Category: zerohedge

Authored by John Whitehead via The Rutherford Institute,

“When it gets down to having to use violence, then you are playing the system’s game. The establishment will irritate you—pull your beard, flick your face—to make you fight. Because once they’ve got you violent, then they know how to handle you.”

– John Lennon

Brace yourselves.

There is something being concocted in the dens of power, far beyond the public eye, and it doesn’t bode well for the future of this country.

Anytime you have an entire nation so mesmerized by political theater and public spectacle that they are oblivious to all else, you’d better beware.

Anytime you have a government that operates in the shadows, speaks in a language of force, and rules by fiat, you’d better beware.

And anytime you have a government so far removed from its people as to ensure that they are never seen, heard or heeded by those elected to represent them, you’d better beware.

What is unfolding before us is not a revolution.

The looting, the burning, the rioting, the violence: this is an anti-revolution.

The protesters are playing right into the government’s hands, because the powers-that-be want this. They want an excuse to lockdown the nation and throw the switch to all-out martial law. They want a reason to make the police state stronger.

It’s happening faster than we can keep up.

The Justice Department is deploying federal prison riot teams to various cities. More than half of the nation’s governors are calling on the National Guard to quell civil unrest. Growing numbers of cities, having just barely emerged from a coronavirus lockdown, are once again being locked down, this time in response to the growing upheaval.

This is how it begins.

It’s that dystopian 2030 Pentagon training video all over again, which anticipates the need for the government to institute martial law (use armed forces to solve domestic political and social problems) in order to navigate a world bedeviled by “criminal networks,” “substandard infrastructure,” “religious and ethnic tensions,” “impoverishment, slums,” “open landfills, over-burdened sewers,” a “growing mass of unemployed,” and an urban landscape in which the prosperous economic elite must be protected from the impoverishment of the have nots.

We’re way ahead of schedule.

The architects of the police state have us exactly where they want us: under their stamping boot, gasping for breath, desperate for freedom, grappling for some semblance of a future that does not resemble the totalitarian prison being erected around us.

This way lies certain tyranny.

For just one fleeting moment, “we the people” seemed united in our outrage over this latest killing of an unarmed man by a cop hyped up on his own authority and the power of his uniform.

That unity didn’t last.

Indeed, it didn’t take long—no surprise there—for us to quickly become divided again, polarized by the misguided fury and senseless violence of mobs taking to the streets, reeking of madness and mayhem.

Deliberately or not, the rioters have directed our attention away from the government’s crimes and onto their own.

This is a distraction.

Don’t allow yourself to be so distracted.

Let’s not lose sight of what started all of this in the first place: the U.S. government.

More than terrorism, more than domestic extremism, more than gun violence and organized crime, the systemic violence being perpetrated by agents of the government constitutes a greater menace to the life, liberty and property of its citizens than any of the so-called dangers from which the government claims to protect us.

Case in point: George Floyd died at the hands of the American police state.

The callous, cold-blooded murder of the unarmed, 46-year-old black man by police is nothing new: for 8 minutes and 46 seconds, police knelt on Floyd’s neck while the man pleaded for his life, struggled to breathe, cried out for his dead mother, and finally passed out and died.

Floyd is yet another victim of a broken system of policing that has placed “we the people” at the mercy of militarized cops who have almost absolute discretion to decide who is a threat, what constitutes resistance, and how harshly they can deal with the citizens they were appointed to “serve and protect.”

Daily, Americans are being shot, stripped, searched, choked, beaten and tasered by police for little more than daring to frown, smile, question, challenge an order or just exist.

I’m talking about the growing numbers of unarmed people are who being shot and killed for just standing a certain way, or moving a certain way, or holding something—anything—that police could misinterpret to be a gun, or igniting some trigger-centric fear in a police officer’s mind that has nothing to do with an actual threat to their safety.

Killed by police for standing in a “shooting stance.” Killed for holding a cell phone. Killed for holding a baseball bat. Killed for opening the front door. Killed for being a child in a car pursued by police. Killed for approaching police while holding a metal spoon. Killed for running in an aggressive manner while holding a tree branch. Killed for crawling around naked. Killed for hunching over in a defensive posture. Killed because a police officer accidentally fired his gun instead of his taser. Killed for wearing dark pants and a basketball jersey. Killed for reaching for his license and registration during a traffic stop. Killed for driving while deaf. Killed for being homeless. Killed for brandishing a shoehorn. Killed for peeing outdoors. Killed for having his car break down on the road. Killed for holding a garden hose.

Now you can make all kinds of excuses to justify these shootings, and in fact that’s exactly what you’ll hear from politicians, police unions, law enforcement officials and individuals who are more than happy to march in lockstep with the police. However, as these incidents make clear, the only truly compliant, submissive and obedient citizen in a police state is a dead one.

Sad, isn’t it, how quickly we have gone from a nation of laws—where the least among us had just as much right to be treated with dignity and respect as the next person (in principle, at least)—to a nation of law enforcers (revenue collectors with weapons) who treat us all like suspects and criminals?

This is not how you keep the peace.

This is not justice. This is not even law and order.

This is certainly not freedom. This is the illusion of freedom.

Unfortunately, we are now being ruled by a government of psychopaths, scoundrels, spies, thugs, thieves, gangsters, ruffians, rapists, extortionists, bounty hunters, battle-ready warriors and cold-blooded killers who communicate using a language of force and oppression.

The facts speak for themselves.

We’re being ravaged by a government of ruffians, rapists and killers. It’s not just the police shootings of unarmed citizens that are worrisome. It’s the SWAT team raids gone wrong that are leaving innocent citizens wounded, children terrorized and family pets killed. It’s the roadside strip searches—in some cases, cavity searches of men and women alike carried out in full view of the public—in pursuit of drugs that are never found. It’s the potentially lethal—and unwarranted—use of so-called “nonlethal” weapons such as tasers on children for “mouthing off to a police officer. For trying to run from the principal’s office. For, at the age of 12, getting into a fight with another girl.”

We’re being held at gunpoint by a government of soldiers—a standing army. While Americans are being made to jump through an increasing number of hoops in order to exercise their Second Amendment right to own a gun, the government is arming its own civilian employees to the hilt with guns, ammunition and military-style equipment, authorizing them to make arrests, and training them in military tactics. Among the agencies being supplied with night-vision equipment, body armor, hollow-point bullets, shotguns, drones, assault rifles and LP gas cannons are the Smithsonian, U.S. Mint, Health and Human Services, IRS, FDA, Small Business Administration, Social Security Administration, National Oceanic and Atmospheric Administration, Education Department, Energy Department, Bureau of Engraving and Printing and an assortment of public universities. There are now reportedly more bureaucratic (non-military) government civilians armed with high-tech, deadly weapons than U.S. Marines. That doesn’t even begin to touch on the government’s arsenal, the transformation of local police into extensions of the military, and the speed with which the nation could be locked down under martial law depending on the circumstances. Clearly, the government is preparing for war—and a civil war, at that—and “we the people” are the perceived enemy.

We’re being taken advantage of by a government of scoundrels, idiots and cowards. American satirist H.L. Mencken calculated that “Congress consists of one-third, more or less, scoundrels; two-thirds, more or less, idiots; and three-thirds, more or less, poltroons.” By and large, Americans seem to agree. When you’ve got government representatives who spend a large chunk of their work hours fundraising, being feted by lobbyists, shuffling through a lucrative revolving door between public service and lobbying, and making themselves available to anyone with enough money to secure access to a congressional office, you’re in the clutches of a corrupt oligarchy. Mind you, these same elected officials rarely read the legislation they’re enacting, nor do they seem capable of enacting much legislation that actually helps rather than hinders the plight of the American citizen.

We’re being locked up by a government of greedy jailers. We have become a carceral state, spending three times more on our prisons than on our schools and imprisoning close to a quarter of the world’s prisoners, despite the fact that crime is at an all-time low and the U.S. makes up only 5% of the world’s population. The rise of overcriminalization and profit-driven private prisons provides even greater incentives for locking up American citizens for such non-violent “crimes” as having an overgrown lawn.  As the Boston Review points out, “America’s contemporary system of policing, courts, imprisonment, and parole … makes money through asset forfeiture, lucrative public contracts from private service providers, and by directly extracting revenue and unpaid labor from populations of color and the poor. In states and municipalities throughout the country, the criminal justice system defrays costs by forcing prisoners and their families to pay for punishment. It also allows private service providers to charge outrageous fees for everyday needs such as telephone calls. As a result people facing even minor criminal charges can easily find themselves trapped in a self-perpetuating cycle of debt, criminalization, and incarceration.”

We’re being spied on by a government of Peeping Toms. The government, aided by its corporate allies, is watching everything you do, reading everything you write, listening to everything you say, and monitoring everything you spend. Omnipresent surveillance is paving the way for government programs that profile citizens, document their behavior and attempt to predict what they might do in the future, whether it’s what they might buy, what politician they might support, or what kinds of crimes they might commit. The impact of this far-reaching surveillance, according to Psychology Today, is “reduced trust, increased conformity, and even diminished civic participation.” As technology analyst Jillian C. York concludes, “Mass surveillance without due process—whether undertaken by the government of Bahrain, Russia, the US, or anywhere in between—threatens to stifle and smother that dissent, leaving in its wake a populace cowed by fear.”

We’re being forced to surrender our freedoms—and those of our children—to a government of extortionists, money launderers and professional pirates. The American people have been repeatedly sold a bill of goods about how the government needs more money, more expansive powers, and more secrecy (secret courts, secret budgets, secret military campaigns, secret surveillance) in order to keep us safe. Under the guise of fighting its wars on terror, drugs, domestic extremism, pandemics and civil unrest, the government has spent billions in taxpayer dollars on endless wars that have sown the seeds of blowback, surveillance programs that have subjected all Americans to a surveillance society, and militarized police that have turned communities into warzones.

We’re being robbed blind by a government of thieves. Americans no longer have any real protection against government agents empowered to seize private property at will. For instance, police agencies under the guise of asset forfeiture laws are taking property based on little more than a suspicion of criminal activity.

And we’re being forced to live in a perpetual state of emergency. From 9/11 through the COVID-19 lockdowns and now the threat of martial law in the face of growing civil unrest, we have witnessed the rise of an “emergency state” that justifies all manner of government tyranny and power grabs in the so-called name of national security.

Whatever else it may be—a danger, a menace, a threat—the U.S. government is certainly not looking out for our best interests, nor is it in any way a friend to freedom.

When the government views itself as superior to the citizenry, when it no longer operates for the benefit of the people, when the people are no longer able to peacefully reform their government, when government officials cease to act like public servants, when elected officials no longer represent the will of the people, when the government routinely violates the rights of the people and perpetrates more violence against the citizenry than the criminal class, when government spending is unaccountable and unaccounted for, when the judiciary act as courts of order rather than justice, and when the government is no longer bound by the laws of the Constitution, then you no longer have a government “of the people, by the people and for the people.”

What we have is a government of wolves.

Our backs are against the proverbial wall.

The government and its cohorts have conspired to ensure that the only real recourse the American people have to express their displeasure with the government is through voting, which is no real recourse at all.

The penalties for civil disobedience, whistleblowing and rebellion are severe. If you refuse to pay taxes for government programs you believe to be immoral or illegal, you will go to jail. If you attempt to overthrow the government—or any agency thereof—because you believe it has overstepped its reach, you will go to jail. If you attempt to blow the whistle on government misconduct, there’s a pretty good chance you will go to jail.

For too long, the American people have obeyed the government’s dictates, no matter now extreme. We have paid its taxes, penalties and fines, no matter how outrageous. We have tolerated its indignities, insults and abuses, no matter how egregious. We have turned a blind eye to its indiscretions and incompetence, no matter how imprudent. We have held our silence in the face of its lawlessness, licentiousness and corruption, no matter how illicit.

We have suffered.

How long we will continue to suffer depends on how much we’re willing to give up for the sake of freedom.

America’s founders provided us with a very specific explanation about the purpose of government and a roadmap for what to do when the government abuses its authority, ignores our objections, and establishes itself as a tyrant.

We must choose between peaceful slavery (in other words, maintaining the status quo in servitude to the police state) and dangerous freedom. That will mean carving out a path in which we begin to take ownership of our government, starting at the local level, challenging the status quo, and raising hell—nonviolently—whenever a government official steps out of line.

We can no longer maintain the illusion of freedom.

As I make clear in my book Battlefield America: The War on the American People, we are at our most vulnerable right now.

Amid rumors of mass protests and riots in the northwest Idaho city of Coeur d’Alene, some locals weren’t having it, and armed themselves to patrol city streets lined with small businesses. 

It’s a trend giving rise to fears that violent armed clashes between different American factions are imminent. Already videos from cities across the nation have depicted counter-demonstrators taking matters into their own hands as police retreat. 

“Reports and rumors that groups bent on rioting and violence in Coeur d’Alene brought out men and women with guns on Monday determined to stop them if they arrive,” local Idaho media reported.

“Dan Carson was patrolling Sherman Avenue with an AR-12 automatic 12-gauge across his chest, an AR-15 strapped to his back, two 9mm handguns holstered and a .38 special, too,” the report continued.

Groups of loosely affiliated ‘Proud Boys’ and armed ‘patriots’ began lining the streets of downtown Coeur d’Alene over reports left wing militants and Antifa anarchists were planning to cause mayhem in the area:

Soon, more armed men, self-described as a loosely formed group of patriots, arrived. They took up posts at corners on both sides of Sherman Avenue.

Later, they were joined by hundreds of citizens packing rifles, semi-automatic weapons, handguns, and bows and arrows.

The sidewalks were packed with people walking up and down Sherman Avenue, firearms proudly displayed for all to see.

They carried guns, had them holstered around their hips and had them strapped across their backs.

pic.twitter.com/9kMcX8WgMS

— Maher Kawash (@MaherKXLY) June 2, 2020

As it turns out, a group of Black Lives Matter protesters did in parts of the city briefly face off with the ‘protect Idaho’ group of armed locals, however, the scene stayed peaceful and without incident, dispersing relatively early into the evening as the police monitored the situation. 

Ultimately it appeared that in the downtown area it was only the armed patriot group which was out in force, unopposed. But the armed citizens patrols were in such large numbers they effectively took over the streets.

Our beautiful home sweet home of North Idaho!! God bless our patriots, law-enforcement, & peaceful protestors (we support you) you are welcome! Those of you who incite violence, to destroy our communities will be met with a force in the likes of which you have never seen! #NIdaho pic.twitter.com/JKyUrLzqSD

— Laurie Powell (@JaynLaurieP) June 2, 2020

It’s a scene that’s also played out in places like Texas, where smaller towns and rural areas have vowed to keep rioters far away, also as individual citizens practice ‘open carry’ in states where it’s permissible. 

Armed citizen warns outsider in live stream (below):

“I’m telling you… if you guys are thinking about coming to Coeur d’Alene to riot or loot, you better fuckin think again, because we ain’t havin it over here.”

“Everybody’s out and strapped… getting ready for the so-called invasion.”

WATCH:

But the trend suggests it could take a single ‘incident’ to spark a deadly encounter between such armed ‘citizens patrol’ groups and Antifa, BLM, or left-wing militants in locations across the nation.

Meanwhile, in San Bernardino County, California an armed clash between rival demonstrators nearly erupted:

As hundreds protest in Upland, tensions are now rising between Trump supporters and George Floyd Activists. Currently police are monitoring the protest. pic.twitter.com/Yql1rgy1g2

— Romualdo Sanchez (@romualdotv) June 1, 2020

Given that local and state police can barely handle the growing riots and random destruction as it is, such a scenario would send things escalating to far more violent proportions at flashpoints across the US. 

During the early momentum of riots taking over Minnesota’s twin cities – ground zero for the initial George Floyd protests that began late last week – local and state police came under intense criticism as they retreated from riot-hit parts of the city, leaving business owners to watch helplessly as their stores and in some cases homes burned the ground.

This and other scenes of lawlessness have resulted in a growing trend this week of armed ‘citizen patrols’ – adding to a potentially deadly combustible mix amid increasingly chaotic unpredictable scenarios on American city streets.

Authored by Jonathan Turley,

Yesterday, the attorney hired by Judge Emmet Sullivan responded on his behalf to defend his controversial orders in the case to invite third parties to argue the merits of the motion to dismiss as well as raising his option to substitute his own criminal charge of perjury against Flynn.  The Justice Department responded with a 45-page filing to a three-judge appeals court panel.

The attention will now focus on the appearance tomorrow of former Deputy Attorney General Rod Rosenstein in the Senate.  For me, the most pertinent question is why this investigation continued past December and seemed to become to a search for a crime rather than the investigation of any crime or collusion with Russia.

“Remember … Ambassador, you’re not talking to a diplomat, you’re talking to a soldier.”

When President Trump’s incoming national security adviser, Michael Flynn, said those words to then-Russian Ambassador Sergey Kislyak, he also spoke to American intelligence agents listening in on the call. For three years, congressional Democrats have assured us Flynn’s calls to Kislyak were so disturbing that they set off alarms in the closing days of the Obama administration.

They were right. The newly released transcripts of Flynn’s calls are deeply disturbing — not for their evidence of criminality or collusion but for the total absence of such evidence. The transcripts, declassified Friday, strongly support new investigations by both the Justice Department and by Congress, starting with next week’s Senate testimony by former Deputy Attorney General Rod Rosenstein.

It turns out Flynn’s calls are not just predictable but even commendable at points. When the Obama administration hit the Russians with sanctions just before leaving office, the incoming Trump administration sought to avoid a major conflict at the very start of its term. Flynn asked the Russian to focus on “common enemies” in order to seek cooperation in the Middle East. The calls covered a variety of issues, including the sanctions.

What was not discussed was any quid pro quo or anything untoward or unlawful. Flynn stated what was already known to be Trump policy in seeking a new path with Russia. Flynn did not offer to remove sanctions but, rather, encouraged the Russians to respond in a reciprocal, commensurate manner if they felt they had to respond.

The calls, and Flynn’s identity, were leaked by as many as nine officials as the Obama administration left office — a serious federal crime, given their classified status. The most chilling aspect of the transcripts, however, is the lack of anything chilling in the calls themselves. Flynn is direct with Kislyak in trying to tone down the rhetoric and avoid retaliatory moves. He told Kislyak, “l am a very practical guy, and it’s about solutions. It’s about very practical solutions that we’re — that we need to come up with here.” Flynn said he understood the Russians might wish to retaliate for the Obama sanctions but encouraged them not to escalate the conflict just as the Trump administration took office.

Kislyak later spoke with Flynn again and confirmed that Moscow agreed to tone down the conflict in the practical approach laid out by Flynn. The media has focused on Flynn’s later denial of discussing sanctions; the transcripts confirm he did indeed discuss sanctions. However, the Justice Department has not sought to dismiss criminal charges against him because he told the truth but because his statements did not meet a key element of materiality for the crime and were the result of troubling actions by high-ranking officials.

The real question is why the FBI continued to investigate Flynn in the absence of any crime or evidence of collusion. In December 2016, investigators had found no evidence of any crime by Flynn. They wanted to shut down the investigation; they were overruled by superiors, including FBI special agent Peter Strzok, Deputy Director Andrew McCabe and Director James Comey. Strzok told the investigators to keep the case alive, and McCabe is described as “cutting off” another high-ranking official who questioned the basis for continuing to investigate Flynn. All three officials were later fired, and all three were later found by career officials to have engaged in serious misconduct as part of the Russia investigation.

Recently disclosed information revealed that Comey and President Obama discussed using the Logan Act as a pretense for a criminal charge. The Logan Act criminalizes private negotiations with foreign governments; it is widely viewed as unconstitutional and has never been used successfully against any U.S. citizen since the earliest days of the Republic. Its use against the incoming national security adviser would have been absurd. Yet, that unconstitutional crime was the only crime Comey could come up with, long before there was a false statement by Flynn regarding his calls.

Not until February 2017 did Comey circumvent long-standing protocols and order an interview with Flynn. Comey later bragged that he “probably wouldn’t have … gotten away with it” in other administrations, but he sent “a couple guys over” to question Flynn, who was settling into his new office as national security adviser. We learned recently that Strzok discussed trying to get Flynn to give false or misleading information in that interview, to enable a criminal charge, and that FBI lawyer Lisa Page suggested agents “just casually slip” in a reference to the criminal provision for lying and then get Flynn to slip up on the details.

Flynn did slip up. While investigators said they were not convinced he intentionally lied, he gave a false statement. Later, special counsel Robert Mueller charged Flynn with that false statement, to pressure him into cooperating; Flynn fought the case into virtual bankruptcy but agreed to plead guilty when Mueller threatened to prosecute his son, too.

The newly released transcripts reveal the lack of a foundation for that charge. Courts have held that the materiality requirement for such a charge requires that misstatements be linked to the particular “subject of the investigation.” The Justice Department found that the false statement in February 2017 was not material “to any viable counterintelligence investigation — or any investigation, for that matter — initiated by the FBI.” In other words, by that time, these FBI officials had no crime under investigation but were, instead, looking for a crime. The question is: Why?

So the transcripts confirm there never was a scintilla of criminal conduct or evidence of collusion against Flynn before or during these calls. Indeed, there was no viable criminal investigation to speak of when Comey sent “a couple guys over” to entrap Flynn; they already had the transcripts and the knowledge that Flynn had done nothing wrong. Nevertheless, facing the release of these transcripts, House Intelligence Committee Chairman Adam Schiff (D-Calif.) bizarrely maintained that “Flynn posed a severe counterintelligence risk” because he could be blackmailed over his false statement.

Putting aside the lack of prior evidence of criminality, Schiff ignores that there were transcripts to prevent such blackmail. Indeed, in the interview, Flynn indicated he assumed there was a transcript, and leaked media reports indicated that various officials were familiar with the content of the calls. The key to blackmail would have been for the Russians to have information that others did not have.

Ironically, in his calls with Kislyak, Flynn expressly sought a more frank, honest relationship with Russia. He told Kislyak “we have to stop talking past each other on — so that means that we have to understand exactly what it is that we want to try to achieve, okay?” That is a question that should now be directed at the FBI, to understand what it was trying to achieve by continuing an investigation long after it ran out of crimes to investigate.

One day after Trump warned he may call in the army if the situation in Washington D.C. does not normalize, sparking outrage in liberal circles who called this a de facto preparation for civil war, moments ago Pentagon spokesman Jonathan Hoffman said that 1,600 active duty troops have moved from Fort Bragg and Fort Drum, to the National Capitol region, “but are not in Washington” – technically they are now located in Joint Base Andrews, which is just on the outskirts of Washington DC).

We continue to update our post on the bizarre aerial activity over Washington DC tonight. A huge airlift operation is underway, multiple airlifters bringing troops and equipment into Andrews AFB outside of Washington DC right now: https://t.co/uQcquS1OrH

— Tyler Rogoway (@Aviation_Intel) June 2, 2020

I would then spot other USAF flights from Fort Riley (Kan) & Fort Bragg (NC) also headed to Andrews w/troops activated by the President to quell protests. In the dark of the night.

Also US Army helicopter over Baltimore’s, peaceful, protests. It had been flying for hours (4/8) pic.twitter.com/ZmFUDdAFWh

— Dave McHugh 🏀 (@davemchugh) June 3, 2020

Video: Elements of 16th Military Police Brigade deployed into Washington DC today.Other troops held in readiness at Andrews Air Force Base & Ft Belvoir incl a paratrooper battalion from 82nd ABD, its supporting helicopters, some surveillance elems of SOF https://t.co/aVIPUPHaEs

— Mark Urban (@MarkUrban01) June 2, 2020

700 #US troops from 82nd airborne div. have been moved from their base in Fort Bragg, North Carolina, to the outskirts of Washington DC, are now poised at Joint Base Andrews in Maryland and Fort Belvoir in Virginia, AP reports. Are armed, have bayonets and have riot gear, pic.twitter.com/WvkSM1SMoh

— JUANA CARRASCO (@cubavence2019) June 3, 2020

The Pentagon also said that the troops are on “heightened alert status but remain under Title X authority and are not participating in defense support to civil authority operations”, at least not yet.

The full Pentagon statement is below.

Authored by Jonathan Latham, PhD and Allison Wilson, PhD via Independent Science News  (emphasis ours)

The Case Is Building That COVID-19 Had a Lab Origin

If the public has learned a lesson from the COVID-19 pandemic it is that science does not generate certainty. Do homemade face masks work? What is the death rate of COVID-19? How accurate are the tests? How many people have no symptoms? And so on. Practically the lone undisputed assertion made so far is that all the nearest known genetic relatives of its cause, the Sars-CoV-2 virus, are found in horseshoe bats (Zhou et al., 2020). Therefore, the likely viral reservoir was a bat.

However, most of these ancestor-like bat coronaviruses cannot infect humans (Ge et al., 2013). In consequence, from its beginning, a key question hanging over the pandemic has been: How did a bat RNA virus evolve into a human pathogen that is both virulent and deadly?

The answer almost universally seized upon is that there was an intermediate species. Some animal, perhaps a snake, perhaps a palm civet, perhaps a pangolin, served as a temporary host. This bridging animal would probably have had an ACE2 cellular receptor (the molecule which allows cellular entry of the virus) intermediate in protein sequence (or at least structure) between the bat and the human one (Wan et al., 2020).

In the press and in the scientific literature, scenarios by which this natural zoonotic transfer might have occurred have been endlessly mulled. Most were fuelled by early findings that many of the earliest COVID-19 cases seem to have occurred in and around Wuhan’s Huanan live animal market. [The latest data are that 14 of the 41 earliest cases, including the first, had no connection to the animal market (Huang et al. 2020)].

Since the two previous coronavirus near-pandemics of SARS (2002-3) and MERS (2012) both probably came from bats and both are thought (but not proven) to have transitioned to humans via intermediate animals (civets and dromedaries respectively), a natural zoonotic pathway is a reasonable first assumption (Andersen et al., 2020).

The idea, as it applied to the original (2002) SARS outbreak, is that the original bat virus infected a civet. The virus then evolved briefly in this animal species, but not enough to cause a civet pandemic, and then was picked up by a human before it died out in civets. In this first human (patient zero) the virus survived, perhaps only barely, but was passed on, marking the first case of human to human transmission. As it was successively passed on in its first few human hosts the virus rapidly evolved, adapting to better infect its new hosts. After a few such tentative transmissions the pandemic proper began.

Perhaps this scenario is approximately how the current COVID-19 pandemic began.

But one other troubling possibility must be dispensed with. It follows from the fact that the epicentre city, Wuhan (pop. 11 million), happens to be the global epicentre of bat coronavirus research (e.g. Hu et al., 2017).

Prompted by this proximity, various researchers and news media, prominently the Washington Post, and with much more data Newsweek, have drawn up a prima facie case that a laboratory origin is a strong possibility (Zhan et al., 2020; Piplani et al., 2020). That is, one of the two labs in Wuhan that has worked on coronaviruses accidentally let a natural virus escape; or, the lab was genetically engineering (or otherwise manipulating) a Sars-CoV-2-like virus which then escaped.

Unfortunately, in the US at least, the question of the pandemic’s origin has become a political football; either an opportunity for Sinophobia or a partisan “blame game“.

But the potential of a catastrophic lab release is not a game and systemic problems of competence and opacity are certainly not limited to China (Lipsitch, 2018). The US Department of Homeland Security (DHS) is currently constructing a new and expanded national Bio and Agro-defense facility in Manhattan, Kansas. DHS has estimated that the 50-year risk (defined as having an economic impact of $9-50 billion) of a release from its lab at 70%.

When a National Research Council committee inspected these DHS estimates they concluded “The committee finds that the risks and costs could well be significantly higher than that“.

A subsequent committee report (NAP, 2012) continued:

“the committee was instructed to judge the adequacy and validity of the uSSRA [updated Site-Specific Risk Assessment]. The committee has identified serious concerns about (1) the misapplication of methods used to assess risk, (2) the failure to make clear whether and how the evidence used to support risk assessment assumptions had been thoroughly reviewed and adequately evaluated, (3) the limited breadth of literature cited and the misinterpretation of some of the significant supporting literature, (4) the failure to explain the criteria used to select assumptions when supporting literature is conflicting, (5) the failure to consider important risk pathways, and (6) the inadequate treatment of uncertainty. Those deficiencies are not equally problematic, but they occur with sufficient frequency to raise doubts about the adequacy and validity of the risk results presented. In most instances (e.g., operational activities at the NBAF), the identified problems lead to an underestimation of risk; in other instances (e.g., catastrophic natural hazards), the risks may be overestimated. As a result, the committee concludes that the uSSRA is technically inadequate in critical respects and is an insufficient basis on which to judge the risks associated with the proposed NBAF in Manhattan, Kansas.”

China, meanwhile, having opened its first in Wuhan in 2018, is planning to roll out a national network of BSL-4 labs (Zhiming, 2019). Like many other countries, it is investing significantly in disease surveillance and collection of viruses from wild animal populations and in high-risk recombinant virus research with Potential Pandemic Pathogens (PPPs).

On May 4th, nations and global philanthropies, meeting in Brussels, committed $7.4 billion to future pandemic preparedness. But the question hanging over all such investments is this: the remit of the Wuhan lab at the centre of the accidental release claims is pandemic preparedness. If the COVID-19 pandemic began there then we need to radically rethink current ideas for pandemic preparation globally. Many researchers already believe we should, for the sake of both safety and effectiveness (Lipsitch and Galvani, 2014; Weiss et al., 2015; Lipsitch, 2018). The worst possible outcome would be for those donated billions to accelerate the arrival of the next pandemic.

Historical lab releases, a brief history

An accidental lab release is not merely a theoretical possibility. In 1977 a laboratory in Russia (or possibly China), most likely while developing a flu vaccine, accidentally released the extinct H1N1 influenza virus (Nakajima et al., 1978). H1N1 went on to become a global pandemic virus. A large proportion of the global population became infected. In this case, deaths were few because the population aged over 20 yrs old had historic immunity to the virus. This episode is not widely known because only recently has this conclusion been formally acknowledged in the scientific literature and the virology community has been reluctant to discuss such incidents (Zimmer and Burke, 2009; Wertheim, 2010). Still, laboratory pathogen escapes leading to human and animal deaths (e.g. smallpox in Britain; equine encephalitis in South America) are common enough that they ought to be much better known (summarised in Furmanski, 2014). Only rarely have these broken out into actual pandemics on the scale of H1N1, which, incidentally, broke out again in 2009/2010 as “Swine flu” causing 3,000 or so deaths on that occasion (Duggal et al., 2016).

Many scientists have warned that experiments with PPPs, like the smallpox and Ebola and influenza viruses, are inherently dangerous and should be subject to strict limits and oversight (Lipsitch and Galvani, 2014; Klotz and Sylvester, 2014). Even in the limited case of SARS-like coronaviruses, since the quelling of the original SARS outbreak in 2003, there have been six documented SARS disease outbreaks originating from research laboratories, including four in China. These outbreaks caused 13 individual infections and one death (Furmanski, 2014). In response to such concerns the US banned certain classes of experiments, called gain of function (GOF) experiments, with PPPs in 2014, but the ban (actually a funding moratoriumactually a funding moratorium) was lifted in 2017.

For these reasons, and also to ensure the effectiveness of future pandemic preparedness efforts­, it is a matter of vital international importance to establish whether the laboratory escape hypothesis has credible evidence to support it. This must be done regardless of the problem–in the US–of toxic partisan politics and nationalism.

The COVID-19 Wuhan lab escape thesis

The essence of the lab escape theory is that Wuhan is the site of the Wuhan Institute of Virology (WIV), China’s first and only Biosafety Level 4 (BSL-4) facility. (BSL-4 is the highest pathogen security level). The WIV, which added a BSL-4 lab only in 2018, has been collecting large numbers of coronaviruses from bat samples ever since the original SARS outbreak of 2002-2003; including collecting more in 2016 (Hu, et al., 2017; Zhou et al., 2018).

Led by researcher Zheng-Li Shi, WIV scientists have also published experiments in which live bat coronaviruses were introduced into human cells (Hu et al., 2017). Moreover, according to an April 14 article in the Washington Post, US Embassy staff visited the WIV in 2018 and “had grave safety concerns” about biosecurity there. The WIV is just eight miles from the Huanan live animal market that was initially thought to be the site of origin of the COVID-19 pandemic.

Wuhan is also home to a lab called the Wuhan Centers for Disease Prevention and Control (WCDPC). It is a BSL-2 lab that is just 250 metres away from the Huanan market. Bat coronaviruses have in the past been kept at the Wuhan WCDPC lab.

Thus the lab escape theory is that researchers from one or both of these labs may have picked up a Sars-CoV-2-like bat coronavirus on one of their many collecting (aka ‘”virus surveillance”) trips. Or, alternatively, a virus they were studying, passaging, engineering, or otherwise manipulating, escaped.

Scientific assessments of the lab escape theory

On April 17 the Australian Science Media Centre asked four Australian virologists: “Did COVID-19 come from a lab in Wuhan?“

Three (Edward Holmes, Nigel McMillan and Hassan Vally) dismissed the lab escape suggestion and Vally simply labeled it, without elaboration, a “conspiracy”.

The fourth virologist interviewed was Nikolai Petrovsky of Flinders University. Petrovsky first addressed the question of whether the natural zoonosis pathway was viable. He told the Media Centre:

“no natural virus matching to COVID-19 has been found in nature despite an intensive search to find its origins.”

That is to say, the idea of an animal intermediate is speculation. Indeed, no credible viral or animal host intermediaries, either in the form of a confirmed animal host or a plausible virus intermediate, has to-date emerged to explain the natural zoonotic transfer of Sars-CoV-2 to humans (e.g. Zhan et al., 2020).

In addition to Petrovsky’s point, there are two further difficulties with the natural zoonotic transfer thesis (apart from the weak epidemiological association between early cases and the Huanan “wet” market).

The first is that researchers from the Wuhan lab travelled to caves in Yunnan (1,500 Km away) to find horseshoe bats containing SARS-like coronaviruses. To-date, the closest living relative of Sars-CoV-2 yet found comes from Yunnan (Ge et al., 2016). Why would an outbreak of a bat virus therefore occur in Wuhan?

Moreover, China has a population of 1.3 billion. If spillover from the wildlife trade was the explanation, then, other things being equal, the probability of a pandemic starting in Wuhan (pop. 11 million) is less than 1%.

Zheng-Li Shi, the head of bat coronavirus research at WIV, told Scientific American as much:

“I had never expected this kind of thing to happen in Wuhan, in central China.” Her studies had shown that the southern, subtropical provinces of Guangdong, Guangxi and Yunnan have the greatest risk of coronaviruses jumping to humans from animals—particularly bats, a known reservoir. If coronaviruses were the culprit, she remembers thinking, “Could they have come from our lab?”

Wuhan, in short, is a rather unlikely epicentre for a natural zoonotic transfer. In contrast, to suspect that Sars-CoV-2 might have come from the WIV is both reasonable and obvious.

Was Sars-CoV-2 created in a lab?

In his statement, Petrovsky goes on to describe the kind of experiment that, in principle, if done in a lab, would obtain the same result as the hypothesised natural zoonotic transfer–rapid adaptation of a bat coronavirus to a human host.

“Take a bat coronavirus that is not infectious to humans, and force its selection by culturing it with cells that express human ACE2 receptor, such cells having been created many years ago to culture SARS coronaviruses and you can force the bat virus to adapt to infect human cells via mutations in its spike protein, which would have the effect of increasing the strength of its binding to human ACE2, and inevitably reducing the strength of its binding to bat ACE2.

Viruses in prolonged culture will also develop other random mutations that do not affect its function. The result of these experiments is a virus that is highly virulent in humans but is sufficiently different that it no longer resembles the original bat virus. Because the mutations are acquired randomly by selection there is no signature of a human gene jockey, but this is clearly a virus still created by human intervention.”

In other words, Petrovsky believes that current experimental methods could have led to an altered virus that escaped.

Passaging, GOF research, and lab escapes

The experiment mentioned by Petrovsky represents a class of experiments called passaging. Passaging is the placing of a live virus into an animal or cell culture to which it is not adapted and then, before the virus dies out, transferring it to another animal or cell of the same type. Passaging is often done iteratively. The theory is that the virus will rapidly evolve (since viruses have high mutation rates) and become adapted to the new animal or cell type. Passaging a virus, by allowing it to become adapted to its new situation, creates a new pathogen.

The most famous such experiment was conducted in the lab of Dutch researcher Ron Fouchier. Fouchier took an avian influenza virus (H5N1) that did not infect ferrets (or other mammals) and serially passaged it in ferrets. The intention of the experiment was specifically to evolve a PPP. After ten passages the researchers found that the virus had indeed evolved, to not only infect ferrets but to transmit to others in neighbouring cages (Herfst et al., 2012). They had created an airborne ferret virus, a Potential Pandemic Pathogen, and a storm in the international scientific community.

The second class of experiments that have frequently been the recipients of criticism are GOF experiments. In GOF research, a novel virus is deliberately created, either by in vitro mutation or by cutting and pasting together two (or more) viruses. The intention of such reconfigurations is to make viruses more infectious by adding new functions such as increased infectivity or pathogenicity. These novel viruses are then experimented on, either in cell cultures or in whole animals. These are the class of experiments banned in the US from 2014 to 2017.

Some researchers have even combined GOF and passaging experiments by using recombinant viruses in passaging experiments (e.g. Sheahan et al., 2008).

Such experiments all require recombinant DNA techniques and animal or cell culture experiments. But the very simplest hypothesis of how Sars-CoV-2 might have been caused by research is simply to suppose that a researcher from the WIV or the WCDCP became infected during a collecting expedition and passed their bat virus on to their colleagues or family. The natural virus then evolved, in these early cases, into Sars-CoV-2. For this reason, even collecting trips have their critics. Epidemiologist Richard Ebright called them “the definition of insanity“. Handling animals and samples exposes collectors to multiple pathogens and returning to their labs then brings those pathogens back to densely crowded locations.

Was the WIV doing experiments that might release PPPs?

Since 2004, shortly after the original SARS outbreak, researchers from the WIV have been collecting bat coronaviruses in an intensive search for SARS-like pathogens (Li et al., 2005). Since the original collecting trip, many more have been conducted (Ge et al., 2013; Ge et al., 2016; Hu et al., 2017; Zhou et al., 2018).

Petrovsky does not mention it but Zheng-Li Shi’s group at the WIV has already performed experiments very similar to those he describes, using those collected viruses. In 2013 the Shi lab reported isolating an infectious clone of a bat coronavirus that they called WIV-1 (Ge et al., 2013). WIV-1 was obtained by introducing a bat coronavirus into monkey cells, passaging it, and then testing its infectivity in human (HeLa) cell lines engineered to express the human ACE2 receptor (Ge et al., 2013).

In 2014, just before the US GOF research ban went into effect, Zheng-Li Shi of WIV co-authored a paper with the lab of Ralph Baric in North Carolina that performed GOF research on bat coronaviruses (Menachery et al., 2015).

In this particular set of experiments the researchers combined “the spike of bat coronavirus SHC014 in a mouse-adapted SARS-CoV backbone” into a single engineered live virus. The spike was supplied by the Shi lab. They put this bat/human/mouse virus into cultured human airway cells and also into live mice. The researchers observed “notable pathogenesis” in the infected mice (Menachery et al. 2015). The mouse-adapted part of this virus comes from a 2007 experiment in which the Baric lab created a virus called rMA15 through passaging (Roberts et al., 2007). This rMA15 was “highly virulent and lethal” to the mice. According to this paper, mice succumbed to “overwhelming viral infection”.

In 2017, again with the intent of identifying bat viruses with ACE2 binding capabilities, the Shi lab at WIV reported successfully infecting human (HeLa) cell lines engineered to express the human ACE2 receptor with four different bat coronaviruses. Two of these were lab-made recombinant (chimaeric) bat viruses. Both the wild and the recombinant viruses were briefly passaged in monkey cells (Hu et al., 2017).

Together, what these papers show is that: 1) The Shi lab collected numerous bat samples with an emphasis on collecting SARS-like coronavirus strains, 2) they cultured live viruses and conducted passaging experiments on them, 3) members of Zheng-Li Shi’s laboratory participated in GOF experiments carried out in North Carolina on bat coronaviruses, 4) the Shi laboratory produced recombinant bat coronaviruses and placed these in human cells and monkey cells. All these experiments were conducted in cells containing human or monkey ACE2 receptors.

The overarching purpose of such work was to see whether an enhanced pathogen could emerge from the wild by creating one in the lab. (For a very informative technical summary of WIV research into bat coronaviruses and that of their collaborators we recommend this post, written by biotech entrepreneur Yuri Deigin).

It also seems that the Shi lab at WIV intended to do more of such research. In 2013 and again in 2017 Zheng-Li Shi (with the assistance of a non-profit called the EcoHealth Alliance) obtained a grant from the US National Institutes of Health (NIH). The most recent such grant proposed that:

“host range (i.e. emergence potential) will be tested experimentally using reverse genetics, pseudovirus and receptor binding assays, and virus infection experiments across a range of cell cultures from different species and humanized mice” (NIH project #5R01Al110964-04).

It is hard to overemphasize that the central logic of this grant was to test the pandemic potential of SARS-related bat coronaviruses by making ones with pandemic potential, either through genetic engineering or passaging, or both.

Apart from descriptions in their publications we do not yet know exactly which viruses the WIV was experimenting with but it is certainly intriguing that numerous publications since Sars-CoV-2 first appeared have puzzled over the fact that the SARS-CoV-2 spike protein binds with exceptionally high affinity to the human ACE2 receptor “at least ten times more tightly” than the original SARS (Zhou et al., 2020; Wrapp et al., 2020; Wan et al., 2020; Walls et al., 2020; Letko et al., 2020).

This affinity is all the more remarkable because of the relative lack of fit in modelling studies of the SARS-CoV-2 spike to other species, including the postulated intermediates like snakes, civets and pangolins (Piplani et al., 2020). In this preprint these modellers concluded “This indicates that SARS-CoV-2 is a highly adapted human pathogen”.

Given the research and collection history of the Shi lab at WIV it is therefore entirely plausible that a bat SARS-like cornavirus ancestor of Sars-CoV-2 was trained up on the human ACE2 receptor by passaging it in cells expressing that receptor.

How do viruses escape from high security laboratories?

Pathogen lab escapes take various forms. According to the US Government Accountability Office, a US defense Department laboratory once “inadvertently sent live Bacillus anthracis, the bacterium that causes anthrax, to almost 200 laboratories worldwide over the course of 12 years. The laboratory believed that the samples had been inactivated.” In 2007, Britain experienced a foot and mouth disease outbreak. Its’ origin was a malfunctioning waste disposal system of a BSL-4 laboratory leaking into a stream from which neighbouring cows drank. The disposal system had not been properly maintained (Furmanski, 2014). In 2004 an outbreak of SARS originating from the National Institute of Virology (NIV) in Beijing, China, began, again, with the inadequate inactivation of a viral sample that was then distributed to non-secure parts of the building (Weiss et al., 2015).

Writing for the Bulletin of The Atomic Scientists in February 2019, Lynn Klotz concluded that human error was behind most laboratory incidents causing exposures to pathogens in US high security laboratories. While equipment failure was also a factor, of the 749 incidents reported to the US Federal Select Agent Programme between 2009-2015, Klotz concluded that 79% resulted from human error.

But arguably the biggest worry is incidents that go entirely unreported because escape of the pathogen goes undetected. It is truly alarming that a significant number of pathogen escape events were uncovered only because investigators were in the process of examining a completely different incident (Furmanski, 2014). Such discoveries represent strong evidence that pathogen escapes are under-reported and that important lessons still need to be learned (Weiss et al., 2015).

The safety record of the WIV

The final important data point is the biosafety history of the WIV. The WIV was built in 2015 and became a commissioned BSL-4 lab in 2018. According to Josh Rogin of the Washington Post, US embassy officials visited the WIV in 2018. They subsequently warned their superiors in Washington of a “serious shortage of appropriately trained technicians and investigators needed to safely operate this high-containment laboratory”.

And according to VOA News, a year before the outbreak, “a security review conducted by a Chinese national team found the lab did not meet national standards in five categories.”

Credible reports from within China also question lab biosafety and its management. In 2019, Yuan Zhiming, biosecurity specialist at the WIV, cited the “challenges” of biosafety in China. According to Zhiming: “several high-level BSLs have insufficient operational funds for routine yet vital processes” and “Currently, most laboratories lack specialized biosafety managers and engineers.” He recommends that “We should promptly revise the existing regulations, guidelines, norms, and standards of biosafety and biosecurity”. Nevertheless, he also notes that China intends to soon build “5-7” more BSL-4 laboratories (Zhiming, 2019).

And in February 2020, Scientific American interviewed Zheng-Li Shi. Accompanying the interview was a photograph of her releasing a captured bat. In the photo she is wearing a casual pink unzipped top layer, thin gloves, and no face mask or other protection. Yet this is the same researcher whose talks give “chilling” warnings about the dire risks of human contact with bats.

All of which tends to confirm the original State Department assessment. As one anonymous “senior administration official” told Rogin:

“The idea that it was just a totally natural occurrence is circumstantial. The evidence it leaked from a lab is circumstantial. Right now, the ledger on the side of it leaking from the lab is packed with bullet points and there’s almost nothing on the other side.”

The leading hypothesis is a lab outbreak

For all these reasons, a lab escape is by far the leading hypothesis to explain the origins of Sars-CoV-2 and the COVID-19 pandemic. The sheer proximity of the WIV and WCDCP labs to the outbreak and the nature of their work represents evidence that can hardly be ignored. The long international history of lab escapes and the biosafety concerns from all directions about the labs in Wuhan greatly strengthen the case. Especially since evidence for the alternative hypothesis, in the form of a link to wild animal exposure or the wildlife trade, remains extremely weak, being based primarily on analogy with SARS one (Bell et al,. 2004; Andersen et al., 2020).

Nevertheless, on April 16th Peter Daszak, who is the President of the EcoHealth Alliance, told Democracy Now! in a lengthy interview that the lab escape thesis was “Pure baloney”. He told listeners:

“There was no viral isolate in the lab. There was no cultured virus that’s anything related to SARS coronavirus 2. So it’s just not possible.”

Daszak made very similar claims on CNN’s Sixty Minutes: “There is zero evidence that this virus came out of a lab in China.” Instead, Daszak encouraged viewers to blame “hunting and eating wildlife”.

Daszak’s certainty is highly problematic on several counts. The closest related known coronaviruses to Sars-CoV-2 are to be found at the WIV so a lot depends on what he means by “related to”. But it is also dishonest in the sense that Daszak must know that culturing in the lab is not the only way that WIV researchers could have caused an outbreak. Third, and this is not Daszak’s fault, the media are asking the right question to the wrong person.

As alluded to above, Daszak is the named principal investigator on multiple US grants that went to the Shi lab at WIV. He is also a co-author on numerous papers with Zheng-Li Shi, including the 2013 Nature paper announcing the isolation of coronavirus WIV-1 through passaging (Ge et al., 2013). One of his co-authorships is on the collecting paper in which his WIV colleagues placed the four fully functional bat coronaviruses into human cells containing the ACE2 receptor (Hu et al. 2017). That is, Daszak and Shi together are collaborators and co-responsible for most of the published high-risk collecting and experimentation at the WIV.

An investigation is needed, but who will do it?

If the Shi lab has anything to hide, it is not only the Chinese Government that will be reluctant to see an impartial investigation proceed. Much of the work was funded by the US taxpayer, channeled there by Peter Daszak and the EcoHealth Alliance. Virtually every credible international organisation that might in principle carry out such an investigation, the WHO, the US CDC, the FAO, the US NIH, including the Gates Foundation, is either an advisor to, or a partner of, the EcoHealth Alliance. If the Sars-CoV-2 outbreak originated from the bat coronavirus work at the WIV then just about every major institution in the global public health community is implicated.

But to solve many of these questions does not necessarily require an expensive investigation. It would probably be enough to inspect the lab notebooks of WIV researchers. All research scientists keep detailed notes, for intellectual property and other reasons, but especially in BSL-4 labs. As Yuan Zhiming told Nature magazine in an article marking the opening of the facility in Wuhan: “We tell them [staff] the most important thing is that they report what they have or haven’t done.”

Meticulous lab records plus staff health records and incident reports of accidents and near-accidents are all essential components (or should be) of BSL work. Their main purpose is to enable the tracking of actual incidents. Much speculation could be ended with the public release of that information. But the WIV has not provided it.

This is puzzling since the Chinese government has a very strong incentive to produce those records. Complete transparency would potentially dispel the gales of blame coming its way; especially on the question of whether Sars-CoV-2 has an engineered or passaged origin. If Zheng-Li Shi and Peter Daszak are correct that nothing similar to Sars-CoV-2 was being studied there, then those notebooks should definitively exonerate the lab from having knowingly made an Actual Pandemic Pathogen.

Given the simplicity and utility of this step this lack of transparency suggests that there is something to hide. If so, it must be important. But then the question is: What?

A thorough investigation of the WIV and its bat coronavirus research is an important first step. But the true questions are not the specific mishaps and dissemblings of Drs Shi or Daszak, nor of the WIV, nor even of the Chinese government.

Rather, the bigger question concerns the current philosophy of pandemic prediction and prevention. Deep enquiries should be made about the overarching wisdom of plucking and counting viruses from the wild and then performing dangerous ‘what if’ recombinant research in high tech but fallible biosafety labs. This is a reductionistic approach, we also note, that has so far failed to predict pandemics and may never do so.

If this article was useful to you please consider sharing it with your networks.

Jonathan R. Latham PhD is co-founder and Executive Director of the Bioscience Resource Project and the Editor of Independent Science News. He holds a PhD in Virology and was a postdoctoral research associate in the University of Wisconsin Department of Genetics.

Allison K. Wilson, PhD is co-founder and Science Director of the the Bioscience Resource Project; Editor of the Bioscience Resource Project website; Assistant Editor of Independent Science News; and a contributor to the Poison Papers project. She holds a BA in Biology from Cornell University, a doctorate in Molecular Biology and Genetics from Indiana University, Bloomington, and was formerly a postdoctoral research associate at the Fred Hutchinson Cancer Research Center, Seattle and the John Innes Centre, Norwich, UK.

Submitted by Gordon Johnson of GLJ Research

After rising 449% m/m in China in March following China’s COVID-19 lockdowns ending, TSLA’s sales of cars in China in April fell -34.8% m/m (this came as a disappointment to many TSLA bulls as the competition gained materially on TSLA in the moth of April – link).

Aggregate EU Registrations: For the six EU countries that have reported May 2020 registrations, TSLA saw numbers for all cars “sold” fall -13.9% m/m and -67.8% y/y; through the first two months combined of 2Q20 (i.e., 2Q20 QTD) in these six EU countries, registrations are down -22.8% q/q and -67.8% y/y.

Aggregate EU EV Market Share: TSLA’s aggregated EU market share fell from 37.2% in 4Q19 to 25.3% in 1Q20.

NO + NL + SP Registrations: 2Q20 QTD, TSLA’s market share is down to 3.8%, vs. 7.7% in 1Q20 and 35.6% in 4Q19. Stated differently, TSLA has lost significant market share in the three key EU markets it… once… dominated.

NO + NL + SP Registrations (more detailed look): Through the first 63 days of 2Q20, sales in these three countries, combined, are down -34.7% q/q and -68.8% y/y.

Model 3 Tracker: Using TroyTeslike’s Model 3 tracker, through the first 63 days of 2Q20, Model 3 configurations are down -87.3% q/q and -86.7% y/y.

Model Y Tracker: Using TroyTeslike’s Model Y tracker, through the first 63 days of 2Q20, deliveries are running at 69 cars. By comparison, in the first full month the Model 3 tracker was collecting data on Model 3 sales, it reached 709 cars by quarter’s end. This may be why TSLA, recently, drastically reduced the lead times from when you order a Model Y in the USA to when you get it – i.e., to 4-8 weeks vs. 8-12 weeks prior (link) – this followed the sharp price cuts taken by TSLA last week due to weaker-than-expected demand globally.

New York State Data: While the data does not look bad, it’s important to remember that in NY State, registrations lag sales. So the April data below is from sales made in March. This means we won’t see the April/May COVID-19 sales impact in NYS until May/June data is out (i.e., later this week).

Colorado, USA: In Colorado, USA, through the 8th week of 2Q20, sales are trending down -22.3% q/q and -76.1% y/y.

RORO Boat Data: Looking at days boats loaded for TSLA cars, volumes are down -82.2% q/q and -78.1% y/y. The first boat of 2Q20 was sent to S. Korea; there is another boat that will arrive in Europe with roughly 3-4K cars (by our est.) before the end of 2Q20; finally, there is another RORO boat that is still moored, but we est. will arrive in Asia before the end of 2Q20 (it will be close, however).

CONCLUSION: Observing the publicly available data, and also observing a recent initiation on TSLA, in which the headline “Tesla (ticker: TSLA) is on the cusp of replicating its success in the U.S. EV market to potentially larger markets in China and Europe” (link) was published on a number of widely-followed financial media sites, as analysts are forced to revert back to TSLA’s actual fundamentals (which remain publicly available for anyone who wants it) – which include market share losses in both the EU and China – sentiment could be set to shift lower.

This year has been nothing short of astonishing. In the last five months, the US has been inundated with a virus pandemic, triggering an economic crash and 40 million unemployed, and now worsening social unrest in major metros. But what’s happening on the ground might be the least of our worries on Tuesday, as four asteroids are about to pass the planet.

NASA’s Center for Near-Earth Object Studies (CNEOS) has detected “four near-Earth objects that will fly past” the planet on Tuesday, reported International Business Times.

CNEOS’ data showed the first asteroid, identified as 2020 KK7, measures about 108 feet wide and traveling at 34,000 mph, will pass the planet on Tuesday at a distance of 0.00343 astronomical units or approximately 319,000 miles. To put this in perspective, this means the giant space rock will pass Earth at a distance that is about from here to the Moon. 

The second asteroid to pass Earth is called 2020 KD4. The rock measures about 115 feet wide and is traveling at 12,000 mph, will pass the planet at a distance of about 0.02680 astronomical units or around 2.5 million miles away. 

The third asteroid to pass Earth is called 2020 KF, which has an estimated diameter of 144 feet, is the largest asteroid to approach the planet, and is traveling at about 24,000 mph. It’s expected to pass the planet at a distance of about 0.03102 astronomical units or 2.9 million miles.

And the fourth asteroid to pass Earth on Tuesday is called 2020 KJ1, has an estimated diameter of about 105 feet, and is moving at 11,000 mph, will pass the planet at about 0.01403 astronomical units or 1.3 million miles.

Amid the social-economic collapse of America, political commentator Katie Hopkins’ prayers could be answered… 

Praying for an asteroid #GeorgeFloydsCriminalRecord

pic.twitter.com/3FLp4OQUUj

— Katie Hopkins (@KTHopkins) May 31, 2020

Authored by Jon Street via Campus Reform,

Former Antifa member Gabriel Nadales praised President Donald Trump for his tweet saying that he intends to designate Antifa a domestic terror organization after several nights of violent riots and looting in dozens of major American cities. 

Nadales, who is an employee of Campus Reform‘s parent organization,  the Leadership Institute, joined Stuart Varney on Fox Business Network on Monday to discuss the recent riots that arose out of protests to the killing of George Floyd, an unarmed black man killed while in Minneapolis police custody.

Nadales was among the first to call for Antifa to be labeled a terror organization in 2019. Trump said at the time he was considering labeling the group a terror organization. Now, it appears the president has made up his mind. 

“The United States of America will be designating ANTIFA as a Terrorist Organization,” Trump tweeted Sunday. 

Nadales reacted to the news Monday, telling Varney, “Antifa’s acts are the very definition of domestic terrorism.” 

“If you look at some of the violence, it’s being instigated by anarchists and Antifa activists,” Nadales, the former Antifa member said, “not by the peaceful protesters who are rightfully angered by what happened.”

WATCH:

A retired St. Louis City police captain was shot and killed overnight trying to stop looters outside a North City pawn shop, according to KMOV4.

77-year-old David Dorn was found at approximately 2:30 a.m. Tuesday on the 4100 block of Martin Luther King Dr.

“He was murdered by looters at a pawnshop. He was the type of brother that would’ve given his life to save them if he had to. Violence is not the answer, whether it’s a citizen or officer,” wrote the St. Louis Ethical Society of Police of Dorn, whose wife is a sergeant with the St. Louis Metropolitan Police Department.

St. Louis Police Chief John Hayden said Dorn was murdered during a looting while “exercising law enforcement training.”

“David Dorn was a fine captain, many of us young officers looked up to him,” Chief Hayden said.

Chief Hayden said officers will wear their mourning badges in response to Dorn’s death. –KMOV4

Graphic:

“All over some TVs.” 77-year-old St. Louis retired Police Captain David Dorn was shot dead by looters when he tried to get them to stop looting a local pawn shop. pic.twitter.com/Xtvii4HoB1

— Ian Miles Cheong (@stillgray) June 2, 2020

According to the report, Dorn was with the St. Louis Metropolitan Police Department for 38 years before becoming the police chief in Moline Acres. He joined the police academy in November 1969, graduating in May 1970. After his retirement he joined Patrol Support in October 2007. 

David Dorn was a father, a husband, a grandfather, a brother and a man beloved by so many. His son says he died doing what he loved: protecting his community. https://t.co/lOTFgvNogG @KMOV pic.twitter.com/SAjBhwRhMF

— Alexis Zotos (@alexiszotos) June 2, 2020

Due to his history in law enforcement, Dorn helped out the owners of Lee’s Pawn and Jewelry – checking on it when the alarm would go off, which is what he was doing Tuesday when he was shot and killed.

CrimeStoppers is offering a $10,000 reward for any information leading to an arrest in the case (866-371-8477).

Meanwhile, about the only mainstream coverage given to Dorn’s death has come from Fox News’ Tucker Carlson.

Tucker Carlson On The Violence Against Cops By The Mob

“For 38 years David Dorn was a police officer in the city of St. Louis. No one ever accused Dorn of racism, he was black. He’s dead now, he was murdered last night by the mob.” pic.twitter.com/hszxwYSn7h

— The Columbia Bugle 🇺🇸 (@ColumbiaBugle) June 3, 2020

Looters murdered David Dorn

CNN refuses to say his name

— Jack Posobiec (@JackPosobiec) June 3, 2020

Authored by Justin Elliott, Lydia DePillis and Robert Faturechi via ProPublica.org,

Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin have become the public faces of the $3 trillion federal coronavirus bailout. Behind the scenes, however, the Treasury’s responsibilities have fallen largely to the 42-year-old deputy secretary, Justin Muzinich.

A major beneficiary of that bailout so far: Muzinich & Co., the asset manager founded by his father where Justin served as president before joining the administration. He reported owning a stake worth at least $60 million when he entered government in 2017.

Today, Muzinich retains financial ties to the firm through an opaque transaction in which he transferred his shares in the privately held company to his father. Ethics experts say the arrangement is troubling because his father received the shares for no money up front, and it appears possible that Muzinich can simply get his stake back after leaving government.

Justin Muzinich, deputy Treasury secretary, in 2019. (Wolfgang Kumm/Picture Alliance via Getty Images)

When lockdowns crippled the economy in March, the Treasury and the Fed launched an unprecedented effort to buy up corporate debt to avert a freeze in lending at the exact moment businesses needed to borrow to keep running. That effort has succeeded, at least temporarily, with credit continuing to flow to companies over the last several weeks. This policy also allowed those who were heavily invested in corporate loans to recoup huge losses.

Muzinich & Co. has long specialized in precisely this market, managing approximately $38 billion of clients’ money, including in riskier instruments known as junk, or high-yield, bonds. Since the Fed and the Treasury’s actions in late March, the bond market has roared back. Muzinich & Co. has reversed billions in losses, according to a review of its holdings, with 28 of the 29 funds tracked by the investor research service Morningstar Direct rising in that period. The firm doesn’t publicly detail all of its holdings, so a precise figure can’t be calculated.

The Treasury is understaffed, and Muzinich was overseeing two-thirds of the department before the crisis hit. He spent his first year as the Trump administration’s point man on its only major legislative achievement, the landmark $1.9 trillion tax cut that mainly benefited the wealthy and corporations.

As the markets panicked about the economic impact of the coronavirus, Muzinich’s responsibilities expanded. The Treasury worked with the Fed on the emergency lending programs, and the agency has ultimate power to sign off. Muzinich was personally involved in crafting the programs, including the effort to bail out the junk bond market, The Wall Street Journal reported in April. He communicates with Fed officials daily by phone, email or text, the paper said.

That effort has many skeptics. The Fed has never bought corporate debt in its more than 100 years of existence, much less that of the indebted and fragile companies that raise money through the sale of junk bonds. Private equity firms, hedge funds and specialty investment firms like Muzinich & Co. dominate the market for junk-rated debt. In effect, the Fed has swooped in to protect the most sophisticated investors from losses on some of their riskiest bets.

Muzinich & Co. Profited From the Government’s Actions

Muzinich & Co.’s largest fund, with over $10 billion in assets, jumped in value when the Treasury and the Federal Reserve announced plans to buy bonds

Data from Morningstar Direct for the Muzinich Enhanced Yield Short-Term Fund

Justin Muzinich’s ongoing ties to the family firm present a thicket of potential conflicts of interest, ethics lawyers said. Instead of immediately divesting his stake in the firm when he joined the Trump administration in early 2017, Muzinich retained it until the end of that year. But even then, he did not sell his stake and use the proceeds to buy broad-based securities such as index funds, as is common practice. Instead, he transferred his piece of the company to his father, who owns Muzinich & Co. In exchange, he received what amounts to an IOU — a written agreement in which his father agreed to pay him for the shares, with interest, but with no principal due for nine years.

“This is something akin to a fake divestiture,” said Kathleen Clark, a law professor and ethics specialist at Washington University in St. Louis.

“It sure looks like he is simply parking this asset with a relative, and he will likely get it back after he leaves the government.”

A Treasury spokeswoman declined to say whether Muzinich has pledged not to take back the stake in the family firm once his public service ends. Muzinich “takes his ethics obligations very seriously” and “any suggestion to the contrary is completely baseless,” she said.

She added the arrangement with his family firm was approved by the Office of Government Ethics and agency ethics lawyers, who recently reexamined the setup given Muzinich’s role in the economic crisis response. They concluded that there is no currently envisaged scenario in which Muzinich would make decisions as a government official that would affect his father’s ability to repay the money he owes under the IOU.

“Treasury’s career Designated Agency Ethics Official has determined that there is no such conflict of interest, as there are no current or reasonably anticipated matters in which Deputy Secretary Muzinich would participate that would affect the note obligor’s ability or willingness to satisfy its financial obligations under the note,” she said in a statement. (The note obligor is Muzinich’s father.)

Muzinich & Co. did not respond to multiple requests for comment.

Muzinich’s relationship with the family firm also creates potential conflicts related to Muzinich & Co.’s clients. The firm makes money by charging investment management fees to several dozen wealthy individuals, insurance companies, pension funds, as well as what filings describe as a “quasi foreign government corporation.” The client list is not public and it’s unclear whether Muzinich would know about clients that came on board since he left. But any large investor has much to gain, or lose, from decisions being made by the Treasury about the bailout policies.

“The clients of this firm, I imagine, must be thrilled that Muzinich has this vitally important, powerful position with a huge amount of discretion and authority,” Clark said.

The Treasury spokeswoman declined to answer a question about the firm’s clients.

Even as Justin Muzinich has presided over bailout policies criticized by some observers, Muzinich & Co. executives have praised the government’s actions in recent briefings for investors. One described the interventions “as providing somewhat of a floor underneath the high yield market.”

Another Muzinich executive, David Bowen, who manages one of the firm’s high-yield bond portfolios, said during a May 20 webinar, “The Fed has been about as supportive, helpful, accommodative — whatever word you want to use — as anyone could imagine.”

Untangling the Financial Relationship

When Treasury Secretary Steven Mnuchin hired Justin Muzinich as counselor in early 2017, in many ways he was selecting a younger version of himself.

Justin Muzinich, center left, then a top adviser to Treasury Secretary Steven Mnuchin, center, on Capitol Hill on Sept. 12, 2017. (Al Drago/The New York Times/Redux)

Like Mnuchin, Muzinich grew up in New York City, the son of a wealthy finance executive. Also like his boss, Muzinich spent years collecting a series of elite credentials: He attended Groton and holds degrees from Harvard College, the London School of Economics, Yale Law School and Harvard Business School. He worked at Morgan Stanley and spent a few months at a hedge fund associated with billionaire Steven A. Cohen, followed by a few years at EMS Capital, which invests the money of the wealthy Safra family.

Colleagues praise Muzinich as hardworking and serious, and Democrats have expressed relief that he isn’t as inflammatory as many other Trump appointees. Powell, the Fed chair, called Muzinich “creative and extremely capable” in a statement to The Wall Street Journal in April.

In 2010, he joined the family firm and became its president. His father, George, founded the company in 1988, specializing in handling portfolios of American high-yield bonds for European pension funds. The company expanded to offer funds to other institutional investors and wealthy individuals, but it stuck to its focus on corporate credit — particularly the riskier type that pays higher interest rates. Headquartered in New York and London, the firm has eight offices across Europe and one in Singapore.

“Talking about credit all the time might sound boring, I’m sure it does,” Justin Muzinich said in a 2014 interview, “but that is what makes you good.”

As he rose in the family business, Muzinich also launched himself into GOP policy circles, advising the presidential campaigns of Mitt Romney in 2012 and Jeb Bush in 2016. He owns a $20 million ultramodern beachfront house in the Hamptons and a $4.5 million Park Avenue apartment and commutes from New York City to work in Washington.

When Muzinich entered the Trump administration, he reported owning stock and stock options in the family firm collectively worth at least $60 million. The true value could be much higher, but disclosure rules don’t require officials to give a specific figure for any asset worth more than $50 million.

The Treasury’s ethics officers are frequently called on to rule on complex questions, given that the department tends to attract people from careers on Wall Street who have large, complicated financial holdings — from ex-Goldman Sachs Chairman Hank Paulson to banker and Hollywood financier Mnuchin.

Stakes in individual companies can create conflicts of interest. So incoming Treasury officials typically sell those stocks and invest in broad-based options like mutual funds. Ownership in private investment funds can be particularly thorny because ethics rules treat each of the fund’s investments in specific companies as sources of potential conflicts. Sarah Bloom Raskin, who preceded Muzinich as deputy secretary in the Obama administration, reported holding only a collection of index and mutual funds that either track the whole stock market or a large basket of companies.

But government ethics officials did not require Muzinich to sell his stake in the family firm through his first year in office as counselor to Mnuchin.

According to ethics filings, Muzinich said that he did not divest it until December 2017, the month the tax law was signed. (Several months later, in April 2018, Trump nominated him to be deputy secretary.)

Muzinich did not receive cash for most of his stake in the family firm. Instead, his more recent financial disclosures show that the stake, held in a family trust, was replaced with an opaque asset described as a “receivable from family,” valued at over $50 million.

Muzinich’s disclosure filings don’t reveal much about this asset at all. They don’t say who the family member is or explain the arrangement. They don’t say how the terms were negotiated, or even if the valuation of the deal was vetted by an independent third party.

It turns out that Muzinich transferred his stake to his father. But his father didn’t have to pay him right away. According to a Senate Finance Committee memo obtained by ProPublica, Justin received two promissory notes from his father in return for the shares. The notes pay Justin between $1 million and $5 million in interest over a year, at a rate of 2.11%. Moreover, his father does not have to pay any principal on the loan for nine years.

Neither the financial disclosure forms nor the Senate memo say how long the agreement is supposed to last. Neither addresses the possibility of his getting the shares back after he leaves the government. The Treasury says the transaction is “not reversible” but did not elaborate.

In other words, Justin still has an ongoing long-term stake in the financial well-being of Muzinich & Co., since his father now owes him more than $50 million. If the company were to plummet in value or even go under, it could cost Justin. Actions the Treasury and the Fed take can either enhance the chances he gets his money back or lower them.

The Treasury defended the IOU transaction as an appropriate remedy for any conflicts of interest. The agency provided a statement from Elizabeth Horton, an ethics attorney who left the agency in 2019 and who worked with Muzinich on the divestiture from his family business. Horton said that when Muzinich first joined the agency, “the Treasury ethics office correctly advised him that he did not need to divest his holdings in his family business because of the generalized nature of his work on tax reform legislation.” She said that when his duties changed, “I advised Mr. Muzinich that an exchange for a fixed value note was an appropriate way to divest.”

Horton said that advice was “consistent with practice in previous administrations” — though the Treasury declined to cite similar cases. “Muzinich worked very closely with the ethics office and was extremely attentive to his ethics obligations,” Horton said.

ProPublica reached out to four ethics officials, including two former Treasury ethics lawyers. None could recall a similar divestment transaction. Three of the four disagreed that it resolved Muzinich’s conflicts, while one said that turning it into an asset with a value that doesn’t fluctuate with future developments should shield him from any allegations of impropriety.

The deal does not look like an arms-length transaction, said Virginia Canter, who served as a career ethics attorney at Treasury during the George W. Bush administration and is now at the watchdog group Citizens for Responsibility and Ethics in Washington.

“The terms of the loan suggest something less than a bona fide transaction,” she said. “Once he leaves office, nothing in the arrangement appears to preclude Muzinich from forgiving the debt owed to him by his father so they can amicably agree on returning to Muzinich the interest in the Muzinich family business.”

As ranking member of the Finance Committee, Sen. Ron Wyden opposed Muzinich’s nomination as deputy secretary because of his role in crafting the tax bill. Although he would have preferred a cash sale of the Muzinich & Co. stock, Wyden said in a statement that in July 2018 Muzinich had agreed to “strengthen his recusal commitments to include matters where his family’s company is a party.”

That satisfied Wyden at the time, but it is a very narrow restriction. A vast range of issues before the Treasury could affect Muzinich & Co. regardless of whether the firm was directly a party to any of them.

How Justin Muzinich treated the transaction for tax purposes could reveal whether it was a true and final sale or not.

Ordinarily, a sale of an asset such as equity in a company would trigger a capital gains tax bill. In Muzinich’s case, that could run into the tens of millions of dollars, even though his father paid him no cash upfront. But there is an exception if the asset in question is merely transferred with a commitment to have it returned, said Steve Rosenthal, a tax law expert at the Urban-Brookings Tax Policy Center.

“If you are merely parking or pledging securities, and you are going to get them back, that’s not viewed as a taxable transaction,” he said.

It is not clear how he reported the transaction to the IRS, and whether he was left with a huge tax bill. The Treasury declined to comment on the tax issues.

Tax Reform — for Friends and Family

Through his first year in the administration, even as Muzinich continued to own his stake in the family firm, he met with a wide range of business executives to hash out major tax provisions that would affect them, according to his 2017 calendars that ProPublica obtained after suing the Treasury last year under the Freedom of Information Act. Others were obtained by the watchdog group American Oversight. The Treasury redacted large sections of the calendars, saying that they required consultation with the White House before they could be released.

One of the most important principles in the federal government ethics rules covers whether an official is dealing with a “particular matter” that would affect a discrete group of people with specific interests or a “general matter” that affects a larger and more diverse group.

The Treasury spokeswoman said the tax reform bill was to affect a very large and diverse group, so ethics rules did not prevent Muzinich from working on it. He was allowed to keep his equity in the company while working on the tax bill because his “duties did not include particular matters that required divestiture of certain assets.”

But many industries had specific interests in the tax bill that they lobbied on — industries that may include clients of Muzinich & Co. Insurance companies, for example, featured prominently. Muzinich met with trade groups representing insurers as well as Liberty Mutual, The Hartford, Zurich and Blue Cross Blue Shield. In the final tax bill, property and casualty insurers fared particularly well by dodging new limitations on deductions that applied to other companies.

Insurance companies invest their premiums in order to increase their profits. In its regulatory filings, Muzinich & Co. reports that 17 of its 89 clients are insurance companies, which have given the firm more than $1.4 billion to invest. Muzinich & Co. did not provide a list of its clients.

Some of the companies Muzinich & Co. has stakes in also have been lobbying the Treasury on their own behalf. For example, Muzinich & Co. helps its clients invest in business development companies, a type of investment fund that enjoys lower taxes in exchange for providing capital to medium-sized companies. The firm itself owns stock in BDCs, many of them run by private equity companies such as Ares Capital Corporation, which has paid millions of dollars to lobby for looser rules governing the BDC industry.

Even beyond any overlap with the family firm’s interests, Muzinich’s calendars, which cover the period from February to September of 2017, reflect the administration’s priorities in negotiating the tax deal. Muzinich spent long days in meetings with private equity titans, energy company CEOs and heavy-hitting interest groups like the Business Roundtable and the anti-tax group Americans for Prosperity. His calendar shows no meetings with labor unions or progressive groups.

Muzinich did meet often with the Treasury’s in-house tax experts but frequently didn’t follow their recommendations. Richard Prisinzano, who served in the agency’s tax analysis office until August 2017, recalled trying to tell Mnuchin and Muzinich that drastically lowering corporate tax rates would likely prompt businesses to transform into C corporations, which often pay lower rates under the new law.

He argued that such a change would further reduce tax revenues. Muzinich disagreed, Prisinzano said, protesting that businesses wouldn’t change their corporate form just to lower their taxes. “He really pushed back,” Prisinzano recalled. “He said to me, ‘The secretary is a numbers person, and the numbers don’t make sense to him.’”

“‘I’m a numbers person, and they make perfect sense to me,’” Prisinzano said he responded. “That was not an answer that they liked.”

In the following two years, many large businesses did indeed convert into C corporations, including private equity giants Ares, Blackstone and KKR. The government hasn’t produced an estimate of how big a hit taxpayers took from these conversions.

During his confirmation hearing as deputy secretary in July 2018, Democratic senators pressed Muzinich on whether he agreed with the White House that the tax bill would “pay for itself,” despite the dire projections of independent forecasters such as the nonpartisan Congressional Budget Office. “Yes,” Muzinich responded.

It has not come close, as corporate tax collections plunged and left the national debt at historic levels on the eve of the pandemic.

Muzinich Takes on the COVID-19 Crisis

As the economic response to the novel coronavirus consumed Washington in March, Mnuchin turned again to Muzinich to negotiate with Congress over the shape of a bailout intended to sustain companies as they weathered the worst part of the crisis.

Ultimately, Trump administration officials and lawmakers settled on a package worth more than $2 trillion, divided into aid regimens for different sectors of the economy. While setting general parameters, the Coronavirus Aid, Relief and Economic Security Act gives the Treasury wide latitude over how the money is to be distributed. It calls for $50 billion in grants and loans for the airline industry, for example, with few rules on who should get what. (In another potential intersection with Muzinich’s Treasury work, Muzinich & Co. started a new business line to loan money to airlines to buy planes in February.)

Perhaps the greatest power the Treasury now has is the authority to sign off on Fed loan programs funded with CARES Act money. The Fed has said it will leverage that money to lend up to several trillion dollars.

Among their biggest decisions: Which firms to include in the $600 billion Main Street Lending Program, which will lend directly to mid-sized businesses, and how to structure two programs that will purchase up to $750 billion in corporate bonds.

The Main Street program, which has yet to launch, changed substantially after it was first announced to sweep in bigger companies and those with heavier debt loads. Offering a glimpse into how the Treasury directly shaped the Fed programs, Energy Secretary Dan Brouillette told Bloomberg the change was made in part to make sure beleaguered oil companies had access to the program’s favorable terms. Muzinich & Co.’s U.S.-based funds include dozens of energy companies.

Mnuchin also deputized Muzinich to fix problems that arose during the first round of funding for the Paycheck Protection Program, which offers forgivable loans to small businesses. The government hasn’t said who got money through the program, but Muzinich & Co.’s portfolio includes many companies that are small enough to be eligible.

The Fed’s bond purchasing programs will go even further to help companies with poorly rated credit.

On March 23, the Fed and the Treasury announced a sweeping stimulus program that would involve buying hundreds of billions of dollars of investment-grade bonds. Selling bonds is a way for large companies like Boeing or PepsiCo to raise money for new investments, to fund day-to-day operations or to pay back older loans. Companies that are strong and profitable are expected to be able to pay back the borrowed money. Their bonds are deemed “investment grade” and come with lower interest rates. The news of the Fed program on its own heralded a dramatic recovery in the bond market, which in three weeks recovered nearly all of the 13.6% it had lost since the plunge began on March 6, according to one index.

Then, on April 9, the Fed announced, with the Treasury’s approval, that it would expand its efforts to buy some junk bonds. These carry higher interest rates because the borrowing companies are viewed as riskier and may already be heavily in debt. One index tracking that market segment surged nearly 8% on the news, the most in a decade. This risker category of bonds has expanded dramatically in recent years as companies took on higher debt burdens to do things like acquire competitors and buy back stock. These are the bonds in which Muzinich & Co. has long specialized.

At the end of 2019, Muzinich & Co. reported it had $2.8 billion of assets under management in its U.S. high-yield bond strategy. A Muzinich fund that focuses specifically on those bonds took significant losses in March, as companies like oilfield services provider Targa Resources and Caesars Entertainment saw the price of their bonds fall 30% and 35% respectively.

The government’s announcement buoyed Muzinich & Co.’s high-yield holdings along with everyone else’s. The portfolio manager for the firm’s U.S. high-yield offering also praised CARES Act’s tax provisions that would “help high yield companies.”

In a separate development in May, the Fed expanded another Treasury-backed lending program in a way that could help Muzinich & Co.’s portfolio. The central bank said May 12 it would support “syndicated loans,” another form of corporate debt often in which riskier firms borrow money from multiple lenders. Muzinich & Co. had more than $3 billion in assets under management in U.S. and European syndicated loans at the end of last year.

The good news for Muzinich & Co. keeps coming. As the firm’s head of investment strategy, Erick Muller, told investors in a May 13 webcast about the junk bond market: “The recovery is pretty spectacular.”