Tag: finance

Authored by Philipp Bagus via The Mises Institute,

The eurozone is a gigantic machine of monetary redistribution. Several independent governments can finance their expenditures through deficits that are monetized directly or indirectly by one printing press. More specifically, the European Central Bank (ECB) may buy eurozone government bonds directly from market participants or accept them as collateral in its lending operations, effectively increasing the monetary base.

Through this monetization, a government can externalize the costs of its deficit partially onto the citizens of other eurozone countries in the form of a lower purchasing power for the euro. The setup resembles a tragedy of the commons. The commonly owned resource is the purchasing power of the euro, which is exploited by several users. These users are the eurozone governments. They issue debts resulting in an increase in the money supply. By running comparatively higher deficits than their peers, eurozone governments can attempt to live at the expense of foreigners.

It cannot be surprising that most governments have ignored the new treaty instituted in the wake of the European debt crisis to bring down debts and deficits. During the last years of moderate economic growth, with interest rates at virtually zero, highly indebted governments did not take advantage of the situation to reduce their debts. Rather they took advantage of the higher tax revenues and reduced interest spending to boost government expenditures in other areas. Governments think that they will get away with it. The rationale for this irresponsible behavior was simple: when there was another crisis someday, these governments would just print more government bonds, have their banks buy them, and make others pay in form of a loss in the euro’s purchasing power.

These governments believe that no one will put an end to the monetization, because ending this mechanism would trigger a sovereign debt default, which would harm the other eurozone governments. European banks and especially the ECB are loaded with eurozone government bonds. A government default would imply losses not only in the defaulting country, but for all eurozone banks. It would lead to cascading bankruptcies, an immense banking, sovereign debt, and economic crisis. The confidence in the euro could be severely shaken by the risk of (hyper)inflation.

Although southern governments such as Italy, France, and Spain did not use the last years to reduce their deficits, Germany and other northern countries such as the Netherlands did reduce their debts, thereby increasing, ironically, the possibility of southern government relying on Germany and the north for bailouts.

Government Deficits and Surpluses in Percentage of GDP

Government Debts in Percentage of GDP

During the COVID-19 panic and resulting lockdowns, Italy, Spain, and France have vehemently demanded “solidarity” from Germany, bluffing about leaving the EU if their demands remain unfulfilled. In spite of their failure to reduce government spending and deficits in good times, they believe it to be their right to be bailed out. Their past excessive deficits can be explained by the prospect of European debt mutualization. Indeed, several bailout schemes have already been instituted during the corona panic. The ECB announced that it would buy €750 billion in bonds, and the EU has agreed upon a €540 billion bailout package.

Unfortunately, the moral hazard implied in the euro setup not only influenced excessive government spending before the corona crisis, but most likely is influencing government responses to the epidemic as well. The costs of lockdowns and government bailouts of citizens and companies are enormous. A government must carefully consider the decision to enforce a costly lockdown. But what if a government can externalize part of the lockdown costs on others through new debts or bailouts? If this possibility exists, as it does in the eurozone, it becomes more likely that a government will declare a lockdown and continue with it for longer. Instead of lifting the restrictions as fast as possible, southern governments maintain them, because they count on a bailout and the support of governments with better fiscal balance sheets. By ruining their own economies, southern governments actually increase the pressure for the institution of new redistribution schemes, and finally a European superstate.

The reasoning, as exemplified by infamous former Greece finance minister Yanis Varoufakis, is:

if you do not rescue us, we will default, leading to a European banking crisis, high losses for the ECB, and a severe depression. So, you better bail us out.

Thus, the setup of the euro may be responsible for suicidal lockdowns in some eurozone countries that will be longer than in other places, with all their detrimental social, political, health, and economic consequences. And it is possible that this crisis will lead to a final decision for the future of the euro and toward a European superstate.

As the coronavirus spreads rapidly around the world, Statista’s Katharina Buchholz notes that some European countries have begun flattening the curve of infections.

According to numbers by Johns Hopkins collected by the website Worldometers, the start to a flattening is especially visible in Germany, where a total of around 150,000 cases had been recorded most recently.

You will find more infographics at Statista

In Italy and France, where there are currently almost 190,000 and 160,000 cases respectively and public life has shut down, some progress has also been made. Spain has had the steepest curve despite also adhering to a strict lockdown. There are more than 210,000 known infections in the country.

The UK, where the outbreak started later, does not yet show any signs of infections slowing down. The same is true across the pond in the U.S., currently the country with most known infections and a curve that is still pointing upwards. Infections are nearing 850,000 stateside.

The countries’ collective aim is to “flatten the curve” of infections. While South Korea was able to (more or less) stabilize its outbreak at around 10,000 cases – due to widespread free testing (including the now infamous drive-thru testing), quarantine measures and the harnessing of mobile technology for public information – China has stabilized theirs at around 83,000 cases. South Korea hit 100 cases on February 20 and managed to leave the steep upward trajectory around 14 days later. In the case of China, more than 100 cases were first recorded on January 20, and quarantine and testing measure succeeded in breaking the upwards trajectory by February 12 – around three and a half weeks later. European countries and the U.S. are already three to five weeks into their respective outbreaks and are now beginning to level curves in some places.

Authored by Daisy Luther via The Organic Prepper blog,

It’s no secret that the Western World is dealing with an economic crisis of epic proportions right now due to the COVID-19 pandemic that is believed to have begun in Wuhan, China. Here in the US, businesses and families both are struggling to remain afloat, even as the government doles out trillions of dollars.

Our struggles may be just the opening China needs to advance the Made in China 2025 strategy, an attempt to become the world’s superpower in technology, manufacturing, and cybertechnology. Part of their strategy is to buy up Western businesses.

Foreign Policy reports that over the past few years, China has invested billions of dollars in Europe and North America, with most of that money going into mergers and acquisitions as opposed to starting new business ventures themselves.

And now our economic woes may give them the opportunity to snap up more businesses at bargain-basement prices.

This, of course, is a national security issue.

Our vulnerability was made all too clear recently when China threatened suggested on state-run media that they could easily halt the export of medications and medical supplies to the United States as we were on the cusp of dealing with the COVID-19 pandemic.

If China retaliates against the United States at this time, in addition to announcing a travel ban on the United States, it will also announce strategic control over medical products and ban exports to the United States. Then the United States will be caught in the ocean of new crown viruses.

According to the US CDC officials, most masks in the United States are made in China and imported from China. If China bans the export of masks to the United States, the United States will fall into the mask shortage, and the most basic measures to prevent the new crown virus are Can’t do it.

Also according to the US CDC officials, most of the drugs in the United States are imported, and some drugs are imported from Europe. However, Europe also places the production base of these drugs in China, so more than 90% of the US imported drugs are Related to China. The implication is that at this time, as long as China announces that its drugs are as domestic as possible and banned exports, the United States will fall into the hell of the new crown pneumonia epidemic. (source)

The jist of the article was that the US, if not the entire world, owed China an apology due to our media coverage of the outbreak in Wuhan and comments made about the outbreak by government officials. In fact, not only did the Chinese government feel the world should apologize to China but that they should thank China because they “made huge sacrifices, paid huge economic costs, and cut off the new crown virus.”

We rely heavily on China for not only medical imports but also food, electronics, mechanical parts, and many more essential products. You can see a more thorough list of what we currently import from China here.

Think about how reliant we are on a country with whom we have enmity. Who thought that was a good idea? At least the US has finally begun taking steps to put a halt to the discreet takeover.

In the United States, the government has woken up to the national security implications of losing sensitive capabilities to China; the Committee on Foreign Investment in the United States (CFIUS) now plays a very active role in screening potential takeovers on national security grounds. (Last year, it famously forced a Chinese company to reverse its acquisition of the gay dating app Grindr.) (source)

But now, due to the pandemic, the United States is currently facing shortages of many of the goods we used to regularly get from China. Meanwhile, we’re also on the verge of an economic collapse.

It’s perfect timing…for China, anyway.

So, will China take advantage of their head start on recovering from the virus? There’s little doubt that they will. In fact, there’s evidence they’ve already begun to do so.

Europe does not have a program like CFIUS, but they’re quickly seeing the need for one.

Bloomberg reports that China-based banks are already seeing a spike in requests from Chinese outfits interested in acquiring European companies.

Many Western governments have already passed business aid packages to make sure companies don’t go under. But that’s not enough. Margrethe Vestager, the European commissioner for competition, has just proposed that governments buy stakes in vital companies to prevent Chinese takeovers. They will also need to screen Chinese raiders taking advantage of the coronavirus.

As for the EU, Sven-Christer Nilsson, a former CEO of the Swedish telecommunications giant Ericsson, told Foreign Policy that “it absolutely has to establish a CFIUS, as do the individual member states. We can’t wait, or we will see the Chinese giving offers companies can’t refuse.” (source)

China is said to be particularly targeting Northern Europe, where many innovation-heavy smaller businesses are located.

We need to reconsider what industries are matters of national security.

Ruth Smeeth, who was until last November a member of the British Parliament’s Defense Committee, says we need to redefine what constitutes national security.

“If we have learned anything from the current crisis, it should be that the definition we have been using of national security has been insufficient…Our world has changed beyond recognition, and by default so have our core industries. Our mergers and acquisitions policies need to reflect that.” (source)

Even with CFIUS, Foreign Policy suggests that the US is not safe from Chinese investors.

The American CFIUS, in turn, needs to rethink what constitutes national security—ventilators clearly do. They must also ask if national security is the only criterion for rejection. Indeed, takeovers should be screened too for the damage they could do to the economy. (source)

It isn’t a stretch of the imagination to think that companies who are desperate to stay afloat would be willing – or even eager – to take Chinese investments to do so and it’s important to note that China has been buying up American tollways, ports, and property since the 2008 crash. In allowing that to happen, we could be opening the gates to an enemy that will take over from within, a bloodless coup that is only recognized when it’s too late. We absolutely can’t allow such a thing to happen.

If you think we’ve got problems now, just imagine what things would be like if China owned more of our economy than we do.

You have to wonder if striking while times are difficult was the plan all along.

Authored by Martin Sieff via The Strategic Culture Foundation,

Open Borders and Free Trade induce national suicide slowly and gradually, without the victims waking up to what is going on until it is too late. But the coronavirus has brought home with global clarity that human societies need governments and regulated borders for their own survival.

The bottom line is clear, societies that have had open borders to previous major centers of infection and transmission, like Iran and Italy which kept open strong flows of people to and from China in the early stages of pandemic, suffered exceptionally badly.

Countries obsessed with maintaining liberal values and open borders like France, Germany, the United Kingdom and the U.S. also suffered disproportionately.

Countries that have allowed their domestic industry to decay have found they cannot now produce the crucial equipment they need, from respirators to gas masks. Countries with strong manufacturing bases like China, or with a prudent nationalist sense of preparing ahead for emergencies like Russia, have done far better. The shortage of respirators in Britain has become more than a national scandal: It is a national shame. That is another inexorable consequence of the pernicious doctrine of Free Trade.

I documented this history in some detail in my 2012 book “That Should Still Be Us“.

There, I showed how even the French Revolution of 1789 was in fact triggered by the catastrophic Free Trade Treaty that hapless King Louis XVI approved with England only three years before. It led immediately to the worst economic depression in French history which triggered revolution. In three years, liberal Free Trade succeeded in destroying a society that had flourished for a thousand years and the most powerful state Europe had known since the fall of the Roman Empire.

In his classic television series and accompanying book “How the Universe Changed”, the great British broadcaster and historian James Burke showed how the discipline of statistics was responsible for discovering the way the cholera bacteria spread through contaminated water in 19th Century London, then the largest urban area ever experienced.

Today, we see a similar pattern in the spread of the coronavirus: While half the counties in the United States remain so far virtually free of the virus, infections have soared in most major metropolitan areas, especially in so-called Sanctuary cities. Invariably these centers are ruled by liberal Democrats where illegal immigrants congregate. They are the places where the values and consequences of Free Trade and Open Borders most clearly flourish. And they ar ealso the places where the terrifying costs of those policies are most evident as well. The chickens have come home to roost.

Countries like Russia and China itself, which have reacted most quickly and decisively to shut down international and domestic travel, have been able to keep their numbers of infections and rates of spread down.

In Europe, by contrast, the impact of the virus has been appalling, The European Union has been as useless as New York City Mayor Bill de Blasio,. Pro-EU liberal national leaders like President Emmanuel Macron in France and the venerable Chancellor Angela Merkel in Germany (Berlin’s version of Nancy Pelosi) just sat back in bemused silence till it was too late. In Italy and Spain, the political splintering of societies has woefully added to the chaos.

This is in fact a very old lesson indeed: The ruling elites of the world should not have had to relearn it.

But for more than 225 years, the ruling elites of the West have mindlessly embraced Open Borders and Free Trade. Yet these have always been mere assertions of prejudice and mindless faith: They have never been proven to be true in any scientific manner.

Instead, when we look at the factual evidence of economic history over the past two centuries, it has always been the case that developing industrial societies which protect their manufactures behind strong tariff barriers flourish with enormous foreign trade and balance of payments surpluses. Then the living standards of their people soar.

In contrast, free market societies too powerless, or just too plain dumb to protect their economic borders get swamped by cheap manufactures and their domestic industries get decimated. This was the case with liberal free market Britain caught between the rising Protectionist powers of the United States, Japan and Germany for the next century.

It has been true for the decline of American industry since the 1950s, the more the United States embraced global free trade, the more its own domestic manufactures and their dependent populations suffered. This never bothered the liberal intellectual elites of the East and West Coast at all. It still doesn’t. Having inflicted lasting ruin and despair on hundreds of millions of people for generations, they despise their victims as “deplorables”  for crying out in pain and seeking to end the disastrous policies.

Russia suffered the full horrors of the merciless laissez-faire, unregulated Free Market policies of the liberal West in the 1990s. Boris Yeltsin never woke up to the catastrophe that Bill Clinton and Larry Summers were inflicting on his country. Over the past two decades, Russia’s recovery from that Abyss under President Vladimir Putin has been miraculous. National social responsibility has succeeded where the crazed, simplistic theories of Adam Smith, David Ricardo and Ayn Rand all palpably failed.

The coronavirus pandemic therefore should serve as a wake up call to the peoples of the West, what Thomas Jefferson memorably called “A Fire Bell in the Night.” They need to start following Russia’s examples of self reliance, prudent preparation and maintaining strong borders.

The ravages of Liberalism – its Open Borders and Free Markets – have already stripped the West of all its defenses, social, demographic, industrial and economic.

The West is out of time: The Audit of Pandemic has been taken, and the reckoning is now due.

When the Fed breached a monetary taboo even Ben Bernanke did not violate when Jerome Powell announced last month he would buy investment grade bonds, it was clear that the Fed’s only solution to avoiding the bursting of the corporate debt bubble was to make it even bigger. And sure enough, the Fed’s explicit backstop of the bond market has meant the supply of IG bonds has set a record pace in 2020. According to Morgan Stanley, IG supply has totaled $693 billion through mid-April, up a staggering 63% y/y…

… with $435 billion pricing since the beginning of March alone. March supply set an all-time record at $264 billion, breaking the prior record by over $80 billion and a further $170 billion in the first half of April. To put that in perspective, the March total surpasses the prior record for the busiest month (January 2017) by over $80 billion. Issuance just in the first half of April already ranks in the top five busiest months on record. Four of the top 10 busiest weeks on record have occurred since the beginning of March, with the week of March 30 ranking as the busiest ever, at $118 billion of issuance.

All to say that this was truly an unprecedented pace. Year-to-date through April 17, total supply of $693 billion is tracking 63% ahead of last year.

And confirming what we said a month ago in “Bond Market Tears In Two“, issuance has been heavily skewed toward high-quality issuers, with issuance rated “A” making up 57% of supply from the beginning of March onwards, for obvious reasons: these are the bonds that will find a willing buyer in the Fed via Blackrock’s purchases of the LQD ETF. Drilling down, consumer Discretionary companies have raised the most new debt financing when combined with revolver draws.

Of course, the Fed’s enabling of this epic bond bubble burst would have been impossible without the coronavirus crisis: the pandemic has produced an unprecedented market shock, with issuers experiencing an extremely sharp drop in earnings, without clarity on when the economy will begin to recover. Indeed, IG issuers have tapped financing wherever possible, including drawing on revolvers. Through April 20, IG issuers had tapped $134 billion in revolvers, putting combined bond issuance and revolver draws at $568 billion since the beginning of March.

And while trends in the use of those proceeds point to companies using debt issuance to shore up liquidity, the IG issuance momentum has been so powerful, companies have been using corporate bonds to refi some of the revolver draws in recent weeks, as we reported last week.

So while it is obvious by now that the Fed’s actions have triggered a tidal wave of new corporate debt issuance, one which will make the corporate sector scream for a bailout during the next, even bigger crisis, and the Fed will gladly bend over backwards yet again, what is perhaps more interesting is the fact that IG issuance tends to spike before or right at the
start of a recession, according to Morgan Stanley.

Looking at the period right before the early 2000s recession, trailing three-month issuance spiked in the same quarter that the recession started (1Q01). Similarly, issuance rose in the first-half of the recession surrounding the global financial crisis (peaking in 2Q08). As shown in the next two charts, in both instances issuance from “problem” sectors rose – Telecom in the early 2000s and Financials during the crisis. In the early 2000s recession, Consumer Discretionary issuance also rose sharply in the first quarter. However, in both cases, issuance did slow meaningfully from the peak for the remainder of the downturn, before returning to a more normal run-rate as the economy recovered.

All of which leads us to the last question: what impact will all this issuance have on corporate fundamentals? Net of maturities, calls,and tenders, Morgan Stanley estimates net bond issuance for 2020 YTD to be about $400 billion. Including the draws that IG issuers have made on their revolvers, net issuance rises to ~$535 billion. To estimate how this level of issuance could impact leverage, the bank then takes its usual subset of US, non-financial companies in the IG index with publicly available data,and extrapolate from 4Q19 fundamentals. Across this subset of ~375 companies, net issuance has totaled about $314 billion when including revolver draws. These issuers had median leverage of 2.38x at the end of 2019.

Assuming flat EBITDA, the increase in debt alone could push gross leverage +0.13x higher. However, a severe shock to the EBITDA of these companies is now assured. As such, incorporating shocks to LTM EBITDA of 10-25% shows leverage could increase by +0.41x, to nearly 1.0x year. Overall, these results suggest that leverage peaks during or after a recession when earnings fall.

In summary, leverage is likely to rise across sectors.

The Consumer sectors could see the largest increase in leverage, followed by Materials and Industrials sectors. Health Care is the least impacted sector, with significantly less net issuance YTD than the others.

And so, as companies flood the market with new debt, they plant the seeds of their own overlevered demise, because while the Fed has made it frightfully easy for IG corporations to issue an unprecedented amount of debt, by doing so it has merely doomed even the most solid credits to a painful day of reckoning, one where they will have more net debt than ever, effectively assuring another avalanche of downgrades – many straight to junk – either in the current crisis, should its duration persist beyond worst case estimates, or in the next one, when the Fed will have no choice but to buy all the outstanding corporate debt.

As the coronavirus outbreak continues to wreak havoc across the globe, people’s time that would have otherwise been spent perusing malls or going to live events, is now being spent on the sofa.

During this period of pandemic-induced social isolation, Visual Capitalist’s Katie Jones notes it’s no surprise that people are consuming vast amounts of media. Today’s graphics use data from a Global Web Index report to explore how people have increased their media consumption as a result of the outbreak, and how it differs across each generation.

More Time to Kill

Global Web Index found that over 80% of consumers in the U.S. and UK say they consume more content since the outbreak, with broadcast TV and online videos (YouTube, TikTok) being the primary mediums across all generations and genders.

Unsurprisingly, 68% of consumers are seeking out pandemic updates online over any other activity. Gen Zers however, have other plans, as they are the only generation more likely to be listening to music than searching for news.

Overall, younger generations are more likely to entertain themselves by playing games on their mobile or computer. Millennials also stand out as the foodie generation, as they are the most likely to be searching for cooking recipes or reading up on healthy eating.

Leaning on a Pillar of Trust

Across the board, consumers view the World Health Organization (WHO) as the most trusted source of information for any COVID-19 related updates.

This isn’t true everywhere on a regional basis, however. For example, while U.S. consumers trust WHO the most, UK consumers view their government as their most trusted news source overall.

Trust in information shared on social media is higher than word of mouth from friends and family, and even foreign government websites. That said, it is lower than information shared on the radio or news websites.

The Need for Pandemic Positivity

While staying abreast of pandemic updates is important, ultimately, a positive mindset and the ability to switch off will help people cope better day-to-day.

Therefore, it seems reasonable that people are more inclined to invest in new subscription services since they have been in isolation, with almost one-third of Gen Zers considering purchasing Netflix, followed by Disney+.

Understandably, people are becoming increasingly worried about how much time they are dedicating to their screens. However, research suggests that screen time itself is no cause for concern. Rather, it’s the content we choose to consume that could have a significant impact our psychological well-being.

Perhaps most intriguingly, the TV shows and movies that are increasing in popularity on Netflix are about pandemics – which could signify the need for people to fictionalize the chaos we find ourselves in.

Regardless of what type of content we are consuming, the fact is that every generation is relying on their devices during this pandemic to inform and distract more than ever before, creating a huge opportunity for media companies to engage a captive audience.

Authored by Cindy Harper via ReclaimTheNet.org,

A handful of companies are controlling the majority of the world’s conversations, subtly introducing rules to close the gap of what ideas they find acceptable and slowly edging out those they don’t.

One of the most prominent ways that tech companies have been doing that, of late, is the result of realizing that they get ample media support and can stay in the good graces of legacy media outlets when they censor content for being “misinformation.”

The guise of protecting the world from “misinformation” is fast becoming the easiest justification for censorship online right now.

Twitter has been one of those companies most accused of negatively impacting the public conversation and pushing for censorship.

Twitter CEO Jack Dorsey talked about this in a livestream with Showtime hosts Desus Nice and The Kid Mero.

“Misleading information is like the challenge of our industry right now,” Dorsey said in the Periscoped stream.

The hosts were eager to discuss what Dorsey had in mind for punishing those who say things that is deemed to be “misinformation.”

The example they gave is, what would happen if President Trump tweeted “potentially harmful” statements about the coronavirus?

Dorsey responded that “labeling would come in really handy,” and talked about Twitter’s recent policy announcement that is aimed to tackle the tweets of public leaders.

“When it’s broadcast on television, you have no ability to talk back,” Dorsey said, and while you may not think it based on Twitter’s recent actions, the ability for users to comment and disagree is an important part of Twitter, Dorsey at least says he believes.

Dorsey said that instead of removing the tweets of world leaders, Twitter will instead introduce an “interstitial.”

“Anything that we can do to interstitial a lot of this and provide context that is credible and might show a disagreement or a debate around the topic, I think, would be helpful,” Dorsey said.

“The team is working on a great experiment to do just that, that we hope to launch as quickly as possible to give people a broader context for a particular tweet… I think we’ll disarm a bunch of it.”

The details are sparse so far but it appears that Dorsey plans to introduce a feature that comes in when Twitter finds a statement that a world leader makes and wants to challenge it.

In other words, Twitter feels brave enough to place some kind of editorialized interstitial between a world leader and the reader, that alters the way the reader perceives the tweet.

Dorsey said that Twitter’s number one focus right now is dealing with misinformation.

“The ability to create deep fakes is moving much faster and with much higher quality than the ability to detect it. So this is going to be a race, just like security is. You can never build a perfect system. You just have to be 10 steps ahead of the attackers,” he said during the stream.

It could end up being similar to the way Facebook has decided it wants to fact-check certain statements on the platform – and has been putting an overlay on content with a link to a fact-check.

It’s worth mentioning that Facebook’s fact-check has several times in the last month alone, “debunked” something that turned out to actually be true – so Twitter, if it too decides to play this game, must be feeling pretty confident they’re going to get it right.

Or, perhaps, they’re just happy to brazenly wield the power anyway.

Sometimes, you just want a bowl of pork soup, or bak kut teh, as it’s called in Singapore. And sometimes, that is an itch that overrides all common sense until you can scratch it accordingly.

Nobody knows this better than Alan Tham Xiang Shen of Singapore, who pleaded guilty on April 16 to violating a Stay-at-Home (SAH) order to fulfill an “irresistible urge” for the soup. In doing so, he was charged with an offense under the country’s Infectious Diseases Act, according to The Straits Times.

Senior District Judge Ong Hian Sun called his violation of the order “socially reprehensible”, before handing him down a 6 week sentence.

Tham arrived in Singapore from Myanmar on March 23 and was directed via SAH order to stay home at all times until April 6. He also signed a slip to acknowledge he had received the order. But instead of going home on the date he was given the order, he instead met up with his girlfriend and went to a foodcourt at Terminal 3 of Changi Airport. They then hired a private car to take them to a money changer and then to Tham’s house. 

About two hours later – after who knows what – the couple had worked up an appetite, so they boarded a bus and went out to get the soup. The couple posted about the meal on social media. They then went to a supermarket, and finally went home.

On March 25, Tham was paid a visit from the Immigration and Checkpoints Authority who informed him that he did not go straight home after the order was issued to him on the 23rd.

Despite being found not to have the virus, Deputy Public Prosecutor Kenneth Chin recommended 10 to 12 weeks jail for Tham. Chin’s office said that the law is there “to prohibit socially irresponsible conduct regardless of whether any person is infected by the offender or not”. 

Tham’s lawyers asked for either a maximum fine of $10,000 or two weeks jail. They argued that the SAH did not specify he had to go directly home after receiving it. 

“The SAH does not impose any movement restrictions before going home, such as you must take away your meal and are not allowed to eat at the food outlet itself,” his lawyer argued, as only a lawyer can do.

But the judge didn’t see it that way and sentenced Tham to 6 weeks of hard time. He is expected to surrender himself at the State Courts on April 30 to begin serving his time.

All for bowl of pork soup.

Via Southfront.org,

The US-Iranian standoff in the Persian Gulf has once again entered an acute phase...

On April 22, US President Donald Trump announced that he had ordered the US Navy to “shoot down and destroy” Iranian gunboats that follow or harass US ships. In response, Commander-in-chief of the Islamic Revolution Guards Corps, Major General Hossein Salami declared on April 23 that Iran will provide a swift, “decisive” and “effective” response to US forces if they threaten Iranian “vessels or warships”.

One of the reasons behind the escalation is the consistent and strengthening anti-Iranian rhetoric of the White House as a part of Trump’s presidential campaign. Another driving force of the US actions is likely the sharpening global economic crisis and the turmoil on the energy market that has led to the dramatic collapse of oil prices. Indeed, a new conflict in the Persian Gulf could theoretically return the oil prices to $50-60 per barrel.

In the current situation, Iran is not interested in an escalation of the conflict with the United States. The escalation could, however, be instigated by the US military:

• A warship or a group of warships could enter Iranian territorial waters;

• A US military aircraft could violate Iranian airspace;

• US forces could block for Iran the civilian maritime traffic through the Strait of Hormuz, or detain an Iranian oil tanker;

• Warships of the US Navy could imitate an attack on an Iranian submarine;

Iranian forces would have to respond to such a provocation. Thus, a military confrontation could start. After initiating a localized military incident, the White House would accuse Iran of aggressive actions against US forces and the US navy could carry out a demonstrative missile strike on a target or several targets inside Iran. Such an attack would prompt an Iranian response that would involve both its regular and irregular warfare capabilities.

The IRGC Navy doctrine reflects irregular warfare principles that include the use of surprise, deception, speed, flexibility and adaptability, decentralization and highly mobile and maneuverable units,  all of which are used at sea. These include hit-and-run style surprise attacks or the amassing of large numbers of means and measures to overwhelm the enemies’ defenses. In this scenario the employed naval forces might be described as a mosquito-like swarm of small boats using their size and maneuverability to track and hunt down enemy warships.

The IRGCN’s mosquito-fleet concept enables rapid formation of tactical groups of small crafts to carry out a surprise strike at any given time from different directions in a particular area of the offshore zone. Such groups can deploy in attack formation immediately prior to reaching the area of the attack.

Crafts from the formation reach their assault line position either independently or in small groups. This is the way the Iranian Navy would employ the swarm concept. It is important to note the high motivation and ideological training of the mariners involved, who well understand the high level of threat to them personally in the event of the employment of this tactical scheme. IRGCN personnel are motivated and ready to accomplish any feat to defend their homeland. This factor (the high motivation of the personnel) makes a mosquito-fleet armed with missile, torpedo and anti-air weapons especially dangerous to naval forces of the US.

The aircraft carriers and large warships of the US naval group would become the main priority target of the Iranian response. In the event that the Iranian attack succeeds, the US would have to carry out a massive strike on Iranian infrastructure objects or political and military command centers. Tehran would have either to accept their defeat in this limited confrontation or to respond with another attack on US forces in the region.

Current US military doctrine dictates the prior employment of mobile interoperable forces, unmanned and robotized systems, as well as massive strikes with high precision weapons in conjunction with the maximum usage of electronic warfare and information warfare. If the confrontation develops further the US would be forced to conduct a limited landing operation on key parts of the Iranian coast. The success of such a limited operation under the likely condition of a strong Iranian military response is improbable. Furthermore, the move would be hampered by the weak psychological condition of US service members caused by current developments inside the US.

The US military would have to either retreat or venture on to a large-scale military operation in the Persian Gulf region. If the number of forces involved does not allow Washington to deliver a devastating blow to Iran within 1-2 weeks, China or Russia could intervene in some form likely turning the military standoff into a frozen conflict.

It is likely that despite all difficulties, the US would be able to create an occupation zone inside Iran, likely in the coastal area near the Strait of Hormuz.

The Iranian oil trade would be fully blocked and the US shale industry would be rescued. At the same time, Washington would have to deal with a permanent insurgency in the occupied area.

Another possible scenario is the defeat of the United States in this limited conflict because of significant losses in warships, aviation and service members of the involved interoperable forces.

In this case, US influence in the region would be drastically undermined and the White House would start drawing up plans of revenge.

When Warren Buffett has been mentioned over the last 2 months, it’s been in the context of wondering when he’s going to deploy some of the $128 billion in (depreciating) cash he has sitting around. So far, he has yet to do that.

At the same time, Berkshire’s portfolio has hardly been immune to the coronavirus shutdown. Names like See’s Candies and Precision Castparts are all taking hits as the global economy grinds to a halt. Buffett’s portfolio was on a run rate of churning out more than $20 billion in profit annually. That number is likely to come under pressure, according to Bloomberg. 

“We’ve got a few businesses, small ones, we won’t reopen when this is over,” Charlie Munger said of the portfolio.

While Buffett was able to navigate 2008 with his rock solid balance sheet and diversification, there has been little said from Berkshire about the recent financial crisis. 

Buffett’s companies are undeniably tethered to the overall economy. See’s Candies, for instance, has furloughed its retail workers. Justin Brands shut down its outlets in Missouri. BNSF will likely report a decline in rail traffic. Precision Castparts temporarily halted some of its operations in April. Lawrence Cunningham, a professor at George Washington University Law School said: “There’s no fortress that’s immune to that right now.”

Some of Buffett’s names, like Geico and Lubrizol have been able to weather most of the storm. Geico is dealing with fewer accidents as a result of less driving and Lubrizol said social distancing and work-from-home measures have become customary. Lubrizol has not cut any of its workers. 

CEO Eric Schnur said: “It’s nowhere near business as usual, of course. But keeping people safe in a potentially unsafe situation is something we think about every day whether or not there’s a coronavirus pandemic.”

Buffett has promised in the past that Berkshire would “forever remain a financial fortress”. But investors have been left wondering exactly what that means in terms of Buffett potentially deploying capital going forward. Berkshire underperformed the S&P 500 during the last bull market and people are wondering if Buffett will take advantage of the recent pullback (if you can even call it that) in valuations. 

Buffett did exceptionally well during the 2008 crisis after making preferred stock/warrant deals with names like Bank of America and Goldman Sachs. Munger said the company is proceeding with caution. Berkshire is set to report earnings in May, which could shed some light into the company’s capital allocation strategies. 

Buffett said in his 2017 shareholder letter: “Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons. And that we will do.”

Shareholder Thomas Russo said simply of Buffett: “He’s patient. One of the best features is that he is able to see opportunities broadly.”