Chinese Ambassador Struggles To Explain Shocking Footage Of Handcuffed & Blindfolded Uighurs Loaded Onto Train Tyler Durden
Sun, 07/19/2020 – 14:00
During a Sunday morning BBC news program, China’s ambassador to the UK Liu Xiaoming was in a rare segment asked point blank about viral footage which purports to show a terrifying scene from Xinjiang province of Muslim minority Uighurs being handcuffed and loaded onto train cars.
While the footage, which appears to have been secretly caught via drone, appears to be a year old or more, it resurfaced in recent weeks, gaining millions of views and reigniting allegations of Uighur people being mass shipped to communist ‘reeducation’ camps and sprawling detention centers.
During the tenses Andrew Marr Show segment, Liu described Xinjiang simply as “the most beautiful place.”
Showing the shocking footage which many observers said echoes Jews being mass loaded onto cattle cars during the Holocaust to be taken to their deaths, Marr pressed the Chinese ambassador with:
“Can I ask you why people are kneeling, blindfolded and shaven, and being led to trains in modern China? What is going on there?”
To which Liu replied: “I do not know where you get this video tape. Sometimes you have a transfer of prisoners, in any country.” And Liu then questioned the authenticity and location of the video: “I do not know, where did you get this video clip?”
Marr then said Western intelligence agencies and Australian experts have backed or ‘verified’ the clip, though this remains uncertain, to which the ambassador said tersely:
“The so-called ‘western intelligence’ keep making false accusations against China.”
He added: “They say ’one million Uighur has been persecuted, do you know how many population Xinjiang has? Forty years ago it was four or five million, now it is 11m people.”
And addressing widespread, persistent accusations of ongoing ethno-religious cleansing of Chinese Muslims in the provice, Liu said: “People say we have ethnic cleansing, but the population has doubled in forty years.”
Marr promptly rebutted: “According to your own local government statistics, the population growth in Uighur jurisdictions in that area has fallen by 84% between 2015 and 2018.” Liu responded: “That’s not right. I gave you the official figure as a Chinese ambassador. This is a very authoritative figure.
The two also sparred over sanctions. “If the UK goes that far to impose sanctions on any individuals in China, China will certainly make a resolute response to it,” the Chinese ambassador said. “You have seen what happened between China (and) the United States. They sanctioned Chinese officials, we sanctioned their senators, their officials. I do not want to see this tit-for-tat between China-US happen in China-UK relations,” he added.
And then this biting line:
“I think the UK should have its own independent foreign policy rather than dance to the tune of the Americans like what happened to Huawei.”
The degree to which this video is or can be verified by US intelligence will be interesting. It could be invoked when potential further human rights related sanctions are rolled out, given the escalating tit-for-tat between Beijing and the Trump administration.
via ZeroHedge News https://ift.tt/2Bi80Jw Tyler Durden
During times of financial disruptions defaults rise in importance and move front and center. The term financial crisis is applied broadly to a variety of situations in which some financial assets suddenly lose a large part of their nominal value, a default falls into this area. In the last decade, debt has soared across the globe. With this in mind, you never want to be caught on the wrong side of a debt default. That is the place where you don’t get paid or are paid with a less valuable currency that has seen its value eroded by inflation. A debt default can take many forms but what they have in common is they all can be considered as reneging on financial obligations. Generally, we make a distinction between public and private debt but even that may become blurred when a government in need of funds has to seize or take over assets or institutions.
Relationship Of Tangibles To Intangibles
An area of great concern should be the growth in non-recourse loans, this includes unsecured personal loans. The fact these are particularly dangerous has not discouraged many investors from becoming seduced into thinking the yield justified rolling the dice and putting at least some money at risk. The chart to the right shows how intangible assets have grown, be cautious if you are owed money, that falls into the area of an intangible asset. The problem is that lenders will find little help in recovering their money from an expensive legal system that has become overwhelmed by the complexity of modern life.
Applies to businesses with $2.7 million in liabilities, raised to $7.5 million under coronavirus stimulus
Owners continue operating their business while in court
Owners can retain equity after exiting bankruptcy
Owners can modify residential mortgages if a home was collateral for a business loan
Faster turnaround to save time and minimize legal fees
Owners generally have three to five years to repay creditors
Creditors can be paid based on a business’s projected income
Legislation that allows easy bankruptcy protection is a gift for anyone wanting to plot a course forward by exploiting those stupid enough to loan them money. This includes landlords and suppliers willing to extend them credit during hard times. To be clear, a default results in a transfer of wealth. This is not always clear in that the party to which the wealth is transferred may have already squandered it, this means it only reduces his financial obligations. Making it easy for someone to run up obligations and not meeting them undercuts the idea we as a society must take responsibility for our actions.
It is also important to make a distinction between public and private debt. Many investors have become seduced into thinking the backing of government adds tremendous validity to both the explicit and implied warranty that come with government-backed instruments. History, however, has shown public debt can also be mishandled, in several ways. One example from the past was how Henry VIII, in addition to engaging in an epic debasement of the currency, seized all the catholic church’s vast landholdings. While not strictly a bond default, actions such as these accompanied by imprisonment or even executions can still be considered as reneging on financial obligations. It is difficult to argue this doesn’t constitute some kind of default.
Inflating away debt is another form of defaulting on debt. We should consider the possibility that inflation has been kept in check primarily because we as a society have invested a large percentage of our wealth into intangible products or goods such as stocks, bonds, and even currencies. If faith drops in intangible “promises” and wealth shifts into tangible goods seeking safety inflation would soar. This would drive interest rates upward and result in massive losses for bondholders. To give you a sense of what this may mean to U.S. Treasury Bond investors a 10-year treasury bond issued at a 2.82% interest rate could see a 42% loss in value from a mere 3% rise in interest rates. This means if you’d held $100,000 in these bonds before rates rise, you would only be able to sell those bonds for $58,000 in the secondary market. Please note the $58,000 you get back would also be affected by a loss of purchasing value lost from inflation.
A debt default that results from the collapse or failure of an institution, financial mechanism, or even a financial instrument and can result in a rapid shift in the value of assets. This has been witnessed time and time again as a stock suddenly becomes worthless. The word “collapse” has a way of conjuring up the image of something falling or crashing in but it is important to note subtle details of the way this occurs can have a great effect on the damage it creates. Many of the economic crises we encounter in our complex modern world have the potential to spread from one institution to another creating contagion and resulting in a destructive domino effect. The massive derivatives market that is touted as one of our modern financial tools is often sighted as having the potential to wreak havoc in this way.
Defaults often fuel the collapse of what some people label as Ponzi-type schemes, underfunded pension funds can be considered in this category.Pensions and promises will be broken so get ready for more pain.This is especially true in the public sector where the 25 largest U.S. public pensions face about $2 trillion in unfunded liabilities. One reader on another site compared pensions to a Ponzi scheme where benefits are paid out to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources. I fear the future will prove him mostly right. The financial stress caused by defaults is often the final straw that brings collapse and causes things to cave in upon themselves.
This Chart Is From Before Recent Problems!
One thing is clear, we are only beginning to see the tip of the iceberg when it comes to this growing problem and just how many pensions are severely underfunded. This is a problem that exists all over the world. Remember the PBGC, America’s safety net for failed pensions has far less in the way of total assets than liabilities. A message from the head of the PBGC in the 2019 annual report states, “The Corporation is in a difficult financial position today.” He goes on to say, “Without reforms, our Multi-employer Insurance Program – the backstop that is the last resort for retirees when a plan fails is very likely to become insolvent in 2025, leaving participants and beneficiaries with significantly less than the level of benefits guaranteed by the PBGC.”
Many who have read my blog have indicated to me they strongly feel a major financial reset will take place in the future. Those invested in bonds should not underestimate the power of inflation to strip them of their wealth. Never before do I remember seeing so many predictions of interest rates remaining low forever and a day. We should have a problem lending hard-earned money out for lengthy periods and we should be wary. Rates are based on predictions of future government deficits and events around the world that may or may not unfold as expected. Part of a conundrum we face is that far more freshly printed money has flowed into the system than new tangible assets created to back it.
An issue that merits far more attention than it gets is the massive role our government plays in the economy. I contend that in the case of a financial crisis brought on by a large number of defaults it will act as a net under the economy making painful deflation unlikely. This means, in the end, those in power and control of the financial system are more likely to engineer an inflationary exit from this mountain of debt. As stated earlier, paying back debt with something of lower value is another way the system masks a default.
via ZeroHedge News https://ift.tt/3hb2F5O Tyler Durden
“Zero Logs” VPN Company Exposes Millions Of User Logs Tyler Durden
Sun, 07/19/2020 – 13:00
A Hong Kong-based UFO VPN – which claims a ‘zero logs’ policy, maintained a database without any password, exposingover 20 million user logs per day which consisted of 894 GB of data.
The logs reportedly included passwords, IP addresses, geographical location, connection timestamps, session tokens, device information andthe OS used.
This is in stark contrast to UFO VPN’s stated privacy policy that “We do not track user activities outside of our Site, nor do we track the website browsing or connection activities of users who are using our Services.”
The exposure, discovered by Comparitech security‘s Bob Diachenko, was discovered after search engine Shodan.io indexed the server hosting the data. Diachenko discovered the exposed data four days later and notified UFO VPN. Two weeks later, he notified the hosting provider, and the next day – more than two weeks after UFO VPN was notified, the database was secured.
If bad actors managed to get their hands on the data before it was secured, it could pose several risks to UFO VPN users.
The plain-text passwords are the most clear and direct threat. Hackers could not only use them to hijack UFO VPN accounts, but might also be able to carry out credential stuffing attacks on other accounts. If the same password is used across multiple accounts, they could all be compromised.
IP addresses could be used to discern users’ whereabouts and corroborate their online activity. VPNs are often used to hide users’ real locations and online activity.
The session secrets and tokens could be used to decrypt session data that an attacker might have captured. For example, if an attacker intercepted encrypted data being sent through the VPN on a compromised wi-fi network, they could conceivably decrypt that data with this information.
Email addresses could be used to target users with tailored phishing messages and scams. –Comparitech
The company told Comparitech in an email: “Due to personnel changes caused by COVID-19, we’ve not found bugs in server firewall rules immediately, which will lead to the potential risk of being hacked. And now it has been fixed,” adding “We don’t collect any information for registering.”
“In this server, all the collected information is anonymous and only be used for analyzing the user’s network performance & problems to improve service quality. So far, no information has been leaked.”
Comparitech disagrees, and believes that the exposed data was not anonymous.
UFO VPN says it has 20 million users, and claims to offer “bank grade protection” in addition to their “zero log” policy. It’s focus is unblocking content such as region-locked streaming service Netflix, as well as blocked apps and websites.
via ZeroHedge News https://ift.tt/3eKMhaP Tyler Durden
Two black women were arrested Saturday for defacing New York City’s “Black Lives Matter” mural, which sits just outside Trump Tower in the borough of Manhattan.
It’s the third time the painted words were defaced in under a week.
Video footage showed the women dumping black paint on the yellow words before one got down on her hands and knees and spread the paint around with her hands.
“They do it for black people, right? Black lives matter. Black lives matter, but you want to defund the police for black people – you’re lying. No, we’re not standing for Black Lives Matter. We want our police. Refund our police,” the woman said as she dumped paint on the mural.
“Ya’ll don’t care about black lives,” she added later.
A New York Police Department (NYPD) detective told The Epoch Times that the situation took place at approximately 3 p.m.
A “Black Lives Matter” mural that was painted on 5th Avenue in New York City, on July 13, 2020. (David Dee Delgado/Getty Images)
“Police observed a 39-year-old and 29-year-old females pouring black paint on the BLM painting on the roadway,” the spokeswoman said in an email.
“The individuals were taken into custody and charged with criminal mischief.”
The women were identified as Staten Island residents Edmee Chavannes, 39, and Bevelyn Beatty, 29.
Both women wore shirts that said “Jesus Matters.”
As police officers tried arresting the women, one of the officers slipped on the paint and hit his head on the pavement. The NYPD declined to give details on his condition.
At least five officers were on the scene.
An NYPD officer falls during an attempt to detain a protester pouring black paint on the Black Lives Matter mural outside of Trump Tower on Fifth Avenue in the Manhattan borough of New York on July 18, 2020. (Yuki Iwamura/(AP Photo)
Three people were arrested Friday for dumping blue paint on the mural.
Those vandals were named as Juliet Germanotta, 39, Luis Martinez, 44, and D’Anna Morgan, 25. They were also charged with criminal mischief before being released.
A man who has yet to be arrested dumped red paint on the mural on July 13.
The mural was painted onto the city street on July 9 on orders from New York City Mayor Bill de Blasio. The Democrat participated in the painting, along with his wife, Chirlane McCray.
“When we say, ‘Black Lives Matter’, there is no more American statement, there is no more patriotic statement, because there is no America without black America,” he said at the time.
Critics say the city should be focused on concretely improving the lives of minorities.
The “refund the police” remark by one of the women arrested Saturday was referring to the Black Lives Matter movement’s efforts to defund the police.
Lawmakers in the city recently slashed $1 billion from the NYPD’s budget.
via ZeroHedge News https://ift.tt/3fPBkWU Tyler Durden
Blast Hits Power Plant In Central Iran Sunday As Mainstream Media Admits ‘It’s Likely Israel’ Tyler Durden
Sun, 07/19/2020 – 12:00
Yet another strange and unexplained explosion has rocked central Iran on Sunday, reports state-owned Islamic Republic News Agency (IRNA).
Citing no injuries during the large explosion, it occurred at a power station in the city of Islamabad, which is in the central province of Isfahan.
At this point, the spate of ‘mystery’ blasts and fires which has damaged key military, nuclear, and industrial sites across Iran – especially in and around Tehran – is approaching a dozen in only the past month.
A separate, prior explosion in Iran over the weekend.
Like with many of the prior incidents, many of which were deadly, Iranian officials downplayed that it was potentially Israeli or US-backed sabotage on its facilities, saying it was likely caused by the erosion of a transformer.
Separately on Sunday, cellophane factory in northwest Iran erupted in fire. Video and images showed a huge cloud of smoke billowing from the site through the day as firefighters struggled to put it out.
Wow. The fires won’t stop. A major fire erupted today at a paint factory in Tabriz, northwestern Iran, where a majority of the people are Azerbaijani. pic.twitter.com/8VXhh6HFXY
Iran’s civil defense organization chief, Ghulam Reza Jalali, was cited in state media as saying Iran is not ruling out sabotage on the power plant either by internal opposition groups or externally supported entities.
To review, all of this comes after earlier this month an advanced centrifuge assembly plant at Iran’s Natanz nuclear site was destroyed in a mysterious fire which is increasingly being blamed on Israeli or US intelligence:
A former official suggested the blaze could have been an attempt to sabotage work at the plant, which has been involved in activities that breach an international nuclear deal.
On 26 June, an explosion occurred east of Tehran near the Parchin military and weapons development base that the authorities said was caused by a leak in a gas storage facility in an area outside the base.
Other recent incidents reported by Iranian news agencies include a fire at industrial complex where gas condensate storage tanks are sited, one at a petrochemical factory and an explosion in Tehran, the capital, which killed two people.
New images show the scale of the destruction from the explosion at Iran’s Natanz nuclear facility on July 2. There may be further damage to the facility’s underground elements, which aren’t visible from above.
Mainstream media is also increasingly laying blame on an Israeli Mossad sabotage campaign, especially prior to the US presidential election, given concern that if Joe Biden takes the White House, Israel will be pressured to stop such sabotage campaigns possibly leading to war.
“Israel has long targeted nuclear programs in the Middle East in secret, open, and openly secret ways,” writes Vox. “Simply put, officials in Jerusalem worry Iran could more credibly threaten Israel’s existence if it had a nuclear weapon,” the report adds.
via ZeroHedge News https://ift.tt/2CrGRnV Tyler Durden
Last week, we discussed why we were taking profits in positions that had gotten egregiously overbought for the second time this year. To wit:
“For the second time in a single year, we have begun the profit-taking process within our most profitable names. Apple, Microsoft, Netflix, Amazon, Costco, PG, and in Communications and Technology ETFs.”
That turned out to be timely as technology shares struggled to maintain their altitude. The tight “wedge” pattern that has developed suggests a downside break could quickly lead to a test of the 50-dma. Such would equate to about a 7% decline.
Furthermore, the S&P 500 continues to remain “technically trapped” between the June highs and the recent consolidation lows. With the market overbought on a short-term basis, the upside has remained limited. However, there is substantial support between the current uptrend line and the 50- and 200-dma’s, limiting downside risk at this juncture.
We will update our risk/reward ranges below. However, as noted previously, July held to its historical performance tendencies. However, the risk comes in August and September, where outcomes tend to be more volatile.
“In the short-term, the bulls remain in charge currently, and as such, we must be mindful of those trends. Also, the month of July tends to be one of the better performing months of the year.”
The Bull Market In Virus Cases
August and September’s seasonal tendencies will also be impacted by the ongoing “bull market” in “virus” cases. Our colleague Jeffrey Marcus noted a critical point for our RIAPro subscribers (30-day Risk-Free Trial)
“The question for clients is this: ‘Is the pattern of the past 5-days a broadening of the rally since March 23rd lows, or are investors moving too far out on the risk curve?’ Experian’s 4 possible Covid-19 economic scenarios may provide an answer. The worst scenario was a W-shaped.”
“There were 72,045 new cases of Covid-19 in the U.S. The second worst daily number to date (chart below). Although the market seems to have ignored the worsening numbers so far, the V-shaped scenario seems a long-shot at this juncture.
Can the U.S economy somehow rebound with ever-increasing cases of Covid-19? The market action over the past 5-days seems to depend on the belief of recovery, and the hope cheap valuations will buffer against tough financial conditions. Clients should own stocks of companies that can prosper during a pandemic ridden economy. Such is as opposed to just ‘hoping’ stocks with rocky roads ahead will continue to rally.”
It is unlikely that a “bull market” in the number of new virus cases can co-exist with a bull market in stocks for long.
Economic Expectations Slow
The most significant risk to the current bull market in stocks comes in two specific headwinds – Congress and the Fed. At the end of the month, the additional $600/week in jobless benefits will expire. Such is no small matter, as noted by CNBC:
25.6 million individuals will lose the additional benefit on July 25th.
$15.4 billion in additional weekly economic benefit nationwide up from states spending less than $1 billion pre-pandemic.
These payments have been a big part of the boost to retail sales over the last couple of months. Retail sales comprise roughly 40% of Personal Consumption Expenditures, which equates to about 70% of the GDP calculation. In other words, it is not a trivial matter.
While it seems like a “no-brainer,” that Congress should extend the benefits, there are some issues which could get in the way:
Political football (R) – Republicans intend to end the enhancement to jobless benefits as they view it as a disincentive for people to return to work.
Political football (D) – Democrats realize an election is soon. If the economy is doing well due to the benefits, the odds increase for a re-election of the incumbent.
Debt Ceiling Debate – With the debt-ceiling, the debate on the next “continuing resolution” will become problematic. For conservative Republicans up for re-election, unbridled spending is going to become problematic.
Even with the current support in place, the initial rebound of economic activity off the lows has begun to slow and stabilize at a level lower than pre-pandemic.
Such should NOT be a surprise with 36.4 million workers either on, or waiting for, unemployment benefits.
Federal Contraction
The other headwind for the market comes from the very thing that boosted asset prices to start with – the Fed’s balance sheet expansion. Over the last couple of months, the slowing rate of advance for the market has coincided with a reduction in the Fed’s “emergency measures.”
As noted previously, the limit to the Fed’s QE program is the Government’s Treasury issuance. An improving economy increased tax revenues, and improved outlooks began limiting the Fed’s ability to engage in more extensive monetary interventions.
Jerome Powell noted the Fed has to be careful not to “run through the corporate bond market.” The Fed is aware if they absorb too much of the Treasury or Corporate credit markets, they will distort pricing and create a negative incentive to lend. Such impairment would run counter to the very outcome they are trying to achieve.
“Instead, as each year passed, more monetary policy was required just to sustain economic growth. Whenever the Fed tightened policy, economic growth weakened, and financial markets declined. The table shows it takes increasingly larger amounts of QE to create an equivalent increase in asset prices.”
“As with everything, there is a “diminishing rate of return” on QE over time. Since QE requires more debt to be issued, the consequence is slower economic growth over time.“
Who Ya Gonna Believe
My friend Doug Kass also made a salient comment regarding the economic risk in front of us.
“Some fundamental investors (like myself) are looking closely at the flattening high-frequency economic data, and the rising chorus of company executives flagging economic and market uncertainties over the last few days.
Specifically, the management of Citigroup, Wells Fargo, JPMorgan, and Goldman Sachs all echoed the same mantra. They are surprised by how optimistic the economic and business forecasts have grown, and the enthusiastic embrace of the capital markets.
These wise managers of businesses have their feet on the ground and virtually dismiss a “V” type recovery that many have endorsed. To paraphrase, they all see many possible outcomes (many of which are adverse and not market-friendly).
Look to the ground, not to the sky – believe them (bank CEOs) and not the markets’ seductive lying eyes.”
As noted above, the data does confirm those views. More importantly, there is another issue that derives from a weaker economic outlook.
“The current forward price-to-earnings ratio on the S&P 500 based on 2020 earnings is 35.6 times earnings. The historical average forward price-to-earnings ratio on the S&P 500 dating back a century and a half is 15.6 times. Thus, today’s valuation is more than +125% greater than the historical average.
The forward P/E ratio on the S&P 500 has been higher than 35.6 only two other times in history. Both are recent episodes. The first was from 2001-Q1 to 2002-Q2 during the bursting of the technology bubble. The second was from 2008-Q2 to 2009-Q1 during the Great Financial Crisis.
During both of these past episodes, the P/E ratio moved in excess of 35 times forward earnings, because while the S&P 500 price was falling (the “P” in the P/E ratio), the earnings were falling much faster (the “E” in the P/E ratio). In contrast, the P/E ratio has moved in excess of 35 times forward earnings today because the S&P 500 price is rising even though earnings are falling considerably.”
More To Go
That is correct, and the issue currently is that expectations for earnings are still far too high through the end of 2020, and into 2021. As I discussed previously:
“Currently, estimates have only been reduced by 34% of their previous peak. Such comes at a time where economic growth is weaker, job loss is higher, and consumption will drop lower than any previous point except during the ‘Great Depression.’”
“We are watching the chart closely as we expect that earnings will eventually drop closer to $60/share to align with historical norms. As such, stock prices will have to correct to align with those earnings.”
(Note: Since that writing, trough estimates have declined to $91.79. The current bear market P/E is currently 35.13x.)
However, even those estimates are likely optimistic, given the data that is coming in. We would not be surprised to see a negative sign in front Q2-GAAP earnings before it is over.
At the moment, such “fundamental relics” like earnings may not seem to matter. Such has always seemed to be the case, just before they begin to matter, and matter a lot.
“The [advice to reduce risk] played out well this past week, given daily swings in the market. While the market was up for the week, it has not reclaimed the June highs. As such, the consolidation continues with risk/reward remaining primarily ‘neutral’ with a ‘negative’ bias.”
That advice remains this week. After several failed tests of the June highs this week, we derisked our portfolios and added to our hedges. Even with those adjustments, our portfolios continued to perform as the rotation to “risk-off” sectors kept markets stable. The reason for the derisking is the negative tilt to the risk/reward ranges currently.
-4.3% to initial March reflex rally top vs. +2.1% all-time highs.* (Negative)
-5.4% to 50-dma support vs. +2.1% to all-time highs.* (Negative)
-7.2% to 200-dma support vs. +2.1% to all-time highs.* (Negative)
-9.6% to -15.8% to previous consolidation vs. +2.1% to all-time highs.* (Negative)
(* If the market breaks out to all-time this analysis is no longer valid and risk/reward ranges will recalibrate for the breakout.)
The Risk Of Confirmation Bias
I have written many times previously about the dangers of getting trapped into a “bullish” or “bearish” mindset. As an investor or portfolio manager, your job is to view the markets for opportunities to increase capital and protect it from loss.
As Doug noted this week:
“There are many who see the markets as “Them versus Us.” The bulls vs. the bears, the fundamentalists vs. the technicians, and so on. I view the investment marketplace as me vs. the markets, and not me vs. opposing views.“
The most significant risk to any investor long-term is getting trapped in “confirmation bias.” Such is the psychological impediment of seeking out information that confirms your existing predisposition. However, such inherently leads to adverse outcomes as investors become blind to the risk that inherently upends their future outcome.
In the end, it does not matter IF you are “bullish” or “bearish.” The reality is that the “broken clock” syndrome owns both “bulls” and “bears” during the full-market cycle. However, grossly important in achieving long-term investment success is not necessarily being “right” during the first half of the cycle, but by not being “wrong” during the second half.
via ZeroHedge News https://ift.tt/2WAib3D Tyler Durden
Mnuchin Suggests US Should Forgive “Small” PPP Loans Of $150,000 Or Less Tyler Durden
Sun, 07/19/2020 – 11:00
In what is turning out to be one of the biggest cash grabs and fleecings of the middle class that our Central Bank and government have ever conspired to create, the government is now considering forgiving all of the “small” PPP loans that it distributed under the coronavirus pandemic.
While the average American is still clinging to the one $1200 stimulus check they were distributed months ago, Treasury Secretary Steven Mnuchin has said that he is considering “forgiving all small loans, but would need fraud protection,” for businesses, according to Bloomberg.
Good luck with that.
As of now, the government has approved about $518.1 billion spread over 4.9 million PPP loans since the pandemic has started. Mnuchin has not yet specified what “small” may constitute and said that “some level of reporting in a simple way is important.”
The Treasury is in the midst of facing several issues in addition to PPP loan paybacks. As we reported days ago here on Zero Hedge, the $600 additional unemployment lifeline for Americans, in addition to other fiscal stimulus, is all on the verge of running out.
Alfredo Ortiz, head of the conservative Job Creators Network, is targeting a payroll tax holiday that’s aimed at smaller businesses. The Committee to Unleash Prosperity, founded by Steve Forbes, Stephen Moore and Art Laffer, is seeking the same.
Despite facing criticism for doling out million of dollars in loans to Wall Street and law firms, the SBA says it will review all loans of $2 million or more carefully before they are forgiven.
Well, that makes us feel better…
via ZeroHedge News https://ift.tt/3h838WC Tyler Durden
The cognitive dissonance required to ignore the widening gap between the real economy and the fraud’s basic machinery–speculation funded by “money” conjured out of thin air–has reached a level of denial that can only be termed psychotic.
When scams start unraveling, the scammers become increasingly frantic to maintain the illusion of legitimacy and the delusion of guaranteed gains that are the lifeblood of every scam. One sure sign that the flim-flam is about to collapse is the manic rise of FOMO, fear of missing out, as the scammers jam the Ponzi scheme’s stellar returns to new extremes.
What greedy human can resist guaranteed gains, especially of the enviously grandiose variety?
The greatest scam of the past century is unraveling before our eyes. I’m calling it finance capitalism as a general descriptor of the dominant form of what’s called “capitalism” because calling it what it actually is–a fraud that’s destroyed the foundations of our economy and society–is, well, a much more difficult sell than “capitalism,” which still has some faint echoes of the open markets, etc. that characterized traditional capitalism, which I call naive capitalism because it is incapable of differentiating between the parasitic, predatory finance version cloaking itself as “capitalism” and actual capitalism, in which capital is put at risk, markets are transparent, etc.
There are many labels for the distorted, corrupted “capitalism” that dominates our economy and society: I’ve long used state-cartel capitalism, others prefer monopoly capitalism or crony capitalism.
I now favor finance capitalism because the heart of the fraud is finance: printing “money” out of thin air without creating any value or any goods and services. If you can’t print “money,” then borrow it into existence–that’s just as profitable a fraud as printing it.
As I explained in Our Wile E. Coyote Economy: Nothing But Financial Engineering (June 11, 2020), the fairy tale that America has a truly capitalist economy no longer aligns with the reality that the U.S. economy is now a decaying billboard of “producing goods and services” behind which the real money is made in financial engineering, a.k.a. legalized fraud.
I’ve discussed this fraudulent distortion of capitalism for years:
Just as Communism was a god that failed, finance capitalism is also a god that failed, an extreme version of crony-capitalism that is nothing more than a mechanism for concentrating wealth and power at the expense of everyone toiling in the real-world economy.
And if we understand this, then we also understand that with its stock buybacks, high-frequency trading and after-hours manipulation, the stock market is nothing more than finance capitalism’s primary mechanism for increasing the concentration of wealth.
How did outright fraud come to dominate our economy? The answer is simple: infinite greed plus the decline of gains from “real capitalism,” i.e. increasing productivity via producing goods and services. The appeal of something for nothing is irresistible when “money” can be printed / borrowed out of thin air and used to run a fraud that exploits human greed.
Like every good Ponzi scheme, those invested in the scam promote the fraud and cajole new marks to sink their cash into the “guaranteed gains” scheme because everyone already in the fraud will lose if there aren’t enough new marks joining to keep it from collapsing. That perfectly describes the entire financial media, the financial “industry” and everyone in it.
Unfortunately for everyone invested in the scam, all the “wealth” created by financial engineering / legalized fraud is fictitious, i.e. phantom. All Ponzi schemes collapse once the supply of greed-blinded marks dries up, and so the “solution” in our finance capitalism fraud is for the central bank, the Federal Reserve, to become the mark with an infinite checkbook: the Fed is busily conjuring “money” out of thin air to buy corporate junk bonds and other “assets” (ha-ha, as if these are actually worth anything–the joke’s on you) to prop up the Ponzi scheme.
This works until it doesn’t, of course. In the meantime, the folks running the fraud are pulling out all the stops to keep it from imploding–goosing the FOMO frenzy, printing and throwing trillions into the scam to maintain the illusion of legitimacy and the delusion of guaranteed gains and talking up the god-like powers of the Fed to prop up the fraud indefinitely.
Despite these massive manipulations, the cracks are increasingly visible. Volatility refuses to sink back to near zero, and the swings in the skimming machine, a.k.a. the stock market are becoming more extreme.
The cognitive dissonance required to ignore the widening gap between the real economy and the fraud’s basic machinery–speculation funded by “money” conjured out of thin air–has reached a level of denial that can only be termed psychotic.
All bubbles pop, all frauds implode, all scams collapse. That ominous clicking coming from behind the tattered billboard is the sound of dominoes falling.
Hong Kong Outbreak “Out Of Control” As City Suffers Record Jump In New COVID-19 Cases: Live Updates Tyler Durden
Sun, 07/19/2020 – 10:09
Once praised as a shining example of viral-suppression for the early and strict measures it took to seal its borders and implement strict test-and-trace protocols, Hong Kong has suffered a second wave of the outbreak that has intensified with dizzying speed.
Hong Kong reported 108 new infections confirmed over the past 24 hours on Sunday. Of these, 83 were locally transmitted and 25 were imported. The figure was its largest daily total since the start of the global outbreak late last year. Of the locally transmitted cases, 35 were tied to existing clusters or infected cases, including those who had dined at Windsor Restaurant in Tsz Wan Shan and at Tao Heung restaurant in Mong Kok.
Responding to the recent surge in new infections, which one of the city’s leading epidemiologists attributed to a particularly virulent strain of the virus that’s 30% more infectious, Hong Kong Chief Executive Carrie Lam announced that quarantine and isolation facilities will undergo a major upgrade to fortify the city’s defenses against another resurgence.
Hong Kong was one of the first cities to report cases of the virus earlier this year. But it had pretty much suppressed local transmission by the beginning of June. But over the past 2 weeks, the virus has made a stunning comeback, facilitated, experts believe, by an influx of foreign travelers. Many fear the virus is now spreading undetected in the city of 7.5 million which is also one of the most densely populated places on earth.
During her speech on Sunday, Lam warned that more than 500 new infections had been confirmed over the past 2 weeks, bringing the city’s total tally to 1,788 cases and 12 fatalities.
“I think the situation is really critical and there is no sign the situation is being brought under control,” Lam said.
Hong Kong implemented new social distancing measures last week, ordering bars, gyms and nightclubs to close and making mask-wearing on public transit mandatory.
On Sunday, Lam laid out more restrictions. The city’s 180,000 civil servants would work from home for a week beginning Monday. All Hongkongers would be compelled to wear masks in indoor public places, not just public transit. Most restaurants must remain closed for dine-in service from 6pm to 5 am until July 28. Only four people are allowed per table. Some 2,000 additional quarantine units will be built near Hong Kong Disneyland, while the AsiaWorld-Expo is being converted to house stable coronavirus patients. It can also be used to house vulnerable patients – like the elderly – should the virus find its way back into nursing homes and other care facilities inhabited by the most vulnerable.
The government also urged schools to hand out diplomas to graduates on-line.
Executives Of Bankrupt Companies Made $131 Million In Bonuses This Year Tyler Durden
Sun, 07/19/2020 – 09:55
While a wave of bankruptcies continues to wash over the country as a result of the pandemic (and just poorly run businesses), that hasn’t stopped the executives of some of the biggest trainwrecks in recent business history from collecting fat bonus checks, despite driving their respective companies into the ground. Among the higher profile names are companies like J.C. Penney, Chesapeake Energy and Hertz, who have all filed for bankruptcy protection this year.
They have also all awarded their executives significant bonuses totaling $10 million, $25 million and $1.5 million respectively in the weeks – or sometimes days – leading up to their bankruptcies. And they’re not the only ones.
Out of the 100 companies that have filed for bankruptcy since the Covid lockdowns began, Bloomberg estimates that 19 of these companies have committed to paying a total of $131 million in retention and performance bonuses.
The companies claim the bonuses are to keep their management teams in order to lead their turnarounds. Yes, the very same management teams that led the companies to bankruptcy to begin with. And the bonuses are tough to claw back unless they are made after a company officially files for protection with the court.
At a place like J.C. Penney, where thousands will lose their job, the company’s CEO stands to make $4.5 million in bonuses. Hertz doled out $1.5 million to its top three executives as part of $16.2 million in retention bonuses three days before it filed for bankruptcy.
Frontier Communications issued bonuses in February, before filing for bankruptcy in April. Chesapeake said in May it intended to pay $25 million in bonuses to 21 executives while requiring others to take salary cuts. The CEO of Intelsat, who led the company to its bankruptcy and has been in charge since 2015, is lined up for a $6.9 million bonus.
Ian Keas, a principal at Pearl Meyer, an executive-compensation consulting firm, said:
“Board members want the people that know the business, know the assets of the company, know the nuances and facets of the business, and can leverage that understanding and knowledge to extract value going forward.”
Julie Farb, director of the Center for Strategic Research at AFL-CIO, a federation of 55 labor unions, had a slightly different take on the bonuses:
“We really find them offensive in light of the median worker pay, the reductions in benefits and layoffs due to store closings. It’s all made worse in the current Covid environment.”
In addition to the amount of the bonuses, the timing is also making them tough to swallow. Right now, tens of millions of Americans are unemployed while others risk their lives on a daily basis to help deal with the pandemic by going to work on a daily basis.
Nell Minow, vice chair of ValueEdge Advisors, a shareholder-advisory firm said:
“They’re going to say they’re doing it for stability and consistency. But when a company is heading toward bankruptcy, maybe stability and consistency should not be your priorities. Maybe it should be rethinking the company’s strategy.”
Creditors may have some recourse by filing an adversary claim to challenge these pre-bankruptcy bonuses. But fighting them can be costly, time consuming and difficult to win.
Peter Carr, a spokesperson for the U.S. Trustee, said:
“The only remedy is a claw-back. The U.S. Trustee program can’t seek that remedy, so we object to any debtor motions that would prevent the unsecured creditors’ committee from pursuing this remedy.”
We won’t hold our breath.
via ZeroHedge News https://ift.tt/3jmQapJ Tyler Durden
