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Authored by Pepe Escobar via The Saker blog,

Hybrid War 2.0 on China, a bipartisan U.S. operation, is already reaching fever pitch.

Its 24/7 full spectrum infowar arm blames China for everything coronavirus-related – doubling as a diversionist tactic against any informed criticism of woeful American unpreparedness.

Hysteria predictably reigns. And this is just the beginning.

A deluge of lawsuits is imminent – such as the one in the Southern District of Florida entered by Berman Law Group (linked to the Democrats) and Lucas-Compton (linked to the Republicans). In a nutshell: China has to shell out tons of cash. To the tune of at least $1.2 trillion, which happens to be – by surrealist irony – the amount of U.S. Treasury bills held by Beijing, all the way to $20 trillion, claimed by a lawsuit in Texas.

The prosecution’s case, as Scott Ritter memorably reminded us, is straight out of Monty Python. It works exactly like this:

“If she weighs the same as a duck…

…she’s made of wood!”

“And therefore…”

“A witch!!!!!”

In Hybrid War 2.0 terms, the current CIA-style narrative translates as evil China never telling us, the civilized West, there was a terrible new virus around. If they did, we would have had time to prepare.

And yet they lied and cheated – by the way, trademark CIA traits, according to Mike “We Lie, We Cheat, We Steal” Pompeo himself. And they hid everything. And they censored the truth. So they wanted to infect us all. Now they have to pay for all the economic and financial damage we are suffering, and for all our dead people. It’s China’s fault.

All this sound and fury forces us to refocus back to late 2019 to check out what U.S. intel really knew then about what would later be identified as Sars-Cov-2.

“No such product exists”

The gold standard remains the ABC News report according to which intel collected in November 2019 by the National Center for Medical Intelligence (NCMI), a subsidiary of the Pentagon’s Defense Intelligence Agency (DIA), was already warning about a new virulent contagion getting out of hand in Wuhan, based on “detailed analysis of intercepted communications and satellite imagery”.

An unnamed source told ABC, “analysts concluded it could be a cataclysmic event”, adding the intel was “briefed multiple times” to the DIA, the Pentagon’s Joint Chiefs of Staff, and even the White House.

No wonder the Pentagon was forced to issue the proverbial denial – in Pentagonese, via one Col. R. Shane Day, the director of the DIA’s NCMI:

“In the interest of transparency during this current public health crisis, we can confirm that media reporting about the existence/release of a National Center for Medical Intelligence Coronavirus-related product/assessment in November of 2019 is not correct. No such NCMI product exists.”

Well, if such “product” existed, Pentagon head and former Raytheon lobbyist Mark Esper would be very much in the loop. He was duly questioned about it by ABC’s George Stephanopoulos.

Question: “Did the Pentagon receive an intelligence assessment on COVID in China last November from the National Center for Medical Intelligence of DIA?”

Esper: “Oh, I can’t recall, George,” (…) “But, we have many people who watch this closely.”

Question: “This assessment was done in November, and it was briefed to the NSC in early December to assess the impact on military readiness, which, of course, would make it important to you, and the possible spread in the United States. So, you would have known if there was a brief to the National Security Council in December, wouldn’t you?”

Esper: “Yes (…) “I’m not aware of that.”

So “no such product exists” then? Is it a fake? Is it a Deep State/CIA concoction to trap Trump? Or are the usual suspects lying, trademark CIA style?

Let’s review some essential background.

On November 12, a married couple from Inner Mongolia was admitted to a Beijing hospital, seeking treatment for pneumonic plague.

The Chinese CDC, on Weibo – the Chinese Twitter – told public opinion that the chances of this being a new plague were “extremely low.” The couple was quarantined.

Four days later, a third case of pneumonic plague was identified: a man also from Inner Mongolia, not related to the couple. Twenty-eight people who were in close contact with the man were quarantined. None had plague symptoms. Pneumonic plague has symptoms of respiratory failure similar to pneumonia.

Even though the CDC repeated, “there is no need to worry about the risk of infection”, of course there was plenty of skepticism. The CDC may have publicly confirmed on November 12 these cases of pneumonic plague. But then Li Jifeng, a doctor at Chaoyang Hospital where the trio from Inner Mongolia was receiving treatment, published, privately, on WeChat, that they were first transported to Beijing actually on November 3.

The key point of Li Jinfeng’s post – later removed by censors – was when she wrote, “I am very familiar with diagnosing and treating the majority of respiratory diseases (…) But this time, I kept on looking but could not figure out what pathogen caused the pneumonia. I only thought it was a rare condition and did not get much information other than the patients’ history.”

Even if that was the case, the key point is that the three Inner Mongolian cases seem to have been caused by a detectable bacteria. Covid-19 is caused by the Sars-Cov-2 virus, not a bacteria. The first Sars-Covid-2 case was only detected in Wuhan in mid to late December. And it was only last month that Chinese scientists were able to positively trace back the first real case of Sars-Cov-2 to November 17 – a few days after the Inner Mongolian trio.

Knowing exactly where to look

It’s out of the question that U.S. intel, in this case the NCMI, was unaware of these developments in China, considering CIA spying and the fact these discussions were in the open on Weibo and WeChat. So if the NCMI “product” is not a fake and really exists, it only found evidence, still in November, of some vague instances of pneumonic plague.

Thus the warning – to the DIA, the Pentagon, the National Security Council, and even the White House – was about that. It could not possibly have been about coronavirus.

The burning question is inevitable: how could the NCMI possibly know all about a viral pandemic, still in November, when Chinese doctors positively identified the first cases of a new type of pneumonia only on December 26?

Add to it the intriguing question of why the NCMI was so interested in this particular flu season in China in the first place – from plague cases treated in Beijing to the first signs of a “mysterious pneumonia outbreak” in Wuhan.

There may have been subtle hints of slightly increased activity at clinics in Wuhan in late November and early December. But at the time nobody – Chinese doctors, the government, not to mention U.S. intel – could have possibly known what was really happening.

China could not be “covering up” what was only identified as a new disease on December 30, duly communicated to the WHO. Then, on January 3, the head of the American CDC, Robert Redfield, called the top Chinese CDC official. Chinese doctors sequenced the virus. And only on January 8 it was determined this was Sars-Cov-2 – which provokes Covid-19.

This chain of events reopens, once again, a mighty Pandora’s box. We have the quite timely Event 201; the cozy relationship between the Bill and Melinda Gates Foundation and the WHO, as well as the Word Economic Forum and the Johns Hopkins galaxy in Baltimore, including the Bloomberg School of Public Health; the ID2020 digital ID/vaccine combo; Dark Winter – which simulated a smallpox bio-attack on the U.S., before the 2001 anthrax attack being blamed on Iraq; U.S. Senators dumping stocks after a CDC briefing; more than 1,300 CEOs abandoning their cushy perches in 2019, “forecasting” total market collapse; the Fed pouring helicopter money already in September 2019 – as part of QE4.

And then, validating the ABC News report, Israel steps in. Israeli intel confirms U.S. intel did in fact warn them in November about a potentially catastrophic pandemic in Wuhan (once again: how could they possibly know that on the second week of November, so early in the game?) And NATO allies were warned – in November – as well.

The bottom line is explosive: the Trump administration as well as the CDC had an advance warning of no less than four months – from November to March – to be properly prepared for Covid-19 hitting the U.S. And they did nothing. The whole “China is a witch!” case is debunked.

Moreover, the Israeli disclosure supports what’s nothing less than extraordinary: U.S. intel already knew about Sars-Cov-2 roughly one month before the first confirmed cases detected by doctors in a Wuhan hospital. Talk about divine intervention.

That could only have happened if U.S. intel knew, for sure, about a previous chain of events that would necessarily lead to the “mysterious outbreak” in Wuhan. And not only that: they knew exactly where to look. Not in Inner Mongolia, not in Beijing, not in Guangdong province.

It’s never enough to repeat the question in full: how could U.S. intel have known about a contagion one month before Chinese doctors detected an unknown virus?

Mike “We Lie, We Cheat, We Steal” Pompeo may have given away the game when he said, on the record, that Covid-19 was a “live exercise”. Adding to the ABC News and Israeli reports, the only possible, logical conclusion is that the Pentagon – and the CIA – knew ahead of time a pandemic would be inevitable.

That’s the smokin’ gun. And now the full weight of the United States government is covering all bases by proactively, and retroactively, blaming China.

Roughly 10 nurses who were suspended from their job because they demanded protective respirator masks are returning to work this week, according to the National Nurses United union. The nurses, who work at Providence St. John’s Health Center, had refused to treat coronavirus patients without N95 masks. 

Along with being reinstated to work, their hospital, located in Southern California, is also supplying N95 masks to nurses working with infected patients, according to the NY Post. 

It was reported last week that these nurses were place on leave after telling their managers they would not go into the rooms of patients with coronavirus without the protection.

Providence had said last week that they had a system set up to disinfect and reprocess the masks. 

Not surprisingly, the hospital was unavailable for comment. 

N95 masks filter out about 95% of all airborne particles, including ones that are too tiny to be blocked by other masks and face coverings. At the time, hospital administrators said they weren’t necessary and didn’t provide them. 

Which is funny, because early on in this crisis, the U.S. government also told people that N95 masks would not help them at all, while at the same time urging people to donate them to healthcare workers.

Now, in many places across the U.S., facemasks are becoming mandatory, as we wrote about a week ago. 

Governors of Connecticut, Maryland, New York, and Pennsylvania have issued orders or recommendations that residents wear face masks while out in public, reported Reuters.

“If you are going to be in public and you cannot maintain social distancing, then have a mask, and put that mask on,” said New York Governor Andrew Cuomo.

It’s finally here. After a decade of management turnover, near misses, last minute rescues, and one valeant (sic) if disastrous attempt at an activist turnaround, one of the most iconic US retailers and mall anchors, J.C. Penney, is preparping to file for bankruptcy.

According to the Journal, J.C. Penney is in advanced talks for bankruptcy funding with a group of lenders, a sign the troubled retailer about to make a visit to 1 Bowling Green. JCP is in discussions with existing lenders including Wells Fargo, Bank of America and JPMorgan for a debtor-in-possession loan that would keep the department-store chain’s operations funded during a court-supervised bankruptcy, according to people familiar with the matter.

The DIP loan would be roughly $800 million to $1 billion, with some of that money potentially including existing debt, and priming all the other unsecured creditors who will end up with a chunk of the post-petition equity, assuming of course it is not a Chapter 7. 

The Journal sources said that a bankruptcy filing could take place within the next few weeks, and certainly before May 15 as JCP entered into a 30-day grace period after missing an interest payment due to bondholders on April 15. It is possible creditors enter into a forbearance agreement if the company needs additional time to iron out negotiations before filing, but the endgame is clear.

Along with Sears, J.C. Penney was one of the dominant department-store chains of the last century. But the 118-year-old company has been losing money for years. With its mall-based stores closed and unlikely to reopen any time soon, the company has been forced to put aside its latest turnaround strategy and face its creditors at the negotiating table.

While department stores were struggling before the pandemic, the coronavirus quarantine forced the closure of most U.S. stores. The result has been a deluge of imminent bankruptcy filings in the retail space, including that other stalwart, Neiman Marcus, which as we reported previously is planning to file for bankruptcy any day.

Retailers are far from alone in seeing their businesses walloped by the pandemic and the collapse of business activity. Energy companies have been pummeled in recent weeks by the combination of a market downturn and plummeting oil prices, leading several to seek restructuring advice or bankruptcy protection. A total of seven U.S. oil-and-gas drillers filed for bankruptcy in the first quarter of 2020, and more are expected to do so.

Should the shutdown of the economy last for several more months, or should a second wave of coronavirus infection strike the US, companies in all other industries are expected to follow suit.

Authored by Richard Kemp via The Gatestone Institute,

The coronavirus pandemic is a 9/11 moment.

Al Qaida had been at war with the West for years before the destruction of the twin towers. But it took that barbarism to galvanise its largely supine prey into action.

Now we have Covid-19. Unlike 9/11 we have seen no evidence so far that China deliberately unleashed this virus on the world. There is certainly evidence, however, that it resulted from the policies of the Chinese Communist Party and that Beijing’s habitually duplicitous and criminally irresponsible actions allowed it to spread around the globe, leading to tens of thousands of deaths that could have been avoided.

Commentators and politicians today worry that the current situation might trigger a new cold war with China. They fail to understand that, in a similar but much more far-reaching pattern to the jihadist conflict, China has been fighting a cold war against the West for decades, while we have refused to recognise what is going on. The reality, in Beijing’s book, is that the cold war between China and the West, which began with the communist seizure of China in 1949, never ended. Despite the Sino-Soviet split and subsequent US-China rapprochement in the early 1970s, for the Chinese leadership the US was still the implacable enemy.

Like 9/11, Covid-19 must now force the West to wake up and fight back.

China today is by far the greatest threat to Western values, freedom, economy, industry, communications and technology. It threatens our very way of life. China’s objective is to push back against the US and become the dominant world power by 2049, a century after the creation of the People’s Republic. Dictator for life Xi Jinping has no intention of doing this through military conflict. His war is not fought on the battlefield but in the boardroom, the markets, the press, universities, cyberspace and in the darkest shadows.

Those who argue China’s right to compete with the West in free markets and on a level playing field seem not to comprehend that Beijing has no free market and no intention of playing on a level field. The world’s leading executioner, China is an incomparably ruthless dictatorship that tortures, disappears and imprisons its people at will and controls its massive population through a techno-surveillance infrastructure that it’s busy exporting around the world to extend its political and economic control to us.

For decades, China has been working on its three-pronged strategy:

1. building its economy and fighting capability, including intelligence, technology, cyber and space as well as hard military power;

2. developing global influence to exploit resources and secure control;

3. thrusting back and dividing the US and its capitalist allies.

China has built its economy on Western money and at Western expense, by industrial-scale theft of intellectual property and technology, copyright violation, illicit data mining, cyberwar, deceit, duplicity, enslavement and uncompromising state control of industry and commerce.

It continues to expand its already immense influence through a Belt and Road Initiative that marches across the globe; massive investment in Africa, Asia, Europe, Australasia and north and south America; and direct aggression in the Pacific including the South China Sea (where Beijing’s artificial island programme has created one of the greatest ecological disasters in history).

All of this is supported by a multi-million dollar propaganda operation, in President Xi’s words: “to tell China’s story well” — in other words: to advance the ideology of the CCP everywhere. This includes buying support or silence from global media outlets, threats and coercion. Just one high profile example of this influence occurred last year when the US National Basketball Association was forced to make a grovelling public apology after the Houston Rockets’ general manager tweeted in support of pro-democracy campaigners in Hong Kong.

Although military conflict is not China’s preferred strategic instrument, Beijing has not neglected fighting capabilities, spending an estimated $230 billion annually, second only to the US. Xi has been rebuilding his forces on an unprecedented scale, with particular emphasis on a naval war with America. Planned military contingency options also include moves against Taiwan and other territories it intends to control directly. China has also now become the second biggest arms seller in the world, including to countries subject to UN sanctions such as North Korea and Iran. This month, 15 armoured vehicles were delivered to Nigeria, including VT-4 main battle tanks, already in service with the Royal Thai Army and, like most of China’s defence equipment, incorporating technology stolen from the West. China’s arms exports are not motivated primarily by revenue generation, but as a means to impose influence and control, create proxies and challenge the US.

Chinese investment penetrates every corner of the United Kingdom, giving unparalleled influence here as in so many countries. Plans to allow Chinese investment and technology into our nuclear power programme and 5G network will build vulnerability into our critical national infrastructure of an order not seen in any other Western nation. Even the BBC, which receives funding from China, has produced and promoted a propaganda video supporting Huawei, to the alarm of some of its own journalists. All this despite MI5’s repeated warnings that Chinese intelligence continues to work against British interests at home and abroad.

The Chinese government has spent billions of dollars establishing Confucius Institutes around the world, mainly at universities. There are over 500 globally, including 29 in the UK and over 70 in the US. Ostensibly aimed at promoting Chinese culture, these bodies are used to infiltrate universities and high schools to indoctrinate students in communist ideology, as well as for espionage activities. More than 100,000 Chinese are studying in the UK. Last year, MI5 and GCHQ warned universities their research and computer systems are under threat from Chinese intelligence assets among these students. The Director of the FBI , Christopher Wray, said recently that China was aggressively exploiting US academic openness to steal technology, using “campus proxies” and establishing “institutes on our campuses.” More broadly he concluded that “no country poses a greater threat to the US than Communist China.”

A senior CCP official unguardedly admitted the Confucius Institutes are “an important part of China’s overseas propaganda set-up”. Increasingly reliant on foreign funding, Western universities have been pressured by Chinese officials to censor debate on politically explosive issues such as Hong Kong, Taiwan, Tibet and Tiananmen Square.

Few in the West fully recognise the threat to our own economies, security and liberty. Many who do refuse to speak out for four reasons. First, fear of coming into China’s crosshairs, provoking economic harm or character assassination. Second, fear of accusations of racism, a concern readily exploited by the Chinese state whose own egregious racism is only too obvious. Third, belief that our liberal values can change those that oppose us. The hope that Chinese exposure to free trade, including entry into the WTO in 2001, would have this effect has proven woefully misguided and served only to strengthen Beijing’s oppressive regime. Fourth, many political leaders, businessmen, academics and journalists have been bought and paid for by Beijing whether by financial incentive or blackmail.

How can the West fight back?

Although still militarily and economically inferior to the US, China is a formidable and growing economic power, interwoven with Western economies to an unprecedented degree.

We must begin to divest from and sanction China, repatriate and use alternative sources of manufacturing and technology, restrict capital investment there and curb Chinese investment here, especially in our infrastructure.

We must re-invigorate and develop our own technology, much long abandoned to the Chinese juggernaut.

We must enforce the norms of international trade and act vigorously to prevent and penalise China’s orgy of industrial theft that has gone largely unchallenged for decades.

We must push back globally against Beijing’s imperialism and propaganda wherever it occurs. We must also prepare for military conflict, with an emphasis on deterring Chinese aggression.

America will have to lead the fightback as it did previously in the cold war, but success will require Europe and our allies around the world to stand with them for the long term. This is not a party political issue, but must become a fundamental element of enduring Western grand strategies. This is the task of decades and will be high-risk and costly. The alternative is to remain on the hook and in hock to the Chinese communist state and let future generations suffer the incalculable consequences of our continued purblind inaction.

Another grim milestone was reached this week, but not on the COVID-19 front. Human rights monitors have recorded that Saudi Arabia has carried out its 800th execution since King Salman bin Abdulaziz (and by extension MbS) began his rule five years ago — most being in the form of the kingdom’s ‘favored’ beheadings.

The British nonprofit Reprieve said the kingdom’s rate of execution in Saudi Arabia has doubled since 2015 when King Salman took over following the death of his half-brother, King Abdullah. Of course, as Salman’s health was reportedly increasingly fragile from the start of his rule, it’s widely believed crown prince Mohammed bin Salman (MbS) has remained the true power and day-to-day decision maker.

MbS was widely hailed as a ‘reformer’ – among other things promising to greatly reduce the number of annual executions, which include the ghastly methods of beheading and crucifixion. But this is nowhere near the reality.

So much for empty talk of ‘reform’, ‘modernization’ and ‘progress’ – as Middle East Eye reports of Reprieve’s findings:

By comparison, Saudi authorities executed 423 people between 2009 and 2014.

Currently, there are at least 13 juvenile defendants on death row – including Ali al-Nimr, Dawood al-Marhoon and Abdullah al-Zaher – who are “at imminent risk of execution”, Reprieve and the European Saudi Organisation for Human Rights said.

Saudi Arabia executed six young men last year who were children at the time of their alleged offences, in a mass execution of 37 people. 

Riyadh’s concerns no doubt now lie far elsewhere regarding the prior MbS rhetoric of reform, given the kingdom is now scrambling to bring oil prices back up after the historic global price crash this week. 

Reform vs. Reality — public beheadings as a form of political suppression: 

#WATCH: Saudi Arabia carried out 800 executions under King Salmanhttps://t.co/TrhQFgVPvR pic.twitter.com/2w3eHxVoFz

— Middle East Monitor (@MiddleEastMnt) April 15, 2020

Apparently ‘Chop Chop Square’ was busy as usual even amid the more pressing crisis of the accelerating oil glut. As of only last week, Amnesty International recorded 789 executions under the king, which only days later grew to 800.

As one Newsweek headline years ago aptly observed, “when it comes to beheadings, ISIS has nothing over Saudi Arabia.”

Authored by Tom Luongo via The Strategic Culture Foundation,

From the very beginning I’ve been a staunch critic of President Trump’s “Energy Dominance” policy. And I was so for a myriad of reasons, but mostly because it was stupid.

Not just stupid, monumentally stupid. Breathtakingly stupid.

And I don’t say this as someone who hates Trump without reservation. In fact, I continue to hope he will wake up one day and stop being the Donald Trump I know and be the Donald Trump he needs to be.

I don’t have Trump Derangement Syndrome of any sort. Neither MAGApede nor Q-Tard, an Orange Man Bad cultist or NPC Soy Boy, I see Trump for what he is – a well-intentioned, if miseducated man with severe personal deficiencies which manifest themselves in occasionally brilliant but mostly disastrous behavior.

Energy Dominance was always a misguided and Quixotic endeavor. Why? Because Trump could never turn financial engineering a shale boom into a sustainable advantage over lower-cost producers like Russia and the OPEC nations.

The policy of blasting open the U.S. oil spigots to produce a production boom built on an endless supply of near-zero cost credit was always going to run into a wall of oversupply and not enough demand.

The dramatic collapse of U.S. oil prices in the futures markets which saw the May contract close on April 20th at $-40.57 per barrel is the Shale Miracle hitting the fan of low demand and leaving the producers and consumers in a state which can only happen thanks to biblical levels of government intervention.

A broken market.

The next morning, ever needing to look like the good guy, Trump tweets out:

We will never let the great U.S. Oil & Gas Industry down. I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!

— Donald J. Trump (@realDonaldTrump) April 21, 2020

It’s clear from this statement that Trump is ready to throw more trillions at the oil industry to keep it and the millions of jobs from disappearing as he does what he always does when confronted with a real problem, doubles down on the behavior that caused it in the first place.

Politicians, even the best ones, are ultimately vandals. They have no other tool than to reallocate scarce capital towards their ends rather than that demanded by the market.

And the main reason why Trump was never going to win the Energy Dominance War he started was because the world doesn’t want the type and kind of oil the U.S. produces at the quantities needed to “Win!”

Ultra-light sweet crude coming from the Bakken, Eagle Ford and Permian simply isn’t that high in demand for export. It’s of limited usage. And, in the end, if the price is right enough, offering oil for sale in ‘not-dollars’ only makes that demand curve even more elastic.

The collapse in oil prices which Trump is desperate to stop won’t simply because Trump stands there like King Canute, arms outstretched. He and his terrible energy policy stand naked now that the tide has gone out.

And the reason for this is simple. There is more to the world economy than money. Money is what makes the economy work but it, in and of itself, is incapable of creating wealth. All money does is act as a means to express our needs and desires at the moment of the trade.

Trump’s vandalizing the world’s energy markets for the past three and a half years now comes back to bite him. To prop up surging U.S. production he has:

• Supported a disastrous war against the people of Yemen

• Repurposed U.S. troops clinging to positions in Syria while stealing their oil

• Nearly started a shooting war with Iran…. Twice.

• Embargoed Venezuela, stole its money, attempted a failed coup and brought even more support to President Maduro from Russia and China.

• Spent billions pointing missiles at Russia via NATO.

• Supported a vicious war to prevent the secession of the Donbass.

• Delayed the construction of Nordstream 2.

• Sowed chaos enough to set Turkey to claiming the Eastern Mediterranean while fighting a losing war in Libya.

• Started a massive trade war with China.

• Spent trillions throwing the U.S. budget deficit for 2020 out beyond 20% of the U.S.’s 2019 GDP.

I could go on, but I think you get the point. None of these acts are defensible as anything other than immoral and counterproductive.

Having antagonized literally more than three-quarters of the world with this insanity, Trump will now turn his destructive gaze on the very people he purports to serve, the American people. Saving jobs through subsidies is capital destructive. It doesn’t matter who does it, Trump, Putin, Xi or FDR.

If Trump tariffs on imports it will only keep the cost of energy for Americans higher than it should be at a time when they need it to be as cheap as possible.

The incentive to improve performance by these companies, shutter expensive wells, default on debt or shift capital away from the unproductive will not happen. The healthy cleansing of bankruptcy is averted. The vultures who profited on the way up will not go bankrupt because the bust is avoided and those that were prudent waiting for this moment will not be rewarded with the reins of the means of production.

And again, we see another one-way trade for Wall St.

All Trump will do here is entrench the very powers that he thinks he’s been fighting, destroying small businesses, nationalizing, in effect, whole swaths of the U.S. economy and setting up the day when everyone else around the world shrugs when he bark.

Because the net effect has been to see the rise in more of the oil trade conducted in currencies other than the U.S. dollar. That trend will continue in a deflating price environment where the need to service dollar-denominated debt is soaking up the supply of dollars faster than the Fed can monetize the debt issued by the U.S. Treasury.

The oil trade will shift from dollars. Dollars will be used to pay off debt, the world will decouple from the dollar and all those dollars currently hoarded overseas and whose demand today will be supply tomorrow will ensure the U.S. economy suffers the worst kind of depression, one of rising commodity prices, falling asset prices and falling wages.

So, Trump will continue to be, as I put it recently, The Master of the Seen, choosing, as always, to ignore the unseen effects of propping up firms that should rightly go the way of all bad ideas, like Marxism.

The U.S. had a grenade dropped on its budget. It looks like a nuclear bomb, but that’s only because of the continued arrogance and necessity of politicians, like Trump, needing to be ‘seen’ doing something caused far more damage than it would have if they hadn’t intervened in the first place.

The adage, “never let a crisis go to waste,” is apropos here. Politicians use the cover of crisis to act. They have to be ‘seen’ acting rather than not. Trump is acutely aware of this because he truly can’t stand criticism.

A man without principles, Trump acts mostly out of his need to deflect criticism and be ‘seen’ by his base as their champion.

But no, Trump outs himself as the biggest Marxist of all time, defending the workers while robbing them of their future through the destruction of their real wealth. His policy mistakes become our real problems. And he compounded those problems by listening to the medical complex vultures about COVID-19 and now he’s trapped but everyone else will pay the price.

He is someone without the sense or the understanding that sometimes the best thing to do is admit defeat, reverse course and put down the scepter of power. But Trump doesn’t know how to do that. He doesn’t know how to actually lead.

Energy Dominance will turn into an Energy Albatross and it will weigh on Trump’s neck in his second term that will see him leave office reviled as the great destroyer of not only the U.S.’s wealth, but more importantly, its standing in the world.

Another week, another record in the Fed’s balance sheet, which as of April 22 hit an all time high $6.573 trillion, an increase of $205 billion on the week, up $2.644 trillion compared to a year ago and well on its way to $10 trillion. 

Yet while the liquidity flood unleashed by the Fed’s balance sheet, and its expanded swap lines has calmed dollar funding markets which were paralyzed as recently as a month ago, and USD Libor dropped below 1% for the first time in a month, an unintended consequence of the Fed’s monetary flood is that it now appears to be paralyzing Europe’s interbank market.

This can be seen in Europe’s version of Libor, 3-Month Euribor, or the rate at which banks borrow from one another, which jumped another 2.9 bps to a fresh four-year high on Thursday, of just above -0.20% even after the ECB tried to ease funding pressures by moderating collateral restrictions for financial institutions seeking to borrow from the central bank.

A key driver behind the Euribor spike is that, in Bloomberg’s view, the Fed has helped bring down the cost of dollars to such an extent that they’re cheaper to borrow in cross-currency markets than any major currency.  As a result, opportunistic players are tapping local markets to swap into dollars, elevating domestic borrowing costs.

Others have a more nuanced view, with Bank of America pointing out that the rise in EURIBOR to its highest level since 2016 “signals stress in the euro area’s interbank market.“

According to BofA, the surge in Euribor means that the wholesale euro unsecured borrowing rate of 18 panel banks in the EU and European Free Trade Association (EFTA) countries has increased. As the bank explains, EURIBOR fixing submissions are based on a hybrid methodology that uses transactions to the extent possible. But eligible EURIBOR volumes are low, especially for tenors above 1W.

In February, between 48% and 66% of EURIBOR fixings were based on level 3 contributions, which are least dependent on eligible transactions.

EURIBOR’s Governance Framework states that level 3 contributions are based on additional transactions data in the underlying interest that were excluded from level 1 and level 2 contributions, and other data from a range of markets closely related to the unsecured euro money market.

The data should then be used through a combination of modeling techniques and/or the panel bank’s judgment. A particular model is not mandated by the administrator and panel banks should determine their contribution based on their own circumstances. This implies there is unlikely to be a one-size-fits-all model for level 3 contributions across panel banks and different markets could have varying influence over time.

BofA then suggests that the recent stress in key markets has impacted level 3 EURIBOR submissions via other data closely related to the unsecured euro money market. One such transmission mechanism involves the increase in bank bond yields, which could have put upward pressure on EURIBOR forwards.

It is at this point that the two narratives combine, because in picking up on Bloomberg’s story, BofA observes that the recent tightening (less negative) of the cross currency basis due to the FX swap lines established by the US Federal Reserve with central banks globally and high USD funding costs have also increased supply of, and decreased demand for, EUR-denominated bank paper swapped back into USD.

Indeed, the EUR FRA-OIS spread also increased to its highest level since 2012, which suggests the rise in bank bond yields is related to interbank stress (Chart 3). But BofA previously noted there were no liquidity concerns in the euro overnight repo market when the FRA-OIS spread first started to widen. Therefore its interpretation is that the increase in the FRA-OIS spread is driven by broad credit concerns due to developments in COVID-19 and in the oil market negatively affecting the global outlook. Furthermore, broad credit concerns may have also been reflected in the rise in non-financial CP issuance and yields (Chart 4).

Looking ahead, BofA is optimistic and believes that the ECB’s inclusion of non-financial CPs to its asset purchasing programme (APP) and Pandemic Emergency Purchasing Programme (PEPP) could act as a strong backstop for the rise in non-financial CP yields. A rebound in global oil prices would also help. But while these measures may address the negative consequences of COVID-19, they do not address the issue of COVID-19 itself. As such, the prospect of deterioration in the COVID-19 situation remains a key upside risk for EURIBOR.

Bloomberg is similarly optimistic, writing that some analysts view the latest ECB measures as helping, and Pictet’s Frederik Ducrozet who wrote that “it provides a backstop for the market not to be concerned about bank funding issues related to a shrinking collateral pool in case of rating downgrades.”

Meanwhile, early signs in the futures market already suggest Euribor will ease lower within the next couple of months. One such easing will impact dollar Libor, whose spreads over swaps are expected to tighten – as indicated by futures markets – at which point three-month cross-currency basis should drift lower to erode the funding advantage for local currencies, and reduce the incentive for opportunists to bid up the cost of funds in domestic markets, in other words, the market is confident that the ECB’s massive liquidity injection will offset a similar action by the Fed, and offset the cheapness of the dollar in cross fx.

While Euribor is soaring, US Libor appears to have gotten over its recent scare, and has been declining, falling by 2.9bps on Thursday, below 1% for the first time since the covid crisis, and driving its premium above OIS by a similar amount. As we have noted previously, some traders are even bracing for negative Libor prints as the Fed inches closer to NIRP.

Yet as the US inches to the monetary singularity of negative rates, sub-zero rates are already a reality in Japan, where the three-month euro-yen Tibor fixing dropped 6.6 bps to -0.048%, posting a negative fix for the first time ever, with Euroyen futures popping higher in response.

With yen-OIS rates steady, Bloomberg suggests that the move was unrelated to policy expectations, and instead, overseas banks could be in the driving seat, potentially a result of the same stress that is pushing Euribor higher.

Whatever the explanation behind this odd squeeze in European money market rates, one thing is clear: we have gotten to the point where overly aggressive intervention by one central bank immediately necessitates an equal and offsetting intervention by all other central banks, or else the entire domestic banking system of whichever bank isn’t debasing its current the fastest faces immediate peril. And another dire consequence: we may have gotten to the point where it is no longer possible to find an equilibrium funding level for global currencies, one which – by definition – exists in a world of positive rates; however when interest rates everywhere are negative (or expected to be), then all bets are off and every single day is a new struggle by the central bankers to keep the system from collapsing.

Authored by Jonathan Turley,

There is an interesting controversy brewing in Nevada over stimulus money and morality.

Bella Cummins is the owner of a lawful small business who was initially refused an emergency loan under the pandemic stimulus money.

“It was interesting… that the bank… wanted to tell me that I wasn’t going to qualify and they weren’t going to send it in.”

The reason? Her business is a brothel.

The CARES Act makes no distinction between moral and immoral businesses so long as they are lawful (and such a distinction in my view would challengeable). Brothels are lawful in Nevada. 

Yet, Cummins was eventually allowed to apply for the loan but there are objections to giving stimulus money to an over-stimulating business.

“It isn’t about them coming up with a decision on how they think or feel, it’s about following a federal policy,” Cummins said.

Cummins has allowed her workers to remain on the property at Bella’s Hacienda Ranch in Well, Nevada.  Her business was deemed nonessential.  While some might disagree, that distinction seems perfectly reasonable.  However, that still leaves the fact that when she went to Nevada State Bank to apply for an emergency loan from the Small Business Administration the bank balked.

Given social distancing rules, this is one business that will face the greatest delay and downturn in recovering from the pandemic.  Social distancing would seem the antithesis of the business model of a brothel.

Since applying for federal help earlier this week, the SBA has notified Cummins that her application to the Paycheck Protection Program for some $70,000 has been approved.

However, she was then told by the bank that the funds were put on hold.

It is not clear if that is based on the nature of her business or simply a pause in the program.

The question remains about the objections and whether there will be a move to limit future loans.  In my view, such restrictions would be arbitrary and discriminatory.  As many on this blog know, I have been a long critic of morality legislation. This is simply another variation in forcing citizens to adhere to majoritarian morals in my view if the loan is denied or the regulations changed on the basis of the business.

For weeks, the United Nations, International Monetary Fund, and World Bank have stated the only solution for emerging market economies severely damaged by the coronavirus outbreak is a “debt jubilee.”

The United Nations Conference on Trade and Development (UNCTAD) published a note on Thursday morning that said about $1 trillion in debt owed by developing countries should be canceled to avoid an emerging market debt crisis. 

“This is a world where defaults by developing nations on their debt is inevitable,” warned Richard Kozul-Wright, director of UNCTAD’s Division on Globalization and Development Strategies.

UNCTAD’s report calls for a global debt relief deal for emerging market economies. It indicates “the vital need for decisive action to provide substantive debt relief to developing countries to free up sorely needed resources to respond to the raging pandemic.” 

Last month, UNCTAD called for an international effort to create an economic relief package for emerging market economies that would amount to at least $2.5 trillion. It said even before the virus pandemic, many of these developing countries had insurmountable dollar debts. 

“The international community should urgently take more steps to relieve the mounting financial pressure that debt payments are exerting on developing countries as they get to grips with the economic shock of COVID-19,” said UNCTAD Secretary-General Mukhisa Kituyi.

Here are some of the countries that have unsustainable debt burdens: 

UNCTAD said developing countries “now face a wall of debt service repayments throughout the 2020s. In 2020 and 2021 alone, repayments on their public external debt are estimated at nearly $3.4 trillion – between $2 trillion and $2.3 trillion in high-income developing countries and between $666 billion and $1.06 trillion in the middle- and low-income countries.”

With the pandemic still raging across the world, emerging market economies battered, commodities crashed, and the global economy shifting into a deep depression, it now appears the end game has finally arrived and the need to rescue the world from a prolonged depression will likely be through a debt jubilee. 

For some color on the current global situation. Raoul Pal, the former hedge-fund manager who founded Real Vision, recently had this to say: “The whole world’s f**ked.”

Pal’s most recent thoughts on dollar debts and a debt jubilee can be found below: 

Less available dollars, in a world of a massive dollar shortage, drives up the dollar creating a shortage both home and abroad. Money printing does not make the dollars available. They get stuck in the financial system and hoarded.

Money for the banks, no money for the debtors…

The domestic shortage of dollars means that money gets hoarded while defaults rise. And the shortage abroad means that $13tn of debt scrambles for the available dollars as world growth slows and banks are less free with capital.

Don’t forget – the $13tn short dollar positions (foreign dollar debt held mainly by foreign corporation and investment vehicles) is the largest position ever taken in the history of global financial markets.

It can only mean a massive, uncontrolled dollar rally.

QE will not fix this. Swap lines will not fix this. A debt jubilee would fix this or multiple trillions of dollars in write-downs and defaults.

It is the dollar strength that brings to world to its nadir (just like the 1930s). It is the dollar system that is the really big problem.

 The dollar has eaten all of its competitors and now it is going to eat itself.

And after decades of “kicking the can down the road” – it appears the end game has finally arrived for countries with insurmountable dollar debts: debt jubilee. 

China has denied a request by US Secretary of State Mike Pompeo to grant international inspectors access to labs in order to assess whether dangerous pathogens might be accidentally released, according to Fox News.

The request comes amid a US investigation into whether the Wuhan coronavirus escaped from the Wuhan Institute of Virology, where they were conducting a host of experiments on bat coronavirus – and had collected bats in a cave over 1,000 miles away in Yunnan which carried COVID-19.

“There are multiple labs inside of China that are handling these things,” Pompeo said on Wednesday at the State Department. “It’s important that those materials are being handled in a safe and secure way such that there isn’t accidental release.”

“We have to make sure that the Chinese Government is handling those materials in an appropriate way not only in the Wuhan Institute of Virology but elsewhere,” Pompeo added, according to the report.

“Any objective person will see that some U.S. politicians have been peddling lies that discredit China’s anti-epidemic efforts to fuddle people’s minds and deflect attention from the fact that they fell short of fulfilling their own anti-epidemic responsibilities,” said Chinese Foreign Ministry spokesman Geng Shuang on Thursday in response to Pompeo’s call for inspections at the Wuhan Institute of Virology and other Chinese labs studying coronaviruses and other pathogens.

Beijing has refuted claims that COVID-19 originated in a laboratory. Intelligence operatives have begun gathering information about the Wuhan lab and are piecing together a timeline of the events following the outbreak.

U.S. officials told Fox News they have ruled out the possibility of a man-made coronavirus to be used as a bioweapon. Instead, they believe it was part of China’s attempt to demonstrate that its efforts to identify and combat viruses are equal to or greater than the capabilities of the United States,

Some officials believe China purposefully covered up the virus and that the World Health Organization (WHO) is complicit. President Trump took aim at the WHO over its role in the crisis and announced last week that the U.S. will halt all funding to the group, saying it had put “political correctness over lifesaving measures.” –Fox News

On Wednesday, Pompeo told “The Ingraham Angle” that the World Health Organization (WHO) had dropped the ball in helping the United States gather critical data from China.

“Look, we know it began at one [lab], but we need to figure this out,” he said, adding “There’s an ongoing pandemic. We still don’t have the transparency and openness we need in China.”