Author: admin

Roughly half a million Chinese living in Hebei Province (not Hubei, Hebei), a province in northern China that surrounds Beijing (which operates as an independent ‘national city’) are under lockdown, but in an effort to try to convey just how prepared Chinese public health officials are for another outbreak (keep in mind, the WHO’s “independent” delegation of investigators is expected to arrive in China next week) they’ve warned every English-language media outlet that will listen that officials have identified another potentially pandemic-quality flu pathogen.

According to the BBC, Chinese scientists have identified a new strain of flu that has “the potential to become a pandemic”. It emerged recently in China’s already-dwindling pig population, but scientists say it can infect humans, which would make it similar to the H1N1 virus that spread across Asia and made it all the way to North America in a short-lived pandemic.

Among other factors, scientists have credited the natural human immunity to flu viruses, built up in elderly people over decades, for stopping H1N1 from becoming the global pandemic that many scientists feared. In fact, the extremely dire warnings about that virus, which never came to pass, partially contributed – one could argue – to the complacent attitude in the US toward viruses spreading from China.

For those who haven’t been paying attention, China is only just starting to recover from a devastating outbreak of “pig ebola” – a particularly deadly strain of swine flu – that wiped out ~1/3rd of China’s pig population.

The team of scientists published their findings in a medical journal where they could be sure that science and health-care reporters would find it.

The researchers are concerned that it could mutate further so that it can spread easily from person to person, and trigger a global outbreak.

While it is not an immediate problem, they say, it has “all the hallmarks” of being highly adapted to infect humans and needs close monitoring.

As it’s new, people could have little or no immunity to the virus.

The scientists write in the journal Proceedings of the National Academy of Sciences that measures to control the virus in pigs, and the close monitoring of swine industry workers, should be swiftly implemented.

But how worried should we be? The third-party ‘expert’ quoted by the BBC explained that the global medical community must be ever-vigilant toward new viral threats. Though since this virus hasn’t yet infected humans, it would seem pretty early in the process to get all hysterical.

The virus, which the researchers call G4 EA H1N1, can grow and multiply in the cells that line the human airways.

They found evidence of recent infection in people who worked in abattoirs and the swine industry in China when they looked at data from 2011 to 2018.

Current flu vaccines do not appear to protect against it, although they could be adapted to do so if needed.

Prof Kin-Chow Chang, who works at Nottingham University in the UK, told the BBC: “Right now we are distracted with coronavirus and rightly so. But we must not lose sight of potentially dangerous new viruses.”

While this new virus is not an immediate problem, he says: “We should not ignore it.”

In theory, a flu pandemic could occur at any time, but they are still rare events. Pandemics happen if a new strain emerges that can easily spread from person to person.

Although flu viruses are constantly changing – which is why the flu vaccine also needs to change regularly to keep up – they do not usually go pandemic.

Prof James Wood, head of the Department of Veterinary Medicine at the University of Cambridge, said the work “comes as a salutary reminder” that we are constantly at risk of new emergence of pathogens, and that farmed animals, with which humans have greater contact than with wildlife, may act as the source for important pandemic viruses.

Shortly after the western press picked up on the latest pig influenza, the WHO chimed in and warned that we must “never let our guard down” when it comes to the risk posed by influenza.

• WHO SPOKESMAN SAYS CHINA STUDY ON NEW VIRUS IN PIGS SHOWS “WE CANNOT LET OUT GUARD DOWN” ON INFLUENZA DURING COVID-19 PANDEMIC

But before we get carried away speculating about this new pandemic, how about we first figure out how things went so badly wrong during the early days of the last one?

China’s top legislative body passed, and president Xi signed, a new controversial law for Hong Kong that would allow authorities to crack down on pro-democracy protesters and “foreign forces” who attempt to destabilize the semi-autonomous region, reported Reuters. The National People’s Congress Standing Committee swiftly approved the landmark national security law on Tuesday, signaling Communist Party leader Xi Jinping’s desire to seize more control to squash pro-democracy protests in the city to stop subversion, terrorism, separatism, and collusion with external forces. 

The National Security Law for Hong Kong was passed unanimously on Tuesday. Chinese President Xi Jinping signed a presidential decree about the legislation. The law is expected to become effective once it is unveiled. #HK pic.twitter.com/XOJ5G7PsoS

— Global Times (@globaltimesnews) June 30, 2020

The new law could jeopardize civil liberties and Hong Kong’s independent judicial system, which has allowed the financial hub to thrive over the decades economically. President Donald Trump warned he would disband Hong Kong’s preferential trade status – and in response to the passage of the law in the overnight hours – Washington released a headline indicating it will bar the export of weapons and sensitive technology to the city.  

The most significant penalty under the new law is life imprisonment – something that will likely deter protesters from organizing on city streets. 

[End of Hong Kong, Beginning of Reign of Terror]

1. #Beijing has just passed the sweeping #nationalsecuritylaw. It marks the end of Hong Kong that the world knew before. pic.twitter.com/QouY6Itr1O

— Joshua Wong 黃之鋒 😷 (@joshuawongcf) June 30, 2020

Sure enough, famous HK pro-democracy protester Joshua Wong tweeted: “It [new law] marks the end of Hong Kong that the world knew before.” Conversely, Hong Kong leader Carrie Lam told the United Nations Human Rights Council in Geneva that the international community must “respect our country’s right to safeguard national security.”

AFP’s Xinqi Su tweeted the new law is expected to go into effect later today. 

#BREAKING #CarrieLam: The National Security Law will come into effect later today. pic.twitter.com/EeiV3OteDr

— Xinqi Su 蘇昕琪 (@XinqiSu) June 30, 2020

The international condemnation to the passage was swift: British Foreign Minister Dominic Raab said he was “deeply concerned by unconfirmed reports that Beijing has passed the national security law.” Japanese Chief Cabinet Secretary Yoshihide Suga described the passage of the national security law as “regrettable.” 

On Monday, a diplomatic tit-for-tat with the US, China announced it would impose visa restrictions on US government officials who “behave egregiously” in connection to Hong Kong affairs. This followed Washington’s decision last week to restrict visas for Chinese government officials who threaten Hong Kong’s autonomy. 

Hang Seng futures were unchanged on the session amid the passage of the new law. 

“Hong Kong stocks pared an advance Tuesday as investors awaited details of the legislation. Property companies were among the biggest losers on the MSCI Hong Kong Index, which gave up a gain of almost 1% before closing up 0.7%,” Bloomberg noted. 

The new security law and tit-for-tat visa restrictions come as tensions between Beijing and Washington are soaring over trade deal purchase commitments, origins of the virus pandemic, and territory disputes in the South China Sea.  

Authored by Daniel Lacalle,

The measures implemented by governments in the Eurozone have one common denominator: A massive increase in debt from governments and the private sector. Loans lead the stimulus packages from Germany to Spain. The objective is to give firms and families some leverage to pass the bad months of the confinement and allow the economy to recover strongly in the third and fourth quarter. This bet on a speedy recovery may put the troubled European banking sector in a difficult situation.

Banks in Europe are in much better shape than they were in 2008, but that does not mean they are strong and ready to take billions of higher risk loans. European banks have reduced their non-performing loans, but the figure is still large, at 3.3% of total assets according to the European Central Bank. Financial entities also face the next two years with poor net income margins due to negative rates and very weak return on equity.

The two most important measures that governments have used in this crisis are large loans to businesses partially guaranteed by the member states, and significant jobless subsidy schemes to reduce the burden of unemployment. Almost 40 million workers in the large European nations are under a subsidized jobless scheme, according to Eurostat and Bankia Research. Loans that add up to 6% of the GDP of the Eurozone have been granted to let businesses navigate the crisis. So, what happens if the recovery is weak and uneven and the third and fourth quarter growth figures disappoint, as I believe will happen? First, the rise in non-performing loans may elevate the total figure to 6% of total assets in the banking sector, or 1.2 trillion euros. Second, up to 20% of the subsidized unemployed workers will probably join full unemployment, which may increase the risk in mortgage and personal loans significantly.

Banks may face a tsunami of problems as three factors collide:

1. rise in non-performing loans,

2. deflationary pressures from a prolonged crisis and,

3. central bank keeping negative rates that destroy banking profitability.

We estimate a rise in net debt to EBITDA of the largest corporations of the Stoxx 600 soaring to 3x from the current 1.8x. This means that banks may face a wall of delinquencies and weakening solvency and liquidity in the vast majority of their assets (loans) just as deflationary pressures hit the economy, growth weakens and the central bank implements even more aggressive but futile liquidity measures and damaging rate cuts.

This combination of three problems at the same time may generate a risk of a financial crisis created by using the balance sheet of banks massively to address the bailout of every possible sector. It may undo the entire improvement in the balance sheet of the financial entities achieved slowly and painfully in the past decade and destroy it in a few months.

Weakening the balance sheet of banks and hiding larger risk at lower rates in their balance sheets may be an extremely dangerous policy in the long run. Governments have pushed banks to give loans to businesses and families with very challenging financial conditions and this may come back like a boomerang and hit the European economy where 80% of the real economy is financed by the banking sector, according to the ECB.

Governments should have taken more prudent measures and address the covid-19 crisis with tax cuts and grants and not so much through massive loans, even if those are partially guaranteed by the states. If the sovereign debt crisis starts to creep again, there will be a fourth risk that may damage banks and the financing of the real economy.

The response of banks in this crisis has been positive but may be too much too soon and clearly, they are taking too much risk at too low rates. So far, financial entities are being prudent and have made large provisions to strengthen the balance sheet. However, these provisions may need to be doubled in the next quarters.

Taking measures to avoid creating a financial crisis from these extreme policies will be critical to avoid a larger problem in 2021-2022.

“For the next two years – 2020/21 – we assume that production and deliveries will be 40% lower than originally planned,” Guillaume Faury, the chief executive officer of Airbus, told German national daily newspaper, Die Welt, on Monday, adding that output would normalize by 2025. 

Faury said the COVID-19 outbreak resulted in Airbus losing 40% of its civil aircraft business. He said that instead of planning for higher production of commercial aircraft, capacity in output and labor must be reduced as the aviation industry is facing the worst crisis in its history.

Airbus had announced previously it was slashing output by a third on average. We noted in March, Europe’s aerospace giant was expecting production cuts of its A330 output amid waning demand for its most popular wide-body airliner.

In April, Faury told employees in a memo seen by Reuters that the company is “bleeding cash” and needs cut costs to weather the coronavirus pandemic storm. 

“In April/May we were up to 80 % below our plan. Only 14 instead of 75 aircraft were delivered in April,” Faury said. “On the one hand, due to the travel restrictions, airline crews could not take delivery of their aircraft, on the other hand, there was no financial security at the airlines, but gradually it is getting better.”

Industry sources told Reuters a 40% cut in “single-aisle equivalent” output is expected to lead to layoffs and lower output capacity in jet making – the timing of the announcement could be in early July. 

Sources said 14,000 to 20,000 jobs could be eliminated – they also said the plan could be unveiled as early as Wednesday when Airbus has called an emergency session with its union. 

“It’s a brutal fact, but we must do it. It is about the necessary adjustment to the massive drop in production. It’s about securing our future,” Faury told Die Welt, while vaguely referring to restructuring details.

Faury doesn’t expect a recovery in output until 2025: 

“After market studies and discussions with the airlines, we assume that the previous volume will be back by 2025 at the latest. We expect that the demand for single-aisle aircraft will pick up faster than for the large-scale models. We therefore currently expect the A320 family to gradually increase production from 2022/2023. We anticipate low demand for wide-body aircraft over the next five years, as there was already an oversupply on the market before the crisis. At some point, a large replacement wave is expected for the Boeing 777 and the Airbus A330, but it is still a long way off,” he said.

Airbus shares have already retraced 61.8%-Fib from the low of 2009 (EUR 7.19) to the high (EUR 139.40) seen in January. 

Airbus CEO reiterated a similar warning that Boeing CEO Dave Calhoun made in April, indicating it would take 2 to 3 years for air travel growth to return to pre-corona levels, adding that long term growth trends could take even longer to recover. 

“Based on what we know now, we expect it will take two to three years for travel to return to 2019 levels and an additional few years beyond that for the industry’s long-term trend growth to return,” he said. 

To put things in perspective for readers, the world’s top commercial jet makers see no recovery in their business nor air travel for several years – the aviation industry supports 65.5 million jobs worldwide and supports $2.7 trillion (3.6%) of the world’s GDP. 

With Airbus and Boeing in the dumps, air travel collapsed, and the travel and tourism industry decimated – don’t expect a V-shaped recovery in the global economy anytime soon.