Feb 072020

Takeuchi Seiho Bear in snow 1940



As I said earlier today, I picked up a whole slew of articles on the “coronavirus” through the day yesterday, collected some more today, and then decided not to put them in my daily Debt Rattle news aggregator today because it would have been too much.

I wasn’t trying to focus on number of deaths or cases, interest in that is overblown by now. What I look for is news about the consequences of the “coronavirus” epidemic. See, most people look at the numbers, think that they are lower than they could be, and lower than in armageddon predictions, so we’ll all be alright.

And I’m not saying that we won’t be, never have, I’m saying the numbers are no longer the main story. The story has changed into the effects of the virus on domestic and international policies, and ultimately -especially- on global trade and travel. And those effects have only just started. Just like I said 2 days ago in The Big Lockdown.

Initially, the effects, the fallout, from the epidemic, will appear minor, companies will be able to switch things a little and do their thing. But at some point that changes. As I saw somebody say earlier, if even just 1% of your car parts are from China, and you can’t get them anymore, you’re not going to be building a car. The vast majority of carmakers use 30% Chinese parts or more.

And then you also have many thousands of cancelled flights, and cruises, and what has a much bigger impact: shipping of goods to, but of course mostly from, China. Chinese ports are already filing up with items like fruits, but that’s nothing yet. If you put half your country on lockdown, who’s going to service incoming and outgoing ships?

The Lunar New Year is done this Monday, but we know Chinese trains are down 75% of their passengers, and plane travel is off by over 50%. Xi Jinping allegedly told Trump yesterday that “We are fully confident and capable of fighting the epidemic. The long-term trend of China’s economic development will not change”, but how much of that is wishful thinking?

How do you restart an economy that has 400 million people under lockdown, and that sees all westerners leave? Xi must be getting anxious and nervous by now. And renditioning people is not going to do the trick. Ideally, he would convince the rest of the world that the virus is contained and no longer dangerous. No doubt the lowering rates of change in new cases is step one in trying to do that.

Xi would have had it easier if China hadn’t first attempted to wipe the disease under the carpet for 1-2 months. But that would be against longstanding Party lines, as I wrote in The Party and the Virus. Step one is always: “complete denial, not a word”.

And now he doesn’t just have western governments to deal with anymore, there’s also the people (both at home and abroad). Just wait until the first death is recorded in the US, Britain, France or somewhere near. The west will tend strongly towards a lockdown too. Politicians will cry: “it’s too expensive”, but that won’t be people’s priority. Fear will be.

So, three essays so far on the topic, 2019-nCoV, The Party and the Virus and The Big Lockdown, and here goes with lockdown fallout.



This is like a quarter of the population. 80 million in US terms. Do the math for your own country. 20 million French, 25 million Germans? Wow. Let’s see that one.

400 Million People Are On Lockdown In China As Guangzhou Joins Quarantine

Guangzhou, the capital of China’s southwestern Guangdong Province and the country’s fifth largest city with nearly 15 million residents, has just joined the ranks of cities imposing a mandatory lockdown on all citizens, effectively trapping residents inside their homes, with only limited permission to venture into the outside world to buy essential supplies.

The decision means 3 provinces, 60 cities and 400 million people are now facing China’s most-strict level of lockdown as Beijing struggles to contain the coronavirus outbreak as the virus has already spread to more than 2 dozen countries. That’s more than 400 million people forcibly locked inside their homes for 638 deaths? Just think about that: If there was ever a reason to believe that Beijing is lying about the numbers (and not just because Tencent accidentally leaked the real data), this is it.

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Saw this yesterday and thought: that’s very extreme. Again, imagine this in your own country or city. What would that take? 100 infections and 2 deaths?

Wuhan Ordered To Round Up All Infected Residents For Mass Quarantine

A senior Chinese official has ordered Wuhan authorities to immediately round up all residents infected with the novel coronavirus and place them in isolation, quarantine camps, or designated hospitals, according to the New York Times. City investigators have also been ordered to go to each home and check the temperature of every resident, as well as conduct interviews with infected patients’ close contacts.

“Set up a 24-hour duty system. During these wartime conditions, there must be no deserters, or they will be nailed to the pillar of historical shame forever,” said Sun Chunlan, a vice premier in charge of leading the CCP’s response to the outbreak. “The city’s authorities have raced to meet these instructions by setting up makeshift mass quarantine shelters this week. But concerns are growing about whether the centers, which will house thousands of people in large spaces, will be able to provide even basic care to patients and protect against the risk of further infection.” -NYT

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No wedding parties, locked in your home just like those cruise passengers are in their cabins. The idea of switching off elevators so people don’t go out is “brilliant”.

China Imposes Tougher Lockdown Measures

Beijing has banned group dining for events such as birthdays and weddings while cities such as Hangzhou and Nanchang are limiting how many family members can leave home each day. Hubei province, the worst hit by the virus, has switched off lifts in high-rise buildings to discourage residents from going outside. Its capital, Wuhan, has a lack of beds and equipment, one senior city official said. Despite the rapid construction of two hospitals, the volume of patients is causing severe strain. Reports on social media say the Wuhan government is to carry out door-to-door temperature checks on residents.

Human Rights Watch director Kenneth Roth said China had suppressed reports in the early days of the outbreak and clamped down on criticism of its handling of the crisis. “There’s no place for secrecy in fighting an epidemic,” he said. Although he praised Beijing for quickly sharing the DNA sequence of the virus, he attacked the lockdowns policy. “Quarantines of this sort typically don’t work. Quarantines, the kind that public health officials advocate, are much more targeted. They’re aimed at people who have been identified as having the virus,” he said. Mr Roth said there were “huge gaps” in getting people fed, housed and treated. Chinese officials have strongly defended their approach.

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This morning’s numbers. “We have declared a people’s war against the epidemic through prevention and control..”

And Trump told Xi he would win that war. But only after he closed the borders with a 14-day quarantine even for Americans,

China Reports 73 New Deaths From Coronavirus, 3,143 New Cases

Chinese President Xi Jinping told his US counterpart Donald Trump on Friday that China’s economic development would not be affected by the outbreak, according to CCTV, China’s state broadcaster. CCTV reported that, in a phone conversation with Trump, Xi said the Chinese government and people had put their fullest efforts into containing the outbreak since it had started. “We have adopted the most comprehensive and strictest prevention and control measures through mobilising and rapid responses. We have declared a people’s war against the epidemic through prevention and control,” Xi was quoted as saying. “We are fully confident and capable of fighting the epidemic. The long-term trend of China’s economic development will not change.”

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It’s either one giant dilemma or very many smaller ones. But I don’t see him solving it before the peak of the epidemic in 2-3 months. What are Chinese workers do in the meantime?

China Faces Dilemma As It Tries To Get Back To Work

China is facing a dilemma as it tries to get back to business after the extended Lunar New Year holiday amid fears that a mass movement of workers across the country will worsen the spread of the deadly coronavirus that has struck nearly 30,000 people. Allowing the workforce to return to their jobs was crucial both for sustaining economic growth and providing support to fight the outbreak, according to Lu Zhengwei, chief economist at the Industrial Bank in Shanghai. “It’s obviously desirable for employers who are now paying rent, salaries and social welfare for their employees, for nothing in return,” he said, adding that most small and medium enterprises in China could only last about a month in the current situation.

After the State Council, China’s cabinet, issued a directive to extend the holiday until last weekend as part of measures to contain the virus outbreak, a number of provinces and municipalities – including Beijing, Shanghai, Zhejiang and Guangdong – pushed back the return to work to this Monday. That extended hiatus of business operations will have an impact on the country’s economy, which has already been battered by the protracted trade war with the United States. Advisory firm Oxford Economics has lowered its growth outlook for China to 5.4 per cent in 2020, compared with 6 per cent previously, according to its chief Asia economist Louis Kuijs. Meanwhile, Tao Wang, China economist at UBS, forecast the country’s first-quarter growth at 3.8 per cent, and 5.4 per cent for the whole year.

[..] Huang Xin, an official with the China Railway Corporation, said about 2 million to 3 million passengers were expected to travel each day from Saturday to Tuesday – only about one-quarter of the normal peak number following the Lunar New Year break. “We will be paying extra attention to return trips of college students and migrant workers,” he said at a press briefing in Beijing. “We will also use big data to adjust our railway capabilities.” [..] Similar arrangements had been made for air passengers, said Yu Biao, an official with the Civil Aviation Administration of China. Yu said the number of flights in China had been halved in the past week, and only 45 per cent of seats had been filled.

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Mandatory 14-day quarantines for US citizens. What will people do, use their remaining vacation days? Or not go?! I think I know.

China Grows Isolated As Airlines Cancel More Than 50,000 Flights

One by one, air carriers have cut service after demand fell sharply and governments took more drastic measures that they say aim to curb the spread of the disease [..] These steps have left China, the world’s second-largest air travel market after the U.S., more isolated. Airlines in dozens of countries have scaled back service or in the case of U.S. airlines canceled flights altogether to the Chinese mainland and Hong Kong as the coronavirus spreads.

This will drive down airlines’ 2020 revenue and deprive other segments of the travel industry, including hotels and retailers, of high-spending tourists. The outbreak has some travelers exercising more caution with their travel, even for destinations other than China. Many travelers would be inquiring about spring travel during this time of year, said Cindy Guo, who runs Top Travel International in Flushing. “Some people prefer to stay home” because of the virus, she said. The U.S. instituted travel restrictions on Sunday that include requiring returning U.S. citizens who have been in Hubei province — where Wuhan, the epicenter of the virus, is located — to face mandatory, 14-day quarantines.

The Trump administration has ordered self-quarantines for U.S. citizens who have been in other parts of mainland China. Additionally, foreigners who have been in China in the last two weeks, except for immediate family of U.S. citizens and permanent residents and a few others, won’t be allowed in at all. [..]

At stake are more than 165,000 scheduled flights in and out of China between Jan. 29 and March 28 that would affect 27 million travelers, according to data from aviation consulting firm Cirium. More than 54,011 flights, or 28% of the scheduled flights to, from and within China between Jan. 23 and Feb. 4 were canceled, 14% of them the international scheduled flights. Getting around within China is also becoming more complicated, and close to 32% of domestic flights were called off in that period.

Read more …

And of course it’s not just airlines. Shipping is a much bigger driver of the economy. It’s been less than 3 weeks, and goods are getting stranded, Try 2-3 more months and tell me what you find.

Global Shipping Being Hit By The Coronavirus. Now Goods Are Getting Stranded

The arteries of global trade are clogging up. Shipping companies that carry goods from China to the rest of the world say they are reducing the number of seaborne vessels, as measures to stop the spread of the coronavirus crimp demand for their services and threaten to disrupt global supply chains. About 80% of world goods trade by volume is carried by sea and China is home to seven of the world’s 10 busiest container ports, according to the United Nations Conference on Trade and Development. Nearby Singapore and South Korea each have a mega port too.

[..] “This will affect many industries and limit demand for containerized goods transport,” Sand told CNN Business. Everything from cars and machinery to apparel and other consumer staples are shipped in containers, and disruption to the industry could reverberate far beyond China as the country seeks to contain the coronavirus outbreak by keeping factories shut and workers at home. The longer the health crisis lasts, the harder it will be to move goods around the world.

Already, carmaker Hyundai has suspended production at its plants in South Korea because of a disruption to the supply of parts caused by the coronavirus outbreak in China, the company said in a statement. The shutdowns mean that some ships can’t get into Chinese ports, as the loading and discharging of goods slows, said Guy Platten, secretary general of the International Chamber of Shipping, a trade body.

Others are stuck in dock, waiting for workers to return to ports so that construction and repairs can be completed, Platten added. Still more vessels are idling in “floating quarantined zones,” as countries such as Australia and Singapore refuse to allow ships that have called at Chinese ports to enter their own until the crew has been declared virus-free, added Sand. Platten said he knew of at least one crew that is running low on food because their ship has been idled for so long.

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I so feel for these people. Claustrophobic as hell I am.

Coronavirus Infections Triple On Cruise Liner Quarantined In Japan

Dozens of additional passengers aboard a cruise liner in Japan have tested positive for coronavirus, bringing the total number of infections on the ship to 61 as 3,700 people remain trapped on the quarantined vessel.
Stuck at the port of Yokohama since earlier this week, the ship’s 3,700 passengers and crew face weeks of quarantine as medical workers test for signs of the deadly contagion. The ship is now like a “floating prison,” one passenger said on social media, where haunting images have emerged showing its abandoned halls, once bustling with activity. Of the thousands of passengers on board, 273 have shown symptoms of illness, such as cough and fever, or came in contact with those who have.

All of those passengers have now been tested, Japan’s Health Ministry said, noting the 41 new patients will be transferred to medical facilities in Tokyo, Saitama, Chiba and Shizuoka prefectures, as well as Kanagawa. It remains unclear whether additional cases could arise on the ship, as the novel coronavirus has been found to spread person-to-person, even among those not yet showing symptoms, with a long incubation period. Some passengers already expressed fear that they could eventually end up stuck on the vessel for much longer than 14 days if new infections occur. With the number of infections on the ship tripling on Thursday as health screenings continue, Japan now counts at least 86 cases of the lethal coronavirus nationwide.

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Welcome! Bring ’em on!

Now the CDC has to figure out who all these people have been in contact with the past 2 weeks and more.

How do they test for asymptomatic carriers? Does the US have enough testing kits? Even if they do, does Britain, does Belgium, France?

And would the US give them away? In China, cities steal each other’s supplies of face masks etc.

Royal Caribbean Ship With 12 Quarantined Passengers Docks In NJ

A Royal Caribbean cruise ship that has 12 passengers quarantined over fears of coronavirus has docked in Bayonne, New Jersey, this morning with ambulances on the scene. The “Anthem of the Seas” arrived in New Jersey just hours ago, at about 6AM, in thick dense fog, according to ABC 6. Several ambulances were on standby at the scene. The passengers in quarantine will all be tested by the CDC, who was also awaiting the arrival of the ship on the scene. The passengers of the ship are all Chinese nationals – many of whom started exhibiting symptoms while aboard the ship, which was coming back from the Bahamas.

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From planes to ships to automobiles. It’s a small step for man, big step for us all.

The Global Car Industry Is Bracing For A Huge Shock From China /span>

China makes more cars than any other country, and is also the world’s biggest market. When car plants across China shut last month for the Lunar New Year holiday, the industry was already under huge pressure: sales had been falling for two years due to the loss of tax incentives for electric cars and the slowing economy, and officials were expecting an unprecedented third year of stagnation.

Many of those plants have since been ordered to remain shut at least until next week as the Chinese government scrambles to contain the virus that first appeared in Wuhan, a major autos hub [..] Automakers are bracing for even longer shutdowns and a deeper recession in global sales.

[..] The extended factory closures are expected to make it much more difficult for the industry to emerge from its recession. According to S&P Global Ratings, the outbreak will force carmakers in China to slash production by about 15% in the first quarter. The auto industry is particularly exposed because the virus originated in one of China’s “motor cities.” General Motors, Nissan, Renault, Honda and Peugeot owner PSA all have large factories in Wuhan, which has been on lockdown since late January. Wuhan and the rest of Hubei province account for 9% of total Chinese auto production, according to S&P Global Ratings. PSA Group told CNN Business this week that its Wuhan plant would remain closed until at least February 14.

Volkswagen is most exposed to potential damage. The world’s largest automaker has 24 plants making cars or parts in China, accounting for 40% of its production. [..] The situation could get worse before it gets better. S&P Global Ratings researchers said the Chinese government could extend factory shutdowns in order to limit contagion risk, affecting as much as half of China’s car and auto parts production.

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9-10 days? You really think that’ll do it?

Toyota Keeps China Plant Output Stopped Till Feb. 16 As Virus Hits Supply

Toyota Motor Corp on Friday said production at all of its plants in China would remain suspended through Feb. 16, joining a growing number of automakers facing output stoppages due to supply chain issues as the coronavirus outbreak spreads. The Japanese automaker, which operates 12 vehicle and vehicle components factories in China, said it would extend its production stoppage “after considering various factors, including guidelines from local and region governments, parts supply, and logistics.” The decision extends Toyota’s initial plans to suspend operations through Sunday, and comes as the threat from the coronavirus crisis closes in on the global auto industry.

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Big one. What’s in the fine print of the contract? What’s the use of going to court if the buyer can’t take delivery? How long would a court case take? How much do you value your buyer?

France’s Total Rejects Force Majeure Notice From Chinese LNG Buyer

French oil major Total has rejected a force majeure notice from a liquefied natural gas (LNG) buyer in China, the first global energy supplier to publicly push back against firms backing out of deals amid the coronavirus outbreak. Concerns that Chinese companies could back out of contracts because of the coronavirus epidemic have slowed down spot crude oil and LNG sales into China, the world’s top energy consumer, increasing global supplies and depressing prices of energy products. “Some Chinese customers, at least one, are trying to use the coronavirus to say I have force majeure,” Philippe Sauquet, head of Total’s gas, renewables and power segment, said during the company’s full-year results presentation on Thursday.

“We have received one force majeure that we have rejected.” Companies invoke force majeure when they cannot meet their contractual obligations because of circumstances beyond their control. Sauquet did not disclose the name of the buyer Total rejected a force majeure notice from. Reuters reported on Thursday that China National Offshore Oil Corporation (CNOOC), the country’s biggest importer of liquefied natural gas (LNG), has declared force majeure on some prompt deliveries with at least three suppliers because of the rapid spread of the coronavirus, two sources said on Thursday. Total is one of the biggest suppliers of LNG to CNOOC, industry sources said.

Last week, a Chinese international trade promotion agency said it would offer force majeure certificates to companies struggling with the fallout from the coronavirus epidemic to give to their overseas partners. Lawyers told Reuters that LNG contracts are typically governed by English law which spell out events that constitute a force majeure and some may include the epidemic clause. Serving the force majeure notice is the first step in a long-drawn out process, they said. The onus is also on buyers to prove that they are not physically able to receive the cargo to demonstrate a force majeure. For instance, if there are port closures or if workers are unable to get to the ports due to the virus.

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I love lines like: ““There is absolutely no need to panic buy..”, because what’s the other side of that? You can trust us to tell you when there’s a need to panic?

But a government could never tell you to panic.

Best version is “This is not the time to panic”. And then you go: Okay, I’ll watch some TV then, and I’ll make sure I get my ten hours of sleep. But first thing in the morning….

Panic Buying As Hong Kong Government Silent On Coming Quarantine Move

Anxious Hongkongers scrambled on Thursday to stock up on essentials over fears that border restrictions to contain the coronavirus would choke off shipments, while the government provided scant details on the mandatory quarantine taking effect in less than 36 hours on arrivals from mainland China. As long queues formed at shops all over the city for the second straight day and people jostled to grab toilet and tissue paper, as well as rice and perishables, food suppliers sought to assure the public there was no need for hoarding. “There is absolutely no need to panic buy. We have always worked to ensure a stable supply of food and all these years, throughout all sorts of big events, we have never had a shortage,” Thomas Ng Wing-yan, chairman of the Hong Kong Food Council, told a press conference.

The fears, fed by online rumours, mounted when the government announced on Wednesday it would impose a 14-day quarantine on anyone entering from mainland China, sparking concerns that supplies would also be held up. But while the government said it would reveal more on the quarantine measures on Thursday, the day ended with no information forthcoming, as sources told the Post that Chief Executive Carrie Lam Cheng Yuet-ngor was still locked in meetings over facilities and details on implementation. Even as they gave assurances, representatives of rice, pork, egg, seafood, poultry and fruit-and-vegetable merchants urged the government to exempt cross-border truck drivers from the 14-day quarantine set to kick in on Saturday, to avert any delays in supplies reaching the city.

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Li Wenliang appears to have been off by a week or so. Bless his soul, he got caught in Phase 1, in which the Party’s knee-jerk reaction is “complete denial, not a word” (they can’t help themselves). One week later he would have come in in Phase 2, “damage control, massaging the numbers downward”. He would have gotten much less Party flack… See again The Party and the Virus.

Coronavirus Kills ‘Hero’ Chinese Doctor Who Sounded Alarm

A Chinese doctor who tried to warn the world about a new coronavirus died of the disease on Friday, prompting an outpouring of sorrow as the death toll passed 630 and Beijing declared a “people’s war” on the rapidly spreading pathogen. Li Wenliang, 34, died in the early hours of the morning at the hospital where he worked and first raised the alarm about the new coronavirus in the central Chinese city of Wuhan, the epicenter of the outbreak, hospital officials said. An ophthalmologist, Li was one of eight people reprimanded by Wuhan police last month for spreading “illegal and false” information about the coronavirus, a flu-like pathogen that since triggered a global health emergency.

His messages to a group of doctors on Chinese social media warning of a new “SARS-like” coronavirus – a reference to Severe Acute Respiratory Syndrome (SARS) which killed almost 800 people around the world in 2002-2003 – triggered the wrath of Wuhan police. China was accused of trying to cover up SARS. He was forced to sign a letter on Jan. 3 saying he had “severely disrupted social order” and was threatened with criminal charges.

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… but Phase 2 already gave way to Phase 3: “close all the doors, not to worry, nothing to see here, we got this, no you can’t come in, too risky!”

That’s what these guys get.

Citizen Journalists Who Exposed Beijing’s Lies In Wuhan Have Vanished

Bloomberg reports that Beijing has silenced two of the citizen journalists responsible for much of the horrifying footage seeping onto western social media. As BBG’s reporter explains, Chinese citizen journalists Chen Qiushi and Fang Bin have effectively been “the world’s eyes and ears” inside Wuhan (much of the film produced by American news organizations has consisted of drone footage). In recent days, SCMP and other news organizations reporting on the ground and publishing in English have warned that Beijing has stepped up efforts to censor Chinese social media after allowing citizens to vent their frustrations and share news without the usual scrutiny.

On Wednesday, China said its censors would conduct “targeted supervision” on the largest social media platforms including Weibo, Tencent’s WeChat and ByteDance’s Douyin. All in an effort to mask the dystopian nightmare that life in cities like Wuhan has become. But that brief period of informational amnesty is now over, apparently. Fang posted a dramatic video on Friday showing him being forcibly detained and dragged off to a ‘quarantine’. He was detained over a video showing corpses piled up in a Wuhan hospital. However, he has already been released.

Chen, meanwhile, seems to have vanished without a trace, and is believed to still be in government detention. Last week, we shared one of Chen’s more alarming videos documenting the severe medical supply shortages and outnumbered medical personnel fighting a ‘losing battle’ against the outbreak.

Read more …


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Feb 062020

Seattle, WA during Spanish Influenza. No ride on street cars without wearing a mask 1918/19


China May Delay Annual Meeting Of Parliament Due To Virus Outbreak (R.)
“Leaked” Infection Numbers Over 154,000; Deaths Approach 25,000 (NN)
Major Mainland Chinese Airlines Place All Foreign Pilots On Unpaid Leave (SCMP)
With Virus Deaths At 565 China Considers Trade Deal Disaster Clause (SCMP)
Chinese Scholar Blames Xi Jinping, CCP For Not Controlling Outbreak (SCMP)
Who Owns The Coronavirus Cure? (SCMP)
Pelosi Shreds Decades Of Tradition In Demonstrating Against Trump (Turley)
Buttigieg and Sanders Separated By Razor-Thin Margin In Iowa (Pol.)
Biden Vows To Press On Despite Iowa ‘Gut Punch’ (BBC)
In This Impeachment, People Only Heard What They Wanted To (Turley)
Nancy Pelosi Should Resign (Turley)
Bloomberg Surrogates Have Seats on DNC Rules Committees (Sludge)



There we go again:

• 565 deaths (up 72 from yesterday, biggest increase in official numbers to date)

• 28,339 cases (up 3,797 from yesterday’s 24,542, and yeserday’s rise of 3872)

• There are suggestions from China that the increase in cases is slowing, but that’s after yesterday’s record increase. We’ll see.

• At the same time, the increase in severe cases appears to be accelerating.

• 10 more infections on cruise ship off Yokohama

• One thing that’s certainly increasing is the skepticism about the official numbers.




Some interesting things in this article:

1) Officials returning to Beijing from other provinces after Lunar New Year are in 14-day quarantine. First time I see mandatory quarantines for Beijing.

2) There’s talk of delaying the (10+ days) National People’s Congress, which only starts on March 5.

Events have been cancelled as far out as April 15. That syncs quite well with what I said in my article The Big Lockdown.

China May Delay Annual Meeting Of Parliament Due To Virus Outbreak (R.)

China is considering delaying the annual meeting of its top legislative body, five people familiar with the matter said, as it grapples with a coronavirus epidemic that has forced drastic curtailment of travel and other activity to curb its spread. The National People’s Congress (NPC), made up of about 3,000 delegates, typically gathers for a session lasting at least 10 days in Beijing, beginning on March 5, to pass legislation and unveil key economic targets for the year. A postponement would be the first since China adopted the current March schedule in 1995 for the meeting of parliament. “The focus remains on taking steps forward towards meeting on schedule, but we are discussing a range of options as the (virus) situation doesn’t look likely to be contained by March,” a senior government official told Reuters, declining to be identified given the sensitivity of the matter.

“A delay is one of those options,” the official said. “It should come as no surprise given that we are in a very difficult time.” Many officials who would ordinarily be involved in preparation for the NPC are staying at home under 14-day mandatory quarantines after returning to Beijing from their home provinces following the Lunar New Year holidays. Central government officials in Beijing were told to resume work on Feb. 3. China has already postponed a high-level business event, the China Development Forum, which is usually held in late March, and the venue for the Canton Fair, a trade fair in the southern city of Guangzhou, has been suspended until further notice. The spring session of the trade fair was due to begin on April 15.

The NPC gathering is crucial this year, as it is set to ratify China’s first-ever civil code, a key milestone in President Xi Jinping’s legal reform effort. The NPC is also widely expected to discuss the months-long protests in Hong Kong, and to announce the annual economic growth target along with China’s defence budget. Under China’s constitution, a full plenary session of the NPC must be held every year. Chucheng Feng, a partner at Plenum, an independent research firm in Hong Kong, put the chance of a delay at just 10% because of the meeting’s political importance. “However, as the epidemic extends into February, the gathering of China’s entire political elite in a confined Great Hall of the People for over a week looks quite dangerous,” he said.

Read more …

Tyler broke the story. This is a handy write-up. It’s the smaller numbers above the big ones that all but prove we’re looking at an automatically updating database.

“Leaked” Infection Numbers Over 154,000; Deaths Approach 25,000 (NN)

Zero Hedge reported this morning, “As Taiwan [News] reports in a report first spotted by user @TheHKGroup, over the weekend, Tencent “seems to have inadvertently released what is potentially the actual number of infections and deaths, which were astronomically higher than official figures”, and were far closer to the catastrophic epidemic projections made by Jonathan Read.” According to official numbers from mainland China, which are updated daily, the current number of coronavirus infections is still under 25,000. Even then, it currently appears to be expanding at roughly 20% per 24-hour period, which represents a doubling of infections every 3.5 days (because the growth is compounded). (The left column is infections, and the right column is deaths.)

However, observers have noted that the official numbers reported by the communist Chinese government recently slipped into the “real numbers,” suddenly showing far higher confirmed infections and deaths: 154,024 infections and 24,589 deaths. Here’s a screen shot that was captured before the numbers reverted back to the lower, “official” numbers:The initial reaction from observers might be something along the lines of, “That was just a typo. So they corrected it.” However, there’s more to this story:

The higher numbers didn’t merely appear by themselves, out of context. Above each number is an “increase” factor that calculates how much larger today’s numbers are compared to yesterday’s numbers. For the 24,589 deaths, located at the lower right of this graphic, you’ll notice a number above it that states, “+1546.” The Chinese characters next to the numbers explain, “Compared to yesterday.” This means there is an underlying database that’s tracking daily numbers and being used to calculate the day-to-day differences. Similarly, there’s a number above the infection count of 154,023 that explains, “+20979.” This indicates the day-over-day increase from the previous day.

These numbers are clearly being automatically calculated, because if human error were to blame for typing the wrong numbers representing infections and deaths, it would be extremely unlikely that two more typos would coincidentally appear above those numbers, accidentally showing day-to-day increases that are consistent with a second set of numbers that are obviously being stored in parallel.

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The highest paid.

Major Mainland Chinese Airlines Place All Foreign Pilots On Unpaid Leave (SCMP)

All foreign pilots working for China Southern Airlines, Hainan Airlines, and a host of smaller mainland Chinese carriers have been placed on indefinite unpaid leave, according to multiple sources and a memo seen by the Post. With the coronavirus crisis forcing airlines to slash flights, several hundred foreign pilots have seemingly become surplus overnight, with some telling the Post they were considering their options amid the uncertainty now facing the world’s fastest-growing air market. “All foreign pilots, including those who have applied for leave exemption and those who have not, shall start a non-fixed term leave without pay as soon as possible,” a Tuesday memo to a batch of foreign pilots for China Southern, the country’s largest carrier, said.

Their grounding was effective that day, with the pilots told they would “return to work when [the] situation gets better.” Xiamen Airlines along with Hainan Airlines, Tianjin Airlines and Beijing Capital Airlines (BCA) – a trio of carriers owned by debt-laden HNA Group – have also placed foreign aircrew on unpaid leave, according to multiple sources. A source at BCA said their pilots had been offered the option of taking a significant pay cut that would bring them in line with their Chinese counterparts. China Eastern Airlines, meanwhile, was understood to have offered unpaid leave to its foreign pilots but had not made it mandatory at this point.

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The trade deal should be the least of Beijing’s worries by now.

Also, there are suggestions here that new cases rise less fast than before. But severe cases seem to rise.

With Virus Deaths At 565 China Considers Trade Deal Disaster Clause (SCMP)

Daily deaths caused by the new coronavirus have reached another record in China, with 73 fatalities confirmed in figures released by health authorities on Thursday morning, taking the death toll in mainland China to 563. The number of new infections in mainland China and Hubei province both fell on Wednesday compared to the day before, with 3,694 additional cases in the country and 2,987 in Hubei, national and provincial health authorities announced Thursday morning. The last time new infection figures dropped was January 28, with the daily increase in confirmed cases in China and Hubei steadily rising to a record high on Tuesday – 3,887 and 3,156, respectively. The deadly new coronavirus, which first emerged at the end of December, has killed at least 565 people worldwide, and sickened more than 28,000.

Mainland media on Tuesday reported that China may consider using a disaster-related clause in the phase one trade deal with the US because of the coronavirus outbreak. The Global Times, a nationalist newspaper affiliated to People’s Daily, cited an unnamed Chinese trade expert close to the government as saying a decision on launching a consultation with the US on the disaster clause was unlikely until the end of the first quarter. In a commentary published on Wednesday, the newspaper said that even if China was unable to reach the goal of increasing purchases from the US, there was still a sensible path forward without jeopardising the agreement and the negotiation process.

“The phase one agreement clearly stated that the two parties would consult with each other, ‘in the event that a natural disaster or other unforeseeable event outside the control of the parties delays a party from timely complying with its obligations under this agreement’. Without doubt the epidemic fits this scenario,” it said.

Read more …

Very popular man, I’m sure.

Chinese Scholar Blames Xi Jinping, CCP For Not Controlling Outbreak (SCMP)

A prominent Chinese scholar has published an article criticising the country’s leadership for failing to control the coronavirus outbreak that has infected almost 25,000 people around the world. Xu Zhangrun, a law professor at Tsinghua University in Beijing, who has been under close surveillance by the authorities, blamed Communist Party leaders for putting politics ahead of the people in his strongly worded piece, which was published on several overseas Chinese-language websites this week. “The political system has collapsed under the tyranny, and a governance system [made up] of bureaucrats, which has taken [the party] more than 30 years to build has floundered,” he said in a reference to how reform-minded leaders sought to rebuild the country and modernise the government after the death of Mao Zedong in 1976 and moved away from one-man rule to collective leadership.

Xu was suspended from teaching at Tsinghua University in 2018, after the publication of an article in which he criticised the decision by party leaders to lift the two-term limit for presidents, allowing Xi Jinping to remain in office beyond his second term, which ends in 2023. His latest criticism came as China’s leaders and law enforcement officials warned that internet controls must be tightened to prevent the spread of rumours and misinformation. On Monday, Xi chaired a meeting of the Politburo Standing Committee at which it was agreed that officials must maintain a tight grip on online media and direct public opinion about “winning the war over the virus”.

On Tuesday, the Ministry of Public Security held a meeting to remind all police officers that political security was of utmost importance in handling the outbreak. The police would “strike harshly” on any and all disruption by “hostile forces”, according to a report by Xinhua. One of Xu’s close friends confirmed on Wednesday that the professor had written the article. “He has already been stripped of his teaching position but he is likely to face more punishment this time,” said the person, who asked not to be named. “We are concerned they [the police] will take him away now that he has published this article.”

Read more …

There’s no such thing. Ridiculous headline.

Who Owns The Coronavirus Cure? (SCMP)

China has applied to patent a drug candidate being developed by Gilead Sciences as the government rushes to find the cure for the deadly coronavirus, a move that could raise questions on intellectual property and marketing rights. The state-backed Institute of Virology in Wuhan filed the patent for using remdesivir to fight the novel coronavirus on January 21, according to a statement posted on its website two weeks later on February 4. If approved, the drug will be used to facilitate its potential global market entry, it added. Studies have been conducted outside the human bodies and found that Gilead’s remdesivir compound and the off-patent chloroquine malaria drug are both “highly effective” in the control of coronavirus infection, the Wuhan institute and the Beijing Institute of Pharmacology and Toxicology said in a research published in Cell Research Journal.

“Since these compounds have [separately] been used in human patients with a safety track record and shown to be effective against various ailments, we suggest that they should be assessed in human patients suffering from the novel coronavirus disease,” the researchers wrote. Remdesivir has not been approved anywhere globally and has not been showed to be safe or effective for any use, Gilead’s chief medical officer Merdad Parsey said in a statement on Friday. The firm is working with Chinese health authorities to conduct a clinical trial on patients with pneumonia symptoms to test its safety and efficacy, it said. Past clinical data on other coronaviruses give it “hope,” it added.

Read more …

3 Turley articles today. One at the Hill, one at the BBC, one on his own site.

When The Dems lost to Trump in 2016, I said his role was to show how rotten the entire system is. And that they should take a good look at themselves, and try to figure out how that loss could ever come about. They never did, they only ever and exclusively looked at Trump, not themselves. This will not change as long as Hillary, Biden, Schiff et al lead the party.

Pelosi Shreds Decades Of Tradition In Demonstrating Against Trump (Turley)

Forty-four years ago, I walked on to the floor of the House of Representatives as a new Democratic 15-year-old page from Chicago. I stood and marveled at the beehive of activity on the floor in the People’s House. I can still remember that moment because it forged a bond and reverence that has never weakened for me. As a Democratic leadership page during the speakership of Tip O’Neill, I watched some of the most passionate and important debates of the generation from the Neutron Bomb to civil rights legislation to sweeping national park bills. The country was deeply divided, but both parties maintained the tradition of civility and decorum. I was struck how members, even in the heat of furious debates, would not attack each other by name and followed rigid principles of decorum.

They understood that they were the custodians of this institution and bore a duty to strengthen and pass along those traditions to the next generation. That is why I was (and remain) so offended by this display. I believe that President Trump himself is worthy of criticism for not shaking the hand of Pelosi. I also did not approve of aspects of his speech, including bestowing the Medal of Freedom on Rush Limbaugh in the gallery like a reality show surprise scene. There was much to object to in the address, but presidents often make comments that enrage or irritate speakers. However, none of that excuses Pelosi. At that moment, she represents the House as an institution — both Republicans and Democrats. Instead, she decided to become little more than a partisan troll from an elevated position.

The protests of the Democratic members also reached a new low for the House. Pelosi did not gavel out the protest. She seemed to join it. It was the tradition of the House that a speaker must remain in stone-faced neutrality no matter what comes off that podium. The tradition ended last night with one of the more shameful and inglorious moments of the House in its history. Rather than wait until she left the floor, she decided to demonstrate against the President as part of the State of the Union and from the Speaker’s chair. That made it a statement not of Pelosi but of the House. For those of us who truly love the House as an institution, it was one of the lowest moments to unfold on the floor. That is why I argue in the Hill that, if Pelosi does not apologize and agree to honor the principle of neutrality and civility at the State of the Union, she should resign as speaker.

Read more …

Tweet: “Buttigieg campaign manager’s wife owns the app company that ruined the Iowa caucuses, and his campaign DONATED $42,500.00 to that same company, Shadow Inc.”

The video is educative.

Buttigieg and Sanders Separated By Razor-Thin Margin In Iowa (Pol.)

Pete Buttigieg and Bernie Sanders are running neck and neck in the Iowa caucuses with almost all of the votes counted. Buttigieg has 26.23 percent of the state delegate count to 26.06 percent for Sanders with 97 percent of precincts reporting, making the race too close to call, according to The Associated Press. Elizabeth Warren is in third at 18 percent of the state delegate count, followed by Joe Biden at nearly 16 percent and Amy Klobuchar at 12 percent. After a technical meltdown created significant delays in the reporting of results in Monday’s caucuses, the Iowa Democratic Party released almost all of the remaining data Wednesday night. The latest results came as CNN wrapped up a series of town halls with candidates in New Hampshire.

Earlier results came Wednesday afternoon as Sanders, Warren and Klobuchar were in the Senate voting in President Donald Trump’s impeachment trial. The Republican-led chamber ultimately voted to acquit Trump on charges of abuse of power and obstruction of Congress as the numbers from Iowa were released. The latest results don’t change the order of the top five candidates, but they do show a razor-thin race at the top, where both the Buttigieg and Sanders campaigns have already declared themselves winners. Buttigieg insisted as early as Monday night that he was the clear victor, and he reportedly reassured supporters of that in a phone call on Wednesday. Sanders, meanwhile, told supporters in New Hampshire that he was leading in popular-vote totals and would come out of Iowa with the same number of national convention delegates as Buttigieg.

In terms of raw votes, Sanders leads in by more than 2,500 votes in the final alignment of Iowa caucus-goers, after supporters of non-viable candidates had the chance to realign at their precincts on Monday night.

Read more …

The entire impeachment trial was based on Trump wanting dirt on his “main political rival”. But Biden was never that. At the time of the Trump/Zelensky call, enough was known about Hunter/Burisma to realize Joe had no chance. And there was very little to suggest that Hunter/Burisma did not warrant an investigation. But Dems keep on saying it was “debunked”, without being able to suggest who did the debunking.

Biden Vows To Press On Despite Iowa ‘Gut Punch’ (BBC)

White House hopeful Joe Biden has called his poor performance in the Democrats’ first 2020 leadership vote, in Iowa’s caucuses, a “gut punch”. Mr Biden has come fourth, according to incomplete results from the election to pick a Democratic presidential nominee. “I’m not going to sugarcoat it,” Mr Biden said. “This isn’t the first time in my life I’ve been knocked down.” With most results declared in Monday’s glitch-plagued caucuses, Pete Buttigieg and Bernie Sanders are neck and neck. But Mr Biden told an audience in New Hampshire: “I’m not going anywhere.”

According to partial results from Iowa, the former US vice-president under Barack Obama has failed to pick up a single one of the delegates needed to clinch the Democratic White House nomination under America’s quirky political system. New Hampshire will be the next state to vote on 11 February in a string of nationwide votes culminating with the crowning of the party’s presidential candidate in July. Eleven contenders remain in the race to challenge President Donald Trump, a Republican, in November’s election.

[..] On Wednesday, Mr Biden sharpened his attacks, targeting the two Democratic front-runners by name. “We need a nominee who can help Democrats up and down the ticket,” Mr Biden said. He suggested that self-described democratic socialist Mr Sanders would be unelectable in a general election. Mr Biden also said it would be a “risk” to nominate 38-year-old Mr Buttigieg, “someone who’s never held an office higher than mayor of a town of 100,000 people”. Mr Buttigieg responded by saying “the bulk of the credit for the achievements of the Obama administration belong with President Obama”.

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As go strictly partisan battles.

In This Impeachment, People Only Heard What They Wanted To (Turley)

Recently, MSNBC host Lawrence O’Donnell declared that his show will not allow Trump supporters on as guests because all Trump supporters are “liars”. Likewise, Trump recently denounced Fox for even interviewing Democratic senators. When that is the state of our news, why should trials be any different? In our hardened political silos, even Framers are bit players in a crushingly formulaic play. Witnesses are as immaterial as facts when the public demands the same predictability from politicians that they do from cable hosts. We are all to blame. Politicians achieve their offices by saying what voters want to hear and today voters have little tolerance for hearing anything that contradicts their preset views of Trump.

As a result, the trial was pre-packed by popular demand. Speaker Nancy Pelosi even declared that Trump would “not be acquitted” even if he was acquitted. When the actual vote doesn’t matter, why should the actual testimony? Just as voters get the government that they deserve, they also get the impeachment trials that they demand. Watching on their favourite biased cable networks, voters raged at the bias of the opposing side in the impeachment as refusing to see the truth. Viewers thrilled as their side denounced their opponents and hissed when those opponents returned the criticism. The question and answer period even took on a crossfire format as senators followed up one side’s answer with a request for the other side to respond.

It was precisely the “fight, fight” tempo that has made cable news a goldmine. As the trial ends, perhaps justice has been done. The largely partisan vote showed that the trial could have had the sound turned off for the purposes of most viewers. We are left with our rage undiluted by reason. It really did not matter what anyone had to say because we were only hearing half of the trial anyway. It provided the perfect verdict on our times.

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Nancy should go home and be a grandma. She acted like a 5-year old during and after the SOTU. You don’t express your “hatred” of someone by imitating their behavior. Grace.

Nancy Pelosi Should Resign (Turley)

The House has its share of infamies, great and small, real and symbolic, and has been the scene of personal infamies from brawls to canings. But the conduct of Speaker Nancy Pelosi (D-Calif.) at the State of the Union address this week will go down as a day of infamy for the chamber as an institution. It has long been a tradition for House Speakers to remain stoic and neutral in listening to the address. However, Pelosi seemed to be intent on mocking President Trump from behind his back with sophomoric facial grimaces and head shaking, culminating in her ripping up a copy of his address.

Her drop the mic moment will have a lasting impact on the House. While many will celebrate her trolling of the president, she tore up something far more important than a speech. Pelosi has shredded decades of tradition, decorum and civility that the nation could use now more than ever. The House Speaker is more than a political partisan, particularly when carrying out functions such as the State of the Union address. A president appears in the House as a guest of both chambers of Congress. The House Speaker represents not her party or herself but the entirety of the chamber. At that moment, she must transcend her own political ambitions and loyalties.

Tensions for this address were high. The House impeachment managers sat as a group in front of the president as a reminder of the ongoing trial. That can be excused as a silent but pointed message from the Democrats. Trump hardly covered himself with glory by not shaking hands with Pelosi. I also strongly disliked elements of his address which bordered on “check under your seat” moments, and the awarding of conservative radio host Rush Limbaugh with the Presidential Medal of Freedom inside the House gallery like a Mardi Gras bead toss. However, if Trump made the State of the Union look like Oprah, then Pelosi made it look like Jerry Springer.

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Yeah. Buttigieg’s campaign manager is married to a woman who owns Shadow Inc. , which produced an app developed by among others Hillary’s campaign manager Robby Mook. And Bloomberg has his people inside the DNC. As does Biden, obviously. It smells like incest.

Bloomberg Surrogates Have Seats on DNC Rules Committees (Sludge)

As the Democratic National Committee establishes procedures for the Democratic presidential nominating process, two members of DNC rules committees simultaneously work on the campaign of former New York Mayor Michael Bloomberg. Having surrogates on the Democratic National Convention’s Rules Committee and the Standing Rules and Bylaws Committee could be a boon for Bloomberg if nominating rules are re-opened for amendment ahead of the July convention. Some DNC members who are concerned about the polling support of Sen. Bernie Sanders (D-Vt.) have discussed reversing rule changes limiting the power of superdelegates that were put in place after the 2016 election, according to a report from Politico. Those discussions have been sharply rebuked by DNC leadership.

The DNC passed intensely-negotiated rule changes in August 2018 that sought to reduce the influence of superdelegates—appointed at-large delegates whose ranks include influential party consultants—primarily by preventing them from casting votes on the first nomination ballot, as they did in 2016. If no candidate receives a majority on the first ballot at the upcoming convention, which will be voted on by 3,979 pledged delegates, then the 771 superdelegates—including some lobbyists for corporate clients—can vote on the second ballot, under the new rules. If the superdelegates were to vote as a block, they could add over 16% to a candidate, potentially pushing their favorite over the top.

Michael Nutter, the former Mayor of Philadelphia who is a member of the Standing Rules and Bylaws Committee, was selected by Bloomberg in December 2019 to serve as his campaign’s national political chair. “Nutter will advise the campaign on policy development and strategy, and serve as a national surrogate on behalf of the campaign, recruiting key voices to join the campaign and traveling to field offices and events, speaking to constituents and press about why Mike Bloomberg is uniquely qualified to unite and rebuild the country at a time when it is more divided than ever,” the Bloomberg campaign said in a December statement.

Nutter was nominated by former DNC Chair Rep. Debbie Wasserman Schultz (D-Fla.) in 2013 and he has served on the rules committee since 2017. Nutter co-hosted a kick-off fundraiser for former vice president Joe Biden in April 2019 after Bloomberg announced a month earlier that he would not run for president, but he quickly switched to Bloomberg’s camp after the former New York mayor reversed course and entered the race.

Read more …


Who needs drug labs?




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Jan 292020

M.C. Escher Fluorescent sea 1933


It’s a little amusing, though that word may not fit the topic, to see how people react to the 2019-nCoV (Wuhan coronavirus) “epidemic” that appears to have started in the city of that name. It’s understandable that people compare the warnings about it to those about for instance SARS (also a coronavirus, so either call this one 2019-nCoV or “Wuhan coronavirus”), and conclude that since that episode was not so bad, neither will this one be, but that’s certainly not the definitive story.

If only because stating that the world is due for a large-scale epidemic, a pandemic, is not some scare-mongering exercise, it’s basic statistics and broadly recognized. The last really big one is over 100 years ago. The Spanish flu of 1917-1918 killed an estimated 50 million people, more than WWI which took place from 1914-1918, and saw an estimated 40 million fatalities.

(Un)predictability is key: Adolfo Garcia-Sastre, director of Global Health and Emerging Pathogens Institute at the Icahn School of Medicine in New York City says: “There is no good way to predict [when a flu pandemic will occur], but “this is something that happens every 10 to 40 years”. In essence, since a real flu pandemic hasn’t happened in 100 years, we’re overdue.

There are of course vast differences between today and 1918. But then again, these differences may balance each other out to an extent: on the one hand: 1) medical science has made enormous progress in the past 100 years. But on the other: 2) there are many more people, and they move around and come in contact with each other a lot more too.


Cross-sectional model of a coronavirus. Source:
Scientific Animations (CC BY-SA 4.0)


World population in 1918 was 1.8 billion; today it’s over 4 times that at 7.7 billion. Add increased mobility through planes, trains and automobiles -in the west and now China- and you will find the number of miles traveled and the number of people “met” per capita has probably gone up by a factor of 10 or more. Just what a virus wants: 10+ times more potential hosts.

The 2009 swine flu killed “only” 200,000 people. Not the “real thing”. SARS affected about 8,000 people and killed 774 in the early 2000s. Hardly even an epidemic, let alone a pandemic. MERS, another coronavirus, infected 186 people and with a death toll of 36. Small change in comparison.

But of course scientists are looking into the matter all the time. And, certainly compared to 1918, they have developed much more sophisticated models to do that, aided greatly by computing power. A simulation of a global pandemic that involves a coronavirus, developed late last year by scientist Eric Toner at the Johns Hopkins Center for Health Security, showed that 65 million people might die within 18 months in such an event.

A more recent model was developed by a team led by Hong Kong University’s medicine dean Gabriel Leung:

The Coronavirus outbreak doubles every 6.2 days [..] That figure validates the forecast of top virologists who claim that Coronavirus is ten times worse than SARS. Hong Kong University is ranked a top 25 college globally and houses the world’s top 1% scientists according to Thomson Reuters. Based on the model used by HKU, up to 150,000 individuals could be affected by Coronavirus in the next three to four months on a daily basis.

Leung’s team said that it confirmed transmission from humans to humans is already occurring in virtually every major city in China. By April to May, Leung said Beijing, Shanghai, Guangzhou, Shenzhen and Chongqing are likely to see widespread infections of Coronavirus, [before the number of infections could begin to gradually decline in June or July, Leung said.

As many as 44,000 people could be infected in Wuhan alone, with only 25,000 likely to be showing symptoms at this time..] Specifically, Leung noted that due to the close ties between Chongqing and Wuhan, Chongqing could see nearly 150,000 people affected per day at its peak.

Chongqing is sometimes presumed to be the world’s most populous city, with 30 million inhabitants, though data are somewhat opaque.

SCMP adds:

Leung, who sits on Chief Executive Carrie Lam Cheng Yuet-ngor’s advisory committee on the coronavirus, called for drastic measures to curb the spread of the virus. “Substantial, draconian measures limiting population mobility should be taken immediately,” he said, calling for the cancellation of mass gatherings, along with school closures and work-from-home arrangements.

He would undoubtedly also cancel all flights to and from Wuhan, and perhaps even all of China, as British Airways has already done, and as other airlines will be forced to follow suit.

Yesterday was the first day that the 2019-nCoV virus had infected over 1,000 new patients. And that’s in official numbers, those are the confirmed ones for a disease with a 2-week incubation period and an R0 rate (how many people are infected by each positive person) of 2.5 to 4. It was also the first day that more new cases were reported outside of Hubei province than inside it.

Scores of new countries were added to the list of those with confirmed cases. There are now 19: China, United States, France, Japan, South Korea, Taiwan, Singapore, Thailand, Australia, Nepal, Vietnam, Hong Kong, Macau, Malaysia, Canada, Cambodia, Sri Lanka, Germany and UAE (Finland was just added; now there’s 20). Moreover, several of these countries have confirmed human-to-human transmission.

Still, while Hong Kong University’s Gabriel Leung estimates the 2019-nCoV peak at late April-early May 2020, Chinese respiratory diseases expert Zhong Nanshan, echoed by Gao Fu, the director of the Chinese Centre for Disease Control and Prevention, said the peak would be reached in 10 days.


Infection cycle of a coronavirus


The WHO is, as I speak, burying China in compliments for its efforts to control the disease. Which is fine, and likely more constructive than criticism, but we’ve all been able to see the footage of dead and dying people in the corridors of Wuhan hospitals. And we know China’s history on SARS reporting. Beijing is worried sick by now, but the CCP’s biggest worry will always remain power and control. The Hong Kong protests have only enforced that attitude.

But who are we to criticize China anyway? In our own countries, the main concern in the media is still about the economic effects of what may or may not become a pandemic. “It’s going to hurt global trade, it’s going to hurt our economy, woe, woe..” As if it’s such a disaster that for a few months fewer non-essential goods are schlepped halfway across the globe. That period is likely too short for us to realize than we would do good to produce at least essential goods closer to home. The main concern is money, not that 132 people have died and many more will soon. Those are our priorities.

For a bright light to hit home upside our heads that we would actually notice, that would make us take a look at ourselves, we would need a real bad pandemic. Or we will not learn that we should not need a pandemic to realize we should take care of ourselves, our own basic needs, and not let someone 10,000 miles away do that.

As for fewer airline bookings or Louis Vuitton or Apple sales, if that’s your priority, maybe you’re overdue a lesson no matter what. A lesson about what your society needs to survive, vs what are extras, luxuries, added benefits. We seem to have lost comprehension of that difference entirely.

Summary: no panic, but vigilance. Same as every other day. And not too much focus on money and profits. 2019-nCoV doesn’t care about those either. In 2020, with all the resources at our disposal, and with 1918 to guide us, we should be able to see these things coming from miles away, and not need any time to respond. It should be no more than flicking a switch.

Now it’s like: but where will our food come from, and our iPhones? We should have the answers to such questions ready at all times, or we have failed as societies. Maybe someone’s holding up a mirror to us.

A question I can’t resist is: Are we better prepared today than people were in 1918? And I can’t give you the answer. I know we should be with all the wealth and resources and available energy we’ve added, but I can’t.



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Dec 232014
 December 23, 2014  Posted by at 12:47 pm Finance Tagged with: , , , , , , , , , ,  6 Responses »

DPC “Broad Street and curb market, New York” 1906

OPEC Will Not Cut Output However Far Oil Falls: Saudi Oil Minister (Reuters)
On Fuel, Airlines Gambled And You Lost (Reuters)
Billionaire Shale Pioneer Cuts Spending 41% on Oil Crash (Bloomberg)
Morgan Stanley, Rosneft Oil-Unit Deal Fails On Sanctions (Bloomberg)
If Shell Backs Out, Arctic Oil Off the Table for Years (Oilprice.com)
Biggest Arctic Gas Project Seeking Route Around U.S. Sanctions
Outlook Sours for Europe’s Oil Titans on Crude Slump (Bloomberg)
Arab OPEC Sources See Oil Back Above $70 By End-2015 (Reuters)
Cheap Oil Is Dragging Down the Price of Gold (Bloomberg)
Ruble Swap Shows China Challenging IMF as Emergency Lender (Bloomberg)
China’s Shadow Banking Thrives Even As Rules Tighten (Reuters)
Russia Faces Full-Blown Crisis Says Former Finance Minister (FT)
IMF Raises Fears Of Global Crisis As Russian Bank Forced Into Bailout (Guardian)
Belarus Blocks Online Sites, Closes Stores To Stem Currency Panic (AFP)
Market-Rigging Laws Will Also Cover Currency, Gold, Oil And Silver (Guardian)
Ukraine Cuts Gold Reserve to Nine-Year Low as Russia Buys (Bloomberg)
Ukraine Central Bank Sees $300,000 in Gold Swapped For Lead Bricks (RT)
Fresh Doubt Over the Bailout of AIG (Gretchen Morgenson)
If Wishes Were Loaves and Fishes (James Howard Kunstler)

The Saudis are the guys who know what demand is like out there.

OPEC Will Not Cut Output However Far Oil Falls: Saudi Oil Minister (Reuters)

Saudi Arabia convinced its fellow OPEC members that it is not in the group’s interest to cut oil output however far prices may fall, the kingdom’s oil minister Ali al-Naimi said in an interview with the Middle East Economic Survey (MEES). OPEC met on Nov. 27 and declined to cut production despite a slide in prices, marking a shift in strategy toward defending market share rather than supporting prices. “As a policy for OPEC, and I convinced OPEC of this, even Mr al-Badri (the OPEC Secretary General) is now convinced, it is not in the interest of OPEC producers to cut their production, whatever the price is,” Naimi was quoted by MEES as saying.

“Whether it goes down to $20, $40, $50, $60, it is irrelevant,” he said. He said that we “may not” see oil back at $100 a barrel, formerly Saudi Arabia’s preferred level for prices, again. He said Saudi Arabia is prepared to increase output and gain market share by meeting the demands of any new customers, adding that lower crude prices would help demand by stimulating the economy. Brent was last down about 80 cents to $61 a barrel. It’s declined more than 46% from the year’s peak in June above $115 per barrel. U.S. crude was down more than $1 to $56 a barrel. “We are going down because you have some OPEC ministers who come every day making statements trying to drive the market down, said Olivier Jakob, an oil analyst at Petromatrix Oil in Zug, Switzerland.

“They come every day to convey the message that they are not doing anything to restrict supplies and that they basically want oil prices to move lower to reduce production in the U.S.” OPEC’s decision not to reduce production at a meeting in November sped up the decline in already falling oil prices. Prospects for a cut in the near future look remote. While analysts said Brent would likely remain above $60 a barrel this year, they said further large jumps in price were unlikely. Analysts said the price drop would have only a gradual impact on the outlook for production. “Given the lead time in permit approval and rig construction ahead of oil production, a sizeable negative U.S. supply response given the price drop is unlikely to take place until late 2015, which places further downward pressure on oil prices in the first six months of next year,” National Australia Bank said in a note.

Read more …

Isn’t that just lovely?

On Fuel, Airlines Gambled And You Lost (Reuters)

With Christmas a few days away, we are in the heart of the holiday traveling season, and most people have already decided their mode of transportation after weighing expense versus convenience. On the topic of expense, earlier this month, Senator Charles Schumer called for a federal investigation into airfare prices, asking why tickets remain so expensive when gas has become so (relatively) cheap. Since fuel prices account for half of airlines’ costs and gas prices have been steadily falling, travelers should be seeing trickle-down savings, he reasoned. But fueling-up an airplane isn’t just a matter of pulling up to the nearest ExxonMobil station and filling up on unleaded.

For starters, it’s an entirely different kind of fuel, although some people seem intently obtuse on the subject. More importantly, because they purchase jet fuel in such huge quantities, many airlines take a different approach to their purchasing strategy than the average driver. They use financial derivatives to hedge their bets against rising fuel prices. In July, American Airlines stopped hedging, deciding that hedging risk was more risky than the gamble on fuel prices itself. As The Motley Fool explains, ”Most airlines hedge with call options, which allow them to cap their fuel costs without locking them in if oil prices happen to fall. The downside of this strategy is that the airline has to pay a premium for each call option.

Unless oil prices rise by a significant amount before the option expires, the airline will lose money on the hedge.” As this Reuters graphic shows, that’s what is happening to many carriers now. Oil prices have been falling since June, causing many to absorb the cost of premiums without enjoying the benefit of hedges against higher prices, so for these airlines lower prices aren’t actually great news. In the case of American Airlines, Schumer is correct, as control over ticket prices serves as a natural hedge to the ebb and flow of fuel prices. But since airlines generally mimic one another when pricing tickets, American has been happy to pocket the money it’s saving rather than reducing prices.

Read more …

The future of the ‘industry’.

Billionaire Shale Pioneer Cuts Spending 41% on Oil Crash (Bloomberg)

Billionaire Harold Hamm, whose early adoption of shale drilling in North Dakota helped usher in a U.S. energy renaissance, plans to cut spending by 41% at his company after the plunge in oil prices. Continental Resources and other U.S. producers can adjust quickly to the crude collapse and will be able to withstand the downturn better than many producing countries, which face economic “ruin,” Hamm said in an interview. “The oil and gas industry has lowered the cost of gasoline to consumers in this country,” Hamm, chairman and chief executive officer of Continental, said yesterday. “It’s been good for America, this increase in supplies that we have here. We don’t want to see it all go for naught.”

Continental and rivals including ConocoPhillips and Apache plan to trim spending and move rigs to more profitable areas while prices remain under pressure. Crude has fallen by almost 50% since June to a five-year low as demand forecasts fell amid a glut in supply fed in part by the shale revolution. Saudi Arabia and OPEC allies have declined to cut output to stave off price declines. U.S. prices are expected to average $63 a barrel in 2015, according to the U.S. Energy Information Administration. U.S. producers have trimmed billions from 2015 spending plans as the price decline eroded potential profits from drilling in shale rock, a technological breakthrough that helped boost production to the highest level in almost 30 years. Spending at Oklahoma City-based Continental will fall to $2.7 billion and the company will increase production by as much as 20% next year.

That’s a decline from a previous growth forecast of as much as 29%, the company yesterday said in a statement. “We’re a company that’s not out over its skis with people or commitments,” said Hamm, the chairman and chief executive officer of Continental. “We’ve been through about half a dozen of these in my lifetime. We can do it.” The cut comes six weeks after Hamm said he liquidated the company’s oil hedges because the price slump was going to be a temporary. Continental will average about 31 rigs in 2015, down from 50, and will drill an estimated 188 wells in the Bakken formation and about 81 wells in the south central Oklahoma formation. In the Bakken, about 70% of rigs aren’t profitable with oil prices at $60 a barrel, according to a note to investors today from ITG Investment Research. In the past two years, producers have needed an average of $57 a barrel while drilling in south central Oklahoma to make a 10% profit, according to ITG.

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“The point of sanctions is to inflict consequences on the entities designated, not for companies to find loopholes to get deals done.”

Morgan Stanley, Rosneft Oil-Unit Deal Fails On Sanctions (Bloomberg)

Morgan Stanley’s failure to complete the sale of its oil storage, trading and transport unit shows the chilling effect U.S. sanctions are having on Russian companies including Rosneft. The U.S. bank and Rosneft, the Russian state-owned oil giant, said Monday that their deal, for an undisclosed amount, had expired after the companies failed to win regulatory approval. Morgan Stanley had warned in October that the agreement might not be completed. U.S. sanctions against Rosneft explicitly prohibit selling certain oil-exploration equipment to the company or giving it long-term debt financing. The sale of Morgan Stanley’s oil-trading unit didn’t appear to trigger those prohibitions. Even so, such a sale would have undercut the broader U.S. goal of isolating the energy company. “It’s appropriate to stop deals with companies that have been targeted in one form or another,” said David Kramer, a former U.S. assistant secretary of state and now senior director for human rights and democracy at the McCain Institute for International Leadership in Washington.

“The point of sanctions is to inflict consequences on the entities designated, not for companies to find loopholes to get deals done.” The failure strikes a blow to Rosneft’s aspirations to become a more global oil company. When the deal was announced a year ago, Igor Sechin, Rosneft’s chief executive officer, said it would “spearhead the company’s growth in the international oil and products markets.” The sale didn’t gain permission from the Committee on Foreign Investment in the United States, an inter-agency panel known as CFIUS that examines acquisitions of companies by foreign investors for national security concerns, according to a person briefed on the matter who asked not to be identified because the review is confidential. The pact also needed other regulatory approvals that never came, the person said.

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Simple: too expensive at present rate of return.

If Shell Backs Out, Arctic Oil Off the Table for Years (Oilprice.com)

The next several months may be pivotal for the future of oil development in the Arctic. While Russia has proceeded with oil drilling in its Arctic territory, the U.S. has been much slower to do so. The push in the U.S. Arctic has been led by Royal Dutch Shell, a campaign that has been riddled with mistakes, mishaps, and wasted money. Nearly $6 billion has been spent thus far on Shell’s Arctic program, with little success to date. Now, 2015 could prove to be a make or break year for the Arctic. Shell may make a decision on drilling in the Chukchi and Beaufort Seas by March 2015. If it declines to continue to pour money into the far north, it may indefinitely put Arctic oil development on ice (pun intended).

The crossroads comes at an awful time for Shell. Oil prices, hovering around $60 per barrel, are far too low to justify Arctic investments. To be sure, offshore drilling depends on long-term fundamentals – any oil from the Arctic wouldn’t begin flowing from wells until several years from now. That means that weak prices in the short-term shouldn’t affect major investment decisions. Unfortunately, they often do. Just this week Chevron put its Arctic plans on hold “indefinitely,” citing “the level of economic uncertainty in the industry.” Chevron had spent $103 million on a tract in the Beaufort Sea in Canadian waters, but weak oil prices have Chevron narrowing its aspirations. This development is illustrative of the predicament facing major oil companies. They need to spend billions of dollars now to realize oil output sometime next decade.

However, they also must conserve cash in the interim. Oil companies across the world are slashing spending in order to shore up profitability. And Arctic oil is expensive oil, some of the most expensive in the world. It is on the upper end of where prices need to be in order to be profitable. By some estimates, oil prices would need to be in the range of $80 to $90 per barrel for Arctic oil to breakeven; other estimates say as high as $110 per barrel. That means that even before the oil price drop, Arctic oil development looked tenuous. Statoil and ConocoPhillips had already scrapped their plans to drill in the Arctic, even when oil prices were nearly double where they are now, because of high costs. And when oil prices drop, these marginal projects get the ax.

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Pressure on Paris.

Biggest Arctic Gas Project Seeking Route Around U.S. Sanctions

Total and its partners will use a record 16 ice-breaking tankers to smash through floes en route to and from the Arctic’s biggest liquefied natural-gas development. They’re still looking for a way around a freeze in U.S. financing. With 22 wells drilled, and a runway and harbor built for the $27 billion project in Russia’s Yamal Peninsula, where temperatures can reach 50 degrees below zero Celsius, Total, Novatek and China National Petroleum Corp. have little choice but to push ahead. The U.S. Export-Import Bank this year halted a study into funding the plans to ship gas from Yamal, or End of Earth in the native Nenets tongue, to buyers around the world as President Barack Obama’s administration imposed sanctions on Russia. The action by the bank, which offers credit assistance to companies buying the nation’s goods and services, effectively blocked the project from borrowing in the U.S. currency.

“The issue is in the financing because this can’t be done in dollars,” Arnaud Breuillac, Total’s president of exploration and production, said in an interview. “It’s more complex. We are working on it.” European governments, reliant on gas from Russia, have had to tread a fine line in their relations with the country since its annexation of Ukrainian Crimea led to sanctions. The U.S. and Europe have mostly targeted the Russian oil industry and individuals with ties to President Vladimir Putin rather than impose measures that could strangle the nation’s gas exports. That means one option for Paris-based Total is to look for help from home. Coface is France’s answer to the U.S. Exim bank. “We’ll get it in other currencies such as euros through credit agencies like Coface,” Breuillac said. In the meantime, the project’s timetable has slipped. Total has said it’s no longer counting on output starting in 2017. Commissioning of the first LNG unit, or train, was to begin in 2016 and commercial production the following year.

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This is where a lot of the losses will be felt down the line.

Outlook Sours for Europe’s Oil Titans on Crude Slump (Bloomberg)

The U.S. shale-oil industry has made another enemy: Europe’s largest crude explorers. Standard & Poor’s Ratings Services revised its outlook to negative for Shell, Total and BP as the oil-market rout driven by weakening demand and a flood of supply from American shale fields threatens cash flow into 2016. The credit-rating company also cast a dim eye on Houston-based ConocoPhillips, saying it’s facing similar cash flow pressure, and said it may cut the ratings on Eni SpA and BG’s BG Energy Holdings. S&P cited “the dramatic deterioration in the oil price outlook” and the 50% increase in debt loads and dividend commitments for the biggest European oil producers since the end of 2008. Oil has slumped about 21% since OPEC decided against cutting its production target last month.

United Arab Emirates Energy Minister Suhail Al Mazrouei said non-OPEC suppliers should cut “irresponsible” output. Prices of Brent, the European benchmark crude, have fallen about 45% this year, setting the stage for the largest annual drop since 2008. The major European oil explorers are hamstrung by heftier investor payouts than their U.S. rivals that leave them less room to maneuver during cash crunches. BP has an indicated dividend yield of 6.85%, followed by 5.7% for Total and 5.25% for Shell. By comparison, Exxon Mobil and Chevron dividend yields are 2.95% and 3.83%, respectively. The European companies also are burdened with relatively inflexible capital spending budgets because most contracts require cash infusions into oil and gas projects, S&P said.

ConocoPhillips was among the first oil producers to slash its 2015 spending plan two weeks ago when it announced a 20% budget cut and plans to defer some projects. Even with those cuts, ConocoPhillips’s net debt may balloon during the next two years as it funnels some cash into “its sizable common dividend,” S&P said in a separate note to clients.

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Who said Arabs have no sense of humor?

Arab OPEC Sources See Oil Back Above $70 By End-2015 (Reuters)

Arab OPEC producers expect global oil prices to rebound to between $70 and $80 a barrel by the end of next year as a global economic recovery revives demand, OPEC delegates said this week in the first indication of where the group expects oil markets to stabilize in the medium term. The delegates, some of which are from core Gulf OPEC producing countries, said they may not see – and some may not even welcome now – a return to $100 any time soon. Once deemed a fair price by many major producers, $100 a barrel crude is encouraging too much new production from high cost producers outside the exporting group, some sources say.

But they believe that once the breakneck growth of high cost producers such as U.S. shale patch slows and lower prices begin to stimulate demand, oil prices could begin finding a new equilibrium by the end of 2015 even in the absence of any production cuts by OPEC, something that has been repeatedly ruled out. “The general thinking is that prices can t collapse, prices can touch $60 or a bit lower for some months then come back to an acceptable level which is $80 a barrel, but probably after eight months to a year,” one Gulf oil source told Reuters. A separate Gulf OPEC source said: “We have to wait and see. We don’t see 100 dollars for next year, unless there is a sudden supply disruption. But average of 70-80 dollars for next year yes.

The comments are among the first to indicate how big producers see oil markets playing out next year, after the current slump that has almost halved prices since June. Global benchmark Brent closed at around $60 a barrel on Monday. Their internal view on the market outlook will provide welcome insight to oil company executives, analysts and traders, who were caught out by what was seen by some as a shift in Saudi policy two months ago and have struggled since then to understand how and when the market will find its feet. For the past several months, Saudi officials have been making clear that the Kingdom s oft-repeated mantra that $100 a barrel crude is a fair price for crude had been set aside, at least for the foreseeable future. At the weekend, Saudi Oil Minister Ali al-Naimi was blunt when asked if the world would ever again see triple-digit oil prices: We may not.

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Or is it the other way around?

Cheap Oil Is Dragging Down the Price of Gold (Bloomberg)

Gold, the ultimate inflation hedge, isn’t much use to investors these days. Oil is in a bear-market freefall that began in June, spearheading the longest commodity slump in at least a generation. The collapse means that instead of the surge in consumer prices that gold buyers have been expecting for much of the past decade, the U.S. is “disinflating,” according to Bill Gross, who used to run the world’s biggest bond fund. A gauge of inflation expectations that closely tracks gold is headed for the biggest annual drop since the recession in 2008. While bullion rebounded from a four-year low last month, Goldman Sachs and Societe Generale reiterated their bearish outlooks for prices. The metal’s appeal as an alternative asset is fading as the dollar and U.S. equities rally, and as the Federal Reserve moves closer to raising interest rates to keep the economy from overheating.

“Forget inflation – all of the talk now is about deflation,” Peter Jankovskis at OakBrook Investments said Dec. 16. “Obviously, oil prices dropping are adding to deflationary pressures. We may see a rate rise next year, and we could see gold come under pressure as the dollar continues to move higher.” Even though there’s been little to no inflation over the past six years, investors have been expecting an acceleration after the Fed cut interest rates to zero% in 2008 to revive growth. Those expectations, tracked by the five-year Treasury break-even rate, helped fuel gold demand and prices, which surged to a record $1,923.70 an ounce in 2011. Now, inflation prospects are crumbling, undermining a key reason for owning the precious metal.

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And with printed money to boot.

Ruble Swap Shows China Challenging IMF as Emergency Lender (Bloomberg)

China is stepping up its role as the lender of last resort to some of the world’s most financially strapped countries. Chinese officials signaled on the weekend they are willing to expand a $24 billion currency swap program to help Russia weather the worst economic crisis since the 1998 default. China has provided $2.3 billion in funds to Argentina since October as part of a currency swap, and last month it lent $4 billion to Venezuela, whose reserves cover just two years of debt payments. By lending to nations shut out of overseas capital markets, Chinese President Xi Jinping is bolstering the country’s influence in the global economy and cutting into the International Monetary Fund’s status as the go-to financier for governments in financial distress.

While the IMF tends to demand reforms aimed at stabilizing a country’s economy in exchange for loans, analysts speculate that China’s terms are more focused on securing its interests in the resource-rich countries. “It’s always good to have IOUs in the back of your pocket,” Morten Bugge, the chief investment officer at Kolding, Denmark-based Global Evolution A/S who helps manage about $2 billion of emerging-market debt, said by phone. “These are China’s fellow friends and comrades, and to secure long-term energy could be one of the motivations.” [..] China and Russia signed a three-year currency-swap line of 150 billion yuan ($24 billion) in October, a contract that allows Russia to borrow the yuan and lend the ruble. While the offer won’t relieve the main sources of pressure on the ruble – which has lost 41% this year amid plunging oil prices and sanctions linked to Russia’s annexation of Crimea — it could bolster investors’ confidence in the country and help stem capital outflows.

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It’s still at least a full third of the credit system.

China’s Shadow Banking Thrives Even As Rules Tighten (Reuters)

New players in China’s shadow banking sector are growing rapidly despite attempts to clamp down on opaque lending, taking advantage of a regulatory anomaly to prosper but also raising the risks of a build-up of debt in the slowing economy. Authorities have sought to rein in the riskiest elements of less-regulated lending after a series of defaults, including a 4 billion yuan ($640 million) credit product backed by Evergrowing Bank in September, because of the danger such debts could pose to the health of the world’s second-largest economy. And a government measure created in 2011 to capture shadow banking, total social financing (TSF), shows some success, with shadow banking contracting in the second half of 2014 to roughly 21.9 trillion yuan ($3.5 trillion), according to a Reuters’ analysis of central bank data.

But that fails to capture as much as 16 trillion yuan ($2.6 trillion) of financing mostly created in the past two years by firms overseen by the China Securities Regulatory Commission (CSRC) rather than the banking regulator, according to a Reuters calculation based on third-party statistics. When including that financing, shadow banking is roughly equivalent to more than 45% of loans in the conventional banking system. “We can observe this, but we don’t have concrete statistics, so we’re unclear on the scope,” said Zeng Gang, director of the banking department at the Chinese Academy of Social Sciences, a think tank that advises the central government. Shadow banking is therefore harder to regulate, he said. Indeed, the State Council called on the central bank last December to develop new statistics to measure shadow banking.

In shadow banking’s new incarnation, brokerages and fund management companies can pool retail investor funds or invest funds already gathered by a bank, acting as an intermediary rather than the actual investor. “China’s credit landscape is just simply evolving too quickly, so TSF doesn’t provide as comprehensive a picture as it used to do,” said Donna Kwok, an economist at UBS. Shadow banking, defined as non-bank credit and off-balance sheet bank lending, is an important part of banking systems around the world. In China, it has helped smaller, private companies access credit and offered investors better returns than bank deposits. The central bank has said the benefits of the sector are undeniable. But it can also fund risky or unproductive investments, building up risks in the banking system.

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Kudrin is in line to be Russia’s next PM.

Russia Faces Full-Blown Crisis Says Former Finance Minister (FT)

Russia faces a “full-blown economic crisis” next year that will trigger a series of defaults and the loss of its investment-grade credit rating, a respected former finance minister has warned. Real incomes will fall by 2-5% next year, the first decrease in real terms since 2000, said Alexei Kudrin, a longtime ally of President Vladimir Putin and widely tipped to succeed Dmitry Medvedev as prime minister. His warning came as Russia’s central bank was forced to prop up a mid-sized lender in a sign of the strains on the banking system. “Today I can say that we have entered or are currently entering a full-blown economic crisis; next year we will feel it in full force,” Mr Kudrin said in Moscow on Monday. In unusually blunt comments for an establishment figure, he also called on Mr Putin to do what was necessary to improve relations with the west:

“As for what the president and government must do now: the most important factor is the normalization of Russia’s relations with its business partners, above all in Europe, the US and other countries.” His bleak forecasts for the Russian economy come after a week of high drama in which the ruble fell by as much as 36% in one day, rattling popular confidence in the government. On Monday, the ruble rose 5.1% to 56.5 to the dollar following a series of measures announced in the second half of last week to shore up confidence in the banking system The central bank said it would inject 30 billion rubles ($530 million) into Trust bank, the country’s 28th-largest lender by assets, “to prevent bankruptcy”.

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““One of the lessons from the Great Financial Crisis is that large changes in prices and exchange rates, and the implied increased uncertainty about the position of some firms and some countries, can lead to increases in global risk aversion, with major implications for repricing of risk and for shifts in capital flows.”

IMF Raises Fears Of Global Crisis As Russian Bank Forced Into Bailout (Guardian)

The International Monetary Fund warned on Monday of the risk of Russia triggering a fresh phase of the global financial crisis as the plunge in the value of the rouble claimed its first banking victim. On the day that Russia’s central bank threw a $530m (£340m) lifeline to Moscow’s Trust Bank, the IMF said its generally upbeat assessment of the impact of falling oil prices on the global economy could be upset by investors taking fright at what is happening to Vladimir Putin’s energy-rich country. Alexei Kudrin, Russia’s former finance minister, said 2015 would be a tough year for the economy as he blamed the Kremlin for failing to act quickly enough and said the country’s debt would be downgraded to “junk” status. “Today, I can say that we have entered or are entering a real, full-fledged economic crisis. Next year, we will feel it clearly,” Kudrin said. Predicting a wave of corporate failures and state bailouts of the banks, he added: “The government has not been quick enough to address the situation … I am yet to hear … its clear assessment of the current situation.”

Olivier Blanchard, the fund’s chief economist, and Rabah Arezki, head of its commodities research team, said: “Oil prices have plunged recently, affecting everyone: producers, exporters, governments, and consumers. Overall, we see this as a shot in the arm for the global economy. Bearing in mind that our simulations do not represent a forecast of the state of the global economy, we find a gain for world GDP between 0.3% and 0.7% in 2015, compared to a scenario without the drop in oil prices.” But they said their optimistic analysis came with a warning. “One of the lessons from the Great Financial Crisis is that large changes in prices and exchange rates, and the implied increased uncertainty about the position of some firms and some countries, can lead to increases in global risk aversion, with major implications for repricing of risk and for shifts in capital flows. This is all the more true when combined with other developments such as what is happening in Russia. One cannot completely dismiss this tail risk.”

Trust, which uses the Hollywood star Bruce Willis to advertise its credit cards, ran into trouble after its policy of offering attractive savings rates and consumer loans fell foul of Russia’s economic slowdown. The country’s central bank said it was providing up to 30bn roubles to help the medium-sized bank in what is thought likely to be the first of a series of bailouts made necessary by the near-halving of the global price of oil and the sharp fall in the value of the rouble. Russian MPs rushed through a bill last Friday authorising a 1tn-rouble recapitalisation of the country’s banks, which have suffered big losses as a result of the currency crisis.

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Collapse before the new year? Or shall we wait for January? See if we can find a way to blame Putin.

Belarus Blocks Online Sites, Closes Stores To Stem Currency Panic (AFP)

Belarus blocked online stores and news websites Sunday, in an apparent attempt to stop a run on banks and shops as people rushed to secure their savings. In a statement Sunday, BelaPAN news company, which runs popular independent news websites Belapan.by and Naviny.by, said that the sites were blocked Saturday without any warning. “Clearly the decision to block the IP addresses could only be taken by the authorities because in Belarus the government has monopoly on providing IPs,” it said. Other websites blocked Sunday were Charter97.by, BelarusPartisan.org, Udf.by and others with an independent news outlook. The blockage started on December 19, when the government announced that purchases of foreign currency will be taxed 30% and told all exporters to convert half of their foreign revenues into the local currency. “Looks like the authorities want to turn light panic over the fall of the Belarussian ruble into a real one,” Belarus Partisan website wrote, calling the blockages “December insanity.”

Internet shopping websites were also blocked en masse. Thirteen online stores were blocked Saturday for raising their prices or showing them in US dollars, deputy trade minister Irina Narkevich said, Interfax reported. The government announced a moratorium on price increases for consumer goods and ordered domestic producers of appliances to “increase deliveries” and keep prices the same at the risk of their management being sacked. Belarussians lined up for hours to clear out their bank accounts and swept store shelves to secure their savings, stocking up on foreign-made appliances and housewares. The Belarussian ruble has lost about half of its value since the beginning of the year, having been hit hard by the depreciation of the Russian ruble since its economy is heavily dependent on its giant neighbour. With foreign currency swiftly depleted in exchange offices, Belarussians even launched a black market website dollarnash.com where individuals could buy and sell dollars and euros.

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Yeah, sure.

Market-Rigging Laws Will Also Cover Currency, Gold, Oil And Silver (Guardian)

Laws to make the manipulation of market benchmarks a criminal offence – sparked by the Libor rigging scandal – will also cover currency, gold, oil and silver markets by 1 April, the government has said. The move announced on Monday is the latest by the coalition government to clamp down on malpractice in the City of London, whose reputation has been further tarnished this year by the exposure of traders colluding to manipulate currency rates. “Ensuring that the key rates that underpin financial markets here and around the world are robust, and that anyone who seeks to manipulate them is subject to the full force of the law, is an important part of our long-term economic plan,” George Osborne said. Under the law, people found guilty of manipulation can be jailed for up to seven years.

It was originally introduced to cover the London interbank offered rate (Libor) market after a global manipulation scandal which resulted in banks being fined billions in 2012. The Treasury said seven benchmarks including the dominant global benchmark in the $5.3tn-a-day currency market – the WM/Reuters 4pm London fix – would be subject to the law, pending a consultation by Britain’s financial watchdog. The EU has criminalised the rigging of financial market benchmarks after the Libor scandal, but those laws will not take effect until 2016. A former City trader was arrested last week in connection with a criminal investigation into allegations that bank traders tried to manipulate currency markets. According to the Financial Times the trader had worked for Royal Bank of Scotland.

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Ukriane is being robbed blind by its own people.

Ukraine Cuts Gold Reserve to Nine-Year Low as Russia Buys (Bloomberg)

Ukraine reduced gold reserves for a second month to the lowest since August 2005 as Russia bought bullion for an eighth month to take its holdings to the highest in at least two decades, according to the International Monetary Fund. Ukraine’s holdings fell to 23.6 metric tons in November from 26.1 tons in October, data on the IMF’s website showed. Reserves in Russia climbed to about 1,187.5 tons in November from 1,168.7 tons a month earlier, according to the data. Holdings by Ukraine are shrinking as fighting with separatists in the east of the country slows the economy and weakens the hryvnia. The country is relying on a $17 billion loan from the IMF to stay afloat and stave off a default.

Foreign reserves are at the lowest in more than a decade amid the deepest recession since 2009. Bullion holdings have dropped 45% from a record 42.9 tons in April, IMF data show. The country’s “financial situation has been under pressure,” Steven Dooley, a currency strategist for the Asia Pacific region at Western Union Business Solutions, said by phone from Melbourne. “Its currency has been under pressure as well. Ukraine is definitely a small player. We really haven’t seen any large impact” on the gold market, he said. Bullion for immediate delivery has declined 1.8% this year to $1,179.47 an ounce after slumping 28% in 2013 as investors reduced holdings in exchange-traded products, the dollar strengthened and the U.S. economy recovered.

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It’s by now impossible to say how much gold one of the world’s most corrupt nations has left.

Ukraine Central Bank Sees $300,000 in Gold Swapped For Lead Bricks (RT)

Cunning fraudsters have conned the Ukraine Central Bank branch in Odessa into buying $300,000 worth of gold which turned out to be lead daubed with gold paint. “A criminal case has been opened and we are now carrying out an investigation to identify those involved in the crime,” a spokesman for the Odessa police force is quoted by Vesti. The news was first reported by Odessa’s State Ministry of Internal Affairs. A preliminary investigation suggests the gang had someone working for them inside the bank that forged the necessary paperwork to allow the sale of the fake gold bullion. It’s also been discovered that bank staff were not regularly checked when entering or exiting the premises.

Since the discovery, the National Bank no longer buys precious metal over the counter, as it cannot be sure of its authenticity, says the First Deputy Head of the National Bank of Ukraine, Aleksandr Pisaruk. The National Bank of Ukraine (NBU) has confirmed the theft of several kilograms of gold in the Odessa region. The cashier involved has apparently fled to Crimea, Vesti Ukraine reports. Criminal proceedings began on November 18, even though the scam apparently took place between August and October. In November, the Central Bank reportedly lost $12.6 billion in gold reserves, putting the total stockpile at just over $120 million. However, the Central Bank reports that foreign currency and gold reserves stood at $9.97 billion at the end of November.

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“.. the case’s significance lies in the information it unearthed about what the government did in the bailout — details it worked hard to keep secret.”

Fresh Doubt Over the Bailout of AIG (Gretchen Morgenson)

“The government is on thin ice and they know it,” a lawyer representing the Federal Reserve Bank of New York wrote in a private email on Sept. 17, 2008, as the federal bailout of the American International Group was being negotiated. “But who’s going to challenge them on this ground?” Well, as it turned out, Maurice R. Greenberg would. Mr. Greenberg, the former chief executive of AIG – the insurance company whose failure threatened to bring down much of the global financial system with it — is not the most sympathetic figure. But the lawsuit he has brought on behalf of Starr International, a large stockholder in AIG, seeking compensation for shareholder losses during those crucial days of the financial crisis, raises troubling issues.

In a 37-day trial that ended in late November, Starr contended that the government’s actions in the bailout, including its refusal to put some terms of the rescue to a shareholder vote, were an improper taking of private property under the Fifth Amendment. It is seeking at least $25 billion in damages on behalf of AIG shareholders. The judge is expected to rule on the case next year. The government rejected Starr’s accusations, contending that its rescue of AIG kept the company from disaster and that AIG’s board agreed to the bailout terms. Those backing the government are indignant over the case. AIG shareholders did well in the bailout and should be grateful for it, they say. And all’s well that ends well, right? AIG repaid its $182 billion rescue loan in 2012; the government generated a profit of $22.7 billion on the deal.

To me, however, the case’s significance lies in the information it unearthed about what the government did in the bailout — details it worked hard to keep secret. And new documents produced after the trial seem to bolster Starr’s case, casting doubt on central testimony by some of the government’s witnesses. The new elements include emails written by the New York Fed’s lawyers during 2008 and 2009 that had been subject to attorney-client privilege and were not produced during the trial. Starr’s lawyers argued that the government’s legal team had knowingly waived that privilege when they put the Fed’s lawyers on the stand at trial; the judge agreed and ordered the government to produce 30,000 new documents.

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“They have succeeded via their dial-tweaking interventions in destroying the agency of markets so that nobody can tell the difference anymore between prices and wishes.”

If Wishes Were Loaves and Fishes (James Howard Kunstler)

Janet Yellen and her Federal Reserve board of augurers might as well have spilled a bucket of goat entrails down the steps of the mysterious Eccles Building as they parsed, sliced, and diced the ramifications in altering their prior declaration of “a considerable period” (that is, before raising interest rates), vis-à-vis the simpler new imperative, “patience,” with its moral overburden of public censure aimed at those too eager for clarity — that is to say, the assurance that the Fed will not pull the plug on their life-support drip of funny money for the racketeering operation that banking has become. The vapid pronouncement of “patience” provoked delirium in the markets, with record advances to new oxygen-thin heights.

Behind all this ceremonial hugger-mugger lurks the dark suspicion that the Federal Reserve has no idea what’s actually going on, and no idea what it’s doing. And in the absence of any such ideas, Ms. Yellen and her collegial eminences have engineered a very elaborate rationale for doing nothing. The truth is, they have already done enough. They have succeeded via their dial-tweaking interventions in destroying the agency of markets so that nobody can tell the difference anymore between prices and wishes. Coincidentally, it is that most wishful time of the year, especially among the professional money managers polishing their clients’ portfolios as the carols are sung and the champagne corks pop. Ms. Yellen should have put on a Santa Claus suit when she ventured out to meet the media last week.

Not even very far in the background, there is wreckage everywhere as events spin out of the pretense of control. Surely something is up in the Mordor of derivatives, that unregulated shadowland of counterparty subterfuge where promises are made with no possibility or intention of ever being kept. You can’t have currencies crashing in more than a handful of significant countries, and interest rates ululating, without a lot of slippage among the swaps. My guess is that a lot of things have busted wide open there, and we just don’t know about it yet, like fissures working deep below the surface around a caldera. This Federal Reserve is running on the final fumes of its credibility.

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