself” mentality across #China and maybe national paralysis. Likely someone high up contacted Shantou to get locals to pull the notice.— Eunice Yoon (@onlyyoontv) January 26, 2020
And in a few areas, vigilantes have apparently taken on the responsibility of guarding the perimeter.
Meanwhile... this man is trying to stop strangers from entering to his village pic.twitter.com/ajo6UZ2fam— Keith Zhai (@QiZHAI) January 26, 2020
Fortunately, few new deaths have been reported so far on Sunday. But the count of confirmed cases had climbed to 2082, and - as the mayor said - many more cases will likely be confirmed by Monday morning local time. Meanwhile, the US, Russia, Thailand and South Korea are still plotting an evacuation for citizens stuck in Wuhan.
As doctors desperately search for a cure or vaccine, three Beijing hospitals designed as coronavirus treatment centers have reportedly started treating patients with a combination of anti-HIV drugs Lopinavir and Ritonavir. The two powerful retrovirals are sold in a combination under the brand name Kaletra, which is produced by AbbVie. Research on 41 Wuhan cases published in Friday's edition of The Lancet medical journal noted that the drugs were useful in treating SARS, which was also a coronavirus, per SCMP.
"Online rumors say that an anti-Aids drug has been used and proved to be effective in treating the coronavirus,” according to a statement by Beijing Municipal Health Commission. "The National Health Commission has recommended the rumored names to treat the coronavirus before and we have Lopinavir/Ritonavir in stock in Beijing,"
Three Beijing hospitals designated to treat confirmed coronavirus cases – Beijing Ditan Hospital, Beijing Youan Hospital, and No 5 Medical Center of PLA General Hospital – have begun using this therapy for treatment, the statement added.
The two drugs are antiretrovirals, which block the ability of HIV to bind with healthy cells and reproduce, and are often used in combination to treat the illness.
CNBC's Yoon shared another treatment strategy that relies on even more common medications, including Tamiflu.
Plan 1: Moxifloxacin 0.4Qd or Levofloxacin (no history of allergy to Quinolone) + Oseltamivir (Tamiflu) 75mg BID, 5 days— Eunice Yoon (@onlyyoontv) January 26, 2020
Plan 2: Intravenous drip of Ceftriaxone 2.0 + Saline 250ml + Azithromycin 0.25 Qd, taken after meal, quarantined, apply for 2019-nCoV testing kit.
Still, not enough research has been done to definitively confirm that these medications are effective in combating the virus. At last check, Beijing has reported 51 cases of the virus, 49 of which remain hospitalized, while two have been cured and one remains in critical condition.
Scientists are still racing to produce a vaccine. Hopefully, one will be found before the worst-case scenario projected by some epidemiologists becomes a reality. Until then, looks like Abbvie will see a substantial bump in sales. But in the meantime, maybe officials in Beijing can send some of those AIDS drugs down to Wuhan. Or they could at least send over a few truckloads of Tamiflu.
* * *
Update (0950ET): As the world is on edge with the rise of the number of officially reported coronavirus infections (and deaths), the mayor of Wuhan said Sunday that he expects new cases to jump by 1,000.
#Wuhan mayor Zhou Xianwang is now hosting a press conference in Wuhan. "1000 new cases of #coronavirus are expected in Wuhan at the moment." Many netizens are outrageous about the slow reaction of the local govt over the outbreak and ask him to take responsibility for it. pic.twitter.com/91DUyav87L— Secret Beijing (@Secret_Beijing) January 26, 2020
Wuhan mayor Zhou Xianwang said there’ll likely be 1,000 more confirmed cases. That’s an estimate from the current 2209 suspected cases & 643 other under observation. pic.twitter.com/LGMQIEy3yE— Aria Chen (@ariahychen) January 26, 2020
Mayor Zhou Xianwang told Reuters and other journalists in a briefing that Wuhan, the epicenter of the outbreak, could soon report an additional 1,000 new cases, which will push total cases across Mainland China to about 3,000.
Xianwang said the city is constructing several new hospitals to deal with infected patients.
He said the city had received new supplies of protective gear including biological suits, masks, and glasses, which have been in short supply.
Wuhan mayor Zhou Xianwang suggested residents quarantining themselves at home to put up a signboard at their door step to “notify others and rationally turn LNY visitors away”. pic.twitter.com/iOHmJbm692— Xinqi Su 蘇昕琪 (@XinqiSu) January 26, 2020
If Xianwang is correct about the increase of new cases, this could mean by the end of Sunday, a total of 3,000 cases could be confirmed across the world, and suggest that Jonathan Read’s model of 250 thousand infected in the next several weeks could become a reality.
* * *
Hundreds of medical personnel are rushing to Wuhan following yesterday's tragic death of Doctor Liang Wudong, of the ENT department of Hubei Xinhua Hospital, who died Saturday while fighting to suppress the virus. The South China Morning Post reports that 1,350 medics (presumably from the PLA) have already arrived in the city, and another 1,000 are expected to arrive soon.
As the number of confirmed cases surges past 2,000, China is scrambling to build not one, but two, SARS treatment-model hospitals in Wuhan (remember, Wuhan is a massive city of 11 million). Authorities have told the press that they expect both hospitals and their combined 2,300 beds to be operational within half a month.
Even though researchers have purportedly cast doubt on the theory that the coronavirus didn't make the jump from animals to humans thanks to a shady food market that trafficking in live wild animals, officials in Beijing on Sunday banned the sale of live wild animals, including bats and snakes, at markets, supermarkets, restaurants and e-commerce platforms across the country. But we thought eating bats was a delicacy and an ingrained cultural practice not to be criticized or stifled?
As we reported last night (Sunday morning in Beijing), health officials in Hubei Province confirmed thirteen more deaths on Saturday, while another was reported in Henan Province. Perhaps most alarmingly, last night, we learned that a patient has reportedly succumbed to the virus in Shanghai as well. In that case, the victim was an 88-year-old man who was suffering from preexisting health issues. AFP adds that 40 cases have been confirmed in the city: 37 stable, one critical, one recovered, and one (88yo man with comorbidities) died. They are also investigating 95 additional suspected cases. These weren't the first deaths outside of Hubei, but, according to the New York Times, "the death in Shanghai, which is among China’s most populous cities and a major commercial hub, is likely to add to anxieties about the disease’s spread."
Over in the US, officials confirmed a third case of nCoV early Sunday. The patient is being treated in isolation at a hospital in Orange County, Calif., a wealthy suburban California county known for its (relative) conservatism. The CDC notified health officials in the county that the patient had tested positive on Saturday, according to a statement obtained by CNN. The individual is said to be in "good condition". State and federal officials are tracking down anybody who might have had contact with the patient, who recently traveled from Wuhan to the US. Two previous cases were confirmed in Illinois and Washington state.
Additionally, Japan confirmed its fourth case of infection, Thailand confirmed its 8th case, Hong Kong confirmed its sixth case and Macau confirmed three new cases overnight. Paris has cancelled a Lunar New Year parade
AFP reported the Shanghai cases late yesterday in the US, but the American press has, for some reason, neglected to emphasize, or even mention, this alarming factoid. We suspect it could have something to do with the stock market.
Across China, 688 new cases of the virus were diagnosed on Saturday. Some experts suspect that Beijing is concealing the true number of confirmed cases for fear of sparking 'social panic', just like the leadership did during the SARS outbreak in 2003 (which is what necessitated all of their promises of "transparency" in the first place).
This would also partially explain the vast discrepancies in case counts between the WHO, and media organizations like SCMP, which has consistently led the world in confirming new cases.
Regardless of the circumstances, Beijing's first priority will always be 'maintain social stability' - no matter the cost, in lives or money. As one twitter wit argued, it looks like the medical field is going to have to learn this lesson the hard way.
Nobody trusts Chinese economic data but everybody is now relying on their healthcare data...— THE LONG VIEW ⚫️ (@HayekAndKeynes) January 25, 2020
the medical field is going to learn this the hard way, the same way the finance community has had to
Despite all this, Pope Francis weighed in on the outbreak on Sunday, praising China's efforts to contain the outbreak, and praying for the dead and the sick.
"I would like also to be close and to pray for the people who are sick because of the virus that has spread through China," Francis told tens of thousands of onlookers gathered in St. Peter's Square for his weekly homily and blessing. "May the Lord welcome the dead into his peace, comfort families and sustain the great commitment by the Chinese community that has already been put in place to combat the epidemic."
Across Asia, prices of protective facemasks have stayed elevated amid rampant price-gouging.
There were a few updates on China's expanding lockdown overnight. The eastern province of Shandong, with a population of 100 million, is the latest to announce that it will suspend long-distance bus service, following similar announcements in Tianjin, Beijing and Xi'an. Sunday marks the beginning of a ban on all private vehicles traveling through Wuhan as authorities expand the quarantine/lockdown, which will remain in place indefinitely until the outbreak is truly 'contained'. Amid the lockdown, South Korea, the US, Russia, France and other governments have hatched plans to evacuate their citizens from Wuhan.
At least two Chinese provinces and three cities have ordered citizens to wear face masks in public, according to Al Jazeera.
And Reuters reports that a manufacturing hub in Suzhou expects its businesses to remain closed until at least Feb. 8, the latest reminder that when all is said and done, this outbreak will likely take a bite out of Chinese GDP (though whether the leadership decides to publicize the true extent of the deceleration in growth remains to be seen).
And as Wuhan continues to suffer from a withering shortage of medical supplies, one resident told the AFP that the entire city has been infected with a pervasive despair.
"In the past week, we've not been able to go out and buy anything to eat," Mashal Jamalzai, a political science student from Afghanistan told AFP. "We want to be evacuated as soon as possible, because their the virus, the hunger or the fear will kill us."
The measure is required in the provinces of Guangdong in the south and Jiangxi in the centre, plus the eastern city of Nanjing, Ma'anshan city in Anhui province and Xinyang city in Henan, according to local authorities.
After Friday's selloff, we imagine investors will be paying close attention to news out of Wuhan as it completely overshadows other 'important' domestic news stories, like the Dems impeachment debacle, or the fact that Bernie Sanders is now on track to win Iowa and New Hampshire.
The US Government, which had lied its way into invading and destroying Iraq in 2003 (with a little help from UK and Europeans), wants Europeans to pitch-in for more US-run invasions. Europeans find this disturbing, but not repulsive enough to say, flat-out, “No!” to it. However, only that “No!” can stop the onrush toward a massive US war against both Iran and Iraq, which would spread ultimately into a global nuclear war between US and Russia.
On January 6th, Barbara Wessel, a columnist for Germany’s Deutsche Welle (DW), headlined a common European sentiment: “Trump has Europeans caught in a trap: Europe is suffering under the way Donald Trump makes political decisions on the fly. The only option left is to appeal to Iran’s interest in self-preservation”. But Iranians can’t stop the sanctions against itself, and can’t stop Trump’s other outrageous aggressions. Wessel’s false underlying assumption was that Europe must lecture Iranians. That’s like lecturing to Jews during WWII: “The only option left is to appeal to Jews’ interest in self-preservation.” Victims already do everything they can to stop their being victimized; they cannot stop the victimizer from victimizing them. They don’t cause it. Europe must, at last, say “No!” to US, the tyrant over the entire world — Bolivia, Venezuela, Syria, Iraq, Iran, Afghanistan, and more. Wessel, however, understood, at least, that the dangerousness actually comes far more from the US, than it does from Iran. So, she recognized that her thinking on this whole matter was confused. She stated:
Any illusions about the possibility of an even partially rational cooperation on foreign policy with the government in Washington have long been shattered. Cynical remarks by US Secretary of State Mike Pompeo, who accuses the Europeans of not giving enough support in the Middle East, underline their helplessness.
Even experienced observers of US Middle East policy have been unable to explain how this [Trump’s “bring American soldiers home”] fits in with the strike against Soleimani...
Europeans find themselves in the trap of a kind of US foreign policy that is marked by the emotional eruptions of an unpredictable president and his power-drunk neocon supporters...
Basically, their [the US Government’s] only explanation for killing Soleimani is: “Because we can.”
Granted, Europe looks weak and helpless when, in joint statements, Europeans call for de-escalation after their presumed partner, the US, has just done everything it can to escalate the situation...
The new year will quickly show how strong the current tendency to suicide is among all those involved...
The presumption on which such sentiments are based is that things must go on as before, and EU must continue to be allied with US, instead of with the rest of the Eurasian Continent - but this presumption (EU with US instead of with all the rest of Eurasia) has been false ever since the US Government went wild in its response to the mainly Saudi Arabian 9/11 assault against the US and Israel cheered that event, and Iran got blamed by the US government for 9/11 as being “The top state sponsor of terrorism” (which was yet another lie), and Obama perpetrated a coup replacing Ukraine’s democratically elected Government with a US-imposed fascist and rabidly anti-Russian government such as Obama wanted to be next-door to Russia. He even was intending to replace Russia’s largest naval base, which is in Crimea, by yet another US naval base, to be installed there. None of this is in Europe’s interest. Nor is it even discussed in Europe or in any other vassal-region of the US empire. It’s censored-out there.
Germany, France, Italy, Spain and all the rest of Europe, actually belong with all the rest of the Eurasian Continent, rather than with the formerly democratic but now fascist United States across the Atlantic Ocean. A federal Eurasia, composed of free and independent states within a wider United States of Eurasia, would have 4.618 billion population, almost half of the entire world, and wealth to match that, and economic growth which far exceeds that of what will then be left of the US-and-its-allied-countries: UK, Saudi Arabia, and Israel. All other nations would ally either with Eurasia or with that US group — American and those three core allies (Saudi Arabia, Israel, and UK). NATO is America’s aggressive alliance, which routinely invades countries that pose no threat to either US or Europe (such as Iraq). America’s plan for NATO is to expand it worldwide, so that the US will automatically have European allies for invasions in places such as Latin America. NATO needs to be replaced by a united Eurasian defense force, which will be able to counterbalance, within its sphere, the world’s largest military.
The US has around 1,000 military bases, of which around 300 are inside US. Though officially the US spends 37% of the global military budget, it actually spends around half of all global military expenditures, but hides around one-third of its annual military spending by listing those costs in other federal Departments, such as the US Treasury Department, so as not to seem as militaristic as the US Government actually is. It’s actually a global empire — the largest that the world has ever known. Europe is, and can only be, vassals in that empire. The alternative requires new thinking, and is not to spend more money on the military, but to recognize that when Russia ended the Cold War in 1991, the war secretly continued, and still does continue, on the US side — and Russia and China recognize that this is America’s intention. Europe must stop the Cold War, because only Europe can do that.
Barbara Wessel’s commentary presumes, instead, that Europe’s leaders have no ability to say no to the US. That presumed passivity is only bad habit, inherited from a Europe which was wrecked by WWII. That’s no longer the reality today. Instead, Europe, joined with Asia, will be the global superpower that can finally end America’s endless wars —simply by not joining them. Eurasia will be the world’s dominant power, if Europeans want a future that is better than the past, instead of catastrophic. Either way, the future won’t be much like the past. Europe needs to wake up now, from its vassalage since WWII ended. Simply continuing that would produce a horrible future.
Another DW columnist on January 6th, Konstantin Eggert, headlined “Opinion: Putin’s power games may get out of hand”, and he was even more supportive of Germany’s vassalage to the US regime. He presented a strong case that by murdering Soleimani, Trump had pulled the trump card in the US-v.-Russia game by eliminating the key person upon whom Putin had been relying in order to transfer dominance in the Middle East away from US and toward, instead, Russia. Soleimani was that key individual for Putin’s success in this.
“According to sources in Moscow, Putin knew Soleimani very well: He played a key role in creating the Russian-Iranian alliance that saved Bashar al-Assad’s regime in Syria from what seemed in 2015 an imminent demise.”
With Soleimani now gone, Eggert predicted that regardless of what Iraq’s Government might want, the US would refuse to terminate its occupation of that country, and Iran would be in a much weaker position than before. He said that “Putin has every reason to wish the Iranians backed off from confrontation with the United States,” so as for Russia to avoid being drawn into World War III. “Putin’s best chance to avoid this drama is to play peacemaker — not alone but in the company of German Chancellor Angela Merkel and Turkey’s Erdogan, who are rushing to meet him in the coming two days. Berlin and Ankara do not want to see the Middle East explode and will be asking Putin to use his close ties in Tehran to hatch a deal and fend off confrontation.” In this sense, the missile that hit Soleimani on January 3rd hit not only Iraq and Iran but EU and Turkey. Eggert therefore advises America’s vassals to remain America’s vassals because Russia now is trapped and Putin might not fold his hand and might not simply let Iran become ultimately swallowed-up — Merkel etc. should urge Putin to fold his hand, is the implication here. Eggert’s implication is that, in the final analysis, might makes right, and that therefore any resistance against it (for example, if Putin continues to resist) would only be harmful. Or, as he puts it:
“With the Iranian regime massively undermined or destroyed, Moscow’s position in the Middle East and Vladimir Putin’s personal prestige as the world’s topmost authority on stopping ‘regime change’ and someone who never leaves allies in the lurch, will be badly hit and revealed as much weaker than it seems.”
Eggert sees Trump’s assassination of Soleimani as, in effect, a master-stroke, which has severely weakened Putin. Of course, if Europe’s leaders will act this way, then Eggert’s might-makes-right view will be vindicated, by them.
Europe is the US regime’s indispensable ally. If EU breaks away from US and joins with the rest of the Eurasian continent instead, at least the possibility will exist for avoiding a hellish future of continued and accelerating vassalage to the US regime for the entire world. Passivity and might-makes-right slants such as “Putin’s power games may get out of hand” (instead of “America’s assassination of Soleimani places entire world in danger”) are choices — not inevitable — and Europeans will ultimately be the individuals who will be making the choices here. Europeans will decide whether the US is the world’s enemy; or, instead, whether Russia, China, Iran, and, really, all the rest of Asia, will be treated as if they were that (like the US regime wants). Ganging-up against the victims — if that is to be the European response — would be a choice, not an inevitability (such as DW implies). It will be up to Europeans whether to order all US troops to leave, and to tariff all imports from America, and to sanction and boycott US brands and increasingly replace them with Eurasian ones instead. Trump can be trumped, but only Europe has the clout to do it. The future will be decided by Europeans. The voices of passivity, such as DW, are doing the bidding of Europeans’ enemy — not of the entire world’s future: a Eurasian-led world.
Plagues from the east are nothing new...
The Black Death and other epidemics arrived in Europe from China during the 1300’s, killing a large percentage of its population. Much of this pestilence came from rats that stowed away on merchant ships coming from the east.
At the end of World War I, another pandemic, wrongly called the Spanish flu, killed an estimated 18 to 50 million people in Europe and North America.
Seventeen years after the SARS virus killed some 800 people in China and Canada and terrified the entire world, a new plague threatens the West: the Wuhan Coronavirus.
Officially named 2019-nCoV, the new virus has so far infected over 800 people in China. This latest plague erupted in the central Chinese city of Wuhan, population 11 million, which is located on the Yangtze River and is an important hub for national communications.
Like SARS, the Wuhan virus is believed to have come from a live animal market that specializes in exotic animals from the Himalayas or China’s remote mountain regions. Serving exotic animals at dinner parties is a big status symbol in China. Sometimes they are even served while still alive. Dog meat is a favorite in northern China.
SARS was believed to have come from civet cats. As a result, thousands of these felines were brutally killed. But it was later determined the virus originated from bats, then spread to other captive animals. Bat soup is another Chinese delicacy.
Keeping large numbers of captive animals crammed together in cages with poor ventilation and no cleaning is an ideal vector for viral diseases. Each year, China consumes 730 million pigs. Fifty percent of China’s factory farmed pigs have so far contracted lethal swine flu. Rising living standards have boosted demand for pork.
I have seen how China raises and transports pigs. It’s a nightmare of brutality and inhuman behavior. No wonder so many of these intelligent sensitive animals fall ill and die. Swine fever could be payback for China’s terrible cruelty to pigs.
And it’s not just China. Pigs in North America are treated almost as badly. A lady where I live was actually jailed and prosecuted for having given water to a truckload of thirsty, starving, terrified pigs on the way to the slaughterhouse.
In North America, animals destined for slaughter are packed together and then dosed with heavy antibiotics to combat communicable diseases from over-crowding and mistreatment. These same antibiotics then enter our food chain, causing us ever growing viral resistance.
When the SARS epidemic erupted in South China 17 years ago, the Chinese communist party tried to hush up the crisis, allowing infected people to travel to North America and Europe.
This time, China did the right thing by jumping hard on the epidemic: shutting down all air, sea and land communications with the greater Wuhan region and 14 smaller cities – right in the middle of China’s huge new year celebrations when over 400 million people return to their homes. The epidemic could not have come at a worse time.
Some Wuhan residents have already flown to other parts of Asia and North America. Simply checking incoming air travellers for fever will not prevent the virus from spreading or identify passengers who have contracted and are developing the illness.
A better solution would be to quarantine all people arriving from Central China and even bar airlines coming from there until we better understand the new virus. We stop so-called ‘terrorists’ and Muslims from flying to our shores. Why not potentially infective people?
China must also be pressed to cease its dangerous, inhumane trade in exotic wild animals and urged to treat all animals with humanity and care. China is a major cause of species loss. Aside from a few brave animal rights groups, there is very little consciousness of our animal neighbors in China nor understanding that animals are sentient beings with emotions similar to those of humans. The Chinese are one of the most intelligent people on earth. Yet when it comes to animals, all they see is walking food.
As I’ve seen on my travels across China, it has made great strides in public sanitation and cleanliness as well as planting trees. Now, it’s time to stop abusing animals or the plagues will keep coming.
About a decade ago, a powerful earthquake triggered a 15-meter tsunami that disabled the power supply and cooling of three reactors at the Fukushima Daiichi nuclear power plant.
The accident led to nuclear cores of three reactors to meltdown, causing widespread radiation release, along with the evacuation of thousands of people within a 30-kilometer radius.
Tokyo Electric Power Company Holdings Inc. (TEPCO) is the operator of the nuclear power plant, released a statement last week detailing how it would take 44 years to decommission Fukushima No. 2 nuclear plant, reported The Japan Times.
Fukushima No. 2 plant is South of No.1 and North of No.3, which suffered a catastrophic triple meltdown in the March 2011 incident.
TEPCO outlines how the decommissioning process will be conducted in four phases: taking ten years for phase one, 12 years for phase two, and 11 years for both phase three and four.
"TEPCO will survey radioactive contamination at the nuclear plant in the first stage, clear equipment around nuclear reactors in the second, remove the reactors in the third and demolish the reactor buildings in the fourth," the Times said.
By the end of phase four, so approximately 2064, a total of 9,532 spent nuclear fuel units from the plant will have been delivered to a local fuel reprocessing plant.
Japan's Economy and Industry Ministry proposed last month that TEPCO could gradually release massive amounts of treated but still radioactive water being stored at the power plant.
In a December 2019 proposal, the ministry suggested a "controlled release" of the contaminated water into the Pacific. Another option via the ministry was allowing the radioactive water to evaporate, or a combination of the two methods.
The government is stepping up the pressure on TEPCO to do something as Fukushima's 'radioactive water crisis' worsens. The problem is that TEPCO is running out of room to store the contaminated water.
But the ministry insisted that the controlled release of the contaminated water into the sea would be the best option because it would "stably dilute and disperse" the water from the plant, while also allowing the government and TEPCO to more easily monitor the operation.
And as we have reported, the Japanese fishing industry isn't the only party that objects to the government's plan. South Korea has also complained to the International Atomic Energy Agency (IAEA).
The Fukushima nuclear disaster is nowhere close to being resolved. Reactors released iodine-131, cesium-134, and cesium-137. Cesium-137 has a half-life of 30 years.
Submitted by Great Game India
Last year a mysterious shipment was caught smuggling Coronavirus from Canada. It was traced to Chinese agents working at a Canadian lab. Subsequent investigation by GreatGameIndia linked the agents to Chinese Biological Warfare Program from where the virus is suspected to have leaked causing the Wuhan Coronavirus outbreak.
The Saudi SARS Sample
On June 13, 2012 a 60-year-old Saudi man was admitted to a private hospital in Jeddah, Saudi Arabia, with a 7-day history of fever, cough, expectoration, and shortness of breath. He had no history of cardiopulmonary or renal disease, was receiving no long-term medications, and did not smoke.
Egyptian virologist Dr. Ali Mohamed Zaki isolated and identified a previously unknown coronavirus from his lungs. After routine diagnostics failed to identify the causative agent, Zaki contacted Ron Fouchier, a leading virologist at the Erasmus Medical Center (EMC) in Rotterdam, the Netherlands, for advice.
Fouchier sequenced the virus from a sample sent by Zaki. Fouchier used a broad-spectrum “pan-coronavirus” real-time polymerase chain reaction (RT-PCR) method to test for distinguishing features of a number of known coronaviruses known to infect humans.
This Coronavirus sample was acquired by Scientific Director Dr. Frank Plummer of Canada’s National Microbiology Laboratory (NML) in Winnipeg directly from Fouchier, who received it from Zaki. This virus was reportedly stolen from the Canadian lab by Chinese agents.
The Canadian Lab
Coronavirus arrived at Canada’s NML Winnipeg facility on May 4, 2013 from the Dutch lab. The Canadian lab grew up stocks of the virus and used it to assess diagnostic tests being used in Canada. Winnipeg scientists worked to see which animal species can be infected with the new virus.
Research was done in conjunction with the Canadian Food Inspection Agency’s national lab, the National Centre for Foreign Animal Diseases which is housed in the same complex as the National Microbiology Laboratory.
NML has a long history of offering comprehensive testing services for coronaviruses. It isolated and provided the first genome sequence of the SARS coronavirus and identified another coronavirus NL63 in 2004.
Chinese Biological Espionage
In March 2019, in mysterious event a shipment of exceptionally virulent viruses from Canada’s NML ended up in China. The event caused a major scandal with Bio-warfare experts questioning why Canada was sending lethal viruses to China. Scientists from NML said the highly lethal viruses were a potential bio-weapon.
Following investigation, the incident was traced to Chinese agents working at NML. Four months later in July 2019, a group of Chinese virologists were forcibly dispatched from the Canadian National Microbiology Laboratory (NML). The NML is Canada’s only level-4 facility and one of only a few in North America equipped to handle the world’s deadliest diseases, including Ebola, SARS, Coronavirus, etc.
Xiangguo Qiu – The Chinese Bio-Warfare Agent
The NML scientist who was escorted out of the Canadian lab along with her husband, another biologist, and members of her research team is believed to be a Chinese Bio-Warfare agent Xiangguo Qiu. Qiu was the head of the Vaccine Development and Antiviral Therapies Section in the Special Pathogens Program at Canada’s NML.
Xiangguo Qiu is an outstanding Chinese scientist born in Tianjin. She primarily received her medical doctor degree from Hebei Medical University in China in 1985 and came to Canada for graduate studies in 1996. Later on, she was affiliated with the Institute of Cell Biology and the Department of Pediatrics and Child Health of the University of Manitoba, Winnipeg, not engaged with studying pathogens.
But a shift took place, somehow. Since 2006, she has been studying powerful viruses in Canada’s NML. The viruses shipped from the NML to China were studied by her in 2014, for instance (together with the viruses Machupo, Junin, Rift Valley Fever, Crimean-Congo Hemorrhagic Fever and Hendra).
Infiltrating the Canadian Lab
Dr. Xiangguo Qiu is married to another Chinese scientist – Dr. Keding Cheng, also affiliated with the NML, specifically the “Science and Technology Core”. Dr. Cheng is primarily a bacteriologist who shifted to virology. The couple is responsible for infiltrating Canada’s NML with many Chinese agents as students from a range of Chinese scientific facilities directly tied to China’s Biological Warfare Program, namely:
All of the above four mentioned Chinese Biological Warfare facilities collaborated with Dr. Xiangguo Qiu within the context of Ebola virus, the Institute of Military Veterinary joined a study on the Rift Valley fever virus too, while the Institute of Microbiology joined a study on Marburg virus. Noticeably, the drug used in the latter study – Favipiravir – has been earlier tested successfully by the Chinese Academy of Military Medical Sciences, with the designation JK-05 (originally a Japanese patent registered in China already in 2006), against Ebola and additional viruses.
However, the studies by Dr. Qiu are considerably more advanced and apparently vital for the Chinese biological weapons development in case Coronavirus, Ebola, Nipah, Marburg or Rift Valley fever viruses are included therein.
The Canadian investigation is ongoing and questions remain whether previous shipments to China of other viruses or other essential preparations, took place from 2006 to 2018, one way or another.
Dr. Xiangguo Qiu also collaborated in 2018 with three scientists from the US Army Medical Research Institute of Infectious Diseases, Maryland, studying post-exposure immunotherapy for two Ebola viruses and Marburg virus in monkeys; a study supported by the US Defense Threat Reduction Agency.
The Wuhan Coronavirus
Dr. Xiangguo Qiu made at least five trips over the school year 2017-18 to the above mentioned Wuhan National Biosafety Laboratory of the Chinese Academy of Sciences, which was certified for BSL4 in January 2017. Moreover, in August 2017, the National Health Commission of China approved research activities involving Ebola, Nipah, and Crimean-Congo hemorrhagic fever viruses at the Wuhan facility.
Coincidentally, the Wuhan National Biosafety Laboratory is located only 20 miles away from the Huanan Seafood Market which is the epicenter of the Coronavirus outbreak dubbed the Wuhan Coronavirus.
The Wuhan National Biosafety Laboratory is housed at the Chinese military facility Wuhan Institute of Virology linked to China’s Biological Warfare Program. It was the first ever lab in the country designed to meet biosafety-level-4 (BSL-4) standards – the highest biohazard level, meaning that it would be qualified to handle the most dangerous pathogens.
In January 2018, the lab was operational ‘for global experiments on BSL-4 pathogens,’ wrote Guizhen Wu in the journal Biosafety and Health. ‘After a laboratory leak incident of SARS in 2004, the former Ministry of Health of China initiated the construction of preservation laboratories for high-level pathogens such as SARS, coronavirus, and pandemic influenza virus,’ wrote Guizhen Wu.
The Wuhan institute has studied coronaviruses in the past, including the strain that causes Severe Acute Respiratory Syndrome, or SARS, H5N1 influenza virus, Japanese encephalitis, and dengue. Researchers at the institute also studied the germ that causes anthrax – a biological agent once developed in Russia.
“Coronaviruses (particularly SARS) have been studied in the institute and are probably held therein,” said Dany Shoham, a former Israeli military intelligence officer who has studied Chinese biowarfare. He said. “SARS is included within the Chinese BW program, at large, and is dealt with in several pertinent facilities.”
James Giordano, a neurology professor at Georgetown University and senior fellow in Biowarfare at the U.S. Special Operations Command, said China’s growing investment in bio-science, looser ethics around gene-editing and other cutting-edge technology and integration between government and academia raise the spectre of such pathogens being weaponized.
That could mean an offensive agent, or a modified germ let loose by proxies, for which only China has the treatment or vaccine. “This is not warfare, per se,” he said. “But what it’s doing is leveraging the capability to act as global saviour, which then creates various levels of macro and micro economic and bio-power dependencies.”
China’s Biological Warfare Program
In a 2015 academic paper, Shoham – of Bar-Ilan’s Begin-Sadat Center for Strategic Studies – asserts that more than 40 Chinese facilities are involved in bio-weapon production.
China's Biological Warfare Program is believed to include full range of traditional chemical & biological agents with a wide variety of delivery systems including artillery rockets, aerial bombs, sprayers, and short-range ballistic missiles. #coronarovirus https://t.co/7qpDNNmqk7— GreatGameIndia (@GreatGameIndia) January 25, 2020
China’s Academy of Military Medical Sciences actually developed an Ebola drug – called JK-05 — but little has been divulged about it or the defence facility’s possession of the virus, prompting speculation its Ebola cells are part of China’s bio-warfare arsenal, Shoham told the National Post.
Ebola is classified as a “category A” bioterrorism agent by the U.S. Centers for Disease Control and Prevention, meaning it could be easily transmitted from person to person, would result in high death rates and “might cause panic.” The CDC lists Nipah as a category C substance, a deadly emerging pathogen that could be engineered for mass dissemination.
China’s Biological Warfare Program is believed to be in an advanced stage that includes research and development, production and weaponization capabilities. Its current inventory is believed to include the full range of traditional chemical and biological agents with a wide variety of delivery systems including artillery rockets, aerial bombs, sprayers, and short-range ballistic missiles.
China’s national strategy of military-civil fusion has highlighted biology as a priority, and the People’s Liberation Army could be at the forefront of expanding and exploiting this knowledge.
The PLA is pursuing military applications for biology and looking into promising intersections with other disciplines, including brain science, supercomputing, and artificial intelligence. Since 2016, the Central Military Commission has funded projects on military brain science, advanced biomimetic systems, biological and biomimetic materials, human performance enhancement, and “new concept” biotechnology.
In 2016, an AMMS doctoral researcher published a dissertation, “Research on the Evaluation of Human Performance Enhancement Technology,” which characterized CRISPR-Cas as one of three primary technologies that might boost troops’ combat effectiveness. The supporting research looked at the effectiveness of the drug Modafinil, which has applications in cognitive enhancement; and at transcranial magnetic stimulation, a type of brain stimulation, while also contending that the “great potential” of CRISPR-Cas as a “military deterrence technology in which China should “grasp the initiative” in development.
In 2016, the potential strategic value of genetic information led the Chinese government to launch the National Genebank, which intends to become the world’s largest repository of such data. It aims to “develop and utilize China’s valuable genetic resources, safeguard national security in bioinformatics, and enhance China’s capability to seize the strategic commanding heights” in the domain of Biotechnology Warfare.
Chinese military’s interest in biology as an emerging domain of warfare is guided by strategists who talk about potential “genetic weapons” and the possibility of a “bloodless victory.”
Credit-card lenders are calling it the 'Golden Age of Plastic'. But that's mostly because they're the ones hoarding all the gold.
Gloom-and-doom economists who have portended the imminent collapse of the American consumer (we don't want to name names) might have a reason to put off their calls for a downturn of epic proportions just a little bit longer. Because at a time when the American consumer is already leveraged to the hilt, and when credit data suggests some are finally biting the bullet and curbing spending to pay it down, lenders have hit on a novel strategy to boost growth.
And that strategy is, according to Bloomberg, raising certain borrowers' credit limits without a request from the borrower. In other words, some consumers are waking up to notices or emails from their credit-card lenders informing them that their credit limits have just been raised - sometimes by a wide margin.
Capital One CEO Richard Fairbank told BBG that the company's resistance to unsolicited credit-limit hikes is a "radical theology" because it goes above and beyond post-crisis safeguards. But now that lenders are being pressed to keep showing revenue growth at a time of record excess, Capital One has changed its mind with the explicit goal of trying to convince consumers to borrow more that they can afford to pay back - or at least not all at once.
Of course, while debt-fueled spending registers as growth in the all-important consumption metrics, there will eventually come a time when they debt must either be repaid, or written off.
“It’s like putting a sandwich in front of me and I haven’t eaten all day,” said D’Ante Jones, a 27-year-old rapper known as D. Maivia in Houston who was close to hitting the ceiling on his Chase Freedom card when JPMorgan Chase & Co. nearly doubled his spending limit a year ago without consulting him. He soon borrowed much more. “How can I not take a bite out of it?"
Banks insist that they raise credit limits "carefully", and that they limit reckless borrowing.
But at this point, anybody who does make the mistake of carrying a balance is going to get hurt.
As we pointed out last month, something strange happened after the Fed started cutting interest rates again last year. While lenders were quick to lower the deposit rates they paid out to customers, interest rates on credit cards and other loans climbed, while the rates on credit cards hit all-time highs. It's a trend we've documented before.
Revolving credit outstanding (i.e. credit card debt) cooled in the fall after a surge in July and a near record surge in August. And total outstanding credit-card borrowing hit a record $880 billion at the end of September, according to the New York Fed...
...but the problem here is that this is a double-edged sword. Because if American consumers really are finally cutting back on their spending to pay down debt, this would be bad news for the consumer-dependent economy.
Ironically, around the same time that Bloomberg published their story, Discover saw its biggest crash since the financial crisis on the highest Q4 charge-off rate in history.
So maybe giving irresponsible borrowers even more rope to hang themselves with wasn't the best strategy.
The Chinese government forced the host of a TV show which popularized eating bats to apologize in the aftermath of the coronavirus outbreak, which scientists have linked to the consumption of wild animals.
Bat soup is a delicacy in some areas of China and was known to be sold at the illegal animal market in Wuhan blamed for being the epicenter of the coronavirus outbreak.
A show called Beauty Eats Bats which originally launched in 2016 was blamed for re-invigorating the trend of eating bats across the country, prompting the Chinese Communist Party to demand that its female host discourage the consumption of bats.
The woman featured in the clip took to social media to profusely apologize for her role in encouraging the consumption of bats and encouraged everyone to start washing their hands more.
【“吃蝙蝠”視頻瘋傳 當事人：為自己的無知道歉】隨著新型冠狀病毒感染的肺炎疫情消息不斷從“一線陣地”傳來，被研究認為是病毒自然宿主的蝙蝠，引起網友關注。近日，一段上線於2016年6月的“美女吃蝙蝠”視頻被網友扒出，女主持也因吃蝙蝠而被網友聲討。 22日，涉事主持汪某表示為自己曾經的無知道歉。 pic.twitter.com/sNeEPuCjbU— 人民日報 People's Daily (@PDChinese) January 25, 2020
The video shows the woman breaking apart the corpse of a boiled bat, dipping its wing in sauce and eating it.
Meanwhile, the scale of the coronavirus outbreak continues to escalate.
56 million Chinese citizens have now been quarantined, with Chinese authorities claiming that around 1300 people have been infected so far.
However, according to one hospital worker in Wuhan, the government is lying and over 100,000 people have actually been infected.
The Wall Street Journal reported today that the United States will send a chartered flight to evacuate all of its citizens and diplomats out of Wuhan.
According to official figures, the virus has killed 41 people, although many suspect this number to be far higher.
Meanwhile, it’s probably a good idea for Chinese citizens to stop eating bats and other wild animals that are vectors for disease.
* * *
My voice is being silenced by free speech-hating Silicon Valley behemoths who want me disappeared forever. It is CRUCIAL that you support me. Please sign up for the free newsletter here. Donate to me on SubscribeStar here. Support my sponsor – Turbo Force – a supercharged boost of clean energy without the comedown.
As the world's cortisol and stomach acid levels rise every hour in parallel with the number of officially reported Coronavirus infections (and deaths), which as of Saturday morning was roughly 1,400...
... the world has an unpleasant flashback to 2003 when for weeks Beijing would lie and hide the full extent of the SARS epidemic to avoid risking a social panic. To be sure, this time China has done its best to pretend it has learned from the past and it is so transparent, even President Xi Jinping warned that the country is facing a "grave situation", and that the spread of the deadly virus is accelerating after holding a special government meeting on the Lunar New Year public holiday.
After staying largely silent in public about the outbreak since it first emerged in central China last month, Xi on Saturday convened a special meeting of the seven-member Politburo Standing Committee, calling for a more centralized response to the epidemic and asserting personal responsibility in addressing the crisis.
"When an epidemic breaks out, a command is issued. It is our responsibility to prevent and control it," Xi said, according to the state-run Xinhua News Agency. He called for the new high-level committee to "address concerns within and outside the country,” indirectly referencing mounting global concern about the epidemic, which Mr. Xi described as a “grave situation” that was accelerating. “We definitely can win the battle to contain the epidemic,” he vowed.
That remains to be seen: as reported earlier, in China - which has put over 56 million people on lockdown quarantine - the coronavirus has killed at least 41 people and infected over 1,400 in China. Ominously, a UK researcher predicted that the Coronavirus would infect over 250,000 people in China in under two weeks, which has sparked a renewed fear that China will once again try to underrepresent the true severity of the diseases until it is too late.
The problem is that even as China theatrically pretends to be so forthright about the extent of the epidemic - if only to avoid panic and chaos over allegations it is again hiding the full impact of the disease - it is doing precisely that, and now we know just how it is doing that: instead of putting down coronavirus as the cause of death for an unknown number of Wuhan casualties, China's coroners and hospitals merely ascribe death to "viral pneumonia", case closed.
Here's how the WSJ describes this treacherous "bait and switch":
A 53-year-old fitness trainer died on Wednesday after checking into a hospital in Wuhan a little more than a week earlier, said his niece. His family had expected the death certificate to reflect the deadly coronavirus, because as his condition deteriorated, his doctors told his family he was suffering from an untreatable virus in his lungs.
Instead, it recorded “severe pneumonia” as the cause of death, she said. The relatives of two other people who died in separate hospitals in Wuhan this week also described similar situations, saying the causes of death had been given as “viral pneumonia.”
Why did the hospital do this? Because as the relatives of all three now dead people said, the deceased hadn’t been included in China’s official count of 41 deaths attributed to coronavirus.
And that's how China is suppressing the full extent of nCoV's lethality, and keeping the mortality rate of the coronavirus artificially low: “There are likely to be many times more cases in Wuhan than officially confirmed,” said Neil Ferguson, a disease modeler at Imperial College London, who echoed the forecast of Jonathan Read, and estimated as many as 4,000 people may have been infected in Wuhan. “Clearly, the hospitals are overwhelmed.”
What's worse is that if there are indeed 4,000 injected already, then the previously discussed catastrophic forecast of 250,000 cases by Feb 4 may be overly optimistic by half.
The official numbers are far lower of course: on Saturday morning, local time, the number of confirmed global infections had risen to at least 1,438, nearly doubling from the previous day. Comically, China has said it would hold officials accountable for any delays or omissions in reporting cases: so far such threats appear to have had precisely zero impact on anyone.
Others have confirmed as much: as the WSJ reports, "some Chinese media with reporters on the ground in Wuhan have said they have found cases that weren’t included in the official reporting. Caixin, a business journal, reported in early January that a doctor in Wuhan had been infected, 11 days before officials confirmed that medical staff had been infected. The Beijing News, a newspaper, reported this week that many patients weren’t officially labeled as carrying the new virus, even though their doctors and nurses said they were."
That said, there may be a legitimate reason why the real number is being underreported, and it has to do with the flood of actual cases which is just too much for local doctors to keep up: China state-run TV cited doctors in Wuhan who said the number of patients with fever was too many to be treated and patients hospitalized couldn’t get the pathogenic test in time, because the samples needed to be sent to the provincial offices of the Chinese Center for Disease Control and Prevention.
That will soon change: China’s health ministry updated its protocol for identifying infections on Thursday with a simplified process for registering cases as suspected or confirmed. An earlier version, viewed by the Journal, required several steps of testing before a patient could be called a suspected case.
Yet despite these mitigating circumstances, it appears that the underlying incentive is to underreport the true extent of the epidemic for as long as possible.
One woman, a 63-year-old retiree in Wuhan, died on Tuesday, her nephew told the WSJ. The death certificate, viewed by the Journal, shows the cause of death as “pneumonia obtained from the community.” Doctors at the hospital that treated her told the family she had the new coronavirus, the nephew said, but she wasn’t counted as a case. The instance has also been reported by the Beijing News.
In another case, a 72-year-old former doctor was in the hospital for three days before he died on Tuesday, his nephew said. The doctors told the family he had caught viral pneumonia, he said. The niece said her uncle, the fitness trainer, first noticed symptoms of what he thought was a common cold in early January, which he believed he had caught at a banquet. He didn’t pay much attention initially, but a few days later, he decided to go to the hospital after seeing blood when he coughed. His niece said he had never been to the food market believed to be the epicenter of the virus.
"The doctor told us repeatedly that he caught the viral pneumonia that no medicine could treat,” she said. A patient’s immune system is the only defense, she said the family was told. “But after he died, the death certificate only said ‘severe pneumonia,’" she said, adding that she had expected the record to reflect the newly detected coronavirus.
The uncle was transferred to the infectious diseases unit on Wednesday, the niece said. Hours later, the family was informed that his condition was critical. Two days after her uncle died, China’s health ministry released the profiles of 39 deaths in Hubei due to the new virus, with two deaths listed in other provinces. She couldn’t find her uncle on the list.
As hundreds if not thousands of Wuhan residents die due to "severe pneumonia" instead of coronavirus, one can't help but wonder if once the true cause of death is reported, instead of a 4% mortality rate as calculated by Dr. Jonathan Read, the Coronavirus epidemic won't be in double digits - SARS was 11% - making this one of the most deadly epidemics in history.
Incidentally, here is a reminder of what happened when China's attempts to cover up the full extent of the 2003 SARS epidemic were exposed:
A Chinese doctor who exposed the cover-up of China’s SARS outbreak in 2003 has been barred from traveling to the United States to collect a human rights award, a friend of the doctor and a human rights group said this week.
The doctor, Jiang Yanyong, a retired surgeon in the People’s Liberation Army, was awarded the Heinz R. Pagels Human Rights of Scientists Award by the New York Academy of Sciences. His army-affiliated work unit, Beijing’s Hospital 301, denied him permission to travel to the award ceremony in September, Hu Jia, a Chinese rights promoter who is a friend of Dr. Jiang’s, said Thursday.
Dr. Jiang rose to international prominence in 2003, when he disclosed in a letter circulated to international news organizations that at least 100 people were being treated in Beijing hospitals for severe acute respiratory syndrome, or SARS. At the time, the Chinese medical authorities were asserting that the entire nation had only a handful of cases of the disease.
The revelation prompted China’s top leaders to acknowledge that they had provided false information about the epidemic. The health minister and the mayor of Beijing were removed from their posts.
Surely this time is different.
The Associated Press reports a staggering surge of US troops into the Middle East since last Spring: "Over the past eight months, the United States has poured more than 20,000 additional troops into the Middle East to counter the escalating threat from Iran that peaked with the recent missile attack on American forces in Iraq."
This despite President Trump's multiple prior pledges to "bring the troops home" especially related to Syria and Iraq. Following the Soleimani assassination and subsequent Iranian ballistic missile retaliation on Ayn al-Assad airbase, where Friday it was reported that 34 soldiers suffered traumatic brain injuries (a dramatically increased figure up from the prior 11), this trend in force build-up looks to continue. Here's breakdown of the staggering numbers via the AP:
The top commander for US forces in the Middle East told a gathering of Marines and sailors during a speech aboard the USS Bataan on Thursday they could be there for “quite a while”.
Gen. Frank McKenzie addressed the question of any near-term potential draw down of the extra forces: “we’ll work that out as we go ahead,” he said.
Underscoring the Iran constitutes a serious "threat" he admitted:
“I’m not sure how long you’re going to stay in the theater. We’ll work that out as we go ahead. Could be quite a while, could be less than that, just don’t know right now.”
On the Iran threat specifically, he said further, “I do believe that they are deterred right now, at least from state-on-state actions by our response. And so I think that while that threat remains, I think we’re in a period where they’re certainly not seeking to escalate anything.”
Ironically Gen. McKenzie's words were given a day before possibly up to one million Iraqis protested across the country Friday demanding an end of America's military presence.
An initial AP report merely put the anti-American forces protest at a mere "hundreds" - yet widely circulated photographs showed at least hundreds of thousands:
Hundreds of supporters of an influential, radical Iraqi Shiite cleric gather in central Baghdad to demand that American troops leave the country. https://t.co/EZ3goJSQ8f— The Associated Press (@AP) January 24, 2020
Later, international reports acknowledged that hundreds of thousands were protesting in major cities, especially Baghdad, after a call to action by popular Iraqi Shia cleric Muqtada al-Sadr.
"Get Out America" signs were featured in the massive street protests:
Though hard to confirm, a top official with the Iraqi Federal Police Forces Jaffar al-Batat has announced that the total number of demonstrators who came out Friday against the US occupation exceeded one million.
OK, there’s a LOT of uncertainty and confusing/conflicting information currently circulating right now about the new coronavirus outbreak that has suddenly erupted out of Wuhan, China.
What’s really going on? What exactly is the ‘coronavirus’?
And most important: How worried do we need to be?
Given the poor communication so far by government health organizations and the media, the severity of the situation and the risk to public health, Chris Martenson filmed this important explanatory video hours ago.
Dr. Martenson’s PhD is in the field of pathogenic biology, so he understands the nature of this virus more than your average scientist.
In the video below, Chris explains the virus in layman’s terms, why the contagion we’re seeing is likely to spread substantially from here, and why the actions being taken so far by public health officials to contain the threat are woefully insufficient.
It’s important, maybe soon critical, to be well-informed on this outbreak. The ten minutes you spend watching this video may be the most important thing you do today:
After viewing, be sure to take prudent steps to secure the safety of your family’s health. Most measures are straightforward and inexpensive — there’s a huge upside to preparing now and a huge downside to delaying, so get busy.
Those interested can continue to follow our updated coverage on the coronavirus here.
Hopefully, authorities manage to contain this outbreak faster than it currently appears they will. But don’t bet your life on it.
A story and "justification" so absurd and absolutely bonkers that we sincerely wish this was The Onion and not from the oldest college daily newspaper in the United States and at one of the nation's most elite Ivy League schools:
Yale will stop teaching a storied introductory survey course in art history, citing the impossibility of adequately covering the entire field — and its varied cultural backgrounds — in one course.
Decades old and once taught by famous Yale professors like Vincent Scully, “Introduction to Art History: Renaissance to the Present” was once touted to be one of Yale College’s quintessential classes. But this change is the latest response to student uneasiness over an idealized Western “canon” — a product of an overwhelmingly white, straight, European and male cadre of artists.
So that's it, apparently: the great masterpieces recognized as such by the entire world for generations are now tainted by their supposed "whiteness" and must be censored by the Robespierre-like mob of the "woke".
It's not merely that the Western Civilization-focused “Introduction to Art History: Renaissance to the Present” class has been deleted, but the entire concept of "Western art" itself will be a focus of criticism in the multiple new 'more culturally sensitive' classes that will replace it.
The Yale Daily News continues:
This spring, the final rendition of the course will seek to question the idea of Western art itself — a marked difference from the course’s focus at its inception. Art history department chair and the course’s instructor Tim Barringer told the News that he plans to demonstrate that a class about the history of art does not just mean Western art. Rather, when there are so many other regions, genres and traditions — all “equally deserving of study” — putting European art on a pedestal is “problematic,” he said.
Clearly, it also sounds like students who happen to favor the Western and European greats will be set up for de-platforming and ridicule.
How long before the beautiful centuries-old campus buildings themselves will be "discovered" as part of the Western tradition of architecture? Will they survive the decades to come as the "purge" grows ever fiercer and more anti-intellectual?
In the name of "diversity" it appears assigning any level of uniqueness to a work of art which happens to have emerged from the medieval or renaissance or early modern period will immediately be shamed by the 'woke mob'.
This follows other Yale departments in prior years attempting to
purge “decolonize” their programs, especially in the English/Literature Department. We wonder how long the title "English Department" itself will be allowed to stand.
All the usual suspects are praising Adam Schiff’s marathon two-and-a-half-hour Senate speech on Wednesday to the skies.
Neocon columnist Jennifer Rubin calls it "a grand slam" in the Washington Post.
Legal analyst Jeffrey Toobin describes it as "dazzling" on CNN.
Hillary Clinton: "Every American should watch this"
John Legend: "This is brilliantly argued and so compelling. Watch if you have time. Call your senators. Everyone says the outcome is predetermined. But make sure your senators hear from you if you're moved by this. Thank you, Congressman Schiff, for standing up for what's right."
Debra Messing: "I am in tears. Thank you Chairman Schiff for fighting for our country."
New York Times columnist Gail Collins says it was "a great job" and that Schiff is "a rock star" for pulling it off.
But in fact it was the opposite
a fear-mongering, sword-rattling harangue that will not only raise tensions with Russia for no good reason, but sends a chilling message to dissidents at home that if they deviate from Russiagate orthodoxy by one iota, they’ll be driven from the fold.
What is that orthodoxy?
It’s that Russia invaded poor innocent Ukraine in 2014, that it interfered in the US presidential election in 2016 in order to hurt Hillary Clinton and propel Donald Trump into the White House, and that it’s now trying to smear Joe Biden merely because he had allowed his son to take a high-paying job with a notorious Ukrainian oligarch at a time when he was supposedly heading up the Ukrainian anti-corruption effort.
As Schiff put it with regard to Donald Trump’s famous July 25 phone call urging Ukrainian President Volodymyr Zelensky to look into Biden’s activities:
"This investigation was related to a debunked conspiracy theory alleging that Ukraine not Russia interfered in the 2016 presidential election. This narrative propagated by the Russian intelligence services contends that Ukraine sought to help Hillary Clinton and harm then-candidate Trump…. This tale is also patently false and, remarkably, it is precisely the inverse of what the US intelligence community’s unanimous assessment was that Russia interfered in the 2016 election in sweeping and systemic fashion in order to hurt Hillary Clinton and help Donald Trump."
So even though the Financial Times reported during the 2016 election campaign that the threat of a Trump victory was spurring "Kiev’s wider political leadership to do something they have never attempted before: intervene, however indirectly, in a US election," articles like that are now down the memory hole because Schiff says they’re Russian propaganda that US intelligence agencies have determined to be false.
The same goes for arguments that it’s actually NATO’s aggressive expansion to the east that has led to a needless buildup of tensions, not Russia’s drive to the west. Recent examples include an article in the National Interest arguing that NATO has "empowered some of the most historically anti-Russian elements in that region – Ukrainian Banderites [i.e. followers of Nazi collaborator Stepan Bandera], Polish nationalists, Balkan Islamists" – elements that, not unreasonably, have sparked Russia’s worst fears – or one in the Nation stating that NATO’s drang nach osten is "the primary cause for the new and very dangerous Cold War."
Articles like those are verboten as well because they go counter to the new line that Russia is entirely to blame. Declared Schiff:
"Russia is not a threat … to Eastern Europe alone. Ukraine has become the de facto proving ground for just the types of hybrid warfare that the twenty-first century will become defined by: cyberattacks, disinformation campaigns, efforts to undermine the legitimacy of state institutions, whether that is voting systems or financial markets. The Kremlin showed boldly in 2016 that with the malign skills it honed in Ukraine, they would not stay in Ukraine. Instead, Russia employed them here to attack our institutions, and they will do so again."
As for Biden, a New York Times editorial said about his son’s unfortunate new job back in 2015:
"Sadly, the credibility of Mr. Biden’s [anti-corruption] message may be undermined by the association of his son with a Ukrainian natural-gas company, Burisma Holdings, which is owned by a former government official suspected of corrupt practices…. Burisma’s owner, Mykola Zlochevsky, has been under investigation in Britain and in Ukraine. It should be plain to Hunter Biden that any connection with a Ukrainian oligarch damages his father’s efforts to help Ukraine. This is not a board he should be sitting on."
We must all put such sentiments behind us now Russia is seeking to "weaponize" such information, according to Schiff, and deploy it "against Mr. Biden just like it did against Hillary Clinton in 2016 when Russia hacked and released emails from her presidential campaign." If Russia wants to weaponize it, then it’s best for the rest of us not to breathe a word of it lest people think we’ve been weaponized as well.
Bottom line: we must impeach Trump, according to Schiff’s epic presentation, not only because he’s overstepped his proper constitutional bounds, but because he’s part of a grand Russian conspiracy to spread disinformation, undercut US security, undermine faith in US intelligence agencies, and "remake the map of Europe by dent of military force." In order to counter this all-encompassing threat, it is our patriotic duty to do the opposite by believing the CIA and redoubling US defense. If anyone tells us that Biden was guilty of a flagrant conflict of interest, we must stop up our ears because that’s what Moscow wants us to think. If anyone says that the entire Russian-interference narrative is just a silly conspiracy theory based on a paucity of facts and an abundance of paranoid speculation, we must do likewise because it’s just the Kremlin trying to worm its way into our minds.
When in doubt, just remember to bleat: America good, Russia baa-aa-aad.
But while it would be nice to dismiss this as a joke, it’s not. Schiff’s emergence as leader of the Democratic impeachment drive means that the party is re-grouping along the most retrograde Cold War lines. As reckless and appalling as Trump’s behavior is in the Persian Gulf, the emerging Democratic worldview is shaping up as no less extreme. Because it sees Russia as mounting a multi-pronged offensive, the clear implication is that the US must respond in kind. This means more troops deployments, more forces mobilized to counter Russian threats from Venezuela to the Middle East, more TV talking heads going on and on about this or that Kremlin conspiracy, and more labelling of people like Tulsi Gabbard and Jill Stein as Russian assets.
Remember, this is the Los Angeles neocon who backed the invasion of Afghanistan, the invasion of Iraq, and Saudi Arabia’s unprovoked war against Yemen, an assault that, since March 2015, has cost 100,000 lives and brought half the country to the brink of starvation. He supported Obama’s war in Libya and called for the establishment of a no-fly zone in Syria and relies on arms manufacturers and military contractors for major financial support.
But while Bernie supporters may have thought that Democrats were edging away from such views, they’re plainly in the wrong. Schiff’s new-found prominence shows that the neocons are back in the saddle. Impeachment advocates should be careful of what they wish for because the anti-Trump forces are turning out to be no less dangerous than those helping him to remain.
Although practically all of the western media reports from the city of Wuhan have claimed that the city's hospitals have been completely overwhelmed by cases of pneumonia as more cases of the Wuhan coronavirus are confirmed, the South China Morning Post reports that a team of researchers at Wuhan’s Jinyintan hospital have retraced the movements of the first individual who was diagnosed with the virus, and determined that he had no links to a shady seafood market selling live snakes and bats for human consumption.
Amazingly, SCMP caveated its report by claiming that other patients among the earliest cases had "continuous exposure to the market," which was shut down on Jan. 1 by Wuhan authorities over fears that its trade in wild animals was linked to the viral outbreak. Authorities have since banned the selling of live animals at markets.
The researchers, seven of whom work at Wuhan’s Jinyintan hospital, designated for patients with the illness, revealed on Friday in The Lancet medical journal that symptoms of the new disease were first reported on December 1 – much earlier than the Wuhan government’s initial announcement on December 31 of 27 cases of the pneumonia-like infection.
According to the report, the first patient had no exposure to the Huanan seafood market which was shut down on January 1 over fears – later confirmed – that the new virus was linked to its trade in wild animals. The researchers added that none of the patient’s family had developed fever or any respiratory symptoms. There was also no epidemiological link between the first patient and the later cases, they found.
The researchers analysed data from 41 patients with confirmed infections who had showed an onset of symptoms up to January 2. Six of those patients died, putting the fatality rate of the group at 15 per cent. The researchers noted that clinical presentations of the patients greatly resembled severe acute respiratory syndrome.
The first patient to die from the new coronavirus had continuous exposure to the market before he was admitted to hospital with a seven-day history of fever, cough and breathing difficulties, according to their report.
Doctors also identified 13 other patients who had no contact with the market, which helps build the case for human to human transmission.
The absence of a link to the seafood market is one of the indicators for human-to-human transmission of the virus and the researchers identified another 13 patients who also had no direct exposure to the market.
"Taken together, evidence so far indicates human transmission for 2019-nCoV," the report said. "We are concerned that 2019-nCoV could have acquired the ability for efficient human transmission," the researchers added, along with a strong recommendation for precautions such as fit-tested N95 respirators and other personal protective equipment.
Much to Beijing's chagrin, a team of Chinese scientists on Friday revealed that symptoms of the virus first emerged as early as Dec. 1, much earlier than the Wuhan government's initial announcement of the first 27 cases on Dec. 31. The notion that the virus may have been transmitted to humans via consuming bats, rats, badgers or snakes was widely reported in the Western press, even by CNN.
Though the possibility of zoonotic transmission hasn't been entirely ruled out, these researchers apparently believed that there's reason to doubt that the fish market was the source of the virus. However, the situation is still very much in flux, and it remains true that some of the other patients did have contact with the market.
Either way, do the researchers findings lend more credence to the other conspiracy theory about the virus's origin? Wuhan reportedly has two labs that participate in China's bio-warfare program, as Radio Free Asia first reported, and a handful of US outlets, including the Washington Times, have picked up the story.
Was CoV manufactured by the real-world equivalent of Umbrella Corp?
Submitted by Michael Every of Rabobank
“When I used to read fairy tales, I fancied that kind of thing never happened, and now here I am in the middle of one!” (Alice in Wonderland, Chapter 4, The Rabbit Sends in a Little Bill)
What if... the protectionists are right and the free traders are wrong?
2020 starts with markets feeling optimistic due to a US-China trade deal and a reworked NAFTA in the form of the USMCA. However, the tide towards protectionism may still be coming in, not going out.
The intellectual appeal of the basis for free trade, Ricardo’s theory of comparative advantage, where Portugal specializes in wine, and the UK in cloth, is still clearly there. Moreover, trade has always been a beneficial and enriching part of human culture. Yet the fact is that for the majority of the last 5,000 years global trade has been highly-politicized and heavily-regulated. Indeed, global free-trade only began following the abolition of the UK Corn Laws in 1846, which reduced British agricultural tariffs, brought in European wheat and corn, and allowed the UK to maximize its comparative advantage in industry. Yet it took until 1860 for the UK to fully embrace free trade, and even then the unpalatable historical record is that during this ‘golden age’, the British:
Destroyed the Indian textile industry to benefit their own cloth manufacturers;
As we showed back in ‘Currency and Wars’, after an initial embrace of free trade, the major European powers and Japan saw that their relative comparative advantage meant they remained at the bottom of the development ladder as agricultural producers, an area where prices were also being depressed by huge US output; meanwhile, the UK sold industrial goods, ran a huge trade surplus, and ruled the waves militarily. This was politically unsustainable even though the UK vigorously backed the intellectual concept of free trade given it was such a winner from it.
Regardless, the first flowering of free trade collapsed back into nationalism and protectionism - bloodily so in 1914. Free trade was tried again from 1919 - but burned-out even more bloodily in the 1930s and 1940s. After WW2, most developed countries had moderately free trade - but most developing countries did not. We only started to reembrace global free trade from the 1990s onwards when the Cold War ended – and here it is under stress again. In short, only around 100 years in a total of 5,000 years of civilization has seen real global free trade, it has failed twice already, and it is once again coming under pressure.
What are we getting wrong? Perhaps that Ricardo’s theory has major flaws that don’t get included in our textbooks, as summarized in this overlooked quote
“It would undoubtedly be advantageous to the capitalists of England…[that] the wine and cloth should both be made in Portugal [and that] the capital and labour of England employed in making cloth should be removed to Portugal for that purpose.” Which is pretty much what happens today! However, Ricardo adds that this won’t happen because “Most men of property [will be] satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations,” which is simply not true at all! In other words, his premise is flawed in that:
As Ricardo’s theory requires key conditions that are not met in reality most of the time, why are we surprised that most of reality fails to produce idealised free trade most of the time? Several past US presidents before Donald Trump made exactly that point. Munroe (1817-25) argued: “The conditions necessary for Free Trade’s success - reciprocity and international peace - have never occurred and cannot be expected”. Grant (1869-77) noted “Within 200 years, when America has gotten out of protection all that it can offer, it too will adopt free trade”.
Yet arguably we are better, not worse, off regardless of these sentiments – so hooray! How so? Well, did you know that Adam Smith, who we equate with free markets, and who created the term “mercantile system” to describe the national-protectionist policies opposed to it, argued the US should remain an agricultural producer and buy its industrial goods from the UK? It was Founding Father Alexander Hamilton who rejected this approach, and his “infant industry” policy of industrialization and infrastructure spending saw the US emerge as the world’s leading economy instead. That was the same development model that, with tweaks, was then adopted by pre-WW1 Japan, France, and Germany to successfully rival the UK; and then post-WW2 by Japan (again) and South Korea; and then more recently by China, that key global growth driver. Would we really be better off if the US was still mainly growing cotton and wheat, China rice and apples, and the UK was making most of the world’s consumer goods? Thank the lack of free trade if you think otherwise!
Yet look at the examples above and there is a further argument for more protectionism ahead. Ricardo assumes a benign global political environment for free trade. Yet what if the UK and Portugal are rivals or enemies? What if the choice is between steel and wine? You can’t invade neighbours armed with wine as you can with steel! A large part of the trade tension between China and the US, just as between pre-WW1 Germany and the UK, is not about trade per se: for both sides, it is about who produces key inputs with national security implications - and hence is about relative power. This is why we hear US hawks underlining that they don’t want to export their highest technology to China, or to specialize only in agricultural exports to it as China moves up the value-chain. It also helps underline why for most of the past 5,000 years trade has not been free. Indeed, this argument also holds true for the other claimed benefit of free trade: the cross-flow of ideas and technology. That is great for friends, but not for those less trusted.
Of course, this doesn’t mean liked-minded groups of countries with similar-enough or sympathetic-enough economies and politics should avoid free trade: clearly for some states it can work out nicely - even if within the EU one could argue there are also underlying strains. However, it is a huge stretch to assume a one-size-fits-all free trade policy will always work best for all countries, as some would have it. That is a fairy tale. History shows it wasn’t the case; national security concerns show it can never always be the case; and Ricardo argues this logically won’t be the case.
Yet we need not despair. The track record also shows that global growth can continue even despite protectionism, and in some cases can benefit from it. That being said, should the US resort to more Hamiltonian policies versus everyone, not just China, then we are in for real financial market turbulence ahead given the role the US Dollar plays today compared to the role gold played for Smith and Ricardo! But that is a whole different fairy tale...
Sen. John McCain's widow says "everyone" knew about Jeffrey Epstein's sex trafficking ring, but were "afraid" to do anything about it.
"Epstein was hiding in plain sight," said McCain, during an appearance at the State of the World 2020 conference in Florida, according to the Washington Examiner.
"We all knew about him. We all knew what he was doing, but we had no one that was — no legal aspect that would go after him. They were afraid of him. For whatever reason, they were afraid of him."
McCain said a girl from her daughter's high school was one of Epstein's victims and that she hopes Epstein "is in hell."
Dr. Barbara Sampson, the New York City medical examiner, said Epstein died by suicide at a Manhattan federal detention facility last August. His death and the circumstances surrounding it have created controversy after the former medical examiner of New York, Dr. Michael Baden, told 60 Minutes that he believes Epstein was murdered. -Washington Examiner
While most of the focus in Congress is on the impeachment, Congress has still found time to advance some votes relevant to the potential war with Iran, and are set for some such votes next week.
Two votes are planned in the House, and expected on Thursday. One is from Rep. Ro Khanna (D-CA) prohibiting any funding for a war in Iran without Congressional authorization. The second will attempt to reveal the 2002 Authorization for the Use of Military Force (AUMF).
The 2002 AUMF was meant to authorize the 2003 invasion and occupation of Iraq. With the Hussein government long gone, many have questioned the relevance of the AUMF, though the administration has at times claimed it authorizes other wars, including military action against ISIS in “Syria or elsewhere.”
The votes are seen not only as a rebuke of Trump’s unilateral action against Iran but a win for House progressives, who have spent years seeking limits on presidential authority. The Trump administration has claimed the 2002 AUMF legally justifies military action against the Islamic State group “in Syria or elsewhere.” — Defense News
While the Iraq AUMF isn’t directly related to a possible Iran War, repealing it would go a long way toward Congress reasserting its war-making powers, and emphasizing that the authorizations aren’t open-ended after the intended war is long over, allowing them to be reinterpreted indefinitely for other operations.
The Senate is not expected to take up any of the Iran War votes this week, though the Senate Foreign Relations Committee will be given a briefing from the State Department on the matter. The State Department had previously canceled this briefing weeks ago.
While we understand that the information we've shared can be distressing, we'd like to take a moment to remind readers that all of the information and research we have cited is legitimate, having originally been conducted by credible epidemiologists, like the UK's Jonathan Read. The fact is, the Chinese government hasn't been nearly as "transparent" as it promised, and it seems like the more we learn about the true scope of this outbreak, the more concerned we become.
The reality is that - as the Architect told Neo in "The Matrix: Reloaded" - denial is the most predictable of human responses. And while the world's public health authorities certainly still have time to get their arms around this outbreak before it becomes a massive, global pandemic with deadly consequences, the WHO's dithering response the other day (asserting that they don't yet have enough evidence of human-to-human secondary transmission to declare a global health emergency) certainly doesn't inspire confidence.
Now that we have that out of the way - let's move on to Dr. Eric Feigl-Ding, a public health scientist on the faculty at Harvard.
A few days ago, Dr. Feigl-Ding tweeted that he was "really, deeply worried about this new coronavirus outbreak" because the virus seemed to have an"upward infection trajectory curve much steeper than SARS."
I’ll be honest - as an epidemiologist, I’m really deeply worried about this new coronavirus outbreak. 1) the virus has an upward infection trajectory curve much steeper than SARS. 2) it can be transmitted person to person before symptoms appear — I.e. it is silently contagious! pic.twitter.com/5Kjo6DkbQj— Dr. Eric Feigl-Ding (@DrEricDing) January 23, 2020
On Friday, the doctor, a well-respected epidemiologist who has worked as an advisor to the World Health Organization, tried his hand at a few projections based on an infection rate much higher than the RO (r-naught) rating of 1.4-2.5 recently estimated by the WHO. As we explained last night, when determining the infectious potential of a virus, arguably the most important variable is RO. This represents the average number of secondary cases resulting from every new infection in an entirely susceptible population.
Of course, government interventions and more vigilant hygiene practices once the public is aware of the threat will help lower the virus's r-naught variable. But remember, nCoV (the WHO's name for the virus) has already been quietly spreading among the people of Wuhan for weeks. And as Dr. Feigl-Ding explains, early evidence would suggest that nCoV is contagious before symptoms appear.
Last night, we published the findings of a team of UK epidemological researchers led by Jonathan Read. Read published a paper with four colleagues that estimates transmission parameters for the Wuhan coronavirus and calculates that the true R0 of 2019-nCoV is between 3.6-4.0 or roughly the same as SARS, and reaches a conclusion about spread of the coronavirus epidemic that is frankly terrifying. With an r-naught of 3.8, the virus could eventually cause hundreds of thousands of deaths in China alone.
In fact, it's not simply terrifying: With an r-naught of 3.8, this virus could be "thermonuclear, pandemic level bad."
HOLY MOTHER OF GOD - the new coronavirus is a 3.8!!! How bad is that reproductive R0 value? It is thermonuclear pandemic level bad - never seen an actual virality coefficient outside of Twitter in my entire career. I’m not exaggerating... #WuhanCoronovirus #CoronavirusOutbreak pic.twitter.com/6mmxIHL9Ue— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
As Dr. Feigl-Ding goes on to explain, using Read's findings as a jumping-off point, the 4,000 number being kicked around by some scientists as the true number of viral cases in Wuhan might be much too low. By early Feb., the doctor warns that nearly a quarter of a million Chinese could be infected.
2/ “We estimate the basic reproduction number of the infection (R_0) to be 3.8 (95% confidence interval, 3.6-4.0), indicating that 72-75% of transmissions must be prevented by control measures for infections to stop increasing...— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
3/ ... We estimate that only 5.1% (95%CI, 4.8-5.5) of infections in Wuhan are identified, and by 21 January a total of 11,341 people (prediction interval, 9,217-14,245) had been infected in Wuhan since the start of the year. Should the epidemic continue unabated in Wuhan....— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
4/ we predict the epidemic in Wuhan will be substantially larger by 4 February (191,529 infections; prediction interval, 132,751-273,649), infection will be established in other Chinese cities, and importations to other countries will be more frequent. Our model suggests that..— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
5/ travel restrictions from and to Wuhan city are unlikely to be effective in halting transmission across China; with a 99% effective reduction in travel, the size of the epidemic outside of Wuhan may only be reduced by 24.9% on 4 February. Our findings are...— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
To be sure, these findings should be taken with a grain of salt. They are based on a set of assumptions that could change as scientists learn more about the virus. But as things stand, it appears that nCoV has a higher infectious potential than other coronaviruses, meaning it will be more difficult to contain. And the possibility of an unchecked pandemic on par with the 1918 Spanish flu shouldn't be ruled out yet.
6/ ...critically dependent on the assumptions underpinning our model, and the timing and reporting of confirmed cases, and there is considerable uncertainty associated with the outbreak at this early stage. With these caveats in mind, our work suggests that...— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
7/ a basic reproductive number for this 2019-nCoV outbreak is higher compared to other emergent coronaviruses, suggesting that containment or control of this pathogen may be substantially more difficult.”!!!! #wuhanvirus #CoronavirusOutbreak #ChinaCoronaVirus ...— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
[Tweet No. 8 was deleted]
9/ ...cannot be stopped by containment alone. A 99% quarantine lockdown containment of Wuhan will not even reduce the epidemic’s spread by even 1/3rd in the next 2 weeks. Thus, I really hate to be the epidemiologist who has to admit this, but we are potentially faced with...— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
10\ ... possibly an unchecked pandemic that the world has not seen since the 1918 Spanish Influenza. Let’s hope it doesn’t reach that level but we now live in the modern world 🌎 with faster ✈️+ 🚞 than 1918. @WHO and @CDCgov needs to declare public health emergency ASAP!— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
11/ REFERENCE for the R0 attack rate (reproductive coefficient) of 3.8 and the 99% containment models come from this paper: https://t.co/KrQfuAfS4l— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
12/ What is the typical R0 attack rate for the seasonal flu in most years? It’s around an R0=1.28. The 2009 flu pandemic? R0=1.48. The 1918 Spanish Flu? 1.80. This new #WuhanCoronavirus reproductive value again? R0=3.8. (Flu reference: https://t.co/ldAWBlFkvA)— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
13/ ...and it gets even worse, the Lancet now reports that the coronavirus is contagious even when *no symptoms*: specifically: “crucial to isolate patients... quarantine contacts as early as possible because asymptomatic infection appears possible”! https://t.co/FZr3Es1VwZ— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
Even if we assume a much lower r-naught, like, say, 2.8, which is just above the upper band of the WHO's estimates, the results could still be "pretty bad".
14/ Let’s pretend the 3.8 estimate is too high (there’s unpublished estimates of 2.5). even if this virus’s R0=2.5, that’s still 2x higher than seasonal flu’s 1.28 (ref above), and higher than 1918 Spanish Flu pandemic of 1.80 that killed millions. So 2.8 is still super bad folks— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
15) My response to some people who think I’m trying to stoke fear... I’m a Harvard trained scientist with a doctorate in epidemiology (and the youngest dual doctoral grad from Harvard SPH). Here are my response: https://t.co/tdxg3gJQ72 https://t.co/AgL4idz8Yc— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
Based on the above thread, the situation might seem especially dire. But as Dr. Feigl-Ding explains later, actions like China's mass quarantine of 46 million and other public-health precautions should help to contain the virus and reduce its ability to spread.
Small note: While there were reports of SARS having 0.49 after containment started, a WHO cited experts who said SARS had initial R0 of 2.9 then 2.0-3.5, which which fell to 0.4 after quarantine. But SARS is more symptomatic than this Wuhan virus. To be updated. pic.twitter.com/wNXf3rgcqg— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
Now, Feigl-Ding's critics have pointed out that this is only one estimate, and that Read and his team have already revised down their r-naught calculation.
"there is considerable uncertainty associated with the outbreak at this early stage." & yet you tweeted: "HOLY MOTHER OF GOD". A Public health scientist should KNOW better than to be an alarmist. https://t.co/2Z5meAFnSx @stgoldst— Politics Trumps All (@TrumpsPolitics) January 25, 2020
The doctor repeatedly said as much during the thread, but we suppose there's something about people tweeting in all-caps that some find extremely off-putting.
Some folks think I’m trying to incite fear. I’m not trying—I’m a scientist. This #coronavirus #WuhanCoronovirus is serious. Over 50 million people are quarantined + case counts will go up much more. Predict @WHO will declare emergency. Let’s hope for the best, prepared for worst. https://t.co/H3UcR9eAjs— Dr. Eric Feigl-Ding (@DrEricDing) January 25, 2020
And of course this isn't 1918 - medical technology is far more advanced. In the event of a mass infection, a vaccine could be found to save the day. But that doesn't mean we should simply dismiss the more dire projections out of hand. This virus could still leave thousands dead before it peters out.
More than 129,000 Illinois public pensioners will see expected payouts of $1 million or more during retirement.
Illinois is home to a small, powerful and protected class of wealth.
Their profits are immense. They bear little to no risk. And the state’s social safety net has been gutted to pay for their privileges, which are closely guarded by politicians.
These are Illinois’ pension millionaires.
Among the state’s 12.7 million residents, they constitute the 1%.
More than 129,000 Illinois public retirees will collect estimated payouts of more than $1 million each over the course of their retirements, according to new analysis from the Illinois Policy Institute.
No public-sector worker should be personally shamed for getting a great deal. Those who choose a life of public service deserve honor and praise.
At the same time, it’s crucial that Illinoisans understand these retirement benefits and call for reform. They have resulted in cuts to core services and constant calls for tax hikes across the state for more than two decades. They’re also pushing the pension funds toward insolvency.
Extreme payouts and early retirements are the norm across Illinois’ five state-run retirement systems:
More than 22,000 retirees in the State Universities Retirement System (43%) will receive an expected lifetime payout of more than $1 million, with 42% retiring before their 60th birthday.
More than 31,000 retirees in the State Employees’ Retirement System (51%) will receive an expected lifetime payout of more than $1 million, with half retiring before age 60.
Nearly 75,000 retirees in the Teachers’ Retirement System (68%) will receive an expected lifetime payout of more than $1 million, with more than half retiring before age 60.
The remaining pension millionaires at the state level are spread across the Judges’ Retirement System (nearly 900, or 94%) and the General Assembly Retirement System (more than 200, or 67%).
Meanwhile, the average 401(k) balance nationwide for people aged 60 to 69 is $195,500, according to CNBC.
These numbers can be difficult to believe. So they’re often spun. There are four common “buts” used to justify the status quo:
1) But these benefits attract top talent
In fact, these benefits have made important fields like teaching much less attractive in Illinois. That’s because in order to pay for the extreme benefits promised in the past, new teachers are enrolled in an unfair “Tier 2” retirement plan that is so lousy it will likely result in a lawsuit when the first Tier 2 worker vests on Jan. 1, 2021.
2) But these workers don’t get Social Security
In fact, almost all state employees in SERS are eligible for Social Security benefits on top of their pensions, which average $1.7 million for career workers.
For other public retirees in Illinois, trading million-dollar payouts for a Social Security check would be a serious downgrade. The average Social Security benefit for 2019 is $17,532 per year. And the earliest anyone can qualify for Social Security is age 62, with the full retirement age pegged at 67 for anyone born after 1960.
3) But workers paid into the system
The average state worker or teacher in Illinois retires before age 60, takes home a lifetime pension benefit of more than $1 million and contributes less than 10% of that amount to the system – the rest is covered by taxpayers.
4) But politicians underfunded the system
Illinois pensions were underfunded because they were overpromised. Like a teenage barback trying to front a monthly payment on a Lamborghini, state politicians have kicked the can, borrowed and lied to keep up appearances. Illinois state and local governments now spend the most in the nation – about double the national average – on pensions as a share of their budgets. Consider that the state spends about one-third less today, adjusted for inflation, than it did in the year 2000 on core services including child protection, state police and college money for poor students. During that time, pension spending increased 501%.
Paying more is not an option.
Backing reforms for a fair pension system should be the No. 1 priority for Illinois state lawmakers. And other states can show them how.
A pension constitutional amendment in Illinois that matches states such as Hawaii and Michigan would allow for changes to retirement ages, capping maximum pensionable salaries, and doing away with guaranteed permanent benefit increases in favor of a true cost-of-living adjustment pegged to inflation. All of this can be done without cutting a dime from the checks of current retirees. These changes to “future” benefits have been enacted in Arizona, where they had support from union leaders who realized pensions were in peril.
If Illinoisans work together, commonsense pension reform can ensure state government works for everyone.
Not just the 1%.
Iran's well-known state media outlet Fars News Agency says US sanctions have knocked it off the internet. As of Friday and into early Saturday the en.farsnews.com domain remained inaccessible while the outlet says it quickly alternately established English content on https://en.farsnews.ir/, which remains live.
Iran says the US Treasury Department shut down international access to its English news site due to new regulations related to US sanctions.
It's not the first time state-linked Iranian media outlets have had access to Western audiences blocked, with PressTV complaining in recent months about being blocked on YouTube and other popular social media sites; however it's less common for their domains to be blocked.
Fars outlet issued a Farsi language tweet Friday which reads according to a translation:
"From an hour ago, audience access to the Fars News Agency site has encountered a problem due to being placed on America's sanctions list, and the technical part of [this] News Agency is working to create access for the audience on the farsnews.ir domain."
It further said administrators of its state-controlled site were notified Friday that it was being shut down after the US Treasury Department ordered the drastic action it due to sanctions violations.
Fars has since erected a separate domain for its now blocked English language site.
As Iran's PressTV describes further:
The news agency said that it had received an email from the server company, which explicitly said that the blockage is due to an order by the Treasury's Office of Foreign Assets Control (OFAC) and its inclusion in the list of Specially Designated Nationals (SDN).
The agency attached to its post a screenshot of its website with the message "www.farsnews.com’s server IP address could not be found.”
In the wake of the Jan.8 Iranian ballistic missile attack on Ayn al-Asad airbase in Iraq, Iranian media outlets were slammed by western analysts for "spreading disinformation" — which initially included claims of multiple American troop deaths and a totally obliterated base.
But in reality both sides could be blamed for sowing war propaganda and disinformation, given the US side initially said "no casualties" — later revised to 11 traumatic brain injuries, and days ago dramatically updated to 34 total head injuries.
Amidst the annual spectacle of the World Economic Forum in Davos, the Bank for International Settlements this week announced that multiple central banks have created a group that will ‘assess potential cases for central bank digital currencies‘.
The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Sveriges Riksbank and the Swiss National Bank, together with the Bank for International Settlements (BIS), have created a group to share experiences as they assess the potential cases for central bank digital currency (CBDC) in their home jurisdictions.
The group will assess CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies. It will closely coordinate with the relevant institutions and forums – in particular, the Financial Stability Board and the Committee on Payments and Market Infrastructures (CPMI).
The group will be co-chaired by Benoît Cœuré, Head of the BIS Innovation Hub, and Jon Cunliffe, Deputy Governor of the Bank of England and Chair of the CPMI. It will include senior representatives of the participating institutions.
As with every other recent development in regards to CBDC’s, the BIS stand at the heart of the issue. The new central bank grouping comes just over six months after the BIS first established an Innovation Hub for central banks (also known as Innovation BIS 2025) with the objective being to ‘foster international collaboration on innovative financial technology within the central banking community‘.
With the agenda to introduce central bank digital currency gathering further momentum, now would be as good a time as any to ask what the global banking elite are seeking to achieve over the short to medium term.
In 2019 I published around a dozen articles on the subject of digital currency, examining the latest speeches from central bankers and the actions they were taking to formulate the foundations for a cashless society. The Innovation BIS 2025 project is a important pillar to the aspirations of the financial elite. By 2025 they are targeting the completion of reformed payment systems in the UK, the U.S and beyond, systems that will possess the capability to interface directly with Fintech firms that specialise in blockchain and distributed ledger technology (DLT). Both blockchain and DLT would be essential for the roll out of a fully fledged CBDC network.
During a speech at the Central Bank of Ireland in March 2019, BIS General Manager Agustin Carstens stated plainly what a CBDC future would look like:
Like cash, a CBDC could and would be available 24/7, 365 days a year. At first glance, not much changes for someone, say, stopping off at the supermarket on the way home from work. He or she would no longer have the option of paying cash. All purchases would be electronic.
To avoid confusion, there are two variants of CBDC that are regularly discussed by central bank officials. The first is a wholesale CBDC, which would be used to facilitate payments exclusively between financial sector firms. The second option, a retail CBDC, would be for use by the general public.
To quote Carstens from the same speech he made in Ireland:
A CBDC would allow ordinary people and businesses to make payments electronically using money issued by the central bank. Or they could deposit money directly in the central bank, and use debit cards issued by the central bank itself.
This would be a significant departure from the traditional model of commercial banks digitising the money held in people’s bank accounts. To way up the likelihood of this scenario, let’s examine what the International Monetary Fund have been saying.
Former Managing Director Christine Lagarde, who is now President of the European Central Bank, addressed the Singapore Fintech Festival in November 2018 and hinted at how the future composition of a CBDC could look:
If digital currencies are sufficiently similar to commercial bank deposits— then why hold a bank account at all?
What if, instead, central banks entered a partnership with the private sector—banks and other financial institutions—and said: you interface with the customer, you store their wealth, you offer interest, advice, loans. But when it comes time to transact, we take over.
Banks and other financial firms, including startups, could manage the digital currency. Much like banks which currently distribute cash.
In this reality, central banks would, according to Lagarde, ‘retain a sure footing in payments‘. By extension, they would also retain autonomy over an all digital financial system.
The IMF expanded on Lagarde’s speech in December 2019 with the publication of an article called, ‘Central Bank Digital Currencies: 4 Questions and Answers‘. Co-written by Tobias Adrian, the Financial Counsellor and Director of the IMF’s Monetary and Capital Markets Department, it asserts that the IMF is now gradually helping countries ‘develop policies‘ as they ‘consider CBDC options and seek advice.’
One of those options is a public-private partnership, which IMF staffed have termed as a ‘synthetic CBDC‘. In the summer of 2019 Mark Carney first raised the prospect of a ‘Synthetic Hegemonic Currency‘ that could be provided by the public sector ‘through a network of central bank digital currencies‘. This would ultimately be at the expense of the world reserve status of the dollar.
The synthetic CBDC model as envisioned by the IMF would see private sector firms like JP Morgan and Barclays issuing digital coins to the general population. Banks would continue ‘innovating and interfacing with customers‘, whilst central banks would ‘provide trust to the system by requiring that coins be fully backed with central bank reserves and by supervising the coin issuers.’ This is worth keeping in mind because as the article confirms, such a set up would ‘preserve the comparative advantages of each participant.’ In other words, global financial institutions and the central banks operating beneath them would work hand in hand with Fintech developers rather than be in competition, creating a state / private lock in that every citizen would be bound by due to the abolition of cash.
The coins the IMF refer to are known as ‘Stablecoins‘, which central bankers routinely discussed throughout 2019. Stablecoins are regarded as a form of crypocurrency, and differ from the likes of Bitcoin in that issuers of the coins would back them using a basket of established fiat currencies. The theory is that this would give the coins stability in terms of their valuation. Stablecoins would be all digital with blockchain and distributed ledger technology central to their make up, meaning payments would be instantaneous across borders.
A few days after the IMF’s article, Lael Brainard of the Federal Reserve addressed an event held in Frankfurt, Germany in honour of Benoit Coeure’s departure from the European Central Bank (the same Benoit Coeure who has now begun his new role heading up the Innovation Hub at the BIS).
This was an important speech because between the lines Brainard set the scene for how central banks could take advantage of the rise in stablecoins. She talked of how the emergence of crypto technology has raised ‘important questions for central banks‘, and that the ‘prospect of global stablecoin payment systems has intensified the interest in central bank digital currencies.’
Facebook’s Libra project is cited by central banks as the bellwether of stablecoins. Whilst Libra has yet to launch, implementation would give it the title of a global stablecoin used throughout multiple different jurisdictions. For Brainard and her colleagues, this brings into question the level of regulation and safeguards that they deem necessary for stablecoins to be rolled out world wide. Without them, Brainard warned, ‘stablecoin networks at global scale may put consumers at risk‘ as well as the financial system as a whole.
There are also questions related to the implications of a widely used stablecoin for financial stability. If not managed effectively, liquidity, credit, market, or operational risks, alone or in combination, could trigger a loss of confidence and run-like behaviour.
Chief amongst the risks raised are money laundering and the financing of terrorism, and it is here where the distinction between a permissioned and permissionless stablecoin network becomes apparent. Central bankers openly advocate for a permissioned network where access must be granted by participants. A permissionless network, according to Brainard, ‘may be more vulnerable to money laundering and terrorist financing.’
One solution mooted by Brainard would be for coordinated regulatory action rather than individual nations determining how stablecoins would be allowed to function. In Brainard’s words, ‘any global payments network should be expected to meet a high threshold of legal and regulatory safeguards before launching operations.’
Elites have been fashioning for decades the narrative that global problems are too large and complex in scale to be remedied at the national level. Their argument has been that more centralisation of powers and the diminishment of the nation state is required to bring about order out of chaos. The seeming regulatory vacuum surrounding stablecoins has given central banks the platform to gradually begin cementing central bank digital currency as a safer alternative, primarily because they would be a ‘direct liability of the central bank.’
As the debate continues around digital currency, the Federal Reserve are quietly progressing with plans to introduce a new payments system called ‘FedNow‘. This will be a platform where users would be able to ‘send and receive payments immediately and securely 24 hours a day, 365 days a year.’
The biggest selling point of digital currency is the convenience factor of national and cross border payments being settled and available without delay. I suspect this is where the banking elite want people to focus their attention, as opposed to how a digital currency network that incorporates central banks and selected private sector players would result in the end of tangible assets.
If you believe what central bankers are saying, then the concept of CBDC’s remain at the investigative stage. Sweden continues to lead the way with the development of an e-krona. The Riksbank has now procured a technology supplier to begin an e-krona test pilot, with the leading objective being to ‘broaden the bank’s understanding of the technological possibilities for the e-krona.’
With the Riksbank being part of the new central bank group working through the BIS, and the IMF admitting that they are now assisting countries in devising policies around digital currency, we are witnessing just how closely they are all collaborating with one another.
One question is whether stablecoins will be used as a stalking horse for CBDC’s, taking them beyond a mere concept. Financial instability has always been an opportunity for the global elite. Stablecoins without sufficient regulatory oversight create an opening for central banks to step in further down the line.
Something to ponder also is how faith could be lost with future stablecoin providers. BIS General Manager Agustin Carstens has said before that trust can be compromised in four particular ways – currency devaluations, hyperinflation, wide-scale payment system disruptions and bank defaults. Naturally, Carstens has positioned central banks as the institutions that can rectify such conflict, even though it has been proven that throughout history it is their policies that have created economic instability leading to collapse.
In relation to what Carstens said about compromising trust, three months prior to the EU referendum Bank of England official Ben Broadbent made a very telling comment in a speech appropriately titled, ‘Central banks and digital currencies‘, about the necessity for currency degradation before the public demand a solution to the traditional monetary model.
Degrade a currency sufficiently, via hyperinflation and collapse of the banking system, and people will eventually look for alternatives. But that’s generally the sort of thing that has to happen. Almost always, these currency substitutions occur only once the existing currency has become deeply compromised. Even then, the thing people naturally reach for is an existing, trusted currency – often the US dollar – rather than some entirely new unit of account.
When currency substitution has occurred naturally it’s almost always done so only after the incumbent currency has been debauched by hyperinflation.
I have warned extensively over the past couple of years of the risk of a global trade conflict triggering higher inflation, the devaluation of currencies such as sterling and the raising of interest rates. It is what would occur afterwards that is of more concern. Would people look to central banks as the saviours in a crisis scenario, giving them licence to digitise all assets through a network of CBDC’s?
As ever, central banks will require sustained geopolitical conflict to shape the future design of the financial system. They are already headlong in devising that very system through the reformation of global payment systems. But with distractions in the shape Brexit and Donald Trump’s presidency still dominating the discourse, potentially up to 2025, how many are even aware of what the central banks are planning?
Once again, the mainstream media is pushing the repugnant race card, suggesting that Trump supporters are a bunch of knuckle-dragging xenophobes whose only reason for wanting a wall on the Mexican border is because they suffer an aversion to people with different skin color than them.
What exactly do White Americans – who opened the floodgates to immigration in 1965 – need to do these days to prove they are not natural born racists? Cancel their monthly subscription to Town and Country? Stop walking their dogs, which are, of course, four-legged vehicles of “racial segregation,” or stop attending their evening yoga class, the unsuspecting breeding grounds for white supremacists? Somehow I suspect that even if White people took to burning effigies of Ku Klux Klan members on their manicured front lawns that would not even put a stop to the ugly rumors. Let’s just face it, the only thing that will finally stop the slanderous slurs is if all White Americans publicly denounce their support of the biggest race-hater of them all, Donald J. Trump. And should they refuse the itinerant Liberal Inquisition will be only too happy to do it for them.
Just ask Noah Berlatsky, occasional columnist for MSNBC, whose latest piece was crowned with the zinger of a headline, ‘Trump voters motivated by racism may be violating the Constitution. Can they be stopped?’ Nice leading question there, but the premise that precedes it, that Trump voters are “motivated by racism,” is just one more election-season deceit.
Leftists are angry.— Candace Owens (@RealCandaceO) December 18, 2019
Usually at their own life choices, but “racism, sexism, and social injustice” sounds better.
Berlatsky’s article opens with the conclusion that Donald Trump “ran an openly racist campaign for president,” and that his popular rallying slogan “Make America Great Again” is actually code that can be translated into “America was greater when white people’s power was more sweeping and more secure.” Yet nowhere in any of Trump’s numerous campaign utterances or even Tweets has he ever singled out America’s White population as the intended sole beneficiary of his plans to remake the U.S. economy. In fact, just the opposite. As Trump has made it his goal to return some of the shine to America’s industrial Rustbelt, threatening companies with penalties and public scorn if they relocate their production operations overseas, the unemployment rate among Blacks now stands at 5.9%, down from 7.5% at the start of his presidency. At the same time, the employment rate among Hispanics is at historic highs.
It was exactly three years ago today, January 20, 2017, that I was sworn into office. So appropriate that today is also MLK jr DAY. African-American Unemployment is the LOWEST in the history of our Country, by far. Also, best Poverty, Youth, and Employment numbers, ever. Great!— Donald J. Trump (@realDonaldTrump) January 20, 2020
At this point, the Democrats will invariably mention Trump’s promise to build a wall on the U.S.-Mexican border, a promise that arguably won the real estate developer the White House in 2016. Yet Trump, the Democrats argue, is an unrepentant racist because he admitted to an unsavory truth that even Hispanics living in America agree with: “When Mexico sends its people, they’re not sending their best…They’re sending people that have lots of problems, and they’re bringing those problems with us. They’re bringing drugs. They’re bringing crime. They’re rapists. And some, I assume, are good people.”
Trump was not arguing, of course, that all Mexicans are rapists or criminals. He was arguing that of the many who do make it across the border a disproportionate number do fit the description.
At this point, it needs to be asked why the Democrats deign to show so much care and compassion for those illegals breaching America’s border on a daily basis, at the very same time Democratic strongholds, like California and New York, are already bursting at the seams with tent cities and grinding poverty. Suffice it to consider a comment by a British tourist to San Francisco, the one-time crown gem of the increasingly tarnished, Democratic-controlled Golden State: “I can’t understand how anyone can live in a place where their everyday trip to get groceries or go to work includes a multitude of beggars asking for spare change or a meal.”
Considering that the Democrats can’t even take care of their own burgeoning problems in their primary constituencies, what is the real motivation behind their proposals to open the U.S. border and abolish U.S. Immigration and Customs Enforcement (ICE)? After all, these are the very same people who screamed ‘not in my backyard!’ when Trump threatened to send all apprehended illegals to the so-called ‘sanctuary cities’. Nancy Pelosi skirted the periphery of racism when she called the idea “disrespectful.”
Just out: The USA has the absolute legal right to have apprehended illegal immigrants transferred to Sanctuary Cities. We hereby demand that they be taken care of at the highest level, especially by the State of California, which is well known or its poor management & high taxes!— Donald J. Trump (@realDonaldTrump) April 14, 2019
Would their sham benevolence have anything to do with securing more Democratic voters, or guaranteeing that the Republican Party eventually goes the way of the dinosaurs? Was New York Governor Andrew Cuomo motivated by pure compassion when he signed legislation granting driver’s licenses to illegal immigrants, who may now cast a ‘legal’ vote under New York’s notoriously loose voting laws? Now Democrats are demanding the elimination Voter ID rules, declaring them racist against minorities. This is one of the ways Berlatsky proposes to end so-called “racist voting” now purportedly contaminating U.S. politics.
It’s no secret that Hispanic Americans traditionally vote Democratic, and if that tendency were to change tomorrow you can bet that Chuck Schumer and Nancy Pelosi would be camped out daily at the Mexican border, demanding the necessary funds to finish the project.
In the final analysis, the Democrat’s groundless assertion that Trump supporters are kneejerk racists disintegrates when it is remembered that up to 10 million former Obama supporters – many of them White – switched allegiances to the Trump camp in the 2016 presidential election. Are we really expected to believe that all of those Americans suddenly became hardcore racists with the arrival of the evil ‘orange man’ and his pledge to build a wall? That sounds highly unlikely. The far more logical explanation for this massive change in political sentiment is that Trump’s plan to remedy America’s dangerously porous borders, thereby enhancing the security of all Americans, regardless of skin color, was a welcomed idea across the board.
Nevertheless, the real danger is that the Democrats, entranced by the cult of political correctness and an out-of-control cancel culture, will attempt by some extreme measures to identify and ban so-called ‘racist Trump supporters’ who are just regular Americans looking for a leader who will provide them with a well-guarded country that protects the rights of all its citizens regardless of skin color. Banning undesirable Trump voters from the ballet box may eventually become as easy as censoring right-leaning Twitter users.
Clearly, the Democrats learned absolutely nothing from the mistake of branding Trump supports “deplorables” – to quote Hillary Clinton – and have only worsened their present position by calling these same voters, many of them former Obama supporters, “racist.” Such a gross simplification and misunderstanding of the current American political realities goes far at explaining why the Democrats stand very little chance of beating Trump at the ballot box.
Update (1650ET): The State Department has issued a statement about the Kelly interview and her complaints about Secretary Pompeo's behavior.
Not only did Pompeo accuse Kelly of lying to him (twice), including by violating an agreement to keep his comments off the record, Pompeo also insisted that Kelly didn't correctly Ukraine on a blank map brought out by a staffer.
"NPR reporter Mary Louise Kelly lied to me, twice. First, last month, in setting up our interview and, then again yesterday, in agreeing to have our post-interview conversation off the record. It is shameful that this reporter chose to violate the basic rules of journalism and decency. This is another example of how unhinged the media has become in its quest to hurt President Trump and this Administration. It is no wonder that the American people distrust many in the media when they so consistently demonstrate their agenda and their absence of integrity."
"It is worth noting that Bangladesh is NOT Ukraine."
Kelly insists that she had every right to break the agreement because Pompeo verbally abused her. But that doesn't quite comport with our understanding of journalistic ethics. As far as we see it, a reporter is only allowed to break the off-the-record agreement if the information becomes public otherwise, or if the source was lying to them, or acting in bad faith.
There are reporters who honor these agreements even to the point of being imprisoned. Are we supposed to believe that a few f-bombs should invalidate it?
* * *
Democrats' impeachment proceedings were completely overshadowed this week by the panic over the Wuhan coronavirus. Still, Secretary of State Mike Pompeo is clearly tired of having his character repeatedly impugned by the Dems and the press claiming he hung one of his ambassadors out to dry after she purportedly resisted the administration's attempts to pressure Ukraine.
That frustration came to a head this week when, during a moment of pique, Secretary Pompeo launched into a rant and swore at NPR reporter Mary Louise Kelly after she wheedled him about whether he had taken concrete steps to protect former Ambassador to Ukraine Marie Yovanovitch.
House Democrats last week released a trove of messages between Giuliani associate Lev Parnas and Connecticut Republican Congressional candidate Robert Hyde. The messages suggested that Yovanovitch might have been under surveillance before President Trump recalled her to Washington. One of the messages seems to reference a shadowy character able to "help" with Yovanovitch for "a price."
Kelly recounted the incident to her listeners (she is the host of "All Things Considered") while
After Kelly asked Pompeo to specify exactly what he had done or said to defend Yovanovitch, whom Pompeo's boss President Trump fired last year, Pompeo simply insisted that he had "done what's right" with regard to Yovanovitch, while becoming visibly annoyed.
Once the interview was over, Pompeo glared at Kelly for a minute, then left the room, telling an aide to bring Kelly into another room at the State Department without her recorder, so they could have more privacy.
Once inside, Pompeo launched into what Kelly described as an "expletive-laden rant", repeatedly using the "f-word." Pompeo complained about the questions about Ukraine, arguing that the interview was supposed to be about Iran.
"Do you think Americans give a f--k about Ukraine?" Pompeo allegedly said.
The outburst was followed by a ridiculous stunt: one of Pompeo's staffers pulled out a blank map and asked the reporter to identify Ukraine, which she did.
"People will hear about this," Pompeo vaguely warned.
Ironically, Pompeo is planning to travel to Kiev this week.
The questions came after Michael McKinley, a former senior adviser to Pompeo, told Congress that he resigned after the secretary apparently ignored his pleas for the department to show some support for Yovanovitch.
Listen to the interview here. A transcript can be found here.
NPR's Mary Louise Kelly says the following happened after the interview in which she asked some tough questions to Secretary of State Mike Pompeo. pic.twitter.com/cRTb71fZvX— Daniel Dale (@ddale8) January 24, 2020
Last we checked, the team at NPR is waiting on Pompeo to apologize
Mike Pompeo Does in fact owe Yovanovitch an apology https://t.co/imazFrG3Q6— Molly Jong-Fast (@MollyJongFast) January 25, 2020
We suspect they might be waiting a while...
Don't be too sure that the coronavirus will blow over and have no effect on global growth.
If there is anything that characterizes this moment in history, it's complacency: everyone's so sure that current trend lines will continue, onward and upward, and risk has been tamed for the foreseeable future.
Don't be too sure.
1. Don't be too sure that the coronavirus will blow over and have no effect on global growth.
2. Don't be too sure that "the Fed has our back" so stocks will always resume their steady climb after every spot of bother.
3. Don't be too sure that the official Chinese pronouncements that the coronavirus is contained are actually accurate.
4. Don't be too sure that there won't be a second and far more lethal advance of the coronavirus once all the overseas Chinese who went home for Lunar New Year return to their jobs in the U.S., Europe, Southeast Asia, etc.
5. Don't be too sure that people will respond to the natural fears of the coronavirus by rushing out to buy a new iPhone, vehicle, etc.
6. Don't be too sure that bubbles in over-valued stocks and housing won't pop.
7. Don't be too sure that global tourism won't take a body-blow from the spread of the coronavirus.
8. Don't be too sure that the risks of the coronavirus spreading can be assessed by anyone with any accuracy.
9. Don't be too sure that the U.S. economy is bullet-proof and so President Trump is a shoo-in for re-election in November 2020.
10. Don't be too sure that the citizenry's tolerance for Fed-driven wealth-income inequality is as limitless as the Fed's balance sheet.
11. Don't be too sure that the super-low unemployment rate is a reliable measure of business confidence or the health of millions of small businesses.
12. Don't be too sure that the Fed's vaunted "wealth effect" won't reverse.
13. Don't be too sure that all risks are known and have been discounted.
14. Don't be too sure that the global health system is capable of dealing with the spread of the coronavirus.
15. Don't be too sure that central banks' lowering interest rates is going to reverse a global recession.
16. Don't be too sure your favored tech stock won't crater as over-valuation mania is replaced by fear.
* * *
My recent books:
Audiobook edition now available:
Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World ($13)
(Kindle $6.95, print $11.95) Read the first section for free (PDF).
Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).
The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)
* * *
If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.
* * *
Update (1934): Let the scapegoating begin.
Whispers about the top brass in Beijing and their displeasure with the local authorities on the ground in Wuhan have been circulating for at least a day. Now, the South China Morning Post has confirmed that President Xi is planning to throw local health officials under the bus.
In order for it to look like China's leaders were simply caving to the public's demands, doctors and the state-controlled press have lined up to criticize Wuhan's top brass for not foreseeing and moving to prevent the severe shortages of supplies, workers and space that is now prompting China to build two massive hospitals in the span of 10 days. Doctors and journalists on the scene in Wuhan are calling for the local leaders - who were not named in the SCMP story - to "immediately step down".
It's early Sunday morning in Beijing, and with the new day comes a new batch of disheartening reports: Hubei province reported 13 new deaths, and the first death was reported in Henan province, bringing the total number of virus-linked deaths outside Wuhan to three.
More alarmingly, Chinese state media has reported a death from the virus in Shanghai. The reports have since been corroborated by the Western press.
In such a densely populated city, it'd be difficult to imagine a virus with this much infectious potential would spread like wildfire. It would be like Wuhan, but worse.
SHANGHAI REPORTS FIRST DEATH IN CORONAVIRUS-RELATED CASE ON JAN 25 - STATE MEDIA— FXHedge (@Fxhedgers) January 26, 2020
In an attempt to make it look like Beijing is taking responsibility for the sluggish response (remember, China basically did nothing for three weeks after the first cases became symptomatic), Hu Xijin, the editor of the state-controlled Global Times, tweeted that China should have been better prepared for the outbreak.
Forbidden City announced Thursday to close over fear of coronavirus, followed by other museums nationwide. Beijing cancelled temple fairs &other Spring Festival activities, prompting other cities to cancel large scale events. Spring Festival economy is taking a big hit this year.— Hu Xijin 胡锡进 (@HuXijin_GT) January 24, 2020
More Chinese cities are limiting or closing public transit, with Tianjin preparing to shut down all inter-province shuttle buses starting...Monday.
Some discrepancies have appeared in the tally of case: The WHO is saying it has confirmed 1,320 cases, while the SCMP. New coronavirus scares have emerged in India, where nearly 100 people are under observation, according to India Today. Seven people are reportedly showing symptoms of the virus. Russia has reported several suspected cases in Moscow, South Korea just confirmed its third case, and Toronto health officials have confirmed their first case.
For some reason, the WHO number is significantly short of the numbers being reported by the Western press: Reuters has just confirmed another death, bringing the total to 56, and the total number of confirmed cases at 1,975.
Will we have 2,500 cases confirmed by tomorrow afternoon? Or will there be even more?
* * *
Update (1723ET): Canadian news website Global News is reporting that Toronto health officials are about to announce that a "presumptive case" of coronavirus has been confirmed at Toronto's Sunnybrook hospital.
Two cases of the virus have been confirmed in the US, but after several scares, no cases have yet been confirmed in Mexico, although testing is still underway for a trio of cases in Jalisco.
* * *
Update (1530ET): Now that the market is closed, local authorities apparently feel it's safe to start dribbling out the real numbers. The number of confirmed coronavirus cases soared on Saturday as China confirmed roughly 500 new cases. The number of cases outside China has also grown as Japan, Hong Kong, Macau, Taiwan, Singapore, Malaysia and Australia have all confirmed new cases. Meanwhile, another death has been confirmed, bringing the total to 42.
According to the South China Morning Post, a Hong Kong newspaper that has been keeping probably the most comprehensive tally of confirmed nCoV cases around the world, put the total number at 1,497 Saturday afternoon in New York. Three doctors in Beijing who visited Wuhan have been confirmed to have the virus.
During a meeting of China' Politburo on Saturday, President Xi not only urged disparate ethnic groups to work together and suppress the virus, but added that the "grave situation" seemed to be "accelerating," according to the BBC and SCMP.
"Party committees and governments at different levels have to make proper plans to contain the virus under the guidance of the Central Committee," he was quoted as saying.
"Hubei province has to regard virus prevention work as the most important task, and enforce stricter measures to stop the virus from spreading inside the province and spilling out into other areas. Isolation treatment should be provided for all infected patients."
As we mentioned earlier, Beijing has dispatched medics and other medically-trained PLA soldiers to Wuhan and other cities to help the overwhelmed hospitals. This headline passed without much scrutiny from the Western media, but we wouldn't be surprised to learn that the situation on the ground is closer to a PLA takeover of all the hospitals in Wuhan. In China, one doesn't simply send in the PLA to 'help with the logistics'.
Why wouldn't China want to tell the world that its massive military machine has temporarily taken over hospitals in the hot zone? Well, we'll let you figure that one out.
As for Wuhan, it'll soon be under complete lock down: Beginning Sunday private vehicles will be banned from its streets. To enforce that kind of a ban, one would need more than just the local police.
All events have been canceled, travel into and out of the city has been shut down, and, as we showed below, crude roadblocks have been set up to essentially seal off the city - a city of 11 million people - off from the rest of China. At least some form of travel restrictions are in place in some 18 cities in central Hubei. Restrictions include cutting off access to public transit and highways. Already, the economic fallout from the outbreak is being estimated in percentage points of local GDP, as we've previously discussed. The disruption of the holiday travel season will hammer China's tourism industry, possibly even worse than 17 years ago during the SARS outbreak.
Horrifying images of patients infected with the virus have popped up on Twitter.
As the situation grows increasingly serious, the senior Communist Party leadership, which has formed a group of top officials to oversee the crisis response, is giving local authorities carte blanche to take any necessary action to ensure hospitals remain fully staffed and supplied. There has reportedly been talk of punishing local officials who may have been slow to respond to the crisis during its early days.
After confirming its fifth case, Hong Kong has declared a state of emergency - the highest tier of public alert, according to the HKFP.
"Today I declare the lifting of the response level to emergency," chief executive Carrie Lam told reporters. She is under pressure to limit arrivals from the Chinese mainland. Right now, anybody arriving from the mainland in Hong Kong must sign a"health declaration form", though it's not clear how that will stop patients carrying the virus who may be asymptomatic.However, schools in the city will not reopen until at least Feb. 17 and transportation to and from Wuhan will be canceled until further notice. On the mainland, tour groups have been cancelled until at least mid-week. Oh, and so much for that mask ban Lam declared that the city will invest necessary to prevent the spread of disease, including increasing the supply of surgical masks after several cases of extreme price gouging were reported.
South Korea, which has confirmed at least two cases of the virus, said Saturday that it would declare all of China a "coronavirus watch zone" as local public health officials work to protect the public and suppress the virus. Several dozen people have already been tested for the virus in SK and come back negative, per Korea Times.
What a way to kick off the four-day lunar new year holiday.
* * *
As we move into Saturday evening on the ground in Wuhan, it's becoming increasingly obvious to the broader global community that China's authoritarian government has failed to contain this viral outbreak.
Chinese authorities expanded the travel restrictions on Saturday to cover 56 million Chinese, Al Jazeera reports. At least 18 cities in central Hubei are now dealing with at least some level of travel restrictions.
Unsurprisingly, some of the roadblocks remind us of 'Mad Max'.
In Wuhan, the situation looks grim. The number of confirmed cases is exploding: another 300 were announced on Saturday, while the death toll is steady at 41. Yesterday, videos flooded western social media (after being assiduously removed from Weibo and the rest of the Chinese Internet) purporting to show bodies piling up in hallways in Wuhan, with rumors that a doctor had succumbed to the virus.
Those rumors have now been confirmed: A doctor who worked at a hospital in Wuhan, China, where coronavirus patients are being treated died Saturday morning, according to the Wall Street Journal. Meanwhile, a two-year-old Chinese girl has become the youngest to be diagnosed with the virus.
Doctor Liang Wudong, of the ENT department of Hubei Xinhua Hospital, died Saturday while fighting on the front lines to suppress the virus.
As it has all week, the South China Morning Post has kept an up-to-date running total of the confirmed cases & deaths. As of 10 am ET on Saturday, the total number stood at exactly 1400.
A map of the various cases shows the spread, though even the most up-to-date maps by Western news agencies appear to already be out of date, including this one by BBG.
Though China has pledged transparency, some suspect that the true tally of cases within Wuhan is much higher. With the epidemic spiraling out of control, President Xi called a meeting of the Politburo Standing Committee, a group of China's top leaders, to discuss a response to the virus. At the meeting, the Communist Party set up a group to manage the response to the virus. The group will comprise members of the Party's Central Committee, while being directed by the Standing Committee. During the meeting, President Xi said various ethnic groups must work together to contain the spread of the deadly virus. Xi also ordered party authorities to ensure that there are enough medical supplies in Wuhan - the capital of Hubei province and a city of 11 million five times the size of London and bigger than any US city.
"Party committees and governments at different levels have to make proper plans to contain the virus under the guidance of the Central Committee," he was quoted as saying.
China's National Health Commission announced on Saturday a nationwide plan to identify suspected cases of the deadly virus on trains, airplanes and buses. Inspection stations will be set up and passengers with suspected pneumonia will be "immediately transported" to a medical center. In the city of Haikou, the authorities said they would set up a 14-day observation center for all tourists who came from Hubei. They will not be allowed to leave the hotels where they are staying. At least 450 additional military and medical personnel have been deployed in Hubei to help with the situation.
Following reports last night of a suspected case in Sydney, Australian authorities have confirmed the first case of the virus. Yesterday, several cases were also identified in France. But that's not all: Malaysia has confirmed that three cases of the virus have been detected. Japan is now up to three cases, all Chinese nationals, according to the Nikkei Asian Review.
Interfax reported Saturday afternoon that seven suspected cases of the virus have been detected in Moscow. The individuals are all said to be suffering from high temperatures. These would be the first confirmed cases in Russia after a nCoV scare involving a Chinese national in St. Petersburg was found to be negative, per TASS.
Following reports that the virus may have originated from people eating bats or rats, the party has ordered more inspections of agricultural products, and has temporarily banned the trade in wild animals. It has also shut down movie theaters, LNY-related events and other mass gatherings across the country, warning that people should avoid coming together en mass until the outbreak is contained.
Qinghai province in northwestern China confirmed its first case on Saturday, leaving Tibet as the only administrative area of China that remains virus-free.
In Wuhan, the horror stories are getting worse: One woman told the SCMP that her husband was turned away by several hospitals despite coughing up blood, a sign of very advanced pneumonia.
"I have nothing. No protective clothing, only a raincoat, and I am standing outside the hospital in the rain," said the woman, who gave her name as Xiaoxi.
"I am desperate, I have lost count of time and days. I don’t know if we will both live to see the new year."
The rapid rise in the number of cases doesn't necessarily mean the outbreak is getting worse, according to a spokesman from the WHO. Instead, it could reflect better monitoring and intervention by government authorities. As far as determining the severity of the epidemic, it's still too early to say.
"It's still too early to draw conclusions about how severe the virus is because, at the beginning of any outbreak, you would focus more on the severe cases," said Tarik Jasarevic, a spokesman for the World Health Organization in Geneva.
Video from inside Wuhan, a city that has been nearly entirely sealed off from the outside world, the situation appears increasingly dire.
A lot of attention has been paid in the Western press about the effort to build a new, 1,000 bed hospital in Wuhan as the city's current health-care infrastructure has been completely overwhelmed. They're hoping to finish the building in under a week, an astonishing pace. State media reported Saturday that a second hospital will also be built.
Foreign governments including the US and Russia are hatching plans to air-lift their citizens out of Wuhan. This could include journalists covering the outbreak, meaning the flow of information out of the city could soon slow to a trickle. Meanwhile, scientists are scrambling to determine the virus's infectious potential before victims start showing symptoms. If it's confirmed that the virus spreads in this way, than that would make full containment virtually impossible.
After three days of "why", here comes the "why not"...
Beginning at 10am ET, White House lawyers began their defense of the President on Day 5 of the Senate Impeachment Trial.
The Trump lawyers are expected to speak for upwards of three hours after Democrats wrapped up their opening arguments on Friday night.
A member of the legal team, Jay Sekulow, referred to Saturday's session as "a trailer" of "coming attractions" for next week's sessions.
Paging all European investment bankers (or at least the ones who still have jobs): If you haven't already, now would probably be a good time to update your resume and reach out to that old counterparty at JPM.
Because Barclays is the latest European investment banking giant to slash banker bonuses for 2019, despite all signs pointing to a blockbuster year for both the American equity market and American banks.
According to the FT, Barclays i-bankers have been complaining about a double-digit decline in the bank's bonus pool for 2019, a necessary sacrifice for CEO Jes Staley's desperation to hit a profitability target and disprove the criticisms of a certain troublesome activist. Of course, the decision to cut bonuses was telegraphed by the bank far in advance, as we reported back in April. This comes after the bank increased its bonus pool last year for the first time since 2013.
Now that Deutsche Bank has committed to dramatically shrinking its investment bank, Barclays is one of the only remaining bulge bracket banks from Europe. Staley has been trading barbs with activist investor Edward Bramson, who is pushing a strategy of cuts to the investment bank to increase the emphasis on Barclays' lucrative consumer business. Staley insists that he can turn around the bloated investment bank by making it more efficient.
According to Barclays last earnings report, the bank achieved a 9.6% ROTE during the first nine months of 2019, leaving it on track to hit its 10% target in 2020. Given the stakes, Staley is doing everything he can to ensure that the bank hits this target, since both his reputation and potentially the survival of the investment bank may depend on it. The investment bank also logged a strong Q3 profit (it jumped 41% YoY) and it's expected that the bank, like many of its American peers, took in more trading revenue last quarter.
"Jes has made it clear that we are going to hit the 9 per cent target come hell or high water," said one Barclays managing director. "Costs are the easiest way to do this, so he’s squeezing the lemon."
For years, former Barclays investment bank head Tim Throsby protected the division from bonus cuts during lean years. But now that he's gone (he was fired last year), one of FT's sources estimated that the drop in the bonus pool was "in the mid-teens", and that bankers wouldn't complain too loudly since they "made up for lost ground" in 2018.
"We are not asking people to get slaughtered, but it will be noticeable," one of the people said. "We underpaid in 2017 and made up a lot of that ground in 2018 under Tim Throsby, and now we are obviously asking for some of that back."
It appears that several Barclays executives tried to convince the FT that the bonus-pool cut isn't a big deal, since the bank goes to great lengths to ensure its total compensation is on par with its American rivals. Besides, the cuts still aren't as deep as the 20%-30% reduction of the Deutsche Bank bonus pool.
Of course, comparing your bank to Deutsche isn't exactly a winning strategy for combating discontent among the ranks.
We have often discussed the struggle of women in Muslim countries in resisting religious-based requirements for coverings and limitations on their movements and interactions. Turkey was once the exception among these countries as a secular, modern nation. That was before the rise of Islamic parties under the authoritarian President Recep Tayyip Erdogan. Turkey under Erdogan has already rolled back on protections for girls and women in abuse cases.
Now the country is considering a horrific law aptly called the “marry-your-rapist” bill.
Under this legislation, men accused of having sex with underaged girls could avoid punishment if they marry their victims.
We have discussed the continuing practice of forced marriages and sexual abuse of girls in Muslim countries, including clerics who insist that girls as young as nine are ready for marriage. This law would effectively allow men to buy their way out of punishment by striking a deal with a victim’s family. Since many girls come from poor families, the opportunity to buy your way out of a rape case is high.
Not only has Erdogan destroyed the country’s secular traditions but eviscerated civil liberties and press freedoms. Women quickly felt the pressure of his Islamic parties. Erdogan himself declared that a woman who did not bear children was “incomplete” and that equality with men was “against nature.”
He declared bluntly:
“You cannot put women and men on an equal footing. It is against nature.”
A similar law was attempted years ago but now conservative and religious parties are trying again. A recent government report on child marriage estimated a total of 482,908 Turkish girls were married in the last decade.
Every once in a while, medical researchers simply have a stroke of good luck. In this case, that "stroke of good luck" could have a profound effect on the medial community.
Researchers at Cardiff University that were in the midst of analyzing blood from a bank accidentally stumbled into an "entirely new type of T-cell", according to The Daily Wire. The new cell carries a "never before seen" type of receptor that acts like a grappling hook, latching on to most human cancers.
Prior therapies, called CAR-T and TCR-T, which use immune cells to attach to HLA molecules on cancer cells' surface, are incapable of fighting solid tumors, the article notes. HLA molecules vary in people, but the new therapy instead attaches to a molecule called MR1, which does not vary in humans. This gives the therapy a chance of fighting most cancers.
It also means people could share the treatment, which could allow banks of cells to be stored and offered quickly, as needed.
The treatment has already worked on lung, skin, blood, colon, breast, bone, prostate, ovarian, kidney and cervical cancer cells. The study stated:
Human leukocyte antigen (HLA)-independent, T cell-mediated targeting of cancer cells would allow immune destruction of malignancies in all individuals. Here, we use genome-wide CRISPR-Cas9 screening to establish that a T cell receptor recognized and killed most human cancer types via the monomorphic MHC class-I related protein, MR1, while remaining inert to noncancerous cells … These finding offer opportunities for HLA-independent, pan-cancer, pan-population immunotherapies.
It concluded: “In summary, we describe a TCR that exhibits pan-cancer recognition via the variant MR1 molecule, and, by equipping patients with melanoma T cells that lacked detectable cancer reactivity with the MC.7 G5 TCR, we rendered the T-cells capable of killing autologous melanoma.”
What does that mean? It means "it works". Additionally, T-Cells of skin cancer patients altered by the treatment were capable of killing the patient's cancer cells and other patients' cancer cells as well.
The lead author on the study, Andrew Sewell, said: “This was a serendipitous finding, nobody knew this cell existed. Our finding raises the prospect of a ‘one-size-fits-all’ cancer treatment, a single type of T-cell that could be capable of destroying many different types of cancers across the population. Previously nobody believed this could be possible.”
“This new type of T-cell therapy has enormous potential to overcome current limitations of CAR-T, which has been struggling to identify suitable and safe targets for more than a few cancer types,” said Professor Oliver Ottmann, Cardiff University’s Head of Haematology.
Trials on terminally ill patients could start as soon as November.
Now if they could only "stumble" onto a cure for the coronavirus next...