As Default Risk Soars, GM Draws Down $16 Billion From Credit Lines, Suspends Guidance
The credit market is pricing the odds of default for General Motors at 49% as the economic collapse triggered by COVID-19 mitigation ripples through almost every industry.
And so, like many other companies, GM is erring on the side of more cash is better and announced today it is drawing down $16 billion from its credit lines and suspending its guidance:
General Motors announced today that it intends to drawdown approximately $16.0 billion from its revolving credit facilities. This is a proactive measure to increase GM’s cash position and preserve financial flexibility in light of current uncertainty in global markets resulting from the COVID-19 pandemic. The funds will supplement the company’s strong cash position of approximately $15 billion to $16 billion expected at the end of March.
“We are aggressively pursuing austerity measures to preserve cash and are taking necessary steps in this changing and uncertain environment to manage our liquidity, ensure the ongoing viability of our operations and protect our customers and stakeholders,” said Mary Barra, GM chairman and CEO.
Over the past several years, we have made necessary, strategic decisions and structural changes that have transformed the company and strengthened the business, better positioning us for downturns.”
In addition, GM Financial (GMF) has strong liquidity and capitalization. GMF had $24 billion of liquidity at the end of 2019 and expects to end the first quarter with similar levels of liquidity. Its liquidity level is targeted to support at least six months of cash needs, including new originations, without access to capital markets. GMF is managing below its target leverage ratios. Additional details can be found here.
“GM Financial has prepared for times like this by maintaining a strong financial position and ready access to cash. We are confident that we will be able to navigate the challenges created by this environment without capital from GM,” said Dan Berce, GM Financial president and CEO.
GM is also suspending its 2020 guidance due to uncertainty around the business impact of the COVID-19 pandemic.
It would appear The Fed’s unlimited money printing (and CP backstop) and the promise of a fiscal bailout were just not enough for GM’s management. The question is – will they use the credit line funds to buyback stock, retire debt, or maintain their workforce throygh this interruption?
US Reports Largest Jump In New COVID-19 Cases Yet, China’s ‘Draconian’ Wuhan Lockdown Finally Comes To An End: Live Updates
Over the past two days, the number of confirmed coronavirus cases and deaths has seen the largest jump on record, even as the number of newly reported cases plateaus in Europe, as New York and a handful of other US states ramp up testing. On Monday, the US was hardest hit, with states adding 10,168 cases, the largest single-day increase for any country outside of China.
And for the first time, the US recorded more than 100 new deaths in a single day, including the first recorded death in Hawaii. The individual, who died on Friday, was an adult from the island of Oahu suffering from “multiple underlying health conditions.”
As a result, at least 16 states have issued stay-at-home orders, which, once in effect, will impact 142 million people, or 43% of the US population, CNN reports.
Alaska has ordered anybody visiting the state to quarantine for two weeks, as President Trump desperately warns that the US “wasn’t built to be shut down” and that extending the shutdown for longer than 2 weeks might do irreparable harm to the economy. German Finance Minister Olaf Scholz hit back at Trump Tuesday morning, telling the German newsmagazine “Bild” that calls to put economic health before protecting human life are “cynical” and “poorly thought out.”
Around the world, there are 387,382 cases of novel coronavirus, according to Johns Hopkins University, which is tracking figures from the World Health Organization and additional sources. On Monday, JH recorded the largest single-day jump in the number of new COVID-19 cases, with 41,371 cases diagnosed. The death toll rose by a record 1,873 – nearly 2k deaths in a single day – bringing the international total to 16,767 deaths globally.
Meanwhile, in Japan, NHK reported that Japanese PM Shinzo Abe urged the IOC to make a decision on the fate of the games “as quickly as possible”, following reports last night that Japan had agreed to postpone the 2020 games until 2021. Earlier, New Zealand’s athletes joined Australia’s and Canada’s in pulling out of the games unless they’re postponed.
Elsewhere in Asia, India has expanded its mammoth national lockdown to cover about two-thirds of the population, even as the number of confirmed cases remains below 500. Neighboring Pakistan is deploying its army to assist with the outbreak, while tiny Albania is imposing a strict 16-hour daily curfew to combat the outbreak.
After Hong Kong reported its largest daily jump in new cases a few days ago, Singapore confirmed 54 new cases of the coronavirus on Monday, the city’ state’s largest daily jump, even after Singapore, HK, Taiwan and a handful of other Asian economies were praised for their efforts to combat the virus. Even as the number of confirmed cases in Japan remains low – possibly because, as some have noted, close personal contact is often frowned upon in Japanese culture – Tokyo’s governor warned on Tuesday that Japan’s capital could be placed under lockdown if the number of cases spike.
In southeast Asia, the tiny, impoverished nations of Myanmar and Laos have just reported their first two cases.
After a nearly week-long streak where China confirmed almost no new domestically-infected cases, it appears the outbreak in the world’s second-largest economy has finally petered out. Lockdown measures that were imposed on China’s Hubei region and especially its capital city, Wuhan, back in February will be lifted on Wednesday, while additional measures in Wuhan will remain in place until April 8.
“It’s finally over,” overjoyed residents cried with joy after the announcement.
Though other Asian governments were moving in the opposite direction. Thailand said Tuesday that it will declare a state of emergency under a decree giving it broad powers to fight the coronavirus outbreak, including the right to censor media. Meanwhile, Macau, a special administrative region of China, along with Hong Kong, has joined the latter city in demanding all foreign travelers be quarantined for 14 days upon arrival.
Meanwhile, over in Italy, authorities are trying to figure out what to do next as stocks and bonds soared in a torrid rally following signs that the country’s lockdown might finally be helping to slow the outbreak.
Although the data from the last two days has been somewhat encouraging, the head of the Civil Protection Agency, the federal agency that has been tasked with reporting the country’s daily case totals, said that the total number of infected is likely 10x the official number of cases that have been confirmed.
“A ratio of one certified case out of every 10 is credible” Angelo Borrelli, the head of the Civil Protection Agency, told La Repubblica. Borrelli said he believed as many as 640,000 people could have been infected in the country.
In Germany, meanwhile, Finance Minister Olaf Scholz said that his country could push for even more stimulus after announcing plans for a massive fiscal stimulus measure on Tuesday morning, and after the EU states got together to discuss additional assistance for Italy.
Meanwhile, in other news, we wanted to point out that, a few days ago, we shared a report about this phenomenon with our readers. Since then, the information has been even more widely reported: Now, a team of British ear, nose and throat doctors are raising the possibility of a new indicator of the coronavirus, one they say has been observed globally, even in patients who are otherwise asymptomatic: anosmia, a condition that causes the loss of sense of smell. In a statement, they warned that adults experiencing recent anosmia could be asymptomatic carriers of COVID-19, and urged them to consider self-isolation.
“All of this evidence is accumulating very rapidly, but there’s nothing yet robustly in print,” said Claire Hopkins, president of the British Rhinological Society. “Since then, I’ve had colleagues from around the world saying: ‘That’s exactly what we’re seeing.’ They’ve been trying [to raise awareness], but it hasn’t been picked up.”
We also reported a couple of weeks back that Iran was temporarily releasing prisoners and requiring them to help with the country’s relief effort. The government has now extended their supervised release by another 25 days until April 18, Iranian President Hassan Rouhani announced on state TV Tuesday as the country’s death toll continues to rise. And while the country continues to blame the US for the outbreak, even after rejecting aide from President Trump, Iran also said Tuesday it does not need the help of Médecins Sans Frontières – aka Doctors without Borders – to set up makeshift hospitals as the country’s hardliners continue to oppose all forms of foreign help.
Spain, the worst-hit country in Europe after Italy, reported another 514 deaths on Tuesday, raising the death toll to 2,696, while it reported another 6.5k cases, bringing the total to 39,673. Madrid remains the worst-hit region, with 12,352 cases, 1,050 people in intensive care and 1,535 deaths.
The situation is getting so bad in Spain, that the bodies of COVID-19 victims are being delivered to the Palacio de Hielo ice rink, which is being used as a temporary morgue in Madrid. The regional government said it was a “temporary” measure to ease pressure on hospitals in Spain, which has recorded the third-highest death toll outside China and Italy.
In Belgium, there were 4,269 cases of the coronavirus on Tuesday, an increase of 526 in the past day. Deaths have also increased by 34, bringing the total to 122, and there have been 256 new hospital admissions in last 24 hours, lower than reported on Monday and Sunday. In nearby France, the country’s finance minister warned the economic impact of the coronavirus pandemic is “comparable only to the great recession of 1929,” Bruno Le Maire said Tuesday.
Following last night’s speech by UK PM Boris Johnson, where the PM declared a national lockdown and granted police the power to enforce it, another major commonwealth country has followed suit. On Tuesday Australia banned all but essential travel outside of the country after PM Scott Morrison announced similar lockdown measures as the number of cases in the country climbs. Ratings data suggest that nearly half of the UK watched Johnson’s televised speech last night, with ratings agencies giving the speech an 80% market share – roughly 40% of the UK population.
After European PMI data released Tuesday showed business activity in the region has crumbled this month, Goldman Sachs slashed its growth forecast for the eurozone, warning that the region’s coronavirus-crippled economy will see a 9% contraction this year, and that budget deficits are likely to mushroom in many countries. The US investment bank said in a note to clients on Tuesday morning that it expected the eurozone economy to shrink by 4% in the first quarter and 11.4% in the second. Its economists blamed “strict containment measures, anecdotal evidence of steep declines in domestic activity and a global recession” for the sharp decline in forecasts. Slovakia, one of the last countries in Europe to confirm cases of the virus, is set to pass a law allowing the use of data from mobile phones to ensure that citizens are observing the quarantine rules introduced to fight the coronavirus outbreak.
The Arab Gulf states are ramping up enforcement of curfews, quarantine and stay at home edicts as coronavirus cases rise to more than 1,900 in the region. Kuwait on Sunday evening arrested nine expatriates in a suburb of the capital for breaking a daily nationwide curfew, and other states including Saudi Arabia and Bahrain have imposed draconian measures.
Finally, as the WHO said early Tuesday, as the US takes the lead in the number of new cases, the organization warned that it might soon displace Italy as the “new epicenter” of the epidemic.
“European PMIs are… Well, There Is No Word For That!”
Submitted by Christopher Dembik of Saxo Bank
Speechless. March statistics are very ugly everywhere in Europe. German Flash manufacturing PMI is out at 45.7 and services PMI is falling at 34.5 (yes, 34.5!!!).
The below chart is the first of many others that will look like this all around the world. There is no doubt that Germany and the eurozone are already in recession.
In many European countries, the manufacturing sector declined further, but the services sector saw the sharpest slowdown, even more than anticipated (28.4 for the eurozone, 29.0 for France and 35.7 for the UK).
It is a very worrying sign for countries, such as France or the United Kingdom, that have a strong reliance on services.
In terms of policy, this is pretty clear what kind of business is most in need of immediate support here. European countries will need to do much more to address the current situation and implement demand-oriented measures to support the economy.
Summary: After the Feds actions overnight, risk is bouncing in Asia and traders are optimistic on an incoming US fiscal relief package
After yesterday’s Asia bloodbath, despite US stocks closing lower as the Senate again stalls on the stimulus bill, the region is set to hit pause on further declines. US futures are in the green and Asian indices trading higher. The NZX 50, Nikkei 225 and Kospi are leading the pack with gains of more than 6% across the board. Throughout the Asia trading day, reports that Republicans and Democrats are moving closer on the fiscal rescue bill has buoyed risk appetite further. If, as Treasury Secretary Steve Mnuchin has stated, a deal is reached soon the stage is set for risk sentiment to bounce in the short term. Particularly as the broad based dollar strength that compounded stresses last week has eased somewhat as panic subsides.
The VIX closed lower overnight, declining to 61.59, illustrating calmer markets relative to the panic deleveraging of the prior week. Although again we caution, this does not necessarily represent a true bottom, rather the subsiding of initial stress levels paving the way for a relief rally. There is likely to be ongoing negative news flow and economic implications that will need to be discounted down the track, but perhaps in a more measured way.
The move to QE Infinity by the US Fed, the world’s de facto central bank/lender of last resort, is one for the history books. The rulebook has gone out the window, a testament to the unprecedented, simultaneous supply and demand shock inflicted by the COVID-19 crisis. Overnight the Fed went all in and launched a tsunami of rescue measures to help shield the US economy from downside presented by the COVID-19 outbreak and the measures to contain its spread and guarantee sufficient flows of credit through the financial system, in attempt to forestall a global credit crunch. QE infinity and beyond, encompassing unlimited purchases of Treasury debt and mortgage-backed securities, is just one part of the new measures. Gold rebounding powerfully on the moves overnight, with the strength continuing in the Asia session and gold hitting a record high in AUD. For more on the new actions and open-ended QE, our CIO Steen Jakobsen has the full rundown.
However, it is clear by now the markets are not just looking for stimulus measures, monetary and fiscal, to relieve the pressure on risk assets. Although each have the capacity to spur sentiment higher and drive short-term relief, the more pressing matter is the healthcare response and the containment of the virus itself. This containment will eventually happen whether by vaccination or flattening of the infection curve and increased immunity, but the timing is unknown, and the global economy will recover – the only thing growing as quickly as the virus case count is the size of the rescue packages, both fiscal and monetary. For more our Christopher Dembik has the G7 stimulus tally.
Markets initially took comfort in the Feds measures but the positive momentum was quickly offset by frustration and disappointment as the Senate once more failed to pass the coronavirus rescue package. Although the partisan dispute persists for now, as the economic damage inflicted on the US economy mounts, this will change. Forcing politicians to work together and stem what is firstly a health crisis and second an economic shock.
Australia Consumer Confidence, as widely expected, plunged 27.8% from last week. Although a drop was anticipated, the survey highlights the level of angst that has set in amongst Australian consumers. All sub-indices came in well below average, falling below levels seen in the GFC to match readings last seen during the 1990-1991 recession. A major problem here is the hit to sentiment and therefore demand cannot easily be reversed by monetary or fiscal policy. Those stimulus measures remain necessary, but likely insufficient. Whilst consumers are fearful of the threat of a global pandemic confidence will be hard to restore, hence why containment and healthcare efforts are so important in supporting confidence.
Australia unemployment
As both NSW and Victoria have moved to shutdown non-essential services to contain the spread of COVID-19, unfortunately members of the workforce that span these services have lost their jobs. According to ABC, the Government is estimatingat least 1 million people could be made unemployed as the economy slows and some businesses remain shutdown. And if the queues outside Centrelink offices are anything to go by, this is fast becoming a reality. This would correspond to an unemployment rate closer to 13%, although the figure would also be dependent upon the change (or not) to the participation rate.
Already restaurant booking data from OpenTable shows a 66% decline year on year in seated diners in Australia. Highlighting how much the services sector is already suffering as consumers limit discretionary spending and stay home whilst restaurants and cafes shut due to increasing public policy responses. For small businesses like restaurants, with high fixed costs like rent to pay this impact will be devastating. With many balance sheets not able to withstand the lockdown period which will inevitably see workers laid off. The food service and accommodation sector last year accounted for around 30% of the part time workforce. Aside from hospitality, other sectors that will be heavily impacted include retail, recreation services, real estate services and construction.
A key area of concern for Australia is the labour market given the level of household debt. Australia has a very high level of household debt relative to other OECD countries; with household leverage ratios at almost 2x incomes, therefore a spike in unemployment could prompt a far more serious economic fallout. That is why it is paramount for the government and the RBA to consider maintaining job security as focal point in their response measures, and why the calls for helicopter money and universal basic incomes grow louder.
China’s Diplomats Contradict Each Other In Rare Communist Party Split Over Trump
China’s diplomatic corps is famous for its remarkably consistent ability to show a unified front it toeing the Communist Party line; however, Trump may have finally broken that.
The differences spilled into public view Monday after China’s ambassador to the U.S. reaffirmed his opposition to promoting theories that the virus that causes Covid-19 originated in an American military lab. Ambassador Cui Tiankai said in an interview with “Axios on HBO” that he stood by his Feb. 9 statement that it would be “crazy” to spread such theories, even though a foreign ministry spokesman has repeatedly floated the idea on Twitter in recent weeks.
Cui’s comments were directly contradictory to foreign ministry spokesman Zhao Lijian, who has been aggressive in suggesting a US conspiracy behind the origins of the coronavirus.
Starting March 12 Zhao Lijian issued his bombshell and novel accusation on Twitter, saying“it might be the US Army who brought the epidemic to Wuhan”. In a series of Twitter statements he questioned: “When did patient zero begin in US? How many people are infected? What are the names of the hospitals? It might be US army who brought the epidemic to Wuhan. Be transparent! Make public your data! US owe us an explanation!”
China’s ambassador in Washington was promptly summoned and called to account by the State Department, after which the theories out of Beijing appeared to cool a bit. Most perhaps took it as Chinese officials hitting back at President Trump’s at that time controversially referring to Covid-19 as a “foreign virus”. And doubling down by later March, he’s begun repeatedly calling in the “Chinese virus”.
Cui asserted in the Axios interview in an apparent rebuke of prior statements by Beijing foreign ministry officials: “Such speculation will help nobody. It’s very harmful.”
He added that: “Eventually, we must have an answer to where the virus originally came from. But this is the job for the scientists to do, not for diplomats.”
2/2 CDC was caught on the spot. When did patient zero begin in US? How many people are infected? What are the names of the hospitals? It might be US army who brought the epidemic to Wuhan. Be transparent! Make public your data! US owe us an explanation! pic.twitter.com/vYNZRFPWo3
It appears Ambassador Cui’s calmer and more measured tone has won out, likely out of a desire to calm the bombastic anti-China rhetoric out of the White House:
The developments suggest that China’s foreign ministry may be having second thoughts about taking a more confrontational approach toward President Donald Trump. The foreign ministry later Monday posted a Chinese-language transcript of Cui’s remarks on its website and another spokesman, Geng Shuang, told reporters “the virus should not be linked to a specific country or region to avoid stigmatization.”
Cui told Axios on HBO he stands by his statements denying the outlandish virus origin theories. “That’s my position then and that’s my position now.”
But simultaneously he took a shot at Sen. Tom Cotton (R-Ark.) who has been at the forefront in Congress of raising the possibility that it was created in the Chinese military’s lab in Wuhan.
The collateral supporting the global mountain of debt is crumbling as speculative bubbles deflate.
A great many freebies are being tossed in the Helicopter Money basket. That households experiencing declines in income need immediate support is obvious, as is the need to throw credit lifelines to small businesses. But beyond those essentials, the open-ended nature of Helicopter Money has unleashed a frenzy of political favors and giveaways that have little to do with helping households and everything to do with rewarding favored cronies, cartels and interest groups.
As Gordon Long and I explain, the short-term “pain relief” of Helicopter Money won’t cure the economy’s financial disease; rather, it will act as a catalyst for longer-term disruption and decline.
None of the giveaways being discussed address the core causes of our systemic financial disease:
— Erosion of real-world collateral supporting the ever-growing mountains of debt and leverage
— Diminishing returns on monetary stimulus (Federal Reserve financial cocaine no longer generates euphoria)
— Domino-like disruption of global supply chains and global demand
— Stagnating purchasing power of labor
— The use of debt to keep up with the soaring costs of essentials (rent, healthcare. childcare) and aspirational goods (iPhones) and services (vacations)
— Repricing of risk and risk assets
The stability of the entire system is increasingly fragile and brittle. The abuse of money-printing–creating currency to benefit bloated, inefficient, parasitic, predatory institutions, cartels and monopolies–is further eroding already-decaying confidence in monetary and fiscal authorities and policies.
The collateral supporting the global mountain of debt is crumbling as speculative bubbles deflate. What happens to margin debt when the $300 stock falls to $100? What happens to the $1 million mortgage when the decaying bungalow’s value falls from $1.2 million to $400,000?
The inevitable result of creating currency is excess of the creation of goods and services is a decline in purchasing power which we experience as inflation / shrinkflation (getting lower quality and less quantity even though the price has remained the same).
This loss of putchasing power has been masked by bogus statistical tricks and shrinkflation, but as the Helicopter Money trillions flood through the economy and global supply chain disruptions cause prices to rise, the usual bag of tricks will no longer be enough to hide the higher costs and declining purchasing power.
Then there’s the psychological impact of the reverse wealth effect as households and enterprises see their net worth and income dropping. The confident euphoria required to borrow and spend freely has evaporated and will not be returning, regardless of how much currency is created and distributed.
Gordon and I discuss these topics in this 37-minute video:
Electricity Consumption In Italy Plummets Amid Countrywide Quarantine
Italy has gone full “Wuhan” with a massive lockdown across the country amid a virus crisis that has paralyzed its economy. So far, 63,927 confirmed cases of COVID-19 had been reported, with 6,077 deaths.
The Italian economy is being draggedinto a depressionas the fast-spreading virus cripples its northern regions, forcing the government to ban travel and close all industrial production across the country.
The impact of the virus on Italy’s economy led to the collapse of electricity consumption last week. Electricity usage fell 16% YoY for March 16-22, according to Bloomberg calculations based on Terna SpA data.
Diego Marquina, an analyst covering European power markets at BloombergNEF, noted on Monday that electricity demand in every European country has declined due to the impact of quarantine measures to mitigate the virus spread.
Marquina said if declining electricity consumption is “sustained…weekday power demand would most likely fall to Sunday levels – a 10-26% reduction, depending on the country.” He estimates that power prices could drop between 6-18 EUR/MWh.
Last week, power demand in Italy fell 17% below the average for the week. The average reduction in demand was -11% in France, -9% in Belgium, and -7% in Spain.
Marquina expects a decrease in power prices across Europe if mass quarantines continue, which would transform weekday demand to Sunday levels for some countries.
Courtesy of Capital Economics, which has compiled alternative data on Europe, traffic congestion in Rome and Milan, has been well below average since a countrywide lockdown was initiated in early March.
Similar to Bloomberg’s data, Capital Economics is also showing a collapse in electricity consumption as major manufacturing hubs across the country remain shuttered into late March.
And for a more transparent illustration of just how destructive the virus has been for Italy’s economy but maybe not for planet Earth, is satellite imagery showing air pollution has cleared out over the region as the country comes to a standstill.
Governments that implement strict social distancing measures to flatten the pandemic curve tend to force an economy-wide shut down that leads to a collapse in business activity. That included China earlier this year, as we noted coal consumption in power plants plunged as two-thirds of the economy ground to a halt.
The next country to see collapsing electricity demand could be the US as strict social distancing policies, enforced by federal and state governments are likely to send the economy into a depression in the second quarter.
Germany has closed its border to visitors from Europe due to coronavirus, but migrants claiming asylum from the Middle East and Africa are still allowed to enter the country.
Aside from exemptions for people from France, Luxembourg, and Switzerland who are providing essential services, German authorities closed the country’s border to all foreign citizens last week.
However, according to the German Ministry of the Interior, so-called “asylum seekers,” a catch-all term that basically describes economic migrants fleeing from the Middle East and Africa, are still welcome.
“At Germany’s EU external borders [airports and seaports], there has been no change in the [asylum] procedure,” a representative of the Ministry of the Interior told Junge Freiheit.
This means that Europeans who previously had a right to enter Germany are being treated as second class citizens compared to migrants from the third world, who merely have to utter the word “asylum” to enter Germany and have their case heard, even in the midst of a deadly global pandemic.
“In practice, this means that if a migrant were to illegally enter the European Union’s Schengen Zone via Italy or Greece and make it to France or Switzerland, he can still demand asylum in Germany, and thus must be allowed to traverse these countries so that he can formally request it on German territory,” reports Voice of Europe.
The situation is similar in Sweden, where asylum seekers will continue to be processed and allowed to stay in the country despite a global pandemic.
Given that migrants already in Germany rioted and displayed ISIS flags when told their refugee camp had to be put in quarantine, one wonders whether newly arrived asylum seekers will obey lockdown rules.
As Breitbart highlights, attempts to enforce a quarantine in migrant-heavy areas of Paris are proving “impossible” because migrants just ignore the law and congregate in large crowds if confronted by police. Authorities cannot hand out fines to migrants due to fears of a violent “backlash.”
An Ipsos survey released last week showed that a majority of people in 12 different countries supported closing the borders until the coronavirus outbreak is contained.
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Chinese Factories Working 24/7 To Build Ventilators For Italy, New York
Approximately 19% of those who contract coronavirus become seriously ill, according to a large Chinese study, while just under 14% fall into the ‘severe’ category, and 5% become critical – typically requiring a ventilator to breathe while suffering from multiple organ dysfunction.
And while the overall fatality rate is a matter of serious debateas many suspect vast underreporting of cases, for those who fall into the critical category, a shortage of respirators would logically increase fatalities among that demographic.
Indeed there is a critical shortage of medical supplies across the United States, compounded by a drop in exports of masks, gowns, sanitizer, and other items from China as demand has surged across the world.
To that end, there is a serious need for ventilators, which several companies – as well as Tesla CEO Elon Musk, have vowed to solve (a claim which ventilator manufacturers aren’t buying).
Ford, General Motors and Tesla are being given the go ahead to make ventilators and other metal products, FAST! @fema Go for it auto execs, lets see how good you are? @RepMarkMeadows@GOPLeader@senatemajldr
In Seattle, manufacturer Ventec Life Systems has been ramping up production to fill orders as quickly as possible.
One Chinese company, Beijing Aeonmed Co., has been working around the clock since January 20 to crank out the life-saving machines, according to Bloomberg.
“There’s literally no country in the world that doesn’t want to buy a ventilator from China right now,” said company director Li Kai. “We have tens of thousands of orders waiting. The issue is how fast we can make them.”
The company has been working three shifts to meet demand from international customers, and have been producing ventilators “non-stop” according to the report.
As the global coronavirus death toll inches toward 15,000, doctors from Milan to New York are desperately seeking ventilators. In severe cases, the availability of a ventilator that can help a Covid-19 patient breathe can determine if he lives or dies. Late last week, New York Governor Andrew Cuomo said the state, which has about 5,000 to 6,000 ventilators, might need 30,000 of them. –Bloomberg
“It’s ventilators, ventilators, ventilators,” NY Governor Cuomo told reporters. “That is the greatest need,” he added – saying that he has “people in China shopping for ventilators.”
According to the Society of Critical Care Medicine, up to 960,000 patients may require ventilators due to coronavirus – however there are only around 200,000 such machines. In Italy, doctors have been forced to triage patients due to the severe shortage.
The mad scramble for scarce medical supplies comes as China and the U.S. try to deflect blame for their handling of the disease. China has been seeking to claw back an international leadership role after early cover-ups helped the virus spread well beyond its borders. The country has sought to brand itself as Europe’s savior in the fight against the pathogen, providing masks and other supplies to the region’s virus hot spots. –Bloomberg
“All the ventilator factories in China have reached their maximum capacity, occupied fully by foreign demand,” said director of supply chain at Vedeng.com, Wu Chuanpu. Vedeng connects medical equipment suppliers and buyers – and is receiving over 60 orders per day totaling hundreds or thousands of such machines. Many orders are from governments, he said.
According to Wu, the factories need to remain at full capacity until May.
“The expansion of the production line is very time-consuming and resources-intensive,” said Wu, adding that “It also involves personnel training. It is too cumbersome.”
The Chinese government has been fast-tracking shipments of medical aid to Europe, which has become the epicenter of the coronavirus pandemic that first emerged in the Chinese city of Wuhan. The largesse appears to be part of a public relations effort by Chinese President Xi Jinping and his Communist Party to deflect criticism over their responsibility for the deadly outbreak.
Beijing’s campaign as a global benefactor may deliver results in Europe, where pandering political leaders have long been notoriously fearful of antagonizing the European Union’s second-largest trading partner. What remains unclear is if European publics, which are bearing the brunt of the suffering caused by the epidemic, will be as easily willing to overlook the malfeasance of Chinese officials.
In what can only be described as a geopolitical humiliation, Ursula Von der Leyen, the president of the European Commission, the administrative arm of the European Union, which touts itself as the “largest economy in the world,” heaped praise on Communist China for donating an inconsequential amount of medical equipment to the bloc. On March 18, she tweeted:
“Spoke with Chinese PM Li Keqiang who announced that China will provide 2 mil surgical masks, 200,000 N95 masks & 50,000 testing kits. In January, the European Union helped China by donating 50 tons of equipment. Today, we’re grateful for China’s support. We need each other’s support in times of need.”
The European Union has been incapable of providing meaningful assistance to Italy, the bloc’s third-largest member, which has been especially hard hit by the virus. After Germany, the EU’s most powerful member, banned the export of medical protection gear to avoid its own supply shortages of masks, gloves and suits, China stepped in.
On March 12, China sent to Italy a team of nine Chinese medical staff along with some 30 tons of equipment on a flight organized by the Chinese Red Cross. The head of the Italian Red Cross, Francesco Rocca, said that the shipment “revealed the power of international solidarity.” He added:
“In this moment of great stress, of great difficulty, we are relieved to have this arrival of supplies. It is true that it will help only temporarily, but it is still important. We have a desperate need for these masks right now. We need respirators that the Red Cross will donate to the government. This is for sure a really important donation for our country.”
In recent days, China has also sent aid to:
Greece, March 21. An Air China plane carrying 8 tons of medical equipment — including 550,000 surgical masks and other items such as protective equipment, glasses, gloves and shoe covers — arrived at Athens International Airport. The Chinese Ambassador to Greece, Zhang Qiyue, referred to words by Aristotle: “What is a friend? A single soul living in two bodies.” He said that “difficult times reveal true friends” and that China and Greece are “working closely together in the fight against the coronavirus.” This, he said, “confirms once again the excellent relations and friendship between the two peoples.”
Serbia, March 21. China flew six doctors, ventilators and medical masks to Serbia to help Belgrade halt spreading of the coronavirus infection. “A big thank you to President Xi Jinping, the Chinese Communist Party and the Chinese people,” said Serbian President Aleksandar Vucic. China’s ambassador to Belgrade, Chen Bo, said the aid was a sign of the “iron friendship” between the two countries. The Chinese news agency Xinhua reported: “President Xi attaches great importance to the development of China-Serbia relations, and believes that through the joint battle against the epidemic, the two countries’ time-tested traditional friendship will gain more hearty support from their people, and their comprehensive strategic partnership will grow deeper and rise to a higher level.
Spain, March 21. The founder and president of the Chinese technology company Huawei, Ren Zhengfei, donated one million face masks. They were expected to arrive at Zaragoza Airport in northeastern Spain on March 23. The masks will be stored at a warehouse belonging to the Spanish apparel retailer Zara. From there, Zara will put its logistics network at the service of the Spanish government. This shipment could be the first of several, as dozens of Chinese suppliers that have worked with Zara for years are reportedly showing a willingness to send material. The United States has warned Spain about the security risk inherent in opening its fifth-generation communications networks to Chinese mobile technology providers, including Huawei.
Czech Republic, March 21. A Ukrainian cargo plane reportedly carrying 100 tons of medical supplies from China arrived at the airport in Pardubice, a city situated 100 kilometers east of Prague. On March 20, a Chinese plane carrying one million masks arrived in the Czech Republic, which reportedly ordered another 5 million respirators from China along with 30 million masks and 250,000 sets of protective clothing.
France, March 18. China sent to France, the second-most powerful country of the European Union, a batch of medical supplies, including protective masks, surgical masks, protective suits and medical gloves. The Chinese Embassy in France tweeted: “United we will win!” The following day, China sent a second batch of supplies. The Chinese Embassy tweeted: “The Chinese people are next to the French people. Solidarity and cooperation will allow us to overcome this pandemic.”
The Netherlands, March 18. China Eastern Airlines, China Southern Airlines and Xiamen Airlines, codeshare partners with KLM Royal Dutch Airlines, donated 20,000 masks and 50,000 gloves. The shipment arrived at Amsterdam Airport Schiphol on a Xiamen Airlines flight. “These are extremely difficult times for our country and our company, so we are very happy with this help for KLM and for the Netherlands,” KLM CEO Pieter Elbers said. “Less than two months ago, KLM made a donation to China and now we are being helped so wonderfully and generously.”
Poland, March 18. The Chinese government pledged to send Poland tens of thousands of protective items and 10,000 coronavirus test kits. On March 13, the Chinese Embassy in Warsaw sponsored a videoconference during which experts from China and Central Europe shared their knowledge on tackling the coronavirus. Police Foreign Minister Jacek Czaputowicz thanked China for its support and stressed the need for continued cooperation with Beijing, including sharing experience in combating the pandemic.
Belgium, March 18. A Chinese cargo plane carrying 1.5 million masks landed at Liege Airport. The masks, which will be distributed to Belgium, France and Slovenia, were donated by Jack Ma, the founder of Alibaba, a Chinese ecommerce giant known as the “Amazon of China.”
Czech Republic, March 18. A plane carrying 150,000 test kits for coronavirus landed in Prague. The Ministry of Health paid about CZK 14 million ($550,000) for 100,000 testing kits, while another 50,000 kits were paid for by the Ministry of the Interior. Transport was provided by the Ministry of Defense.
Spain, March 17. A Chinese plane carrying 500,000 masks arrived at Zaragoza Airport. “The sun always rises after the rain,” Chinese President Xi Jinping told Spanish Prime Minister Pedro Sánchez. He said that the friendship between China and Spain will be stronger and bilateral ties will have a brighter future after the joint fight against the virus. Xi said that after the pandemic, both countries should intensify exchanges and cooperation in a wide range of fields.
Belgium, March 16. Another shipment of medical supplies donated by the Jack Ma Foundation and Alibaba Foundation for epidemic prevention in Europe arrived at Liege Airport.
Fortune magazine explained the motivation behind China’s propaganda push:
“For China, the outreach to Europe is part of an effort to claw back an international leadership role after early cover-ups helped the virus spread well beyond its borders. President Xi Jinping’s government has sought to silence critics, including reporters and online commentators, and also spread conspiracy theories about where the virus originated.
“Geopolitically, China’s move to brand itself as Europe’s savior aims to improve its standing on a global stage as both spar with the Trump administration. China and the U.S. have continued a wider fight for global influence — Beijing kicked out more than a dozen American journalists this week — while also seeking to deflect blame for their handling of the disease.”
In an interview with the UK-based newspaper Guardian, Natasha Kassam, a former Australian diplomat, said:
“Now we see Chinese officials and state media claiming that China bought the world time to prepare for this pandemic. We know the propaganda machine within China is able to rewrite history but now we are seeing that replicated overseas. China’s victory over Covid-19 has already been written and authorities are trying very hard for that message to be received overseas.”
In an essay for the Spanish publication Libertad Digital, commentator Emilio Campmany astutely explained:
“The huge Chinese propaganda apparatus has been launched. In Italy they feel, with good reason, abandoned by the European Union and are grateful for the help that the Asian country is giving them. This has been suitably amplified by the Italian media.
“This is a propaganda operation that hides various truths. The first and most important is that the culprit for this pandemic is the Chinese regime. It does not take any conspiracy theory to point it out. It was widely recognized that Chinese live animal markets are a very serious epidemic hazard. The very severe communist regime of the people’s republic, which controls everything for the welfare of the citizens, has been unable to shut them down. When the first cases emerged, it took forever for the highly efficient Communist Party to react and instead devoted its myriad resources just to hiding the truth. When it could no longer hide what was happening, it intervened brutally, and only in this way has it managed to stop the epidemic, not without first giving rise, due to its negligence, to the virus spreading throughout the world.
“The second is that communist bestiality is not necessary to effectively combat the virus. Infinitely better results can be achieved with capitalist intelligence, as has been shown by South Korea, which, having been much more capable than China, is not dedicated to paying for items in the West. For days now, this country has shown how valuable it can be to carry out massive tests. That is the best way for now, and the incredible thing is how long it took the Italians and the Spanish to realize this. However, this delay is not a consequence of not being blessed with two communist regimes, but rather of being governed by incompetents who, above all in our case, are that, socialists and communists.
“China wants to take advantage of this calamity to wrest global leadership from the United States. It will be the communist country that makes us the most energetic medicines to fight the virus. It will discover the vaccine before anyone else and distribute it worldwide in record time. It will buy our assets and invest in our countries to rescue our economies. Ultimately, it will claim to be our savior.“
