Australia Launches Criminal Probe Into Carnival After Dozens Died, 100s Were Infected Aboard Its Ships
The cruise ship-outbreak “Nightmare at Sea” has by now become a familiar trope to many of those following the coronavirus pandemic gripping the world. But although dozens of ships operated by nearly all of the major cruise lines (and their many subsidiaries) have experienced outbreaks onboard, one cruise line stands out as a symbol for the calamities that unfolded on its ships, some of which became floating international incidents.
That company, of course, is Carnival. Not only is it the owner of the Princess Cruise subsidiary, which is responsible for the “Diamond Princess” fiasco in Japan, the “Grand Princess” in California, and, most recently the Coral Princess, Another lethal outbreak unfolded aboard the Zandaam which docked in Ft. Lauderdale earlier this week. That ship is owned by another Carnival subsidiary, Holland America. After being turned away by more than a dozen countries, somehow, that ship, too, became America’s problem.
As cruise ships continued to contribute to the spread of the virus, and their management continued to appear confused, overwhelmed or downright negligent in responding to these floating fiascos, we started to suspect that the issue would soon become a criminal matter, somewhere, perhaps notoriously punitive Japan.
But Australian authorities managed to strike first. As the BBC reports, a criminal investigation has been launched in Australia into how passengers traveling aboard the “Ruby Princess” were allowed to disembark in Sydney even though some clearly exhibited flu-like symptoms.
Eventually, some 600 passengers tested positive for COVID-19; 10 of them died. The ship is still sitting off the coast of Australia, with some 200 passengers aboard. It has become a terrible political headache for PM Scott Morrison at a time when he needs to focus on leading his country’s response to the outbreak.
Police in New South Wales said they would look into whether Australia’s national biosecurity laws had been violated. The country has so far reported 5,548 coronavirus cases and 30 deaths. Those sickened on cruise ships account for roughly 10% all cases in Australia.
Data obtained by Bloomberg reveals that dozens of cruise ships continued to sail the globe even after COVID-19 first emerged as a transnational threat in late January/early February. Though the virus’s true infectious potential wasn’t ascertained right away, by mid-February, cruise lines should have been able to read the writing on the wall. And yet, ships continued to launch as late as the first week in March, shortly before Carnival’s Princess Cruises subsidiary finally suspended operations, even as dozens of cruises continued on.
Carnival still has five ships active with passengers aboard, traveling thousands of miles from port. There have been no incidents of coronavirus reported on those ships, at least not yet. MSC Cruises also reported one ship with passengers, while Norwegian and Royal Caribbean report none, per BBG.
A new kind of crime is making the headlines in Sweden, in Swedish known as förnedringsrån. Förnedring means “humiliation” and rån means “robbery.” The victims of these “humiliation robberies” are almost always children or teenagers. As previously reported by Gatestone Institute:
“The number of children who rob other children has increased by 100% in only four years, according to a new study by Swedish police… In 2016, there were 1,178 robberies against children under 18 years of age. In 2019, the number had increased to 2,484. The number of violent crimes where the suspect is a child under 15 years of age has also gone up dramatically: In 2015, there were 6,359 reported violent crimes where the suspect was a child under 15. In 2019, that number had increased to 8,719 reported violent crimes”.
The “humiliation robberies” have recently caused much consternation in Sweden. In Gothenburg, a criminal gang of youths forced their victim to kiss the gang leader’s feet, while they filmed him. After that, they stomped on his face until he passed out.
In Stockholm, two 16-year-olds robbed, punched and kicked their 18-year old victim for hours. At the end of the ordeal, they took him behind a church where one of the perpetrators urinated on him while they called him names such as “fucking Swede”. They then forced him to take his clothes of while laughing mockingly at him, the victim, only known as Liam, told Swedish TV. The two 16-year-olds filmed the incident and spread it on social media.
The parents of one of the perpetrators came to Sweden six years ago from an unspecified African country, according to Swedish TV, who interviewed them in February. The parents both work and said that their son lacks for nothing. The mother wore a hijab during the interview.
Although Swedish media rarely publish details of the ethnic origins of gang members, some media research has shown that gang members overwhelmingly are either foreign-born or children of immigrants. In 2017, the Swedish mainstream media outlet Expressen did a report about the 49 criminal networks in Stockholm. The report showed the networks consisted of between 500 and 700 gang members: 40.6% of the gang members that Expressen surveyed were foreign-born; 82.2% had two parents who were foreign-born. Their main country of origin was Iraq, followed by Bosnia, Lebanon, Somalia, Syria and Turkey.
“It is a way to show your power. They want to dominate places. They do that by putting fear in other youths,” said Thomas Petterson, an analyst for the Gothenburg police, in August.
“When it comes to these kinds of young people, they get a kick out of the deed, rather than going after possessions,” said criminal prosecutor Linda Wiking.
However, little is apparently new about this form of crime. The only truly novel aspect of it is that the crime has become extreme to the extent that even Swedish mainstream media can no longer ignore it.
As early as 2007, four academics (Ingrid Björkman, Jan Elfverson, Jonathan Friedman and Åke Wedin) wrote a book, Exit Folkhemssverige (“Exit the Swedish Welfare State”), which received little to no attention in mainstream media at the time. The book contains much information about gang robberies, including the humiliation of the victims that they often entail:
“Since the early 1990s, gang robberies, where young people rob other young people, have been a marked feature of juvenile delinquency. From being a metropolitan phenomenon, the robberies have now spread across the country. Several reports, including an extensive BRÅ survey in 1999 of Malmö and Gothenburg, as well as interviews with police officers, give a coherent picture of the youth robberies. The increase is dramatic. In the Stockholm and Malmö regions, police reported robberies doubled in 1999, and the police are talking about a ‘youth epidemic’. 80 – 90% of robbers have an immigrant background. The majority are 15 – 17 years…The victims are Swedish children and young people, primarily ‘Swedish guys from rich men’s schools’, as one robber put it. The robberies are mostly carried out in the daytime and despite the fact that there are adults nearby. The surroundings rarely intervene… The robberies usually follow a certain pattern: A group of immigrant boys approach a selected victim and convey a clear threat with their actions. A common scenario is that one of the robbers holds a knife pressed against the victim, while the others rob him of mobile phone, bank card, money. The victim… is frightened and dare not [do anything] but give up the requested items… If he doesn’t give up, he’ll be beaten, often very brutally. Humiliation of the victim is not infrequently included in the picture. If it is a boy, it is about breaking his self-esteem. He is forced to cry, give up his shoes, even undress naked, kneel and plead for his life, etc. For the girl victims, sexual humiliation applies. They get their clothes ripped off, the robbers grab them and call them “whores”. However, the robberies are rarely combined with rape. When the girls manage to get away, the robbers laugh out loud and let them run. Even little girls aren’t safe… The gangs have gained respect, as it is called. This means that they have taken over certain neighborhoods, with the result that Swedish young people are restricting their freedom of movement…The teenage perpetrators behave like Mafiosi, police say. The robberies are a demonstration of power. If the robbers are caught, they laugh at the police, because the penalties for the crimes are so insignificant due to the young age of the perpetrators.” (From chapter 5.)
The authors continued:
“The fact that it is a question of showing their power is confirmed by the immigrant youths themselves… ‘The Swedes must become like us foreigners. Otherwise, they won’t make it,’ says one immigrant… ‘You don’t rob your own. And then it becomes immigrants against Swedes’. ‘If you get to know them and pretend to look up to them, then you don’t get robbed,’ explains a Swedish 14-year-old. The defense mechanism is called conscious identity change. A sociological study at the University of Gothenburg by John Järvenpää has dealt in detail with the phenomenon of immigrant youth and robberies…The crucial motive for the choice of victims was ethnic. No one could imagine robbing someone of their own nationality. First, ‘it’s about respect.’ Second, they would be severely punished by their compatriots. ‘I’d get killed,’ says one. ‘The family would have killed us,’ says another. That the robbers focus on Swedes is mainly because Swedes are afraid and therefore easy prey…”
Exit Folkhemssverige also has a section about gang rape, which the authors present as a different kind of humiliation crime:
“Previously, gang rapes were virtually unknown in Sweden. But since the 1980s, they have steadily increased. Since 1995, they have quadrupled. In 1999, 35 gang rapes were recorded in Stockholm alone. Today, the media reports every week or every two weeks on such violent crimes. The usual pattern is the same as in the gang robberies. First, the ethnic relationship is the same: the victims are Swedish and among the perpetrators, the immigrants are greatly over-represented. For example, a study on sentencing practices shows that out of 24 perpetrators convicted of gang rape in 1989–91, 21 were foreign nationals. Whether the three Swedish citizens were ethnic Swedes or immigrants is not accounted for. Second, both perpetrators and victims are getting younger. In August 2001, for example, two 13-year-old girls in Malmö were raped by six immigrant boys aged 11 to 14. The case received widespread media attention, resulting in 17 rape reports against the same gang being filed with the police in the following days… The term ‘whore’ for Swedish women was launched by Muslim immigrant men from the Middle East. The concept has since been adopted by male immigrants from other cultures and now seems established…”
Exit Folkhemssverige was based, among many other sources, on the Swedish National Council for Crime Prevention’s (Brå) report “Youth who rob youth in Malmö and Stockholm” which was published in the year 2000 — evidently at a time, when Swedish authorities still published details about the ethnic backgrounds of perpetrators. According to the report, 70-75 % of the victims of youth robbers were Swedes born of two Swedish-born parents, whereas:
“Between 1995 and 1999, the proportion of suspected perpetrators born in Sweden to Swedish-born parents fell in both Malmö and Stockholm, from 21% and 36% respectively, to 10% and 15% respectively… In Malmö, foreign-born young people made up more than half of all suspected perpetrators in 1995. By 1999, this proportion had increased to 69%. In Stockholm, young people born abroad accounted for about 40 % of the suspected perpetrators in both 1995 and 1999. Foreign-born young people were severely over-represented among the suspected perpetrators…” (page 27)
Twenty years after Brå‘s report about youths who rob other youths, Prime Minister Stefan Löfven, blamed the most recent and widely publicized “humiliation robberies” on the former liberal-conservative government, which Löfven took over from in 2014:
“For a long time there was a policy, during eight years of the former conservative government, of tax reductions and welfare cuts. That will not do. Now we have changed that policy, we will invest more in welfare”.
Löfven might benefit from learning the history of gang violence in Sweden. He might start by reading Brå‘s 20-year old report.
India Bans Exports Of Trump’s “Game Changer” Anti-COVID-19 Drug
After initially declaring that he wouldn’t use the DPA because American companies were doing the right thing and accelerating production of ventilators and other critical supplies on their own – Trump said that with a straight face while Elon Musk turned in a batch of Tesla-made “ventilators” that turned out to be CPAP machines – President Trump became embroiled in what has become by all accounts a nasty feud with 3M, a Dow constituent and pillar of American industry.
After Trump accused the company for being “unpatriotic” and risking American lives by choosing to honor contracts promising deliveries of critical medical supplies to customers abroad instead of turning them over to hospitals in the US, its CEO appeared on CNBC Friday to try and explain why its decision would save more lives in the long run because it would surely prompt other countries to respond in-kind. And given 3M’s complex, international supply chain, this could jeopardize the company’s ability to continue providing its products to the US.
Many of Trump’s critics blasted the president for appearing to scapegoat a vital American corporation for the administration’s flat-footed response to the outbreak, and repeated some version of the argument outlined above. And while their arguments are certainly based on a reasonable foundation, they’ve neglected to mention one critical fact: Other countries are already doing the same thing to the US. Many Chinese factories have stopped delivering products from masks and gloves all the way to widely used drugs. And now, after earlier restricting its export to purely “humanitarian” grounds (as if there was any other reason for the use of medicine), New Delhi is banning export of hydroxychloroquine, a malaria drug that Trump once touted as a “game changer”, and which has recently proved effective at combating some of the virus’s deadliest symptoms.
According to Bloomberg, exports of the drug and its formulations are now being prohibited “without any exceptions” and with immediate effect, according to India’s Directorate General of Foreign Trade. The statement is dated April 4.
Trump raised the issue of India’s decision to restrict export of the drug up during Saturday’s press conference. He claimed that he had appealed directly to Indian Prime Minister Narendra Modi for already-ordered shipments of the drug to be released to the US
India is giving his request “serious consideration,” the president said.
Trump says the federal government is stockpiling millions of doses of the drug to make it available for coronavirus patients. And fortunately, it’s not the only drug that has shown to be effective in treating COVID-19. Japanese PM Shinzo Abe recently ordered apanese drugmakers to ramp up production of Avigan, a drug Abe believes to be quite effective. Antivirals like Gilead’s Remdesivir have also shown effectiveness and are also being studied.
Just like today, brass and bureaucrats ignored warnings, and sent troops overseas despite the consequences.
The U.S. military has been forced by the coronavirus pandemic to make some serious changes in their operations. But the Pentagon, and especially the Navy, have also displayed a revealing resistance to moves to stand down that were clearly needed to protect troops from the raging virus from the start.
The Army and Marine Corps have shifted from in-person to virtual recruitment meetings. But the Pentagon has reversed an initial Army decision to postpone further training and exercises for at least 30 days, and it has decided to continue sending new recruits from all the services to basic training camps, where they would no doubt be unable to sustain social distancing.
On Thursday, the captain of the aircraft carrier USS Theodore Roosevelt, on which the virus was reportedly spreading, was relieved of command.He was blamed by his superiors for the leak of a letter he wrote warning the Navy that failure to act rapidly threatened the health of his 5,000 sailors.
Secretary of Defense Mark Esper justified his decision to continue many military activities as usual by declaring these activities are “critical to national security.” But does anyone truly believe there is a military threat on the horizon that the Pentagon must prepare for right now? It is widely understood outside the Pentagon that the only real threat to that security is the coronavirus itself.
Esper’s decisions reflect a deeply ingrained Pentagon habit of protecting its parochial military interests at the expense of the health of American troops.
This pattern of behavior recalls the far worse case of the U.S. service chiefs once managing the war in Europe. They acted with even greater callousness toward the troops being called off to war in Europe during the devastating “Spanish flu” pandemic of 1918, which killed 50 million people worldwide.
It was called the “Spanish flu” only because, while the United States, Britain and France were all censoring news about the spread of the pandemic in their countries to maintain domestic morale, the press in neutralist Spain was reporting freely on influenza cases there. In fact, the first major wave of infections in the United States came in U.S. training camps set up to serve the war.
Abundant documentary evidence shows that the 1918 pandemic actually began in Haskell County, Kansas, in early 1918, when many residents came down with an unusually severe type of influenza. Some county residents were then sent to the Army’s Camp Funston at Ft. Riley, Kansas, the military’s largest training facility, training 50,000 recruits at a time for the war. Within two weeks, thousands of soldiers at the camp became sick with the new influenza virus, and 38 died.
Recruits at 14 of 32 large military training camps set up across the country to feed the U.S. war in Europe soon reported similar influenza outbreaks, apparently because some troops from Camp Funston had been sent there. By May 1918, hundreds of thousands of troops, many of whom were already infected, began boarding troopships bound for Europe, and the crowding onboard the ships created ideal conditions for the virus to explode further.
In the trenches in France, still more U.S. troops continued to be sickened by the virus, at first with milder illness and relatively few deaths But the war managers simply evacuated the sick and brought in fresh replacements, allowing the virus to adapt and mutate into more virulent and more lethal strains.
The consequences of that approach to the war became evident after the August 27 arrival in Boston harbor, when visitors brought a much more virulent and lethal strain of the virus; it quickly entered Boston itself and by September 8, had appeared at Camp Devens outside the city. Within ten days, the camp had thousands of soldiers sick with the new strain, and some of those infected at the camp boarded troops ships for Europe.
Meanwhile the lethal new strain spread from Camp Devens across the United States through September and October, ravaging one city after another. From September onward, the U.S. command in France, led by Gen. John Pershing, and the war managers in the War Department in Washington, were well aware that both U.S. troops already in Europe and the American public were suffering vast numbers of severe illnesses and death from the pandemic.
Nevertheless, Pershing continued to call for large numbers of the replacements for those stricken at the front lines, as well as for new divisions to launch a major offensive late in the year. In a message to the War Department on September 3, Pershing demanded an additional 179,000 troops.
The internal debate that followed that request, recounted by historian Carol R. Byerly, documents the chilling indifference of Pershing and the military bureaucracy in Washington to the fate of American troops they planned to send to war. After watching the horror of lethally-infected soldiers dying of pneumonia in the infected camps, acting Army Surgeon General Charles Richard strongly advised Army Chief of Staff Peyton March in late September against sending troops from the infected camps to France until the epidemic had been brought under control in the surrounding region, and March agreed.
Richard then asked for stopping the draft calls for young men heading for any camp known to be already infected. March wouldn’t go that far, and although the October draft was called off, it was to resume in November. The War Department acknowledged the heavy toll the pandemic was taking on U.S. troops in October 10, informing Pershing that he would get his troops by November 30, “if we are not stopped on account of Influenza, which has now passed the 200,000 mark.”
Richard then called for troops to be quarantined for a week before being shipped to Europe, and that the troopships carry only half the standard number of troops to reduce crowding. When March rejected those moves, which would have made it impossible for him to meet Pershing’s targets, Richard then recommended that all troop shipments be suspended until the influenza pandemic was brought under control, “except such as are demanded by urgent military necessity.”
But the chief of staff rejected such a radical shift in policy, and went to the White House to get President Woodrow Wilson’s approval for the decision. Wilson, obviously recognizing the implications of going ahead under the circumstances, asked why he refused to stop troop transport during the epidemic. March argued that Germany would be encouraged to fight on if it knew “the American divisions and replacements were no longer arriving.”Wilson then approved his decision, refusing to disturb Pershing’s war plans.
But the decision was not carried out fully. The German Supreme Command had already demanded that the Kaiser accept Wilson’s 14 points, and the armistice was signed on November 11.
The disastrous character of the U.S. elite running the First World War is clearly revealed with the astonishing fact that more American soldiers were killed and hospitalized by influenza (63,114) than in combat (53,402). And an estimated 340,000 American troops were hospitalized with influenza/pneumonia, compared with 227,000 hospitalized by Germans attacks.
The lack of concern of Washington bureaucrats for the well-being of the troops, as they pursue their own war interests, appears to be a common pattern—seen too, in the U.S. wars in Vietnam, Afghanistan and Iraq. Now it has been revealed once again in the stunningly callous response of the Pentagon to the coronavirus pandemic crisis.
In the 1918 war, there was no protest against that cold indifference, but there are now indications that the families of soldiers put being at risk are expressing their anger about it openly to representatives of the military. In a time of socio-political upheaval, and vanishing tolerance for the continuation of endless war, it could be a harbinger of accelerated unraveling of political tolerance for the war state’s overweening power.
“Meet The Global Robot Army That’s Been Deployed To Fight COVID-19
In addition to the selfless human heroes who continue to fight the unprecedented global pandemic on its front-lines, there has also been a lesser covered group of virus-fighters, dutifully going about their daily tasks to help battle the virus.
We’re referring to the global robot army that has been deployed to fight the virus.
Robots worldwide are doing everything from bathing surfaces with radiation, sanitizing floors, scanning for fevers, spewing anti-microbial gas and enforcing mask wearing, according to the WSJ. Many of the robots are being put to work in areas where humans haven’t tread yet, especially in areas like hospital cleaning.
For example, at Cincinnati/Northern Kentucky International Airport, there’s a robot that disinfects and dispensing germ-killing fluid from its tanks. The robot weighs 1,050 pounds and is equipped with AI and a bank of cameras and sensors. Similar robots are already being used en masse at Changi in Singapore.
When the outbreak happened in China, UBTech Robotics, based in Shenzhen, China, developed a program to modify its robots to battle the virus. They attached a disinfectant sprayer to their Atris outdoor robot, which allows it to spray in public places.
They have also modified two other models, the Cruzr and Aimbot, to be able to take people’s temperature using thermal cameras. The robot’s object-recognition algorithms allow them to also determine whether or not a person is wearing a mask.
Other robots are using UV light in indoor spaces to disinfect. UVC lights have long been used in hospitals to disinfect and sanitize rooms. Since the lights are harmful to humans (but also lethal to microbes), no humans can be in the room while disinfecting is taking place.
UVC lights can clean an entire room in anywhere from 10 minutes to an hour, depending on the strength of the bulb being used. They can also reach surfaces often missed by human cleaners and kill airborne microbes – a feature that could come in hand if the coronavirus is spreading by people breathing in particles in indoor spaces.
Companies like UVD Robots, launched in Denmark in 2014, are working to try and implement these lights in a safe way for humans, on top of robots that can wander public spaces. Demand for UVC disinfecting robots has “exploded” by 2x to 3x since December of last year, CEO Juul Nielsen says. They are being considered for places like warehouses, prisons and offices and are operating in a manner similar to the way robots are used in areas like melted down nuclear power plants.
Some of the outlook for the industry remains unclear and it is possible that the idea of autonomous robots that clean may lose some of its glimmer after the coronavirus fades. They may also turn out to not be cost effective, compared to traditional manual labor which can easily clean tough to reach surfaces, like door handles.
But Jenny Lee, a 15-year veteran of venture-capital firm GGV Capital, thinks that the focus on robots now will translate to a broader focus on automation going forward. She hopes companies will continue to work on robots with smaller form factors and more autonomy.
Benjamin Tanner, chief executive of Austin, Texas-based Microchem Laboratory said: “There are manufacturers who have done no testing of their own, and it’s a little bit of buyer beware on the UV market.”
John Rhee, general manager of UBTech Robotics North America concluded: “We talk about flattening the curve, but the need to be vigilant and have increased monitoring and have measures in place to decrease transmission are things that organizations both public and private will have to take seriously for a very long time.”
Imprisoned WikiLeaks publisher Julian Assange is not eligible for an early Covid-19 release from prison with other inmates because he is not serving a criminal sentence, the Australian Associated Press has reported.
British Justice Secretary Robert Buckland said Saturday that some low-risk inmates, weeks from release will be let go with monitoring devices to help avoid a further outbreak of Covid-19 in the nations’ prisons.
Belmarsh Prison in London, file image.
So far 88 prisoners and 15 staff have tested positive for the virus in British prisons. More than 25 percent of the nations’ prison staff are quarantining themselves.
“This government is committed to ensuring that justice is served to those who break the law,” Buckland said in a statement. “But this is an unprecedented situation because if coronavirus takes hold in our prisons, the NHS could be overwhelmed and more lives put at risk.”
The Ministry of Justice told the AAP that Assange won’t be among those released because he isn’t serving a custodial sentence.
WikiLeaks’ founder Julian Assange leaves Westminster Magistrates Court in London.
Britain will release about 4,000 nonviolent inmates from their prisons to help curb the spread of the coronavirus, the country’s Ministry of Justice announced Saturday.
The ministry described prisoners eligible for release as “low-risk offenders,” noting those convicted of violent or sexual offenses will not be considered.
Inmates will be tracked electronically and required to stay home, officials said.— The Hill
In other words, because he has not been convicted of a crime, and is instead only being held on remand pending the outcome of the U.S. extradition request, he must remain in Belmarsh prison with high-risk inmates–the most serious and hardened criminals.
WikiLeaks Ambassador Joseph Farrell released this video:
The Daily Maverickreported this week that there is one other prisoner on remand in Belmarsh, who would presumably also be left to rot in the jail as the virus spreads throughout the British prison system.
Peter Navarro Explodes At Faucci In Heated Showdown Over Hydroxychloroquine
White House economic adviser got into a massive argument with the coronavirus task force’s Anthony Fauci over the doctor’s ongoing resistance to the use of hydroxychloroquine to treat COVID-19, despite reports of the drug’s widespread efficacy.
Numerous government officials were at the table, including Fauci, coronavirus response coordinator Deborah Birx, Jared Kushner, acting Homeland Security Secretary Chad Wolf, and Commissioner of Food and Drugs Stephen Hahn.
Behind them sat staff, including Peter Navarro, tapped by Trump to compel private companies to meet the government’s coronavirus needs under the Defense Production Act.
According to the report, towards the end of the meeting Hahn began a discussion of the commonly used malaria drug hydroxychloroquine – which was recently rated the ‘most effective therapy‘ for coronavirus according to a global survey of more than 6,000 doctors.
After Hahn gave an update on various trials and real-world use of the drug, Navarro got up and dropped a stack of folders on the table to pass around.
According to Axios‘s source, “the first words out of his [Navarro’s] mouth are that the studies that he’s seen, I believe they’re mostly overseas, show ‘clear therapeutic efficacy,’” adding “Those are the exact words out of his mouth.
Fauci – who’s not got his own Twitter hashtag, #FireFauci – began pushing back against Navarro, repeating his oft-repeated contention that ‘there’s only anecdotal evidence’ that the drug works against COVID-19.
Navarro exploded – after Fauci’s mention of anecdotal evidence “just set Peter off.” The economic adviser shot back “That’s the science, not anecdote,” while pointing to the stack of folders on the desk, which included the results of studies from around the world showing its efficacy.
Here’s what unfolded next, via Axios:
Navarro started raising his voice, and at one point accused Fauci of objecting to Trump’s travel restrictions, saying, “You were the one who early on objected to the travel restrictions with China,” saying that travel restrictions don’t work. (Navarro was one of the earliest to push the China travel ban.)
Fauci looked confused, according to a source in the room. After Trump imposed the travel restrictions, Fauci has publicly praised the president’s restriction on travel from China.
Pence was trying to moderate the heated discussion. “It was pretty clear that everyone was just trying to get Peter to sit down and stop being so confrontational,” said one of the sources.
Eventually, Kushner turned to Navarro and said, “Peter, take yes for an answer,” because most everyone agreed, by that time, it was important to surge the supply of the drug to hot zones.
The principals agreed that the administration’s public stance should be that the decision to use the drug is between doctors and patients.
Trump ended up announcing at his press conference that he had 29 million doses of hydroxychloroquine in the Strategic National Stockpile.
According to a source familiar with the coronavirus task force, “There has never been a confrontation in the task force meetings like the one yesterday,” adding “People speak up and there’s robust debate, but there’s never been a confrontation. Yesterday was the first confrontation.”
Meanwhile, 37% of 6,227 doctors across 30 countries felt the drug was the “most effective therapy” out of 15 options in treating coronavirus, according to a poll reported by the Washington Times.
The drug has been prescribed in 72% of cases in Spain, 49% in Italy, 41% in Brazil, 39% in Mexico, 28% in France, and 23% in the USA. Overall, 19% of physicians have prescribed the drug for high-risk patients, and 8% for low-risk patients.
More from the Sermo poll (via the Washington Times)
***
Sermo CEO Peter Kirk called the polling results a “treasure trove of global insights for policy makers.”
“Physicians should have more of a voice in how we deal with this pandemic and be able to quickly share information with one another and the world,” he said. “With censorship of the media and the medical community in some countries, along with biased and poorly designed studies, solutions to the pandemic are being delayed.”
The survey also found that 63% of U.S. physicians believe restrictions should be lifted in six weeks or more, and that the epidemic’s peak is at least 3-4 weeks away.
The survey also found that 83% of global physicians anticipate a second global outbreak, including 90% of U.S. doctors but only 50% of physicians in China.
On average, U.S. coronavirus testing takes 4-5 days, while 10% of cases take longer than seven days. In China, 73% of doctors reported getting rest results back in 24 hours.
In cases of ventilator shortages, all countries but China said the top criteria should be patients with the best chance of recovery (47%), followed by patients with the highest risk of death (21%), and then first responders (15%).
Wall Street’s Formerly Biggest Bear Goes All-In Ahead Of The Coming Runaway Inflation
Last week we reported that Morgan Stanley’s Michael Wilson, who for most of 2018 and 2019 had dominated the league tables as the biggest bear among Wall Street’s big banks (this of course excludes such outlier bears as SocGen’s Albert Edwards who has for years been warning about what is coming), turned bullish and last Monday said that he is a “buyer of dips” since “2400-2600 on the S&P 500 will prove to be very good entry points for those with a time horizon of 6-12 months.”
Over the weekend, Wilson was also the author of Morgan Stanley’s influential Sunday Start weekly which sets the narrative not only for the key bank themes over the rest of the week, but also is a signpost for Morgan Stanley’s clients, and perhaps not surprisingly, Wilson used the podium to expand why on such short notice, he has U-turned from Wall Street’s de facto uber bear to one of the biggest, if not most vocal, bulls.
In a nutshell, what follows is his explanation why “Bear Markets END with Recessions“, which in theory is correct, but one wonders what happens if instead of a recession we are looking at a depression. And if so, the real question is when will the bear market end, because as a reminder the recession of 1929, which of course was much more than just a recession, lasted 43 months. If we are indeed entering another D-word phase, are we looking at another 43 months before the market stabilizes?
In any case, here is Wilson with a dose of – rather rare these days – bullishness, and not only that, but a rather somber assessment of what is really coming down the line – runaway inflation and a sharply lower dollar:
In the past month, we’ve experienced a full bear market, down 20%, and a full bull market, up 20%. Of course, this extreme volatility follows a period of extreme calm that saw some of the lowest volatility readings in history. As the famed economist Hyman Minsky observed, a market collapse can be brought on by the speculative activity that defines an unsustainable bullish period – the Minsky Moment. If you accept that 4Q19 resembled a speculative frenzy driven more by liquidity than fundamentals, the Minsky Moment diagnosis is not only compelling but hard to refute.
In my Sunday Start last month (Unfinished Business), I suggested the US economy was finally headed toward a recession but, once over, it could usher in the second leg of the secular bull market. Since then, whatever debate remained on the recession has been conclusively resolved, with the discussion quickly shifting to who can come up with the most negative forecasts.
That’s the bad news. The good news is that crises lead to bailouts, and this time is no different. Since this is a public health crisis, the response has been extreme. There are literally no governors on the amount of monetary or fiscal stimulus that will be used in this fight. As evidence, our economists now estimate a US fiscal deficit of 18% this year, a level last seen during World War II. While the struggle against Covid-19 is a war, the amount of money being thrown at this enemy may be excessive, given that this conflict will be shorter and the outcome more certain – we will win. The destruction of productive assets will undoubtedly be much less severe than in WWII, leaving potential GDP intact once the recession is over even though the recovery path is uncertain.
Recessions require a trigger, and the conditions must be in place for that trigger to work. Every expansion leads to excessive credit creation, and this time it took place in corporate credit and the shadow banks, among other areas. A recession always creates the most pain where credit and leverage had reached excess. However, given the extreme response from the Fed and Congress, we envision less pain than normal for these bad actors. This is one reason why we have been getting more bullish in the past few weeks, though the economic and earnings data are likely to remain bad and even get worse.
My longer-term secular bull market view has always assumed a cyclical bear market in the middle punctuated by a recession – like today. I’ve argued further that the next leg of the secular bull would see the long-awaited appearance of inflation, which would require a transition from monetary to fiscal policy dominance. Cue the steepest recession since the 1940s accompanied by a health crisis.
The old adage of “never let a good crisis go to waste” could not be more apropos today. Not only are we likely to get the largest peacetime fiscal deficit in history, but the stimulus targets the parts of the economy with a higher propensity to spend. The first experiment with QE after the financial crisis was accompanied by fiscal austerity and bank regulation – a deflationary combination. This time, we have a potentially much more inflationary combination of an unprecedented targeted fiscal stimulus and possible deregulation of the banks to get the cash into the hands of lower income individuals and small businesses that are inclined to spend it. Such a dramatic shift in US fiscal and monetary policy relative to other regions should lead to a materially weaker dollar, which is ultimately the easiest path to reflation not only for the US, but also the world.
Finally, let’s not forget some of the other inflationary developments of the past five years – populism, which has driven minimum wage legislation, and nationalism, which has led to tariffs and a trend toward de-globalization. Now a pandemic will likely further disrupt and permanently add costs to global supply chains.
To summarize, with the forced liquidation of assets in the past month largely behind us, unprecedented and unbridled monetary and fiscal intervention led by the US, and the most attractive valuation we have seen since 2011, we stick to our recent view that the worst is behind us for this cyclical bear market that began two years ago, not last month.
Therefore, current levels in equity and credit markets should prove to be good entry points on a 6-12-month horizon. Bear markets end with recessions, they don’t begin with them, making the risk/reward more attractive today than it’s been in years; with the twist that the next leg of the bull market could look much different than the last and the unthinkable – inflation – begins to appear.
“This is one of the worst cover-ups in human history, and now the world is facing a global pandemic,”said Rep. Michael T. McCaul, the ranking Republican member of the House Foreign Affairs Committee, before the US intelligence community concluded, in a classified report to the White House, that China has concealed the origin and extent of the catastrophic global coronavirus outbreak.
The Chinese Communist Party’s “failure has unleashed a global contagion killing thousands”,wrote Cardinal Charles Maung Bo, president of the Federation of Asian Bishops’ Conferences, on April 1. “As we survey the damage done to lives around the world, we must ask who is responsible?”
“… there is one government that has primary responsibility for what it has done and what it has failed to do, and that is the CCP [Chinese Communist Party] regime in Beijing. Let me be clear — it is the CCP that has been responsible, not the people of China… Lies and propaganda have put millions of lives around the world in danger… In recent years, we have seen an intense crackdown on freedom of expression in China. Lawyers, bloggers, dissidents and civil society activists have been rounded up and have disappeared.”
One more person has just disappeared: Ai Fen, a Chinese physician who was head of the emergency department at Wuhan Central Hospital, had worked with the late Dr. Li Wenliang. Ai, who claimed that her bosses silenced her early warnings about coronavirus, appears to have vanished. Her whereabouts, according to 60 Minutes Australia, are unknown. The journalists who saw what happened inside Wuhan have also disappeared. Caixin Global reported that the laboratories which sequenced the coronavirus in December were ordered by Chinese officials to hand over or destroy the samples and not release their findings.
“If I had known what was to happen, I would not have cared about the reprimand, I would have fucking talked about it to whoever, where ever I could”, Ai Fen said in an interview in March. Those were her last recorded words.
There is no record at all, however, about how this pandemic began.Wet market? A cave full of bats? Pangolins? Or a bio-weapons laboratory? No foreign doctors, journalists, analysts or international observers are present in Wuhan. Why, if the virus came out of a wet market or a cave, did China suppress inquiries to such an extent? Why, in December, did Beijing order Chinese scientists to destroy proof about the virus? Why did Chinese officials claim that US soldiers brought the virus to Wuhan? Why should it be scandalous that a US President calls a virus that began in China a “Chinese virus“?
Who announced on January 11 that Wuhan’s wet market was the origin of this epidemic? The Chinese regime. It was later discovered that the first known case of coronavirus traced back to November 17, 2019.
The same Chinese regime later claimed that this coronavirus “may not have originated in China”. What respected scientist or institution can now trust anything that comes out of China?
Many leading scientists have dismissed the claim that the Covid-19 virus was an engineered pathogen. This conclusion was seemingly based on the fact that Wuhan has two major virus research labs: the Wuhan Center for Disease Control and Prevention, which is apparently less than a mile from the market, and the Wuhan Institute of Virology, a biosafety level 4 (BSL-4) laboratory, handling the world’s most deadly pathogens, located just seven miles from the market. The story was immediately and emphatically trashed as a “conspiracy theory“.
Those scientists claim that the virus likely originated among wildlife before spreading to humans, possibly through a food market in Wuhan. They say that, through genetic sequencing, they have identified the culprit for Covid-19 as a bat coronavirus. End of story? Science, thankfully, begins by asking questions and then seeking answers.
Bats were not, it seems, sold at Wuhan’s wet market. The Lancetnoted in a January study that the first Covid-19 case in Wuhan had no connection to the market. The Lancet‘s paper, written by Chinese researchers from several institutions, detailed that 13 of the 41 first cases had no link to the market. “That’s a big number, 13, with no link,” commented Daniel Lucey, an infectious disease specialist at Georgetown University. So how did the epidemic start?
“Now it seems clear that [the] seafood market is not the only origin of the virus, but to be honest we still do not know where the virus came from now”,notes Bin Cao, pulmonary specialist at Capital Medical University, and the corresponding author of the Lancet article.
US Secretary of State Mike Pompeo has said that China’s Communist Party is withholding information about the coronavirus.
If we do not know, it is necessary be open to all possibilities.
“Less than 300 yards from the seafood market is the Wuhan branch of the Chinese Center for Disease Control and Prevention” wrote David Ignatius of the Washington Post.
“Researchers from that facility and the nearby Wuhan Institute of Virology have posted articles about collecting bat coronaviruses from around China, for study to prevent future illness. Did one of those samples leak, or was hazardous waste deposited in a place where it could spread?“.
“Collecting viruses” presumably does not exclude the possibility of a “leaked virus”. Worse, if China is not able to protect its laboratories, it needs to be held accountable and made to pay for the devastating global damage.
“Experts know the new coronavirus is not a bioweapon. They disagree on whether it could have leaked from a research lab”,statedThe Bulletin of the Atomic Scientists. Professor Richard Ebright of Rutgers University’s Waksman Institute of Microbiology, and a major biosecurity expert, agreed with the Nature Medicine authors’ argument that the coronavirus was not manipulated by humans. But Ebright does think it possible that the Covid-19 started as an accidental leak from a laboratory, such as one of the two in Wuhan, which are known to have been studying bat viruses:
“Virus collection or animal infection with a virus having the transmission characteristics of the outbreak virus would pose substantial risk of infection of a lab worker, and from the lab worker, the public.”
Ebright has also claimed that bat coronaviruses are studied in Wuhan at Biosafety Level 2, “which provides only minimal protection” compared with the top BSL-4.
“We don’t know what happened, but there are a lot of reasons to believe that this indeed was a release of some sort”, China expert Gordon Chang said to Die Weltwoche.
“No one has been able to study it. How can you say it’s not a release from a lab if you can’t go to the lab? Indeed, we have seen Beijing do its best to prevent virologists and epidemiologists from actually going to Wuhan. The World Health Organization team went to Wuhan for like half a day with only part of the team.”
That is another major problem. The potential major investigator of the Wuhan coronavirus pandemic’s origin, the World Health Organization (WHO), is now accused of being “China’s coronavirus’ accomplice“. As late as January 14, the WHO quoted Chinese health officials claiming there had been no human transmissions of the coronavirus within the country yet.
China poses a biosecurity risks for the entire planet. One year before the first coronavirus case was identified in Wuhan, US Customs and Border Protection agents at Detroit Metro Airport stopped a Chinese biologist with three vials labeled “Antibodies” in his luggage. According to an unclassified FBI tactical intelligence report obtained by Yahoo News:
“Inspection of the writing on the vials and the stated recipient led inspection personnel to believe the materials contained within the vials may be viable Middle East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS) materials.”
Why is China trafficking in dangerous viruses in the first place?
According to Yanzhong Huang, a senior fellow for Global Health at the Council on Foreign Relations:
“A safety breach at a Chinese Center for Disease Control and Prevention lab is believed to have caused four suspected SARS cases, including one death, in Beijing in 2004. A similar accident caused 65 lab workers of Lanzhou Veterinary Research Institute to be infected with brucellosis in December 2019. In January 2020, a renowned Chinese scientist, Li Ning, was sentenced to 12 years in prison for selling experimental animals to local markets”.
In February, Botao Xiao and Lei Xiao, from Guangzhou’s South China University of Technology, wrote in a research paper:
“In addition to origins of natural recombination and intermediate host the killer coronavirus probably originated from a laboratory in Wuhan. Safety level [sic] may need to be reinforced in high risk biohazardous laboratories”.
Xiao later told the Wall Street Journal that he had withdrawn the paper because it “was not supported by direct proofs”.
Chinese laboratory mistakes have happened before. By 2010, researchers published as fact: “The most famous case of a released laboratory strain is the re-emergent H1N1 influenza-A virus which was first observed in China in May of 1977 and in Russia shortly thereafter”. The virus may have escaped from a lab attempting to prepare a vaccine in response to the U.S. swine flu pandemic alert.
In 1999 the most senior defector in the US from the Soviet biological warfare program, Ken Alibek, revealed that Soviet officials concluded that China had suffered a serious accident at one of its secret biological plants, causing two major epidemics of fever that had swept China in the late 1980s. “Our analysts”, Alibek stated in his book, Biohazard, “concluded that they were caused by an accident in a lab where Chinese scientists were weaponizing viral diseases”.
In 2004, the World Health Organization disclosed that the latest outbreak of “severe acute respiratory syndrome” (SARS) in China involved two researchers who were working with the virus in a Beijing research lab. The WHO denounced Chinese breaches of safety procedures, and director of the Center for Disease Control and Prevention, Li Liming, resigned. Science magazine also stated that “for the third time in less than a year, an outbreak of SARS seems to have originated from a failure in laboratory containment”.
Moreover, three years ago, when China opened the laboratory in Wuhan, Tim Trevan, a Maryland biosafety specialist, told Nature that he worried about the safety of the building because “structures where everyone feels free to speak up and openness of information are important.” Free speech and open information: exactly what Chinese regime fought against in December and January.
A Chinese video about a key researcher in Wuhan, Tian Junhua, which was released a few weeks before the outbreak in Wuhan, shows Chinese researchers handling bats that contained viruses. In the video (produced by China Science Communication, run by the China Association for Science and Technology), Tian says:
“I am not a doctor, but I work to cure and save people… I am not a soldier, but I work to safeguard an invisible national defense line”.
“I can feel the fear: the fear of infections and the fear of getting lost. Because of the fear, I take every step extremely cautiously. The more scared I feel, the more care I take in executing every detail. Because the process of you finding the viruses is also when you can be exposed to them the easiest. I do hope these virus samples will only be preserved for scientific research and will never be used in real life”.
For a month, the Chinese Communist Party, instead of fighting the contagion, did everything possible to censor all information about the Covid-19 outbreak. After President Xi Jinping declared “a people’s war” on the epidemic on January 20, Chinese security services pursued 5,111 cases of “fabricating and deliberately disseminating false and harmful information”. The Chinese Human Rights Defenders documented several types of punishment, including detention, disappearance, fines, interrogations, forced confessions and “educational reprimand”.
After that, China lied about the real number of deaths. There are photographs of long lines of stacked urns greeting family members of the dead at funeral homes in Wuhan. Outside one funeral home, trucks shipped in 2,500 urns. According to Chinese official figures, 2,548 people in Wuhan have died of the Covid-19. According to an analysis by Radio Free Asia, seven funeral homes in Wuhan were each handing out 500 funeral urns containing remains for 12 days, from March 23 to the traditional tomb-sweeping festival of April 5, a time that would indicate up to 42,000 urns, or ten times higher than the official figure.
In February, it was reported that Wuhan crematoriums were working around the clock to cope with the massive influx of infected bodies. Wuhan’s officials are apparently pushing relatives of the victims to bury the dead “quickly and quietly“.
“Natural virus” does not exclude its fallout from a laboratory where pathogens are collected and studied. The Nature Medicine authors “leave us where we were before: with a basis to rule out [a coronavirus from] a lab construct, but no basis to rule out a lab accident”, Professor Ebright commented.
“Debate may rage over which center it is, but at this point it seems undeniable that a center has been directly involved with research on viruses, although not necessarily on the creation of a virus” wrote Father Renzo Milanese, a longtime Catholic missionary in Hong Kong.
“In other words, the virus passed from a research center in Wuhan early on. More importantly there is also no question that the authorities were aware of the dangerousness of the virus, that they did not inform anyone and that they tried to keep the facts hidden”.
US Senator Josh Hawley has introduced a resolution calling for an international investigation into China’s handling of the spread of the virus. According to Hawley:
“The Chinese Communist Party was aware of the reality of the virus as early as December but ordered laboratories to destroy samples and forced doctors to keep silent. It is time for an international investigation into the role their cover-up played in the spread of this devastating pandemic”.
Admitting a fault, as the Japanese did after the Fukushima nuclear accident in 2011, might be one way for a country to be accepted again by the international community. Censoring, denying and covering up, as China is doing, will not.
“China claims that the deadly virus did not escape from its biolab,” said a China specialist with the Population Research Institute, Steven W. Mosher.
“Fine. Prove it by releasing the research records of the Wuhan lab”.
“They’ve Left Me High And Dry”: Here Is The Real Reason Companies Have Drawn Down A Record $293 Billion In Revolvers
One week ago, we reported that starting exactly one month ago on March 5, an unprecedented wave of corporate revolver draws was unleashed, resulting in what JPMorgan calculated was a record $208BN in revolving credit facilities being fully drawn (for the full list of companies see here). A few days later, a report from Goldman Sachs observed that, contrary to JPM’s data of exponentially rising revolver draws, “the pace of revolver draws has slowed nearly 50% so far this week relative to last week, with only $40bn over the last 5 business days, relative to an average trailing 5 business days run rate last week of $75bn.”
In retrospect, there may be reason to be skeptical about Goldman’s data because in JPM’s latest weekly revolver update, the bank’s tracker of companies that have tapped banks for funding rose to $293 billion to date (remarkably, $125 bil or 43% of total borrowings, are by junk-rated firms) an increase of over $80 billion in just one week, although just like Goldman, JPM notes that “while growth has continued, the pace seems to have slowed in the past three days, both in terms of amounts borrowed and number of borrowers (see Figure 1).”
In total, the nearly $300BN in borrowings represent 77% of their credit facilities, but as JPM notes, “some firms with asset-backed facilities may not have enough borrowing base to borrow the full committed amount.” Another observation: we are still seeing large draws but fewer mega-sized draws, which makes sense as by now most mega companies have already drawn down on their revolver.
That said, JPM cautions that the actual amount of borrowing is likely significantly greater than $293 bil, as it only reflects publicly disclosed amounts, mostly from larger companies, and likely excludes many middle market firms and privately owned companies.
Some more details on the ongoing drawdown flurry:
$143 bil (49%) of announced borrowings are by investment grade firms, of which $35 bil (12%) are BBB- rated, $125 bil (43%) are by noninvestment grade firms, and $25 bil (9%) did not have available ratings.
The $293 bil total excludes $48 bil of ongoing deals, rumored loans, and new facilities that are not clear if drawn for Airbus, AT&T, Daimler, Fiat Chrysler, Honeywell, Mondelez, and Simon Property Group. If these facilities are finalized and/or fully drawn, the known total would be $340 bil.
In aggregate, the borrowings represent 77% of their credit facilities, but note that some firms with asset-backed facilities may not have enough borrowing base to borrow the full committed amount.
So why the continued rush to fully drawdown available facilities? The trivial, politically correct explanation is simply that the Commercial Paper market, where companies have traditionally gone to meet short-term funding needs, remains broken, and even though the Fed has already announced the launch of a Commercial Paper and Money Market backstop facilities, the Commercial Paper 90 Day AA non-fin spread to 3M OIS remains at levels well beyond the wides reached during the financial crisis.
In short, the Fed has much more work to normalize the CP market.
But rational as it may be, that’s not the reason for the panicked scramble to drain nearly $300BN in liquidity from the banks. Instead, the real reason is also the one that may well result from this drawdown panic as the banks themseleves suddenly find without liquidity and are forced to put themselves in quarantine from future liquidity demands: companies are increasingly worried their banks may shut them down and reneg on revolver contracts, refusing to give them access to facilities they have opened… or worse, banks may shut down period.
For a very vivid example of just that look no further than online lender Kabbage (backed, predictably, by the god of all catastrophic money-losing startups, Japan’s SoftBank whose implosion will be this bubble’s Enron and Lehman moment combined) which last week unexpectedly and without warning cut off credit to its small-business clients in the past week.
The borrowers, who range from software consultants to heavy-equipment contractors, told Bloomberg that Kabbage didn’t give them any notice, and that they learned their credit lines had been suspended only upon logging into their accounts. Some said they were counting on the money to get through the tough times ahead.
“This is very bad business ethics,” said Joydeep Paul, who runs Medserv Healthcare Solutions LLC, an emergency-medical training company in Princeton, New Jersey. He says his line of credit was cut from $22,000 to $0. “You just turn it off without saying a word — not an email, not a phone call, nothing.”
The irony is that just like countless “genius” investors who rode the biggest fake bull market in history – all on the bank of trillions and trillions in central bank backstops as the latest flurry of Fed actions has confirmed – online lenders spent the past decade touting themselves as the opposite of banks; however as soon as a real downturn hit and the gates came down. As Bloomberg reports, as the coronavirus pandemic ravages cities across the U.S., these nonbank lenders turned to a playbook that banks used during the last financial crisis more than a decade ago: reducing access to credit when the economy is contracting. Other lenders, including On Deck Capital Inc. and Fundbox Inc., have also tightened their underwriting standards or limited lines of credit.
“They’ve left me high and dry when I needed them the most,” Rob Jacques, co-founder of theCodery, a software consulting company in Petaluma, California told Bloomberg. He said he was particularly galled to be cut off without notice because until recently – when times were good – Kabbage called him every day asking him to borrow more money.
Oops.
Atlanta-based Kabbage, which got its start on Shark Tank, said it has loaned more than $9 billion to thousands of small businesses since it was founded in 2009. Ironically, the company now needs to lend money to itself most of all, having furloughed hundreds of its workers this week as it contends with a slowdown in spending at small businesses, which have suffered as consumers nationwide have been ordered to stay inside to slow the spread of the deadly coronavirus pandemic.
But wait, the idiocy get better: Kabbage – having failed at its primary mission of providing funding in times of need instead of cutting lines of credit – is now pivoting to becoming a middleman that will connect people with loans from the Small Business Administration. It has also started a website to help small businesses sell gift certificates to consumers.
One can only imagine just how the company will screw that up.
“Like many other fintechs, we have temporarily adjusted our lines of credit and are focused on supporting the SBA’s Paycheck Protection Program,” Paul Bernardini, a spokesman for Kabbage, said in a statement. By “adjusting” he meant “cut off.”
“Just as manufacturers have retooled their processes to build ventilators and masks, we’re doing the same to reallocate our resources to respond to the national emergency and provide financial products that small businesses need most.”
Rob Frohwein, Kabbage’s chief executive officer, was just a bit more honest in how he defined the company’s “pivot” in an email to employees on Friday, when he said the company would temporarily stop making loans: “As of last night, all lending has been turned off,” Frohwein wrote.
Hey Rob, while you are pivoting, here is an idea for Kabbage’s new motto: “we will give you money when you don’t need it, and cut you off when you need it most.” Catchy, right?
And then there is the old standby: Kantbage.
But wait, it gets better, because the company that gave the world the unbelievable pile of shit known as WeWork is also involved in… Kabbage. That’s right, in 2017 this pathetic excuse for a lender raised $250 million from SoftBank.
And the punchline: other SoftBank Vision Fund portfolio companies – including Indian startup Oyo Hotel, co-working giant WeWork and real estate brokerage Compass – have axed staff in recent weeks.
* * *
However none of this supreme irony is any comfort for those companies which naively entrusted this dog turd with their financial future, and as Bloomberg reports, the credit reductions come at a dire time for restaurants and shops across the country. In normal times, small businesses have about a month of cash on hand, according to a 2016 study by JPMorgan. That means they’re particularly vulnerable as major cities across the country continue to expand shelter-in-place orders.
On Deck began putting holds on customers’ ability to draw on their lines of credit if they hadn’t done so in the last 30 days. Customers affected by the holds have been asked to send the company recent bank statements to have the holds lifted. Jim Larkin, a spokesman for On Deck, said the firm will “continue to serve and support our existing customers and are selectively lending to new customers.”
Fundbox, a venture-capital backed small-business lender based in San Francisco, has also limited some customers’ ability to draw on their credit lines.
“Like many companies that serve small businesses, we’ve had to make changes that have affected some of our customers,” Tim Donovan, a spokesman for Fundbox, said in emailed statement. “While these decisions have not been easy, it will allow us to continue to serve the majority of our small-business customers now and in the future.”
Kabbage customers who called to ask what happened were told that their accounts were under review. An employee at Kabbage, who asked for anonymity to protect their job, said that customer-service agents were instructed not to tell borrowers that the company had suspended credit lines across the board.
Michael Figueroa, a security contractor in Fort Lauderdale, Florida, said the representative he talked with was apologetic. “Hey, I don’t even know if I’m going to be working here tomorrow,” he recalled the agent saying.
* * *
So far it’s only the non-banks that have taken the axe their existing loan commitments. The good news: the banks have so far been resilient and not a single prominent bank has left its clients in the cold. However, with the US economy entering a depression, hundreds of US companies have drawn $300BN just in case it’s only a matter of time before the banks go where the non-banks have so boldly gone in the past few days.
