Category: zerohedge

Authored by Matthew Ehret via The Strategic Culture Foundation,

In my recent paper Why Assume There Will Be a 2020 Election?, I took the opportunity of today’s multifaceted crisis in order to revisit an important Wall Street funded coup d’état effort of 1933-34.

As I explained in that location, this bankers’ coup was luckily exposed by a patriotic general named Smedley Darlington Butler during one of the darkest moments of America and profoundly changed the course of history.

The Deep State Plot Against JFK

The danger of World War and a military coup arose again during the short lived administration of John F. Kennedy who found himself locked in a life or death struggle not with Russia, but with the Military Industrial Complex that had become dominated by the many Dr. Strangeloves of the Joint Chief of Staff and CIA who fanatically believed that America could win a nuclear war with Russia.

Kennedy’s valiant efforts to achieve dialogue with his Soviet counterparts, move towards peace in Vietnam, support of colonial liberation, promotion of space exploration and advocacy of a Nuclear Test Ban treaty made him a target of the Deep State of his time. During this period, this effort was led from the top by JFK’s two most powerful American opponents: Allan Dulles (director of the CIA) and General Lyman Lemnitzer (head of the Joint Chiefs of Staff), both of whom were proponents of pre-emptive nuclear war, architects of the Bay of Pigs regime change trap and advocates of Operation Northwoods (an ultimate “inside job” precursor to 9/11 which JFK subverted).

As historian Anton Chaitkin recently reported:

“Lemnitzer had displayed what his faction viewed as his qualifications for this role back in August 1960, when, as Army chief of staff, he announced that the Army was all ready to “restore order” in the United States after a nuclear war with the Soviet Union—to bring back normalcy just as the military does after a flood or a riot”

This plot was detailed in a quasi-fictional book written by investigative journalists Fletcher Knebel and Charles Bailey published in 1962 entitled Seven Days in May and swiftly made into a famous film with unprecedented support by JFK himself who gave the film crew and director John Frankenheimer full access to the White House, advisors and materials for the film which he believed every American should see.

In the story, a patriotic lieutenant discovers the plans for the coup which is scheduled to take place during a vast military drill whereby a President who is close to finalizing a de-armament treaty with Russia will be incapacitated in a bunker while a military regime takes over America.

Tragically, where the lieutenant is able to expose the plot and save the nation in the story, by the time of the film’s 1964 release, JFK had been deposed by other means.

Now 56 years later, history has begun to repeat itself with distinctly 21st century characteristics… and a viral twist.

 

The Stage is Again Set for Martial Law

Another President resistant to regime change and nuclear confrontation with Russia and China finds himself today in the White House in the form of Donald Trump.

As in 1933, today’s financial collapse threatens to rip the social and economic fabric of America to shreds, and just as in 1963 a powerful military industrial complex and private banking system manages a web of power which is devoted to overturning the 2016 election (and 1776 revolution) by any means.

The biggest difference today is that a global coronavirus pandemic threatens to be the catalyzer used to justify military dictatorship in America and broader nuclear confrontation with Russia and China.

Instead of names like “Dulles”, or “Lemnitzer”, today’s coup directors feature such names as “Pompeo” and “O’Shawnessy”… both Deep State assets highly positioned in 3rd and 4th place to take over the Presidency at the drop of a hat.

Terrence O’Shawnessy: The Man Who Could Be President

Having slipped silently under the radar four weeks ago, the American Government passed a new emergency protocol into law which vastly expands powers and procedures of Martial Law under “Continuity of Government” which must be taken very seriously.

These new protocols deal at length with the triggering of Martial Law should the nation become ungovernable through a variety of foreseeable scenarios that COVID-19 has unleashed, such as “unwanted violence” caused by “food shortage, financial chaos” or also if the President, Vice President and Secretary of State all become incapacitated for any reason.

Even though this act was classified “Above Top Secret” a surprisingly in depth March 18 Newsweek report by William Arkin documented how the “Combat Commander” of U.S. Northern Command (NORTHCOM) will immediately take power as a part of the “Continuity of Government” procedures which took on monstrous dimensions under the control of Dick Cheney in the wake of 9/11. According to Newsweek, the new regulation drafted by the Joint Chiefs states that the military may take control where “duly constituted local authorities are unable to control the situation” even when “authorization by the President is impossible”. Arkin describes the new protocols for “devolving” leadership to second-tier officials in remote and quarantined locations.

General O’Shawnessy, (former Deputy of UN Command in Korea) currently doubles as the head of the North American Aerospace Defense Command (NORAD) and has devoted his past 14 months to the promotion of a military confrontation over the Arctic which he has described as “the new frontline of our homeland defense” against Russia and China who are “determined to exploit the region’s economic and strategic potential”.

NORTHCOM went operational on October 1, 2002 as part of the Neocon takeover of America. This neocon coup which came to full fruition with 9/11 was governed by a manifesto entitled the Project for a New American Century  which laid out a Pax Americana of police state measures at home, regime change abroad and containment of a rising China and Russia under a religious belief in a unipolar world order.

This continental organization interfaces closely with both FEMA and the Department of Homeland Security, and was given a wide jurisdiction embracing not only the USA but also Mexico, Canada, Puerto Rico and the Bahamas, acting as “primary defender of an invasion of America”. NORTHCOM interfaces closely with the deep state by hosting personnel from the FBI, CIA, NSA and Defense Intelligence Agency in its headquarters and is responsible for the protection of the President, Vice President and Secretary of State.

Most recently, RT has reported on March 28 that O’Shawnessy has ordered teams of “essential staff” deep into vast bunkers 650 meters below the surface in Cheyenne Mountain, Colorado to “wait out the COVID-19 crisis”. Announcing this secretive mission, the General tweeted “Our dedicated professionals of the NORAD and NORTHCOM Command and control watch have left their homes, said goodbye to their families and are isolated from everyone to ensure they can stand watch each and every day to defend our homeland.”

Other military personnel have been banned from travelling and commanded to stay near their bases ready for action and as of March 30, over 14 600 National Guard forces have been deployed to all 50 states. Although they cannot currently engage in policing due to the 1878 US Posse Comitatus Act, Martial Law would render that provision null and void.

It is also noteworthy that only one day after the Coronavirus was labelled an “international public health emergency” by the World Health Organization on January 30, Defense Secretary Mark Esper approved nationwide pandemic plans and warned NORTHCOM to “prepare to deploy”.

This author doesn’t believe it to be a coincidence that patriotic voices who would typically be opposed to such a Martial Law agenda have been taken out of public life due to chaos emerging from the Coronavirus with Senator Ron Paul’s March 22 COVID-19 diagnosis forcing him into quarantine and the politically naive Tulsi Gabbard’s dropping out of the presidential race in order “to be prepared for the national guard duties”. It isn’t very hard to imagine a COVID-19 diagnosis, real or fabricated to take the President and other members of the government out of office at a moment’s notice.

Time is running out for America and only bold, decisive action taken courageously and swiftly can change the course of self-annihilation upon which the republic now finds itself.

Presidents Xi Jinping and Putin have opened their arms to welcome America and other western nations into their new multipolar system which is built not upon a worship of money or militarism, but rather cooperation and creative mutual growth. Project Airbridge collaboration between China and the USA has begun as a part of the Health Silk Road bringing millions of medical supplies to America.

Meanwhile a brilliant coalition of former Latin American heads of State called for the creation of a new just economic order and debt jubilee as a response to the failure of the neoliberal system which shines a principled light out of the current threefold danger of economic collapse, war and Martial Law.

Surgeon General Dr. Jerome Adams told NBC‘s “Meet the Press” that next week’s national coronavirus situation would be “our Pearl Harbor moment,” adding “It’s going to be our 9/11 moment.“

Responding to a question on state-specific stay-at-home orders, Adams said “I talked to many of these governors, and here’s what I say to them. Here’s what I would say to them right now. The next week is going to be our Pearl Harbor moment. It’s going to be our 9/11 moment. It’s going to be the hardest moment for many Americans in their entire lives, and we really need to understand that if we want to flatten that curve and get through to the other side, everyone needs to do their part.”

Jerome Adams: Next Week Will Be The Coronavirus “Pearl Harbor, 9/11 Moment” pic.twitter.com/DLeL05lsIZ

— Pitbull (@Willian87420216) April 5, 2020

Adams says that “Ninety percent of Americans are doing their part – even on those states where they haven’t had a shelter-in-place.” He then asked governors to give the Trump administration at least a week – if they can’t give them 30-days, “so we don’t overwhelm our health care systems over this next week,” adding that they would reassess at that point.

“We want everyone to understand; you have to be Rosie the Riveter. You have to do your part.”

Mask-gate…

Adams has also been backpedaling bigly on his February 29th recommendation to “STOP BUYING MASKS” – as he claimed they “are NOT effective in preventing general public from catching #Coronavirus.”

Seriously people- STOP BUYING MASKS!

They are NOT effective in preventing general public from catching #Coronavirus, but if healthcare providers can’t get them to care for sick patients, it puts them and our communities at risk!
https://t.co/UxZRwxxKL9

— U.S. Surgeon General (@Surgeon_General) February 29, 2020

Wrong.

To cover his tracks, Adams told MSNBC “Here’s what’s changed. We now know that, uh, about 25% and some studies even more, of COVID-19 is transmitted when you are asymptomatic or pre-symptomatic.”

WATCH: The U.S. @Surgeon_General says don’t “substitute social distancing with face masks.” #IfItsSunday

Vice Adm. Adams: “We always recommended if people had symptoms they wear a face mask … the CDC has now recommended that people wear cloth face coverings out in public.” pic.twitter.com/eOQazZmOG6

— Meet the Press (@MeetThePress) April 5, 2020

Except we’ve known about asymptomatic transmission since at least January; as we wrote on January 27th: “Incubation is asymptomatic, contagious, and can be as long as 14 days.”

Meanwhile, several counties around the country are now mandating face coverings in public – and the CDC has considered recommending that people wear face masks all the time.

More Adams clips:

WATCH: Vice Admiral Jerome Adams says “we want everyone to act as if they have COVID-19 right now.” #MTP #IfItsSunday@Surgeon_General: “Protect your neighbor, protect your loved ones.” pic.twitter.com/RgBoh6X85y

— Meet the Press (@MeetThePress) April 5, 2020

WATCH: Vice Admiral Jerome Adams says “we want everyone to act as if they have COVID-19 right now.” #MTP #IfItsSunday@Surgeon_General: “Protect your neighbor, protect your loved ones.” pic.twitter.com/RgBoh6X85y

— Meet the Press (@MeetThePress) April 5, 2020

Meanwhile, the latest as of this writing:

Authored by Erica Sandberg via City-Journal.org,

As the United States continues its “pause,” shuttering businesses and public spaces in order to prevent transmission of the coronavirus, residents are compelled to shelter inside their homes. Meantime, those who live on the streets remain outside. San Francisco is well known for its persistent homeless population, made up heavily of drug addicts, the mentally ill, or both. For now, individuals congregate in tents and encampments and drug suppliers continue to deal.

Before Covid-19 struck, San Francisco officials took no meaningful action to address the squalid conditions under which so many homeless people live. They threw money at the problem, but the problem grew. Homeless activists and some city leaders have argued that living on the street is a right, but today it presents a serious public-health dilemma: how will officials get homeless people to comply with social-distancing requirements, and what should they do with those who’ve contracted the virus?

The city is working to set up the Moscone Center as a shelter, a sensible idea. An even better one would be to revive the recently closed California Pacific Medical Center hospital campus and erect MASH-style medical units. These would allow for closely monitored and efficient care. In fact, the city could use this as an opportunity to provide intensive integrated treatment, including substance-abuse services.

Instead, Mayor London Breed and the Human Services Agency came up with the plan to route over 3,000 people currently living in shelters and navigation centers into hotels.

The city is planning to put thousands of physically and psychologically sick people into private hotel rooms, in some of the most luxurious hotels in San Francisco—the InterContinental, Mark Hopkins, and The Palace. Occupants would receive three meals per day, hygiene products, and access to nurses.

At first glance, the plan appears sensible.

The shutdown has devastated the hospitality industry, and hotels stand empty. Filling rooms with guests of any kind is attractive for hotel owners, especially since tax dollars will foot nearly all of the bill.

On closer examination, however, serious problems emerge.

According to Matt Haney, a city supervisor actively promoting the proposal, occupants would be quarantined to their assigned rooms and be required to follow strict rules. But many of these future luxury hotel guests are hardcore drug addicts. How will the city manage their drug needs in the midst of a pandemic?

Haney concedes that intravenous drug use presents a major challenge to the city’s plan. It’s likely, for instance, that many guests will overdose in their rooms.

Others may detox, alone and in agony. Providing addicts with access to maintenance medication such as Suboxone or methadone is a good idea, Haney says, yet these treatments require precise administration. No one has figured out the logistics of providing drug treatment to thousands of addicted residents who may not be interested in receiving it.

Additionally, if the hotels are quarantined, and drug dealers aren’t allowed in, what will prevent the contagious residents from leaving to score the substances they seek? As cravings intensify, violence may erupt that can put hotel staff and other occupants at risk. Armed security guards patrolling the halls and buildings might be required to keep the right people in and the wrong people out. Could the police be expected to maintain order and prevent antisocial drug addicts from leaving their rooms? Apparently the city will offer some type of case management, but there’s already a dearth of needed homeless services, including high-quality psychiatric care. Treating this service-resistant population is challenging under the best circumstances. “It’s not going to be a perfect system,” says Haney.

There’s also no exit plan. A four-month contract for the room occupants is being considered, but where all these people will go afterward is undetermined. California law stipulates that a person lodging in a hotel room for longer than 30 days is considered a tenant. Therefore, thousands of homeless people who have stayed in the posh hotels would become legal permanent residents, with protections against eviction.

Even Haney acknowledges the problem.

“The city should make it clear that they would not be considered tenants,” he says.

“It needs to be temporary. Once the emergency is over, they should leave.”

Yet sending people back onto the streets will surely be met with resistance from homeless-rights activists, some government officials, and the homeless themselves. Who would want to pack up and move from The Palace, after all?

Few of the city’s decision-makers are looking at the long-term effects of placing sick, drug-addicted homeless people into hotel rooms.

Once again, San Francisco is ignoring the law of unintended consequences.

President Trump just announced that Sunday’s White House Task Force press briefing will begin at 6:45pmET.

Notably, it’s slated to begin 45 minutes (likely closer to an hour) after futures open. What does that tell you?

The evolution of panic hoarding started with 3M N95 masks, then hand sanitizers, non-perishable foods, guns and ammo, and now cash?

A video surfaced on Instagram on Saturday, showing a possible bank run in Baltimore City at the MECU Credit Union, located at 2337 E Northern Pkwy.  

The area is considered low/middle class working families (predominantly African American community). The video shows a large line of cars on Saturday afternoon and a line at the ATM. People weren’t cashing in their paychecks because many people were laid off, as we noted, more than 14 million people in the last several weeks have lost their jobs across the county, and what we could be looking at is the beginnings of a bank run.

“As soon as the National Guard rolled into Baltimore City – many folks asked themselves – is this a revisit of the Freddy Gray unrest back in 2015,” said Teresa Davis, owner and operator of Teresa Davis Productions.

Davis said for weeks the National Guard had staged military tent cities across the Baltimore–Washington metropolitan area. She said military Humvees had been spotted in East Baltimore (down the street from MECU bank), more specifically on East Monument Street, near the Johns Hopkins Hospital, which she adds is a low-income/high-crime area.

She said the last time Humvees were spotted on East Monument Street was back during the 2015 riots.

Davis said residents had concerns that military vehicles on the streets could suggest that social unrest is nearing. She said, “you know it is kind of weird, everyone just lost their jobs, people are freaking out, and now people are storming the bank.”

“How are they going to pay their bills that are still mounting? How are they going to feed their families,” she said. 

Davis said residents are going to the local banks because they fear banks are going to fail, and unrest could be nearing.

“They want their monies out,” Davis said, adding that some people in the community have been watching their 401ks crash, and others have been watching the news that a recession could be imminent.

Last month, the smart money in Mid-Town Manhattan and Hamptons were withdrawing as much cash as they could, with at least one bank running out of $100 bills.

Several weeks ago, we noted that the FDIC made an unusual request to all Americans to keep their monies in the bank because it is safe…

“Your money is safe at the banks. The last thing you should be doing is pulling your money out of the banks thinking it’s going to be safer somewhere else.”

The chart below shows the surge in demand for cash by Americans at the moment has surpassed all of 2008, and about to rival the panic ahead of Y2K that ATMs would not function…

“Here we go again,” Davis said, referring to the possibility that social unrest like the 2015 riots could be nearing. She said there’s certainly a different dynamic at play today, back then, thousands of people didn’t lose their jobs all at once – it was years of wealth, health, and education inequality, on top of the trigger: Freddy Gray’s death, that brought people into the streets. Now today, “social unrest could be more explosive.”

Crude prices are plunging early in Asian trading with Brent down 12% following a delay to the much-hoped-for OPEC+ meeting (due tomorrow, Monday, but now pushed off until Thursday).

 

As Ransquawk details, an OPEC+ call that was scheduled for Monday has been delayed until Thursday, amid an intensifying dispute between Russia and Saudi Arabia over who is to blame for falling crude prices. Participants are to discuss the demand hit to crude from COVID-19. Analysts do not seem to be convinced that the group will make sufficient progress; the Saudis and Russia have called for other global producers – namely US, Canada and Mexico – to share the burden of cuts, while Norway has also said it would consider cutting production in any coordinated global effort.

LEVEL OF CUTS: Ahead of the now notorious March OPEC meeting, there was a recommendation to cut an additional 1.5mln BPD from April 2020 through the end of 2020, with a review in June. The deal was conditional on support from OPEC+, and OPEC said any deal could only be applied on a pro-rata basis, and proposed core members cut by 1mln BPD, and non-OPEC by 500k. Ahead of Thursday’s meeting, a figure of 10mln BPD cut to output has been floated (around 10% of global supply), although following a call with Saudi Arabia, US President Trump last week indicated that it could be as much as 15mln BPD. A source has suggested that the 10mln should be slashed from current levels of output. Either way, Goldman Sachs thinks that the demand hit might actually be more like 26mln BPD, and a cut of 10mln BPD may prove to be insufficient.

TEXAS: The Trump administration has previously signalled it would not impose mandatory curbs on companies’ production, given the antitrust legislation, although Stratfor’s analysts note that Texas, where field production was running at a pace of 5.37mln BPD at the end of 2019, does have the legal framework to be able do so at a state level. One of the three Texas Railroad Commission members, Ryan Sitton, has indicated a willingness to agree production cuts to support oil prices and prevent producers in the state going bust. Texas regulators are to meet on 14th April to discuss production curbs in the state, and may vote on any resolution a week later, Reuters reported. Sitton, however, is a lame duck on the Commission, having lost in the March primary to a challenger, and his term concludes in December; the state’s two other regulators, Wayne Christian and Christi Craddick, have not publicly endorsed cuts. Meanwhile, US President Trump on the weekend said he was considering slapping tariffs on oil imports, or even take other such measures, in order to protect the US energy sector from falling oil prices; Canada is reportedly also mulling such steps. This follows calls by leading lawmakers in recent weeks for such action. For reference, the US imports of petroleum were around 9.1mln BPD in 2019, of which Saudi and Russian imports were just over 500k each.

WHAT TO WATCH: Talk of further production cuts was supportive for crude prices last week, and were participants not able to strike a deal, oil could again find itself under pressure. In terms the signposts to watch, Stratfor suggests monitoring Saudi willingness to go back to letting Russia cut a much smaller amount, or an openness to a Texas-only US commitment. “In any case, a deal keeping Brent above USD 30/bbl does not seem the most likely outcome,” it said. Additionally, others have noted that Saudi Arabia delayed publishing its official selling prices for May until 10th April (a day after the call), an unprecedented measure to allow stakeholders more time to reach a deal ahead of Thursday’s call, a source said; the data was due to be published on Sunday, and it will this week be useful in corroborating how the meeting really went.

“The sense of urgency is building,” said Jason Bordoff, a former Obama administration energy adviser and the founding director of Columbia University’s Center on Global Energy Policy.

“Nobody wants to be seen to blink first in this game of oil-price-war chicken…but I don’t think anyone — including the Saudis and the Russians — is happy with how the oil market looks right now.”

*  *  *

Interestingly, the collapse in crude did not do anything to stall the equity algos which purportedly saw hope in some slowing accelerations in body counts and decided it was time to buy the dip…

Shawn Reynolds, portfolio manager for investment firm VanEck’s natural-resources equity strategies, said he isn’t ready to boost his holdings of energy assets. He has slashed his investments in the sector to the smallest allocation he has ever had.

“Just to stop the carnage, you want to see some rationality brought back to the market,” he said.

“Everybody is just getting killed.”

Mr. Reynolds said he wants to see clarity on the pandemic and more details on supply curbs before he even considers increasing it again.

Authored by Mark Jeftovic via Guerilla-Capitalism.com,

This is the second instalment of The Jackpot Chronicles: Four Possible Post-Coronavirus Scenarios.

Force Majeure means:

a chance occurrence or superior force that renders a contract unenforceable and frees all parties from their obligations under it.

We are frequently told that there exists some manner of “Social Contract” to which we are implicitly bound by virtue of being alive. This implied Social Contract confers legitimacy upon the institutions that order our world, the national governments, the central banks, the miltary and police. And by extension certain communication outlets and media are endowed with a status of official curators over the narratives around institutional power.

Under the Force Majeure Scenario, the first of four possible Coronavirus aftermaths posited in “Welcome to the Jackpot”, the overwhelming or superior force is not the pandemic itself, but rather the collapse of the debt supercycle, the monetary system that derives from it, and the structure of nation states that are burgeoned by it.

The last time we were here, when a systemic crisis has shaken the foundation of the social order, the policy response was favourable to one party of the social contract at the expense of the others.

The GFC, which I now call GFC 1.0 or GFC ‘08, saw the financialized class, those closest to the monetary spigots of the Central Banks enjoy accelerating prosperity as their asset values rose, whilst the rest of the population endured stagnation and a steadily increasing cost-of-living (which mainstream commentators refused to acknowledge as inflation).

The policy response from the last crisis has led us directly, in a straight line to this one. The only surprise being the exact nature of the catalyst which would pop the Everything Bubble, and perhaps the ferocity with which the air began to let out once it did.

The signs were certainly there that we were nearing some kind of archetypical “shoeshine boy”moment or phenomenon. Complacency in passive investing, extreme overabundance in the unicorn population, the fact that there exists (existed) an entire industry around arbitraging long term leases with short term rentals via AirBnB, there was a sense of Roaring 20’s around it all and all those vile contrarians were wondering “just how long can this go on?”

Stacking additional layers of arbitrage, using leverage, atop a unicorn, could only occur at or near the peak of an Everything Bubble

Under Force Majeure the public begins to understand that the people who populate institutions are just that, people. Despite specialized training perhaps, they are not endowed with any superhuman intellect or wisdom. Success within the matrix of the institutional elite comes from proxemics and adroitly navigating the system itself, not much more.

“An era can be considered over when its basic illusions have been exhausted”

– Arthur Miller

An era like this comes to an end when the public realizes that their betters aren’t intellectually superior but rather institutionally privileged. Now facing an existential crisis of their own making, they are completely out of touch with the public mind and out of their depth to deal with it.

Then The System Finally Comes Unglued. Now what?

The central banks and national governments have fired their bazookas in unison yet despite a typical relief rally in the form of a standard issue dead cat bounce, reality continues to insist on asserting itself. On a recent Jelly Donuts podcast, Grant Williams talks about forthcoming GDP numbers coming off 30% “truly apocalyptic”.

Yet, the incumbent institutional custodians will continue to deny reality and to discredit themselves, what will it look like then the populace comes to realize that the old social order, and the institutions that curate it are being deprecated?

Breaking: A new bull market has begun. The Dow has rallied more than 20% since hitting a low three days ago, ending the shortest bear market ever. https://t.co/06YS0XqWGP

— The Wall Street Journal (@WSJ) March 26, 2020

Ontario Premier Doug Ford recently advised citizens who couldn’t pay their looming rent bills at the first of the month to simply “not pay”. He later tried walking that back, but when this sentiment gets writ large, with governments printing money and sending out cheques, what happens when people and businesses simply decide not to pay their taxes either?

Can political leaders say, with a straight face, that citizens should stiff their landlords or mortgage lenders but not the State?

And if the State can simply print up money and send out cheques, why do we need taxes anyway? Have we arrived at full MMT?

All of the central bank and fiscal stimulus portends a secular shift from deflation to inflation and I don’t think very many people understand what that means.
It means a whole lot of broken clocks are gonna be right for once, but at a time it counts the most.

Twitter financial commentator and humorist @RudyHavenstein nails it…

Now, every company that levered up on debt to buy back their own shares over the last 10 years wants a bailout. Grant Williams points out in Things That Make You Go Hymm that the airline industry spent 47B on buybacks since 2010, they want a 50B bailout.

Source: Grant Williams, Things That Make You Go Hymm March 22/2020

What the chart, right, doesn’t show is the total dollar amount spent by the airlines on buying back their own shares between 2010 and 2019.

That number is $47.3 billion (of which American Airlines – whose negative cumulative free cash flow between those dates was $7.9 bln – contributed $13 bln).

Even the private jet industry wants a bailout.

And what will public citizens get? Those whose businesses have been ordered to close, whose jobs have already been lost? They’ll get a check for $1,200, or a tax deferral until August. Bfd.

Charles Hugh Smith’s books speak a lot about this type of secular wane in institutional relevancy, which we discussed on our podcast once and it bears repeating here:

MJ: when I look at  Pathfinding [Our Destiny] like part seven where where we’re talking about what the way forward looks like, that it’s outside of the control of the of the establishment, that it’s outside of the system I get this sense that for society to flourish and adapt around this and evolve. I guess that’s the key word, we’re going do this around the institutionalized hierarchies.

They’re not going to get religion one day, we’re not going to elect the right candidate, we’re not going to have the right party gain power that’s suddenly going to say “I read this great book by Charles Hugh Smith and this is how we’re going to do it”.

It’s going to be something like institutionalized hierarchies will just lose more and more relevance as these new social and business and financial configurations start gaining more and more relevance.

CHS: That’s an excellent point and I think if anything I didn’t emphasize that enough. That really what we’re talking about is kind of like hacking the system in in the old time sense that a hack was a workaround. It wasn’t like you were breaking into the system to steal something, you’d created a workaround for a kludgy system that just didn’t work anymore.

And so I think you’re absolutely right, it’s going to be working around us and and Bitcoin is one example of how workarounds are manifesting and of course the status quo is going try to suppress those and/or co-opt them but what we’re really talking about is when systems fail at a systemic level you can’t reform them. You’re not going to make a policy tweak that’s going to fix higher education or the health care system. It just isn’t going work.

People are going to start working around that and they’re going be starting to pay cash for for medical care from pop up providers or remote physicians. Or there’s lots of different solutions to that in education. What I see the model that’s going to emerge whether people like it or not and is that students are going to start taking control of their own education and they’re going start organizing their own education.

They don’t need this bloated structure that charges them $70,000 a year and so that’s where technology, the internet and networking has really enabled a whole suite of solutions that basically bypass all the institutions that now hold the wealth and power, that have all this as you say institutionalized lethargy as as their their model.

It’s actually quite an exciting time but for those who are dependent on the system within these institutions it’s a very disturbing time

Under Force Majeure as the institutions become understood to be out of touch with both the causes and remedies to the immediate crisis, they begin to signal their own hypocrisy and irrelevancy more intensely.

It will not be long before citizens will face the dilemma of continuing to observe the edicts of their governments, whose policies inexorably stripped them of their ability to weather any kind of economic speed bump. They will come to realize that despite what the government decrees, especially if that means keeping their businesses closed or their jobs on hold for much longer, they may be better off working around that.

That’s when myriad alternative economies and ecosystems will explode, black markets, grey markets, Local Exchange Currencies, private blockchains, invisible agoras.

As governments at all levels teeter on insolvency and their ability to control their own populace everywhere or to be in a position to guarantee security and order, I could envision neighbourhood watch groups morphing into localized militias. I would anticipate an explosion in private security and ex-military contractors.

Don’t be surprised to see Facebook resurrect their Libra, either under that monicker or some rebranded version as the large corporations, the ones that have revenues larger than most national GDPs begin to reassert some of their plans which may have been impeded earlier.

However it plays out, the key points to bear in mind are that:

• It would be a mistake to think of the next 20 years as a linear, albeit accelerated version of the previous 20 years (a la Chris Martenson)

• We are about to undergo a change in secularity from deflation to inflation (a la Grant Williams, Peter Schiff and many others)

• The incumbent institutions of the fiat currency era are about to be swept away, akin to the way the royal houses of Europe were after World War 1 (the last major “Force Majeure” transition period that comes to mind for me).

It will all be very reminiscent of Neal Stephenson’s “Snow Crash”

With most of the developed world on lockdown, and markets and economies paralyzed until there is a material decline in new coronavirus cases, i.e., until we slide “over the hump” of the coronavirus curve, the biggest question – and variable – in assessing the economic damage unleashed by the covid-19 virus is the length of the lockdowns now in force, with Deutsche Bank’s Luke Templeman pointing out that “politicians and health officials have discussed dates ranging anywhere from weeks to over a year.”

In an attempt to answer this most important for capital markets question, namely when will the civic and economic restrictions begin to be lifted in various key countries, Deutsche Bank provides some estimates largely based on the experience of the lockdown and reopening in China’s Hubei province.

Using the “Chinese” experience as indicative of what other countries can achieve, recent studies have confirmed that after implementing various suppression measures, several large countries “appear to be converging onto the decline in the daily growth rate of deaths” seen in China. An Imperial College study in particular pointed out that the overall number of deaths in other countries could be between two and eight times the number of deaths as in China.

As DB notes, one way to look at how other countries are converging on the experience in Hubei province, China is shown in the following chart. As the German bank explains,  it uses “a three-day comparison in order to filter out the noise from sudden jumps and drops when figures were relatively small. We also start each time series at the point at which restrictions were introduced to attempt a closer comparison. We then show all the countries individually against the Hubei experience.”

With that in mind, here’s China:

… and the rest of the countries that have reported the most fatalities to date:

Looking at the charts above, at first glance it appears that the growth rate in the number of fatalities in Hubei province is falling faster than that in other countries. This is true, however, according to DB it does not invalidate the comparison of Hubei with other countries. That is because Hubei implemented restrictions earlier in the process of infection than did some other countries with the US being the laggard. There is also that fact that, whether anyone wants to admit it or not, China’s data has been chronically fabricated and the Wuhan baseline is at best a stylized interpolation of what Beijing wants the world to see even as it continues “one of the worst coverups in human history.”

That said, one must also add to this is the fact that the six other countries examined here have a greater proportion of people in the population that classify as high risk (primarily the elderly). As such, it is not unexpected that the fatality growth curves of these six countries initially lagged that of Hubei.

Despite all these complicating circumstances, a comparison with the Hubei experience is still worth examination. While it is early days, most of the charts indicate each country’s fatality trajectory are now converging (in different stages) with that of Hubei.

There are certainly outliers. For instance, Germany still has a relatively low number of deaths which has made the calculations swing considerably. Meanwhile, the US still shows a fatality growth rate that is not on an obviously downwards trajectory. Still, it must be noted that there can be a 14-day lag between restrictions and outcomes, and President Trump only urged social distancing on 16 March (while our time series starts at 12 March when New York implemented restrictions). Coupled with this, different states in the US have implemented restrictions at different times. Despite this, the Imperial study mentioned earlier specifically indicated that the US began to show convergence with China last week now that many states have implemented lockdowns.

In summary, extrapolating the Hubei experience of lockdown and the beginning of lifting restrictions gives us an indication of when other economies can be reopened even if the timing is unlikely to exactly match.

When will restrictions be lifted?

So with a whole host of caveats, the following chart from DB shows a ‘football field’ representation of the range of possible timelines for the restart of activity in several countries. It includes the current period of lockdowns and the projected time line based on extrapolating the Chinese response. It is likely these countries will begin to loosen restrictions within the range based on the Hubei experience (light blue bar).

To be sure, the decision to relax restrictions depends very heavily on how the epidemic curve in each country progresses. This progression reflects decisions made up to 14 days earlier given the likely incubation period of the virus. In Hubei, the three-day growth rate in new cases decreased from over 200 per cent to 63 per cent in the 14 days after restrictions were put in place. Ultimately, it was 63 days after the restrictions were put in place until they were lifted.

The following table summarizes the potential dates that restrictions on civic and economic activity could end in various key countries.

Here one more caveat: as a reminder, the focus of impact in China was different from that of other countries. China managed to implement restrictions on Hubei that kept the majority of the impact inside the province by effectively streamrolling over the civic liberties of millions of people, something most democratic countries are unable to do with the stroke of a pen the same way Beijing did. Additionally, many other countries have seen the virus enter their borders via different channels – some of which have yet to be confirmed – which can and will change the timeline for the breadth of the spread. Finally, political pressure from different groups in western countries may result in pressure to reopen earlier than the Hubei timeline.

That said, as JPMorgan observed on Friday, with every passing day the list of countries in the “late accumulation” phase are getting closer to the curve apex after, at least in theory, follows a recovery.

That said, if governments rush to reopen economies, if new clusters re-emerge, or if the virus mutates rendering any existing antibodies within the population irrelevant, the whole process begins from square one.

Unfortunately for Europe which was already on the verge of recession well before the Coronavirus breakout, waiting patiently is a luxury the continent can not afford, and as the FT reports today, “governments across Europe have begun preparations to ease the lockdowns imposed across much of the continent to contain the coronavirus pandemic, even if restrictions that have paralyzed the economy are expected to remain in force for several more weeks.”

In short, Europe is preparing to become China, which after an initial period of aggressive quarantines, forced the entire nation back into the office even though new cases continue to flare up and a second cluster now appears to have emerged.

France, Spain, Belgium and Finland are among many countries that have set up expert committees to examine a gradual easing of stay-at-home orders for some businesses and schools while avoiding a second wave of infections that could overwhelm health services.

Pedro Sánchez, the Spanish prime minister, on Saturday extended the shutdown of his country for another two weeks until April 26 but he said a ban imposed last month on all non-essential work including manufacturing and construction would be lifted after Easter.

“When we have the [infection] curve under control, we will shift towards a new normality and towards the reconstruction of our economy,” Mr Sánchez added. “A specific team of epidemiologists has been working for two weeks now on a plan to restart economic and social activity.”

Angelo Borrelli, head of Italy’s Civil Protection Agency which is in charge of co-ordinating the national response to the  outbreak, suggested a “phase two” of the country’s lockdown could begin next month: “I don’t want to give dates, but between now and May 16 we may have further positive data that suggests we can resume activities and then start phase two,” he said.

Édouard Philippe, the French premier, said last week that the process of “deconfinement” had no precedent and would be “fearsomely complex”, adding: “We are probably not heading for a deconfinement that would be absolute everywhere for everyone.”

Denmark, which was one of the first countries in Europe to shut down activity and close its borders, last week became the first to put a timetable on the loosening of restrictions: “If we Danes for the next two weeks — beyond Easter — continue to stand together, at a distance, and if the numbers remain stable and reasonable, then the government will begin a gradual, quiet and controlled opening of our society again,” Prime Minister Mette Frederiksen said on March 30.

Germany, where the daily rate of confirmed coronavirus cases and deaths has risen in recent days, has also begun preparing what one official called a “phase-out” that would be “acceptable in terms of health policy”. “But we’ve been careful about what we say in public,” he added.

“The important message now is: we are not in a phase of the pandemic where we can tell people the measures can now be relaxed,” Steffen Seibert, spokesman for German chancellor Angela Merkel, said on Friday. “Of course you can prepare for that mentally, but for the moment it’s this [stay-at-home] message that matters.”

Few other governments are willing to put a timescale on the loosening of restrictions not least because, according to most experts, it will require a massive increase in testing capacity. Many also worry about undermining the stay-at-home message with the onset of the Easter holidays and warmer weather and with populations already chafing at weeks of confinement and the loss of earnings.

Meanwhile, experts warn it is a big mistake for governments not to engage the public in a debate about loosening restrictions: “Although it is clear we cannot talk about when the opening up will take place, we can talk about how,” said Christiane Woopen, professor at the University of Cologne’s Center for Ethics, Rights, Economics, and Social Sciences of Health and a scientific adviser to the government of North Rhine-Westphalia, Germany’s most populous region.

“The public deserve it. They are taking a lot of hardship. They have to trust what political leaders are doing in the next months.

And then there is the worst case scenario: prof Woopen is one of a dozen academics — epidemiologists, physicians, lawyers and economists — who published a report last Friday for the Munich-based Ifo economics institute. The report is an attempt to frame what Prof Woopen calls an “opening strategy, not an exit strategy”, since there is unlikely to be any return to normality before a reliable vaccine against Covid-19 becomes widely available, which appears to be at least a year away.

Finally, even if Deutsche Bank is right and the lockdowns are lifted some time in late May/early June, any loosening of restrictions would have to be accompanied by a ramping up of testing, said Martin Lohse, professor of pharmacology at the University of Würzburg, and another of the Ifo report’s authors.

Even Germany’s extensive testing – it was conducting 50,000 a day last week – is insufficient given its population of 80m, he said. Antibody testing would also be indispensable even if none of the tests being trialled around the world was so far deemed accurate enough. And governments needed to boost production of protective equipment as the wearing of face masks becomes more widespread. France for example is now considering making face masks mandatory in public.

More rigorous contact tracing and tracking via mobile phone apps, would also be essential, Prof Lohse added.

In short, a reopening of the economy would likely entail the introduction of a smartphone based “bio-passport”, where any person who wishes to “reenter society” will have to not only undergo some form of daily testing to confirm they are virus free, but also effectively hand over most if not all privacy to the government. Needless to say, the long-term sociological consequences of such a collectivization of private information will be unlike anything seen in recent history.

Last month, Dr. Fauci insisted at a White House task force press briefing that there was no evidence that pets were vulnerable to the novel coronavirus. Then scientists in Belgium and Hong Kong confirmed that they had found pet cats owned by people infected with the virus that had somehow caught it, as evidence was detected in their urine. At least pet dog has also been infected.

As CNN so aptly points out, the “weak positives” produced in tests of these animals haven’t offered any reason for scientists to suspect that these animals could infect humans – only that these pets could be infected by humans, as humans were once, in turn, infected by animals.

No article that we’ve seen in the mainstream US press has offered a detailed explanation for the scientific community’s reasoning in thinking that these tests suggest that pets can’t infect humans. But while CNN and others have reveled in mocking alarmists who believed in this Internet ‘conspiracy theory’, they neglected to explain that there are two critical reasons for this: the first being that dogs and cats infected in past coronavirus outbreaks (namely, the SARS outbreak in 2002-2003) have shown that the strains they typically pick up don’t cause respiratory problems. Have we confirmed the same is true for the novel coronavirus? No.

The second is that they haven’t found enough examples, and investigators tracing cases haven’t found a case yet where it’s obvious that a pet infected a human.

Still, the World Organization For Animal Health warns that pets who test positive should be quarantined, and any humans who interact with them should wash and sanitize.

But we digress.

We bring up all of this because a few hours ago, the management at the Bronx Zoo learned that Nadia, a 4-year-old Malayan tiger, has tested positive for the coronavirus, according to statements from the U.S. Department of Agriculture and the Wildlife Conservation Society, which manages the New York City zoo.

The tiger is believed to have contracted the virus from an asymptomatic zookeeper. The Bronx Zoo closed to the public in mid-March, and the tiger that tested positive began showing symptoms on March 27.

Right now, millions of New Yorkers are probably wondering how this tiger managed to get a test before their friend/brother/sister/mother/father/grandfather/aunt/etc.

 

 

Authored by Cyril Widdershoven via OilPrice.com,

The current optimism of analysts and the media that an end to the ongoing OPEC+ oil price spat is near is entirely unjustified.

The ongoing oil market volatility, the battle between leading producers for market share, the logistical impossibility of enforcing U.S. production cuts, and the continued demand destruction caused by COVID-19 are not issues that can be solved by an OPEC meeting.

Immediately after Trump’s latest OPEC twitter offensive, Saudi Arabia and Russia came out with critical statements about the impact and influence of the US president on the matter. While Putin and Mohammed bin Salman are reluctant to bash Trump, the real power when it comes to the oil market does not lie with the U.S. President.

The tweet by Trump claiming that MBS and Putin would agree to a 10+ million bpd production cut shows not only his overestimation of his own power over the two countries, but also shows a lack of knowledge about the underlying market fundamentals and the current demand destruction worldwide.  As former US president George W. Bush stated during his election campaign, which did not end well as we know, “it’s the economy stupid” that matters in the end.

Trump’s tweets and general approach to this matter suggests he and his administration are out of touch with reality.

Even if a Saudi-Russian combination would cut 10 million bpd, the oil price reaction would be minimal and very short-lived. At present, leading oil market experts such as Vitol, Trafigura and Goldman Sachs are warning of a total demand destruction of 20 million bpd or more. When looking at the cuts in global refinery runs, we have already hit levels of -17 million bpd or more. Downstream companies are cutting back on all production as demand from industry and consumers worldwide collapses. Lockdowns in more than half the world are having a major impact, hurting demand for oil, gas and other kinds of energy. Cutting 10+ million bpd of production is not a real solution and it could even cause markets to react negatively.

When production cuts fail to send oil prices up, the fear in the market could hit historical highs, causing oil prices to fall to levels below $10 per barrel in the coming weeks.

The upcoming “OPEC+ and Friends” meeting is going to be a very tricky one.

There is the very real possibility of the meeting failing as the targets that have been set are totally unclear. Saudi Arabia, probably supported by Abu Dhabi, called an emergency meeting, not only of OPEC+ members but of all oil-producing nations. That means that, at least according to Western media, the US is invited and will likely attend. In inviting the U.S., it seems that Saudi Arabia has called Trump’s bluff because by attending the meeting Washington will be implicitly stating that a possible production cut agreement would include the US. When looking at the US upstream oil and gas sector there is one thing you can state without any analysis….Washington and US oil and gas operators are not on the same page.

Suggestions of Washington being able to control or even force US oil to cut production, even via legislation, are ludicrous and would end in a mammoth legal battle. Even if only Texas representatives attend, oil companies will be unlikely to comply, it is simply not in the US oil and gas DNA to work together on an international level. Free market economics is a cornerstone of U.S. society and business.

The second major threat at the Monday meeting is that Saudi Arabia not appear to be at all convinced that it needs to change its current tactics. Its targeted goals of regaining market share, forcing Russia to come to the table and bringing non-OPEC producers such as U.S. shale to their knees are working well. Several Saudi officials have stated that they are willing to discuss a new agreement but only under the conditions that potential production cuts will be on the shoulders of all, not only Saudi Arabia, Russia, and UAE. In this light – Trump’s demand for a more than 10 million bpd cut from Russia and Saudi Arabia is unrealistic, to say the least.

Russia’s position has, until now, remained unclear. While Putin is still acting as though he has nothing to worry about, Russian oligarchs and the Russian leader are happy to debate any options that are on the table. For Russia, the current position taken by Trump is being seen as an opportunity to get some gifts from the U.S. very soon. Russia might consider cooperation with the U.S. if Washington agrees to bring an end to Russian sanctions. But that is not as important to Moscow as a strong relationship with Riyadh and OPEC going forward. Future opportunities with Saudi Arabia are more attractive to Putin than a positive relationship with a President that may not be re-elected this year. 

While all eyes will be on Washington, Riyadh, and Moscow in the coming day, there is a fourth group that is going to be vital at Monday’s meeting.

In order to reach a 10 million bpd cut, OPEC will have to convince all other oil-producing countries to contribute. At present, convincing such a large list of independent nations to join these efforts seems unrealistic. Countries such as Libya, Iran, Iraq, Brazil, and Canada, are unlikely to agree at present to cut production.

This is yet another reason that the OPEC meeting will likely fail on Monday.

The real fear for markets at the moment should be sentiment and expectation. After Trump’s tweet cited a 10-15 million barrel per day cut, oil prices have soared and anything less than that will be seen as a failure. After what is looking set to be a fairly quiet weekend for energy markets, a Monday failure with plenty of media attention is likely to drive markets into a frenzy. This fear, combined with continued demand destruction could serve as a serious problem for oil markets next week. 

With this in mind, the rational short-term approach of OPEC+ should be, especially for Riyadh and Moscow, to not move at all. Don’t increase production, stand on the quay and watch the US shale and non-OPEC VLCCs fill oil storage to the brim. If OPEC+ cuts without the assistance of other nations it will lose future leverage and markets may crash anyway.  By doing nothing, Saudi Arabia and Russia can maintain the illusion that a production cut from OPEC+ would save markets.