“Sick People” – Russian Lawmakers Blast US For Nuclear War Exercise
US Defense Secretary Mark Esper participated in a war exercise late last week at the United States Strategic Command (USSTRATCOM) HQ in Omaha, Nebraska, which featured how the Pentagon would respond to a Russian nuclear attack on Europe, reported Defense One.
“We conducted a mini-exercise,” a senior defense official said, speaking on the condition of anonymity. “The scenario included a European contingency where you are conducting a war with Russia and Russia decides to use a low-yield limited nuclear weapon against the site on NATO territory, and then you go through the conversation that you would have with the secretary of defense and then with the president ultimately to decide how to respond.”
“During the exercise, we simulated responding with a nuclear weapon,” the official said.
News of the “mini-exercise” immediately traveled to Moscow. Russian lawmakers called the Pentagon’s nuclear war simulation completely outrageous:
Senator Sergei Tsekov called organizers and participants of the exercise “sick people,” telling RBC News on Saturday, that he was “very surprised, frankly, very much, that they are doing this and also declare it. Although, on the other hand, judging by their current state and current actions, why be surprised?”
Alexander Sherin, the deputy head of the Duma’s defense committee, told HCH news on Saturday that the US’ nuclear war simulation with Russia has several objectives:
“Firstly, the population is getting used to such an incredible scenario for resolving the conflict as a nuclear strike between the Russian Federation and the NATO bloc. Secondly, an attempt to intimidate the population of Europe and justify the presence of American bases in European countries as guarantors of security and defenders in the event of a nuclear attack from Russia,” Sherin said.
He said it would be foolish for Moscow to launch nuclear strikes on European countries because the fallout would flow back into Russia.
Sherin says the reason the US nonchalantly leaks its nuclear war exercises to the media is because it has never had a major war on its soil, unlike Europe and Russia.
The latest drill comes as President Trump’s gargantuan military budget of more than $740 billion has allocated a whopping $44 billion for nuclear weapons.
Peter Kuznick, the director of the American University’s Nuclear Studies Institute, told RT News there is no such thing of limited nuclear war.
Kuznick said how these things play out is that both sides will continue shooting atomic weapons at one another until the human civilization is completely wiped out.
The exercise comes weeks after we reported the US added a ‘low yield’ nuclear weapon to its submarine arsenal in a controversial first in decades.
Trump’s soaring military budget has led to the most significant increase in global military spending in more than a decade suggests governments across the world are preparing for the next big conflict.
I am one of the many women Mike Bloomberg’s company tried to silence through nondisclosure agreements. The funny thing is, I never even worked for Bloomberg.
But my story shows the lengths that the Bloomberg machine will go to in order to avoid offending Beijing. Bloomberg’s company, Bloomberg LP, is so dependent on the vast China market for its business that its lawyers threatened to devastate my family financially if I didn’t sign an NDA silencing me about how Bloomberg News killed a story critical of Chinese Communist Party leaders. It was only when I hired Edward Snowden’s lawyers in Hong Kong that Bloomberg LP eventually called off their hounds after many attempts to intimidate me.
In 2012, I was working toward a Ph.D. in sociology at Tsinghua University in Beijing, and my husband, Michael Forsythe, was a lead writer on a Bloomberg News article about the vast accumulation of wealth by relatives of Chinese President Xi Jinping, part of an award-winning “Revolution to Riches” series about Chinese leaders.
Soon after Bloomberg published the article on Xi’s family wealth in June 2012, my husband received death threats conveyed by a woman who told him she represented a relative of Xi. The woman conveying the threats specifically mentioned the danger to our whole family; our two children were 6 and 8 years old at the time. The New Yorker’s Evan Osnos reports a similar encounter in his award-winning book, “Age of Ambition: Chasing Fortune, Truth and Faith in the New China,” when the same woman told Osnos’s wife: “He [Forsythe] and his family can’t stay in China. It’s no longer safe,” she said. “Something will happen. It will look like an accident. Nobody will know what happened. He’ll just be found dead.”
The experience was especially terrifying because it came just months after the murder of a British businessman, Neil Heywood, who was poisoned by the wife of a senior Chinese leader, Bo Xilai, according to Chinese state media. His body was reportedly discovered in a hotel in the southwestern Chinese city of Chongqing. While our family spent the kids’ summer vacation in 2012 outside of China, Bloomberg executives kept my husband busy in nonstop conference calls about how to maintain our security. I had recurring nightmares about my young children getting beaten up or killed. I desperately wanted to speak publicly about the death threats, feeling it would give us stronger protection, but Bloomberg News wanted us not to say anything about it while the company conducted its own internal investigation. I had been loyal to the company ever since my husband and I married in 2002, and I didn’t want to jeopardize his job. I stayed silent until October 26, 2012, when another (unrelated) story was published in defiance of the Chinese government. I decided to tweet that we had received death threats after the Bloomberg story on Xi Jinping.
Screenshot: Leta Hong Fincher
Within hours of my tweets — the original and my replies to questions — a Bloomberg manager called my husband and said, “Get your wife to delete her tweets.” I did not delete them, but I also did not tweet or speak publicly about the death threats again. I did not want to anger the company because we needed it to relocate us to Hong Kong, where our children would be safe. As we finished the remainder of our time in Beijing, applying for schools in Hong Kong and preparing for our move, I lived in constant fear. Would someone get to our children while they were on their way to or from school? Who was watching and listening to us? I obsessively pulled down all our window blinds at night in case Chinese security agents were watching us. I was careful not to speak loudly about our plans in our home or on my phone in case we were bugged.
In August 2013, I finally relaxed as we flew out of Beijing and moved to a temporary apartment in Hong Kong. I thought that our yearlong nightmare had ended. But things would soon get even worse.
My husband had been working for many months on another investigative report for Bloomberg about financial ties between one of China’s richest men, Wang Jianlin, and the families of senior Communist Party officials, including relatives of Xi. Bloomberg editors had thus far backed the story. A Bloomberg managing editor, Jonathan Kaufman, said in an email in late September 2013, “I am in awe of the way you tracked down and deciphered the financial holdings and the players. … It’s a real revelation. Looking forward to pushing it up the line,” according to an account published by the Financial Times.
Then Bloomberg killed the story at the last minute, and the company fired my husband in November after comments by Bloomberg News editor-in-chief Matt Winkler were leaked.
“If we run the story, we’ll be kicked out of China,”Winkler reportedly said on a company call.
Mike Bloomberg, then New York City mayor and majority owner of Bloomberg LP, was asked on November 12, 2013, about reports that his company had self-censored out of fear of offending the Chinese government and he dismissed the question.
“Nobody thinks that we’re wusses and not willing to stand up and write stories that are of interest to the public and that are factually correct,” Bloomberg told a press conference.
Yet, days after Bloomberg made those comments to reporters in New York, Bloomberg lawyers in Hong Kong threatened to devastate my family financially by forcing us to repay the company for our relocation fees to Hong Kong from Beijing and the advance on my husband’s salary that we took out, leave us with no health insurance or income, and take me to court if I did not sign a nondisclosure agreement — even though I had never been a Bloomberg employee.
The law firm representing Bloomberg, Mayer Brown JSM, sent a letter to my lawyer on December 6, 2013, threatening a court injunction if I didn’t agree to their confidentiality terms within seven days.
I told my husband’s lawyer that I did not want to sign a gag order, so Bloomberg summoned me and my husband to a meeting on December 16 at Mayer Brown JSM’s office in central Hong Kong. We sat around a fancy conference table with some Bloomberg senior editors and Mayer Brown lawyers and spoke via videoconference with a lawyer from Willkie, Farr & Gallagher, representing Bloomberg in New York. My husband’s lawyer said that I did not possess any recordings or emails that might be damaging evidence about the company’s practices.
“But what about all the evidence that is in her head?” said the outsized man on the video screen. When Bloomberg’s lawyer in New York uttered those words, I suddenly pictured him holding a giant vacuum cleaner, trying to suck all the memories out of my brain. I told everyone that I needed to leave the room and I walked out of the building, determined to go down fighting.
On December 20, they sent a letter to my husband demanding that I sign a nondisclosure agreement. If I didn’t agree, we might owe the company thousands of dollars. I might even have had to pay Bloomberg’s legal bills. The thought of Bloomberg possibly ruining our family financially if I didn’t give in to their threats made me sick, but I was also infuriated that they had kept us in harm’s way after we received threats, forbidden me from speaking publicly about the death threats we received in Beijing, and now were trying to take away my freedom of speech forever.
It was only when I hired Snowden’s lawyers in Hong Kong — Albert Ho and Jonathan Man offered me a low rate because it was a “good cause” — that Bloomberg finally backed off. In the meantime, they had sent me several more threatening letters. One letter from Mayer Brown JSM on January 8, 2014, spelled out that “by virtue of the knowledge that she retains (in her head) of our client’s [Bloomberg’s] Confidential Information she has an ongoing duty of confidentiality to our client.” They demanded that I sign away my right to speak out about things such as “unpublished drafts of an article prepared for our client; documents concerning our client’s newsgathering, editorial processes and editorial judgment …; any emails and other communications (including oral discussions) between and among our client’s employees concerning our client’s newsgathering editorial processes and editorial judgment.”
Ho, a veteran Hong Kong pro-democracy legislator and activist who has been assaulted twice over the years, told me that if Bloomberg didn’t back down, we could hold a press conference to shame them. Fortunately, it didn’t come to that and in February 2014, Bloomberg finally stopped sending me legal threats. I returned to Tsinghua University to finish my Ph.D. and published my first book about women in China. My husband joined the New York Times, re-reported the entire story on the Chinese businessman, Wang, which Bloomberg claimed was “not ready for publication,” and his story was published on the front page of the New York Times in late April 2015.
I never wanted to seek publicity about Bloomberg’s threatening behavior and was genuinely terrified of financial ruin, so in spite of preserving my freedom of speech, I have never written about my experience before. I am speaking out now because unlike so many other women, I am not bound by a nondisclosure agreement. Given the large number of women silenced by NDAs, it’s clear that there has been an environment of sexism at Bloomberg’s company. Bloomberg managers and lawyers treated me as though I were a piece of company property, an appendage of my husband, using intimidation and threats to try to bully me into submission. I agonized over whether to sign the NDA and I remember feeling physically suffocated, as though my mouth were stuffed with cotton balls. I haven’t met any of the other women, but I imagine that they, too, may have experienced the same terror of being threatened by a multibillion-dollar corporation, which could ruin their lives if they did not comply. Even now, I am nervous about the consequences of speaking out. But the more of us speak out, the stronger we are.
“Range Beyond 1,000 Miles” – Leaked Images Reveal US Army Super Cannon
We noted last Oct. the US Army was developing a “powerful cannon that can fire a projectile over a distance of more than 1,150 nautical miles,” or about the distance from New York City to Tennessee.
The Strategic Long-Range Cannon (SLRC) is a “game-changing” weapon to counter China and Russia at great distances enters the first round of live-testing in 2023.
Over the weekend, Defense Blog published a piece detailing how the Army “accidentally revealed the first images” of the new super cannon during a US-UK Modernization Demonstration Event.
The alleged pictures of the new cannon were shared by the US Army CCDC Army Research Laboratory at an event on Feb. 20 at Aberdeen Proving Ground, Maryland.
“The @USArmy hosted a US-UK Modernization Demonstration Event Feb. 20 at @USAGAPG to identify capability collaboration to the British Army. Officials from @ArmyFutures @USArmyCCDC , the centers and the lab, briefed interoperability to minimize risks of #modernization divergence.,” @ArmyResearchLab tweeted.
Other photos posted on Twitter detailed how the projectile can travel more than 1,000 nautical miles. Here’s one of the leaked images:
And another:
It seems that the GI. Joe brand owned by the toy company Hasbro has already created a futuristic toy called the “Thurnderclap,” which looks very similar to the super cannon.
However, super cannon is nothing new. The V-3 was a German World War II large-caliber cannon that filed projectiles upwards of 102 miles.
A bloated national defense budget has given the Army the ability to develop their wildest weapons – such as a super cannon. More government waste as war spending will bankrupt the nation.
A recent Pew Research Center survey finds that only half of American adults think colleges and universities are having a positive effect on our nation. The leftward political bias, held by faculty members affiliated with the Democratic Party, at most institutions of higher education explains a lot of that disappointment. Professors Mitchell Langbert and Sean Stevens document this bias in “Partisan Registration and Contributions of Faculty in Flagship Colleges.”
Langbert and Stevens conducted a new study of the political affiliation of 12,372 professors in the two leading private and two leading public colleges in 31 states.
For party registration, they found a Democratic to Republican (D:R) ratio of 8.5:1, which varied by rank of institution and region.
For donations to political candidates (using the Federal Election Commission database), they found a D:R ratio of 95:1, with only 22 Republican donors, compared with 2,081 Democratic donors.
Several consistent findings have emerged from Langbert and Stevens’ study. The ratio of faculty who identify as or are registered as Democratic versus Republican almost always favors the Democratic Party. Democratic professors outnumber their Republican counterparts most in the humanities and social sciences, compared with the natural sciences and engineering.
The ratio is 42:1 in anthropology, 27:1 in sociology and 27:1 in English. In the social sciences, Democratic registered faculty outnumber their Republican counterparts the least in economics 3:1. The partisan political slant is most extreme at the most highly rated institutions.
The leftist bias at our colleges and universities has many harmful effects. Let’s look at a few.
At University of California, Davis, last month, a mathematics professor faced considerable backlash over her opposition to the requirement for faculty “diversity statements.”
University of California, San Diego, requires job applicants to admit to the “barriers” preventing women and minorities from full participation in campus life.
At American University, a history professor recently wrote a book in which he advocates repealing the Second Amendment.
A Rutgers University professor said, “Watching the Iowa Caucus is a sickening display of the over-representation of whiteness.”
University of California, Berkeley, professor and former Secretary of Labor Robert Reich chimed in to say: “Think about this: Iowa is 90.7% white. Iowa is now the only state with a lifetime voting ban for people with a felony conviction. Black people make up 4% of Iowa’s population but 26% of the prison population. How is this representative of our electorate?”
A Williams College professor said he would advocate for social justice to be included in math textbooks.
Students at Wayne State University no longer have to take a single math course to graduate; however, they may soon be required to take a diversity course.
Then there’s a question about loyalty to our nation.
Charles Lieber, former chairman of the Department of Chemistry and Chemical Biology at Harvard, was arrested earlier this year on accusations that he made a materially false, fictitious and fraudulent statement about work he did for a program run by the Chinese government that seeks to lure American talent to China.
He was paid $50,000 a month and up to $158,000 in living expenses for his work, which involved cultivating young teachers and students, according to court documents. According to the Department of Justice, Lieber helped China “cultivate high-level scientific talent in furtherance of China’s scientific development, economic prosperity and national security.”
It’s not just Harvard professors.
Newly found court records reveal that Emory University neuroscientist Li Xiao-Jiang was fired in late 2019 after being charged with lying about his own ties to China. Li was part of the same Chinese program as Lieber.
A jury found a University of California, Los Angeles, professor guilty of exporting stolen U.S. military technology to China. Newsweek reported that he was convicted June 26 on 18 federal charges.
Meanwhile, NBC reported that federal prosecutors say that University of Texas professor Bo Mao attempted to steal U.S. technology by using his position as a professor to obtain access to protected circuitry and then handing it over to the Chinese telecommunications giant, Huawei.
The true tragedy is that so many Americans are blind to the fact that today’s colleges and universities pose a threat on several fronts to the well-being of our nation.
High-Income Taxpayers Now Confronted At Home By IRS Agents
The IRS announced Wednesday that it would increase at-home visitations to high-income taxpayers who haven’t filed tax returns on time.
Remember when the IRS under the Obama administration targeted conservative groups? Now it appears this anti-wealth attitude extends to anyone earning over $100,000 that hasn’t filed a return since 2018 or prior years.
During an at-home visit, IRS agents will inform the non-compliant taxpayer how to file returns and show them a pathway of regaining compliant status.
Uncle Sam wants his goddamn money!
“The IRS is committed to fairness in the tax system, and we want to remind people across all income categories that they need to file their taxes,” said Paul Mamo, Director of Collection Operations, Small Business/Self Employed Division. “These visits focusing on high-income taxpayers will be taking place across the country.”
Visitations have already started this month and will continue through March for severe cases of high-income taxpayers not filing.
In the last year, the agency started aggressively targeting low-income families who neglected to pay their taxes. These struggling folks in the “greatest economy ever” are barely surviving on depressed wages, insurmountable debts, and soaring housing and healthcare inflation, have no money left over to pay taxes.
If you’re rich or poor and haven’t paid your taxes in the last several years, watch out because Big Brother is now dispatching its agents to hunt you down.
And in case an agent confronts a non-compliant taxpayer – they will offer several options if the tax bill cannot be paid in full, such as a payment plan. But if a non-compliant taxpayer declines to pay, the IRS will inform the individual that they will pursue them in court.
Land of the free? Not when it comes to debt…
And here’s the most bizarre move the IRS made before they launched a massive campaign across the country to confront rich and poor non-compliant taxpayers. The agency bought 5,000 guns, some automatic weapons, and 5 million rounds of ammunition.
“Among the agencies being supplied with night-vision equipment, body armor, hollow-point bullets, shotguns, drones, assault rifles, and LP gas cannons are the Smithsonian, U.S. Mint, Health and Human Services, IRS, FDA, Small Business Administration, Social Security Administration, National Oceanic and Atmospheric Administration, Education Department, Energy Department, Bureau of Engraving and Printing and an assortment of public universities,” said john Whitehead via The Rutherford Institute.
Chinese Workers Refuse To Go Back To Work Despite Beijing’s Demands
When we commented earlier that the coronavirus pandemic means that the vast majority of Chinese small and medium enterprises (SMEs) have at most 2-3 months of cash left, a potentially catastrophic outcome that will not only crippled China’s economy but its $40 trillion financial system, we summarized the circular quandary in which Beijing finds itself, to wit:
… unless China reboots its economy, it faces an economic shock the likes of which it has never seen before in modern times. Yet it can’t reboot the economy unless it truly stops the viral pandemic, something it will never be able to do if it lies to the population that the pandemic is almost over in hopes of forcing people to get back to work. Hence the most diabolic Catch 22 for China’s social and economic system, because whereas until now China could easily lie its way out of any problem, in this case lying will only make the underlying (viral pandemic) problem worse as sick people return to work, only to infect even more co-workers, forcing even more businesses to be quarantined.
Shockingly (or perhaps not at all in light of China’s tremendous human rights record), Beijing has picked output over life expectancy, and in a furious scramble to restart its economy, which as we showed earlier remains flatlined…
… according to most high-frequency metrics, it has been “advising” people to get back to work, even as new coronavirus cases are still coming in, in the process threatening to blow out the current epidemic with orders of magnitude more cases as places of employment become the new hubs of viral distribution.
As Bloomberg picked up late on Sunday, following what we said earlier namely that “local governments around the country face a daunting question of whether to focus on staving off the virus or encourage factory reopenings” China’s central and local governments are one again easing the criteria for factories to resume operations “as they walk a tightrope between containing a virus that has killed more than 2,400 people and preventing a slump in the world’s second-largest economy.” This schizophrenic dilemma for a government which faces two equally terrible choices, was best summarized by the following two banners observed in China:
Banner 1 says: “If you go out messing around now, expect grass on your grave to grow soon.“
Banner 2 says, “Sitting at home eats up all your have, hurry up go out & find a job.”
Indeed, a perfectly schizophrenic message from the government to the people:
Banner 1 says: “If you go out messing around now, expect grass on your grave to grow soon.“ Banner 2 says, “Sitting at home eats up all your have, hurry up go out & find a job.” The slogan changes as frequently as they change the criteria for #COVID19 diagnosis. #coronaviruspic.twitter.com/2VnB5jZ0zz
And yet, even with both options equally terrible, Beijing also has no choice but to pick one. As a result, as Bloomberg writes, “the rush to restart has been propelled by China’s leader Xi Jinping and top leaders, who are urging companies to resume production so the country can continue to meet lofty goals for growth and economic development in 2020.”
Regular Zero Hedge readers know the rest: with most of Chinese economic output paralyzed, officials in China’s provinces have taken up Xi’s call, with one region after another relaxing rules that had kept more than half the nation’s industrial base idle following the Lunar New Year holiday.
So as China undergoes a wholesale push to reboot its economy, there is certainly some success. AS Bloomberg notes, “about 600 kilometers east of the virus epicenter of Wuhan, vendors and customers at the Yiwu wholesale market in Zhejiang province are having their body temperature tested at the entrances after the vast complex that wholesales manufactured goods reopened on Tuesday, three days earlier than expected. Power demand has also started to pick up in China, with six major generators reporting that coal consumption – while still below pre-holiday levels – rose 7% on Feb. 20 from the previous day.”
Well, “pick up” may be a bit of an exageration but here it is: the smallest possible increment, yet still more than 50% below where it was on previous years, suggesting China’s economy is running at half of its capacity, which in GDP terms means an epic collapse, a lifetime away from the traditional 6%-7% Y/Y increase.
Ultimately, the core problem China is facing as we explained earlier today, is one of trust: trust by workers that their employers, and certainly the government, has their best interest in mind when it is urging everyone to get back to work. Or lack thereof.
“Our factory is still missing quite a lot of workers, so we can only resume limited production,” said Dong Liu, vice president of a textile manufacturer in Fujian, southeastern China, that employs more than 400 workers. Dong said he applied to the government on Feb. 17 to restart and the inspector came the next day and gave permission. “More and more factories are allowed to reopen this week,” he said, although as they reopen, they find the problem mentioned before: nobody is gullible enough to go back to work. After all why risk it if a return to the place of work with the pandemic still raging means a material chance of a death sentence?
Naturally, China’s massive population – while bombarded by propaganda on a daily basis – is hardly naive, and is very well attuned to what is really going on. And what is going on is that China’s economy has ground to a halt because nobody trusts the government anymore!
Even Bloomberg admits it: “the push to get production rolling again risks a renewed spread of the virus, about which much is still not yet known” (it’s certainly not known where it came from after Chinese scientists disproved the widely held propaganda narrative that it miraculously emerged from some bat at the Wuhan seafood market during the peak of bat hibernation season).
“A peak may come at the end of this month for the whole country but it won’t necessarily indicate a turning point,” Zhong Nanshan, a respiratory disease expert who led research into a treatment for SARS, told reporters in Guangzhou earlier this week. “The epidemic could have a new peak after people travel back to work.”
The last sentence is predicated on two major assumptions:
that workers will decide they want to return to work; and
that they will consider the outsized risk to their lives from returning to work as lesser than the threat to their livelihood from not receiving a salary.
And what happens if they all refuse to come back? What if China, sick of the lies and fabrications of its government, creates the largest, if completely unexpected, labor union in history and one which refuses to work and demands handouts from the government until the coronavirus pandemic is well and truly halted, something which can not be ascertained for a long, long time in light of the government’s flagrant and ongoing lies?
Meanwhile, the government schizophrenic, contradictory instructions continue:
“Every day several government departments send representatives to spot check our efforts to curb the virus,” said Melissa Shu, the company’s export manager. “They come from the district government, the center for disease control, the city government, at different times of day and check if we disinfect in time, whether we test the temperature of workers, whether workers have masks, whether one person has a separate lunch seat, whether lunch is properly arranged, etc, etc.”
Shu said at lunchtime, workers need to sit at least one meter apart (about three feet).
“As a result, we can’t ask all the workers to come to work even when they’re in town ready to work,” she said, adding that the plant has about 40-50 staff working in rotation, about half the number employed before the virus.
Ironically, some Chinese factories already have plenty of space, thanks to the long-running trade war with the U.S.
“Compared with the virus, that was much worse” said Hui Zhuo, founder of a wooden furniture manufacturer in Zhongshan, in the Pearl River Delta. “We’ve cut a lot of workers in the last two years — so I’m not too worried this time because the space in my factory is big enough to avoid being crowded.”
And speaking of trade war, if the long-running feud between the US and China wasn’t enough for Chinese customers to seek alternative supply chains, the coronavirus fiasco is sure to be the tipping point:
In the longer term, the outbreak is likely to exacerbate the damage wrought on China’s factories by the trade war. For some overseas customers in fast-moving industries like fashion, the factory shutdown amid the virus has been another wake-up call that may spur them to reduce their reliance on Chinese suppliers.
“I think for the next season or the next year’s goods, retailers would be looking at sourcing more from other countries,” said AJ Mak, CEO of Chain of Demand, which provides artificial-intelligence systems to retailers in Asia and the U.S. to predict product demand. “I think those conversations which started from the trade war would be definitely accelerated.”
The irony is that by the time most Chinese workers do return to their jobs, those jobs may not exist anymore.
Meanwhile China’s push to salvage its growth targets won’t be complete until the virus is fully under control – something that is impossible to predict, and will in fact be delayed the more China pushes to restore full factory staffing:
“When can everyone come back to work? No one knows,” said Shu at the Zhenjiang LED factory. “Logistics is still not yet fully resumed, inter-city transportation is still restricted. Only after the epidemic is fully controlled, we can truly return to normal work and life.“
What we do know, is that for now, when given the choice of the carrot or the stick, Chinese employers and the government are picking the carrot… for now. As China’s Global Times reported, fabrication giants such as Apple supplier Foxconn have rolled out incentives to encourage workers to return to their posts amid the coronavirus pandemic. In fact, the company’s factory in Zhengzhou said it would award 7000 yuan to back-to-work staff and give bonuses in stages to workers who clock in for up to 55 days.
Apple supplier #Foxconn‘s factory in Zhengzhou said it would award 7000 yuan to back-to-work staff and give bonuses in stages to workers who clock in for up to 55 days. Foxconn rolled out incentives to encourage workers to return to their posts amid the #COVID19: media reports pic.twitter.com/glx55EEPC1
So far such “carrot” approaches have failed to yield results, which leads us to think that a far worse eventuality is next: the stick.
And if China’s population was already furious at the inept response to the coronavirus pandemic, the information blackout, the self-serving lies by the communist party over the past two months, and the general lack of respect for ordinary people by China’s billionaire oligarchs, one can only imagine what happens to the mood across China’s workforce – the largest in the world – once the entire nation becomes one giant gulag, where everyone is forced to work for the greater good, or else…
Pizza Hut’s Largest Franchisee Is On The Brink Of Bankruptcy
NPC International, better known as Pizza Hut’s largest franchisee, is on the brink of bankruptcy.
The company is reportedly exploring restructuring options for its more than 1,200 Pizza Hut locations and 400 Wendy’s locations. The franchise secured $35 million in loans earlier this year to help bolster its liquidity, but also recently defaulted on $800 million of its $1 billion in debt, according to Restaurant Dive.
NPC reportedly skipped loan payments and entered into a forebearance agreement with lenders to allow time to weigh options for restructuring. The company is working with advisers at Greenhill & Co., AlixPartners LLP and Eldridge Industries LLC to weigh its restructuring options.
A bankruptcy could help the company re-negotiate agreements with landlords and the company is reportedly still weighing options that will keep it out of court.
The company’s woes are partially attributable to lack of delivery, which is a consumer trend that other fast food companies have been able to embrace with services like Uber Eats and DoorDash. The company has also experienced headwinds from rising food and labor costs – and domestic same store sales that slipped 2% during Q4.
Chris Tuner, Yum Brands CFO, said last week: “There is potential for choppiness in near-term results of Pizza Hut U.S., primarily related to our largest franchisee.”
The chain has tried to adapt to other ideas, like self-service pickup cubbies and in-store kiosks. Pizza Hut is considering rolling these ideas out to all stores, pending the results of a pilot test in two Texas restaurants. Meanwhile, Yum Brands has leveraged a delivery partnership with Grubhub to try and compete with other delivery names and competitors like Domino’s.
Pizza Hut announced last year it could temporarily close up to 500 underperforming restaurants for remodeling.
Recall, just weeks ago, we reported about the epidemic of small restaurants going bankrupt due to lack of traffic in areas where they are situated.
In that piece, that noted that names like Bar Louie and American Blue Ribbon Holdings, which owns Village Inn and Bakers Square, both filed for bankruptcy earlier this month and that both both cited lower foot traffic in the U.S. as the reason for their downfall.
Bar Louie’s Chief Restructuring Officer Howard Meitiner said at the time: “This inconsistent brand experience, coupled with increased competition and the general decline in customer traffic visiting traditional shopping locations and malls, resulted in less traffic at the company’s locations proximate to shopping locations and malls.”
It isn’t even March yet, and progressives are already making their excuses for why they may lose to Trump in 2020. In a piece written for The Atlantic, Sarada Peri – a former senior speechwriter for President Barack Obama – launched the latest in a long line of arguments explaining why their loss would be unfair.
The piece, titled “Trump Is Going to Cheat,” is the usual Democratic fare.
The author insists that the president is going to somehow use underhanded means to sway the election in his direction. Unfortunately for her, the argument doesn’t pass the smell test.
President Trump Is Going To “Lie” To Win In 2020
Peri begins by pointing out that the Democrats are currently in a heated contest to determine which one of them is the most electable. It doesn’t take long, however, for her to identify the real challenge any nominee will face: “He or she will need to run against a president seemingly prepared, and empowered, to lie and cheat his way to reelection.”
The author claims that President Trump would seek another win by lying and saying “absolutely anything necessary to attract and maintain support.” She also points to the so-called list of Trump’s lies as president. If the newspaper responsible for this particular curation is to be believed, he has rattled off over 15,000 since taking office. Of course, even a cursory glance shows that most of the statements in the fib collection are either Trump’s opinions, hyperbole, or even simple mistakes.
Moreover, the notion that the Democrats — and their close friends and allies in the press — are somehow the epitome of honesty is laughable given their constant caterwauling about Russiagate conspiracy theories. But, according to Peri, President Trump is going to do far worse when it comes to winning in November.
Trump Is Going To “Cheat!”
Just in case bending the truth a little doesn’t quite cut it, the president will find a way to cheat, somehow. Peri is sure of it. She recalls an observation made by journalist Katy Tur during a discussion about the challenges involved in covering the president:
“She said that what made covering Trump as a reporter and running against him as a candidate so difficult was the way that scandals stuck—or didn’t stick—to him. Hillary Clinton’s use of a private email server as secretary of state was like a stain on her shirt that people couldn’t get past, because it was the only mark on an otherwise clean shirt. But Trump had so many stains that ‘you couldn’t tell if it was a stained shirt or if it was just supposed to be that way.’”
The author goes on to cite the controversy over Trump’s phone call with Ukrainian President Volodymyr Zelensky as an example of how he will break the rules to defeat his opponent. Of course, she forgets to mention that the Democrats failed to prove that Trump’s motivation in his dealings with Ukraine was specifically to hurt former Vice President Joe Biden.
Peri also seems to forget the fact that Hillary Clinton’s campaign brazenly paid money to have a former British spy dig up dirt on Trump using Russian and Ukrainian sources. A little bit of “good for me, but not for thee,” perhaps? But that’s not the worst of it. It seems employing the Democrats’ tactic of using foreign powers to gain an edge in the election isn’t the only card up Trump’s sleeve.
Trump Will Use Media To Cheat!
In her effort to convince readers that Trump will use unfair means to keep his position in the Oval Office, Peri makes one of the most laughable arguments a progressive could suggest in this type of conversation: She blames the media. That’s right — she actually complains that right-wing media would support Trump and influence the masses:
“Perhaps the most troubling form of cheating is the most diffuse, and therefore the hardest to grasp. Trump’s reelection campaign, abetted by right-wing media and companies like Facebook that have absolved themselves of any democratic responsibility, is waging a disinformation war modeled on the efforts of dictators and unprecedented in its scale. As reported by this magazine, the campaign is prepared to spend $1 billion to harness digital media to the president’s advantage, including bot attacks, viral conspiracy theories, doctored videos, and microtargeted ads that distort reality.”
Trump Ain’t Leaving!
Just when you think the author’s arguments couldn’t get any more ridiculous, she makes her final assertion: If Trump’s lying and cheating don’t secure his position, he will simply refuse to leave. Now, she is not the first to put forth such a silly idea, but, as proof, she cites the fact that he has made jokes about remaining in office past his term.
“He retweeted Jerry Falwell Jr.’s suggestion that he ought to have two years added to his term and ‘joked’ about staying in office longer than eight years,” she wrote.
“If he loses in November, the litigious showman might claim that the election was rigged against him and theatrically contest the results in court.”
The Democrat Delusion
According to Google, the definition of the word “delusional” is as follows:
“Characterized by or holding idiosyncratic beliefs or impressions that are contradicted by reality or rational argument, typically as a symptom of mental disorder.”
Peri’s piece is chock full of the delusional talking points the corporate press has bandied about since Trump took office. But it is far more than that. It is a stellar example of a tactic that is all too relevant nowadays: Always accuse your opponent of that which you are doing.
Most of the accusations that one hears from Peri and her ilk have a ring of familiarity to them – but that’s because they describe the behavior and tactics the left tries to use against Trump…
Democrats now know how millions of Republicans felt in 2016. A populist with devoted plurality support charges through the primary and caucus states, racking up delegates against multiple “establishment” candidates who all want to be the last alternative standing. Before the media knew it, Donald Trump could not be stopped.
…
Democrats are waking to the prospect of a nominee who wants to eliminate private health insurance, raise taxes on the middle class, ban fracking and put government in charge of energy production, make college a taxpayer entitlement, offer free health care to illegal immigrants, raise spending by $50 trillion, and tag every down-ballot Democrat with the socialist label.
“Big Hit” – Xi Warns Of Economic Fallout From Covid-19 Outbreak
China’s top leader, Xi Jinping, told officials at a Communist Party meeting on Sunday that the Covid-19 outbreak is a “big test” for the country, and policy adjustments would cushion the economy for a downturn. Xi acknowledged “obvious shortcomings in response to the epidemic,” warning that short-term financial stress could be imminent.
We’ve noted on several occasions that China’s economy is completely paralyzed.
Just take a look at Goldman’s Adam Gillard’s recent commodity report that suggests full country apparent demand is down a massive -66% y/y.
Or better yet, Nomura’s Chief China economist Ting Lu noted that China’s Emerging Industries PMI (EPMI), which gauges momentum in the country’s high-tech industries and is closely correlated with official manufacturing PMI slumped to 29.9 in February (from 50.1 in January!).
So, it’s apparent that the closely followed China manufacturing PMI could print in 30-40 range this month, suggesting the current growth slump triggered by the virus is collapsing the Chinese economy.
Xi said Sunday the “the epidemic situation is still severe and complex, and prevention and control work is in the most difficult and critical stage.”
He warned:
“The outbreak of novel coronavirus pneumonia will inevitably have a relatively big impact on the economy and society.”
Beijing has deployed several rounds of monetary policy to support the economy, as a twin shock (demand and supply) is having devastating impacts on first-quarter growth.
Xi said low-risk provinces should restart production monetarily, areas with medium-level risks should restart production on an orderly timeline, and high-risk regions should focus on virus containment strategies.
For more color on China’s plunging economic output, we noted last week several “alternative” economic indicators such as real-time measurements of air pollution (a proxy for industrial output), daily coal consumption (a proxy for electricity usage and manufacturing) and traffic congestion levels (a proxy for commerce and mobility), concluding that China’s economy appears to have ground to a halt.
These observations were subsequently reaffirmed when we showed that steel demand, property sales, and passenger traffic had all failed to rebound from the “dead zone” hit during China’s Lunar New Year hibernation.
No matter the policy support Beijing deploys to stabilize the economy, economic paralysis is already visible, with 750 million people in lockdown, where people are becoming irritable at Beijing’s now openly over propaganda to downplay the epidemic. The shuttering of factories will lead to countless workers being fired and companies running out of funds, as the next big bankruptcy wave will hit smaller to medium-sized operations. To make matters worse, the price of food is surging for the most volatile combination possible, a collapse of the economy mixed with social unrest, one which, if not arrested soon could lead a new violent phase in the virus outbreak.
Putting it all together, the most significant economic shock to hit China’s economy in nearly a decade is unfolding, and it could also tilt the global economy into recession.
For weeks, investors have been gobbling up stocks, convinced that more stimuli from Beijing could force a V-shaped rebound in China’s economy in Q2 – but as the pandemic spreads across the world, now shutting down parts of South Korea, Japan, Iran, and Italy, the whole containment narrative has broken down – and the global economy could be nearing a prolonged period of below-trend growth.
10-Year Treasury Yield Plunges To Just 1 Basis Point Away From Recession “Tipping Point”
After more than a month of shocking complacency (because what, central banks will somehow print antibodies and “fix” the covid pandemic which will restore collapsing global supply chains?) traders are “suddenly” realizing that the coronavirus outbreak contains a significant likelihood of impact to the global economy and the potential to become a black bat, pardon, black swan type event. An event which could quickly spiral into a US – and global – recession.
How to determine if a recession is coming? One place to watch is the NY ‘sFed recession probability indicator, which is a function of the slope of the curve between 3m bills and the 10y rate and was developed using a logistic regression technique. As BofA writes, going back to 1960, there have been 8 recessions, but comparisons with the last 3 recession are likely more relevant. Chart 1 shows that within a 12-month window prior to each of the last 3 recessions, the probability exceeded 30%. If we look at all 8 recessions since 1960, we find that the critical 30% threshold remains relevant back to 1969 (7 recessions), but provided a false positive in 1967 and was not reached in the 1960 recession.
Yet while a 30% recession probability is still a gray zone, once the NY Fed’s indicator reached a level of 40% it has not provided any historical false positives.
Why is this notable? Because in the Fed’s framework, the 40% level corresponds to a slope of -45bp between 3m bills and the 10y rate.
Looking at the current cycle, not only is the current probability above 30%, but it was above 40% in August of 2019, when the world was flooded with recession fears and sent a record $17 trillion in global sovereign debt into negative yielding territory. The probability indicator declined post-August as the Fed’s 3 cuts steepened the curve, but given the current reading – and the August reading – versus the critical 30% level of the past 3 recessions, BofA warns that we “have to view the recession outcome as significant enough to consider hedging against.”
Furthermore, when looking for recession proxy signals, BofA focuses squarely on the probability of a zero lower bound (i.e. fed funds rate cut to 0%) in 18 months (this is shown in chart 2 below). With this approach, BofA obtains roughly one in three chance of seeing the Fed at the ZLB by mid-2021, corroborating the above.
What does all this mean for the 10Year Treasury as a recessionary signal?
According to BofA, recent mini-cycle troughs have coincided with bottoms on 10y Treasury yields around 1.4% (as shown in chart 3 below for The Conference Board Leading Indicators and 10yT yields since the great recession).
More importantly, breaking through this “tipping point” level requires more than 50% probability priced for the Fed cutting rates back to 0%! This means that breaking 1.4% in an on-hold context for the Fed creates a significant inversion of the curve, pushes recession signals higher, and pressures a further inversion of the FF1/FF6 spread which we found in Pricing cuts ahead of the Fed to have no false positives for Fed cuts following a -30bp inversion (currently -16bp).
As of open of trading on Sunday evening, the implied 10Y yield is 1.41%, or just 1 basis point above this critical “tipping point” below which trapdoors to both a recession and the Zero Lower Bound are open.
What this means in practical terms from a duration perspective is that “the market may gap lower on a break below 1.4% for the 10Y Treasury”, as this corresponds to phase transition higher in recession probabilities and a clear challenge to the on-hold Fed stance, “particularly as convexity flows add to what would likely be a broader risk-off move. “
Finally, while the threshold for cuts is high – especially if a slowdown is driven by pandemic fears – and considering the Fed’s recent rhetoric which has sought to allay expectations of a rate cut as soon as June, once the Fed commits to cuts, BofA finds it unlikely that they will be the insurance style of 2019, and instead the Fed will proceed to cut all the way to zero to avert the coming recession. For the curve, this implies some scope for further bull flattening, but limited beyond 1.4% in the 10Y, as the Fed is likely to be more significantly priced in beyond this level.
And while BofA goes on to list several ways to hedge this eventuality, the simple take home here is that if the 10Y tips below 1.40%, it will proceeds to plunge straight down, which in turn will force the Fed to change its “reaction function” again, and announce that an aggressive rate cut phase is coming, one which will be meant to offset what the market is now saying is a virtually assured recession. It also means that anyone hoping the Fed will further taper its QE4 in coming months is in for a rude awakening.
