China Refuses WHO Request To Take Part In Coronavirus Origin Probe
At a time when President Trump has officially accused the Wuhan Institute Of Virology of being the cause for the worst pandemic in modern history (as we did first all the way back in January), claiming he has seen evidence that the lab is in fact the origin, potentially exposing China to trillions in global damages and reparations, not to mention the ire of millions of people around the globe who have lost family or loved ones to the Wuhan Virus, one would think – if indeed it was as innocent as it claims – that China would do everything in its power to open up the Institute for the entire world to inspect and prove its innocence. In fact, one would even think China would even make Peng Zhou – whom we singled out in January and who is now being investigated by “the Five Eyes‘ for his role in the Wu Flu epidemic – accessible to the world to remove even the smallest trace of doubt his lab had anything to do with the coronavirus release.
One would be wrong.
As Reuters reports, the World Health Organization (WHO) – which as has already been demonstrated has been doing China’s bidding, PR and damage control ever since the pandemic emerged – has been refused an invitation to take part in a Chinese investigation into the origins of COVID-19. Almost as if China has something to hide even from the organization that it so explicitly control each and every day.
Sky News spoke to Dr Gauden Galea, the WHO’s representative in China, on Thursday who reported that China refused requests by WHO officials to participate in an investigation.
“We know that some national investigation is happening but, at this stage, we have not been invited to join,” Dr Galea was quoted as saying.
“WHO is making requests of the health commission and of the authorities… The origins of virus are very important, the animal-human interface is extremely important and needs to be studied.
He is right. And yet, even though the WHO has been exposed as China’s lapdog, China refuses to grant the only international health organization access. For some odd reason the WHO never bothered to ask “why”?
He said it was crucial to know “as much as possible” in order to prevent a “reoccurrence”. When asked by Sky News whether there was a good reason for the WHO to not be included in the investigation, Dr Galea said: “From our point of view, no”.
But from China’s… yes.
Dr Galea told Sky News that while WHO was confident the virus was “naturally occurring” – and once again, the WHO shows that it can’t even approach this most critical of tasks with an open mind and is already prejudicted by the pro-China position even though the US president himself today said he has seen evidence that virus indeed originated in the Wuhan lab – the laboratory’s logs would need to be “part of any full report, any full look at the story of the origins”. So far, WHO has not been able to investigate the logs, he said.
The WHO representative also said China would have to explain why no new cases of COVID-19 were reported in the country for a significant period of time in early January. Not that China would ever answer.
So while the “establishment” of pro-China healthcare workers and faux Facebook “fact checkers” such as the grotesque case of the borderline criminally conflicted Danielle Anderson, among those who have pushed the “conspiracy theory” that China knows more than its letting on about the virus – some three months after this website of course – are US President Donald Trump, French President Emmanuel Macron and German Chancellor Angela Merkel, who said the more transparent China is, the better.
Meanwhile, Trump has withdrawn funding from the WHO over concerns about its transparency and for placing too much trust in China.
As for China, the bigger question is not if Beijing is lying but when, if ever, it is telling the truth: even the pro-establishemnt, anti-Trump Associated Press reported earlier this month that China was aware of the virus’ seriousness and the possibility of human-to-human transmission days before warning citizens. But China maintains it acted swiftly to deal with the virus and has been transparent with both the WHO and other countries.
Australia’s Foreign Minister Marise Payne has been one of the strongest advocates for a global inquiry into the virus, saying mid-April that Australia would “insist” on one. However, as we reported previously, demonstrating that Beijing won’t even accept being questioned let alone probed, China took offense to that, saying Australia was just parroting the views of the United States, while France, Britain and the European Union and threatened an import boycott.
Even tiny New Zealand, whose real estate market is largely at the whim of Chinese oligarchs, has expressed an interest in looking into how the pandemic occurred, but hasn’t specifically singled out reviewing China’s role. New Zealand Prime Minister Jacinda Ardern also signalled an inquiry should happen once the pandemic was over.
“There have been politicians around the world who have said, ‘Look, in the aftermath of this, we do need to look at what happened and whether or not there are areas we could as a global community improve our response’,” she explained last week. “I think that’s common sense. Of course, we want to make sure we learn from what has been a global pandemic that has shaken the globe in a way that none other has for many decades” she said in her most politically correct tone, desperate not to offend China.
Finally, confirming just how political any potential probe would be, a terrified NZ Foreign Minister Winston Peters said on Tuesday that he trusted China wouldn’t punish New Zealand for taking part in an inquiry.
“It is very hard to conceive, no matter what country it is, of there not being a desire from every country around the world – including the country of origin – for an investigation to find out how this happened,” he said, adding laughably “I’m not worried about [potential ramifications] because China has promised me they don’t behave that way.”
The funniest part about the bolded sentence is that he actually wasn’t kidding.
China’s ‘Belt And Road’ Partners Beg Beijing For Bilateral Bailouts
China’s cash-strapped partners in their “Belt and Road” (BRI) global development project have been begging Beijing for debt relief amid the coronavirus pandemic, according to the Financial Times.
And according to Chinese policy advisers, the Xi regime is considering several options – including suspending interest payments on loans from the country’s financial institutions. That said, outright debt forgiveness is unlikely.
According to Washington-based consultancy RWR Advisory, Chinese financial institutions have lent an estimated $ 461bn for BRI projects since 2013 – making it the largest development initiative in the world.
“We understand a lot of countries are looking to renegotiate loan terms,” said one researcher at China Development Bank, which spearheads hundreds of billions of dollars in BRI projects globally along with the Export-Import Bank of China.
“But it takes time to strike a new deal and we cannot even travel abroad right now. The BRI loans are not foreign aid. We need to at least recoup principal and a moderate interest,” said the researcher on condition of anonymity.
“It is OK for 20 per cent of our portfolio projects to have problems,” they added, “But we can’t tolerate half of them going under. We might consider extending loans and giving interest relief. But in general our loans are issued according to market principles.”
The BRI, which was launched in 2013 as the signature foreign policy initiative of President Xi Jinping, is aimed at building infrastructure and boosting China’s influence around the world. Most of the 138 countries that have officially signed up to the BRI are developing nations, many with the weakest credit ratings in the world. -Financial Times
In particular, BRI partners in several African nations – which have received approximately $ 143bn in BRI loans between 2000 and 2017 – are understood to have applied for debt relief.
A policy adviser to the Chinese government, who declined to be identified, said that Beijing’s preferred option in dealing with national requests for debt relief would be to “suspend interest payments” on loans.
However, some borrowers with “good market order” may be allowed to reschedule their loans. Forgiving debt permanently would be a “last option”, the adviser said. -Financial Times
Earlier this month China agreed to freeze bilateral loan repayments for low-income countries until the end of the year, agreeing to a G20 initiative which covered “all official bilateral creditors,” including lending from Chinese policy banks.
That said, diplomats say that the process of sifting through which loans from various countries would be eligible, while negotiations are being undertaken with China on a bilateral basis. According to the FT, China consequently has a ton of leverage.
According to researcher Mei Guanqun of the Beijing think-tank China Center for International Economic Exchanges, China has yet to solidify plans for dealing with the mounting debt-relief requests.
“But there are a few rules of thumb,” he said. “First, China’s commercial banks like [Bank of China] and [Industrial and Commercial Bank of China] are unlikely to forgive loans because they are under pressure from Beijing to meet financial targets.”
“Second, China Development Bank and China ExIm Bank may provide sovereign loan relief to countries that are friendly with us,” added Mei. “We may cut interest rates by a few percentage points or have it removed. We could also reduce principal payment by a moderate amount. The idea is to keep borrowers from going under, which may undermine our interest.”
According to Andrew Davenport, COO of RWR Advisory, Beijing is concerned that BRI will be interpreted to have resulted in “predatory economic behavior” by which China will be able to claim valuable assets as collateral when countries can’t pay their debts.
“The narrative certainly matters and indeed they seem to worry about it,” said Davenport. “If they can persuade people not to always be looking at what mischief Beijing is up to but rather to see the ‘goodness’ on offer, that’s a winning formula for China.“
Between the unaccountability of elites and total fragmentation of civil society, Covid-19 as a circuit breaker is showing how the king – systemic design – is naked.
We are being sucked into adanse macabreof multiple complex systems “colliding into one another,” producing all kinds of mostly negative feedback loops.
What we already know for sure, as Shoshana Zuboff detailed in “The Age of Surveillance Capitalism,” is that “industrial capitalism followed its own logic of shock and awe” to conquer nature. But now surveillance capitalism “has human nature in its sights.”
In “The Human Planet: How We Created the Anthropocene,” analyzing the explosion in population growth, increasing energy consumption and a tsunami of information “driven by the positive feedback loops of reinvestment and profit,” Simon Lewis and Mark Maslin of University College, London, suggest that our current mode of living is the “least probable” among several options. “A collapse or a switch to a new mode of living is more likely.”
With dystopia and mass paranoia seemingly the law of the (bewildered) land, Michel Foucault’s analyses of biopolitics have never been so timely, as states across the world take over biopower – the control of people’s life and bodies.
David Harvey, once again, shows how prophetic was Marx, not only in his analyses of industrial capitalism but somehow – in “Grundrisse: Foundations of the Critique of Political Economy” – even forecasting the mechanics of digital capitalism:
Marx, Harvey writes, “talks about the way that new technologies and knowledge become embedded in the machine: they’re no longer in the laborer’s brain, and the laborer is pushed to one side to become an appendage of the machine, a mere machine-minder. All of the intelligence and all of the knowledge, which used to belong to the laborers, and which conferred upon them a certain monopoly power vis-à-vis capital, disappear.”
Thus, adds Harvey, “the capitalist who once needed the skills of the laborer is now freed from that constraint, and the skill is embodied in the machine. The knowledge produced through science and technology flows into the machine, and the machine becomes ‘the soul’ of capitalist dynamism.”
Living in ‘Psycho-Deflation’
An immediate – economic – effect of the collision of complex systems is the approaching New Great Depression. Meanwhile, very few are attempting to understand Planet Lockdown in depth – and that goes, most of all, for post-Planet Lockdown. Yet a few concepts already stand out. State of exception. Necropolitics. A new brutalism. And, as we will see, the new viral paradigm.
So, let’s review some the best and the brightest at the forefront of Covid-19 thinking. An excellent road map is provided by “Sopa de Wuhan” (“Wuhan Soup’), an independent collection assembled in Spanish, featuring essays by, among others, Giorgio Agamben, Slavoj Zizek, Judith Butler, David Harvey, South Korean Byung-Chul Han and Spaniard Paul Preciado.
Franco Berardi, a 1968 student icon now professor of philosophy in Bologna, offers the concept of “psycho-deflation” to explain our current predicament. We are living a “psychic epidemic … generated by a virus as the Earth has reached a stage of extreme irritation, and society’s collective body suffers for quite a while a state of intolerable stress: the illness manifests itself at this stage, devastating in the social and psychic spheres, as a self-defense reaction of the planetary body.”
Thus, as Berardi argues, a “semiotic virus in the psycho-sphere blocks the abstract functioning of the economy, subtracting bodies from it.” Only a virus would be able to stop accumulation of capital dead in its tracks: “Capitalism is axiomatic, works on a non-verified premise (the necessity of unlimited growth which makes possible capital accumulation).
Every logical and economic concatenation is coherent with this axiom, and nothing can be tried outside of this axiom. There is no political way out of axiomatic Capital, there’s no possibility of destroying the system,” because even language is a hostage of this axiom and does not allow the possibility of anything “efficiently extra-systemic.”
So what’s left? “The only way out is death, as we learned from Baudrillard.” The late, great grandmaster of simulacrum was already forecasting a systemic stall back in the post-modernist 1980s.
Croatian philosopher Srecko Horvat , in contrast, offers a less conceptual and more realist hypothesis about the immediate future: “The fear of a pandemic is more dangerous than the virus itself. The apocalyptic images of the mass media hide a deep nexus between the extreme right and the capitalist economy. Like a virus that needs a living cell to reproduce itself, capitalism will adapt itself to the new 21st century biopolitics.”
Workers disinfecting street in Tehran during Covid-19 pandemic, March 19, 2020. (Tasnim News Agency, CC BY 4.0, Wikimedia Commons)
For the Catalan chemist and philosopher Santiago Lopez Petit, coronavirus can be seen as a declaration of war: “Neoliberalism unabashedly dresses up as a war state. Capital is scared,” even as “uncertainty and insecurity invalidate the necessity of the same state.” Yet there may be creative possibilities when “obscure and paroxistic life, incalculable in its ambivalence, escapes algorithm.”
Our Normalized Exception
Giorgio Agamben caused immense controversy in Italy and across Europe when he published a column in late February on “the invention of an epidemic.” He later had to explain what he meant. But his main insight remains valid: The state of exception has been completely normalized.
And it gets worse: “A new despotism, which in terms of pervasive controls and cessation of every political activity, will be worse that the totalitarianisms we have known so far.”
Agamben redoubles his analyses of science as the religion of our time: “The analogy with religion is taken literally; theologians declared that they could not clearly define what is God, but in his name they dictated rules of conduct to men and did not hesitate to burn heretics. Virologists admit they don’t know exactly what is a virus, but in its name they pretend to decide how human beings shall live.”
Cameroonian philosopher and historian Achille Mbembe, author of two indispensable books, “Necropolitics” and “Brutalisme,”has identified the paradox of our time: “The abyss between the increasing globalization of problems of human existence and the retreat of states inside their own, old-fashioned borders.”
Mbembe delves into the end of a certain world, “dominated by giant calculation devices,” a “mobile world in the most polymorphous, viral and near cinematic sense,” referring to the ubiquity of screens (Baudrillard again, already in the 1980s) and the lexicography, “which reveals not only a change of language but the end of the word.”
Here we have Mbembe dialoguing with Berardi – but Membe takes it much farther: “This end of the word, this definitive triumph of the gesture and artificial organs over the word, the fact that the history of the word ends under our eyes, that for me is the historical development par excellence, the one that Covid-19 unveils.”
The political consequences are, inevitably, dire: “Part of the power politics of great nations does not lie in the dream of an automated organization of the world thanks to the manufacturing of a New Man that would be the product of physiological assemblage, a synthetic and electronic assemblage, and a biological assemblage? Let’s call it techno-libertarianism.”
This is not exclusive to the West: “China is also on it, vertiginously.”
This new paradigm of a plethora of automated systems and algorithmic decisions “where history and the word don’t exist anymore is in frontal shock with the reality of bodies in flesh and bones, microbes, bacteria and liquids of all sorts, blood included.”
Rendering of Open Cobalt 3D hyperlinks connecting five virtual spaces. (Julian Lombardi, CC BY-SA 3.0, Wikimedia Commons)
The West, argues Mbembe, chose a long time ago to “imprint a Dionysiac course to its history and take the rest of the world with it, even if it doesn’t understand it. The West does not know anymore the difference between beginning and ending. China is also on it. The world has been plunged into a vast process of dilaceration where no one can predict the consequences.”
Mbembe is terrified by the proliferation of “live manifestations of the bestial and viral part of humanity,” including racism and tribalism.
This, he adds, conforms our new viral paradigm.
His analysis certainly dovetails with Agamben’s: “I have a feeling that brutalism is going to intensify under the techno-libertarianism drive, be it under China or hidden under the accoutrements of liberal democracy. Just like 9/11 opened the way to a generalized state of exception, and its normalization, the fight against Covid-19 will be used as a pretext to move the political even more towards the domain of security.”
“But this time”, Mbembe adds, “it will be a security almost biological, bearing with new forms of segregation between the ‘immunity bodies’ and ‘viral bodies’. Viralism will become the new theatre for fractioning populations, now identified as distinct species.”
It does feel like neo-medievalism, a digital re-enacting of the fabulous “Triumph of Death” fresco in Palermo.
Poets, Not Politicians
It’s useful to contrast such doom and gloom with the perspective of a geographer. Christian Grataloup, who excels in geo-history, insists on the common destiny of humanity (here he’s echoing Xi Jinping and the Chinese concept of “community of shared destiny”): “There’s an unprecedented feeling of identity. The world is not simply an economic and demographic spatial system, it becomes a territory. Since the Great Discoveries, what was global was shrinking, solving a lot of contradictions; now we must learn to build it up again, give it more consistence as we run the risk of letting it rot under international tensions.”
It’s not the Covid-19 crisis that will lead to another world – but society’s reaction to the crisis. There won’t be a magical night – complete with performances by “international community” pop stars – when “victory “will be announced to the former Planet Lockdown.
What really matters is a long, arduous political combat to take us to the next level. Extreme conservatives and techno-libertarians have already taken the initiative – from refusal of any taxes on the wealthy to support the victims of the New Great Depression to the debt obsession that prevents more, necessary public spending.
In this framework, I propose to go one step beyond Foucault’s biopolitics. Gilles Deleuze can be the conceptualizer of a new, radical freedom. Here is a delightful British series that can be enjoyed as if it were a serious Monty Python-ish approach to Deleuze.
Foucault excelled in the description of how meaning and frames of social truth change over time, constituting new realities conditioned by power and knowledge.
Deleuze, on the other hand, focused on how things change. Movement. Nothing is stable. Nothing is eternal. He conceptualized flux – in a very Heraclitean way.
New species (even the new, AI-created Ubermensch) evolve in relation with their environment. It’s by using Deleuze that we can investigate how spaces between things create possibilities for The Shock of the New.
More than ever, we now know how everything is connected (thank you, Spinoza). The (digital) world is so complicated, connected and mysterious that this opens an infinite number of possibilities.
Already in the 1970s, Deleuze was saying the new map – the innate potentially of newness – should be called “the virtual.” The more living matter gets more complex, the more it transforms this virtual into spontaneous action and unforeseen movements.
Deleuze posed a dilemma that now confronts us all in even starker terms. The choice is between “the poet, who speaks in the name of a creative power, capable of overturning all orders and representations in order to affirm difference in the state of permanent revolution which characterizes eternal return: and that of the politician, who is above all concerned to deny that which ‘differs,’ so as to conserve or prolong an established historical order, or to establish a historical order which already calls forth in the world the forms of its representation.”
The time calls for acting as poets instead of politicians.
The methodology may be offered by Deleuze and Guattari’s formidable “A Thousand Plateaus” – significantly subtitled “Capitalism and Schizophrenia,” where the drive is non-linear. We’re talking about philosophy, psychology, politics connected by ideas running at different speeds, a dizzying non-stop movement mingling lines of articulation, in different strata, directed into lines of flight, movements of deterritorialization.
The concept of “lines of flight” is essential for this new virtual landscape, because the virtual is conformed by lines of flight between differences, in a continual process of change and freedom.
All this frenzy, though, must have roots – as in the roots of a tree (of knowledge). And that brings us to Deleuze’s central metaphor; the rhizome, which is not just a root, but a mass of roots springing up in new directions.
All this frenzy must have roots. (StockSnap from Pixabay)
Deleuze showed how the rhizome connects assemblies of linguistic codes, power relations, the arts – and, crucially, biology. The hyperlink is a rhizome. It used to represent a symbol of the delightful absence of order in the internet, until it became debased as Google started imposing its algorithms. Links, by definition, always should lead us to unexpected destinations.
Rhizomes are the antitheses of those Western liberal “democracy” standard traits – the parliament and the senate. By contrast, trails – as in the Ho Chi Minh trail – are rhizomes. There’s no masterplan. Multiple entryways and multiple possibilities. No beginning and no end. As Deleuze described it, “the rhizome operates by variation, expansion, conquest, capture, offshoot.”
This can work out as the blueprint for a new form of political engagement –as the systemic design collapses. It does embody a methodology, an ideology, an epistemology and it’s also a metaphor. The rhizome is inherently progressive, while traditions are static. As a metaphor, the rhizome can replace our conception of history as linear and singular, offering different histories moving at different speeds. TINA (“There is no alternative”) is dead: there are multiple alternatives.
And that brings us back to David Harvey inspired by Marx. In order to embark onto a new, emancipatory path, we first have to emancipate ourselves to see that a new imaginary is possible, alongside a new complex systems reality.
So let’s chill – and de-territorialize. If we learn how to do it, the advent of the New Techno Man in voluntary servitude, remote-controlled by an all-powerful, all-seeing security state, won’t be a given.
Deleuze: a great writer is always like a foreigner in the language through which he expresses himself, even if it’s his native tongue. He does not mix another language with his own language; he carves out a non pre-existent foreign language within his own language. “He makes the language itself scream, stammer, murmur. A thought should shoot off rhizomatically – in many directions.
I have a cold. The virus is a rhizome.
Remember when Trump said this was a “foreign virus?”
All viruses are foreign – by definition.
But Trump, of course, never read “Naked Lunch” by Grandmaster William Burroughs.
CDC Extends Social Distancing Guidelines To Apply To Pets
Now that the first domesticated dog has tested positive for for the novel coronavirus, joining at least one tiger at the Bronx Zoo, it’s probably worth noting that the CDC earlier this month extended America’s social distancing guidelines to include pets.
To be clear: there’s no evidence of pets infecting humans, but that doesn’t mean it can’t happen. So far, tests suggested that the viral strains found in animals weren’t concentrated enough to cause infection in humans, but nobody can say for certain.
Instead of allowing your dog to run around the neighborhood without a leash, sniffing the anus of every fellow canine, the new guidelines advise Americans to “treat pets as you would other human family members.”
“Do not let pets interact with animals or people outside the household,” the CDC said.
Dog owners should avoid taking their fur-babies to dog parks, or any places where they might risk infection.
More importantly, the guidelines recommend that “if a person inside the household becomes sick, isolate that person from everyone else, including pets.”
While the CDC acknowledged that much research still needs to be done, there’s enough evidence now to suggest that pets can be infected by humans.
Outside the US, a handful of other house pets, including both cats and dogs, have been infected in Japan and in China, according to unconfirmed reports.
During the COVID-19 crisis, there has been no shortage of “crazed fanatics.”
In a recent interview, Bill Gates claimed that “normalcy will only return when we’ve vaccinated the entire global population.” Acknowledging that the “economic hit” will be immense, he proclaimed, “but [we] don’t have a choice.” That is, no choice other than to go down the path Gates prescribes.
Then, to deflect criticism from his prescribed path, Gates sets up a mystical strawman opponent who wants to “ignore what’s going on here.”
Dr. Ezekiel Emanuel was an architect of Obamacare. Emanuel too proclaimed, “We will not be able to return to normalcy until we find a vaccine or effective medications.”
Rhetorically, Emanuel asked, “How are people supposed to find work if this goes on in some form for a year and a half? Is all that economic pain worth trying to stop COVID-19?”
Emmanuel didn’t invite a dialogue on his questions. He answered his questions with the cry of every other fanatic, “The truth is we have no choice.”
Fanatics proclaim their way is the only way forward and want us to believe “we have no choice.”
Notice, Gates and Emmanuel present a false dilemma, two alternatives: shut down the economy for many months to come or do nothing. You either support the lockdowns, or you’re a threat to public health.
Gates and Emmanuel refuse to acknowledge other possibilities. They fail to see the limitless possibilities that arise from voluntary adjustments by businesses and individuals.
Through this COVID-19 crisis, fanatics have weaponized the false dilemma logical fallacy to obscure “rational, honest debate.” “This insidious tactic has the appearance of forming a logical argument, but under closer scrutiny it becomes evident that there are more possibilities than the either/or choice that is presented.”
You may recognize this tactic in various other forms. You either want educational spending by government to increase, or you’re against education. You either want higher taxes on the “wealthy,” or you want the poor to go without healthcare.
Foxes and Hedgehogs
Those who use the false dilemma tactic and think in black and white terms have the worst records as forecasters. In his book, Enlightenment Now, Steven Pinker reports on the research of University of Pennsylvania professor Philip Tetlock, who interviewed 284 forecasters to understand the makeup of an accurate forecaster from the many more who are “often mistaken but never in doubt.”
Tetlock metaphorically drew on the Greek poet Archilochus who wrote, “The fox knows many things, but the hedgehog knows one big thing.” “The hedgehogs are more the big idea people, more decisive,”Tetlock observes. For forecasters, decisiveness is not a good quality. Don’t rely on the forecasts of hedgehogs.
A physician with the mindset of a hedgehog might remove your tonsils to cure repeated sore throats. Medical hedgehogs wouldn’t be knowledgeable of dietary and lifestyle changes that could support your health.
Pinker warns, those “with Big Ideas—left-wing or right-wing, optimistic or pessimistic—which they held with an inspiring (but misguided) confidence” were the worst forecasters. Having a narrow focus, hedgehogs can’t see the big picture beyond their specialization. In the words of Nobel laureate Daniel Kahneman, they labor under “an enhanced illusion of their skill.” Their forecasts, Kahneman adds, “produce poorer predictions than dart-throwing monkeys who would have distributed their choices evenly over the options.”
The black-or-white thinking of these poor forecasters stems from their desire “to squeeze complex problems into the preferred cause-effect templates.” Ideas and evidence that don’t fit their theories are treated as “irrelevant distractions.”
Fame leads to arrogance. Kahneman writes, “The more famous the forecaster the more flamboyant the forecasts.” Tetlock observes, “Experts in demand were more overconfident than their colleagues who eked out existences far from the limelight.”
Pinker adds that poor forecasters are allergic to the ambiguities of life and “to wishy-washy answers.” Rather than looking for evidence that contradicts their position, they pile “up reasons why they were right and others wrong.” Such experts “were unusually confident and likelier to declare things ‘impossible’ or ‘certain.’ Committed to their conclusions, they were reluctant to change their minds even when their predictions clearly failed. They would tell us, ‘Just wait.’”
Foxes are the “superforecasters.” Pinker instructs that they are “not necessarily brilliant,” but “they have personality traits that psychologists call ‘openness to experience’ (intellectual curiosity and a taste for variety), ‘need for cognition’ (pleasure taken in intellectual activity), and ‘integrative complexity’ (appreciating uncertainty and seeing multiple sides).”
Superforecasters are actively looking for their mindset biases. Pinker writes of the best forecasters, “They constantly ask themselves, ‘Are there holes in this reasoning? Should I be looking for something else to fill this in? Would I be convinced by this if I were somebody else?’”
Politicians and central planners listen to fanatical hedgehogs who insist their way is the only way. The hedgehogs may be decisive, but their forecasts are often spectacularly wrong.
Why Hysteria is Contagious
Jonathan Sumption, a former UK Supreme Court Justice, recently warned, “When human societies lose their freedom, it’s not usually because tyrants have taken it away. It’s usually because people willingly surrender their freedom in return for protection against some external threat.”
Sumption blames the public for demanding draconian actions. Most “don’t pause to ask whether the action will work. They don’t ask themselves whether the cost will be worth paying.”
Because of herding behavior, “hysteria is infectious.”
If you were handed two cards with lines on each, one clearly shorter than the other, could you tell the difference? If you think this is a ridiculous question, think again.
In one of psychology’s most famous experiments, Solomon Asch showed that if you’re in a group and most of the group members claim the shorter line is longer, you might just go along. In his book You Are Not So Smart, David McRaney reports, “In Asch’s experiments, 75 percent of the subjects caved in on at least one question [about the length of the lines]. They looked at the lines, knew the answer everyone else was agreeing to was wrong, and went with it anyway.”
Perhaps even worse, those who changed their correct answers to conform with others “seemed oblivious to their own conformity. When the experimenter told them they had made an error, they came up with excuses as to why they made mistakes instead of blaming the others.”
If you’re sure you would go against the grain, consider this: “The percentage of people who conformed grew proportionally with the number of people who joined in consensus against them.”
Imagine you are in a meeting, and a significant decision is to be made. You think your manager’s plan is ditzy. You are ready to speak out when you see everyone else in the meeting is agreeing with your manager. Would you behave like a mouse and go along? If you’ve ever gone along with a poor decision, don’t beat up on yourself; it’s tough to go against the herd.
Perhaps you think Asch’s experiments merely show there is no reason to dispute the crowd when the situation is trivial. Sadly, research shows when something significant is on the line, fewer people will buck the herd.
In his book The Science of Fear, Dan Gardner reports on experiments by psychologists Robert Baron, Joseph Vandello, and Bethany Brunsman found that conformity goes up “so long as the judgments are difficult or ambiguous, and the influencing agents are united and confident.”
Gardner wondered, would new evidence “make us doubt our opinions?” The answer, Gardner found, is, “Once we have formed a view, we embrace information that supports that view while ignoring, rejecting, or harshly scrutinizing information that casts doubt on it.” Confirmation bias trips us up from changing our mind.
The latest evidence suggests COVID-19 is not as high a risk as initially thought. If you think such evidence will convince your neighbors or Facebook friends that it’s time to end the lockdowns, you will be endlessly frustrated. Our neighbors care what other people think. If you live in an area where support for the lockdowns is widespread, your neighbor will likely go along. Remember, the more nuanced an issue is, and the more critical the problem, the more the desire to conform goes up.
We are living through both a pandemic and a contagious madness of global proportions.
Politicians who led us down this destructive lockdown path won’t be changing their view until their “solution” is politically untenable.
In his conclusion to The Road to Serfdom, Hayek warns, “We shall not grow wiser before we learn that much that we have done was very foolish.” To grow wiser, we first need to “free ourselves” from a mindset that obscures our errors. We will continue to make errors as long as we continue to believe “what we have done in the recent past was all either wise or inevitable.”
We have become a nation of professional victims. We are not victimized by the coronavirus or by politicians and “experts.” We are victims of our choice to conform in support of their policies. Stephen Covey has observed, “It’s easy to take responsibility for the good things in our lives, but the real test comes when things aren’t going well.”
Today, we can take responsibility for changing our minds. We are each 100% responsible for how we choose to interpret our experience of life. In her timeless book, The Discovery of Freedom Rose Wilder Lane explained why some prefer to turn over responsibility to authority. When something goes wrong, they proclaim I am an innocent victim of forces beyond my control. Pretending we are innocent is a steep price we pay for losing our freedom.
Writes Mackay, “Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, one by one.”
When we choose to see beyond the “we have no choice” mindset, limitless solutions will begin to come into view. The future of America depends, not upon bailouts or a fast-tracked vaccine, but upon individuals choosing to recover their senses.
When in trouble politically, governments have traditionally conjured up a foreign enemy to explain why things are going wrong.
Whatever one chooses to believe about the coronavirus, the fact is that it has resulted in considerable political backlash against a number of governments whose behavior has been perceived as either too extreme or too dilatory. Donald Trump’s White House has taken shots from both directions and the response to the disease has also been pilloried due to repeated gaffes by the president himself. The latest mis-spoke, now being framed by Trump’s press secretary as sarcasm, involved a presidential suggestion that one might consider injecting or imbibing disinfectant to treat the disease, either of which could easily prove lethal.
So, the administration is desperate to change the narrative and has decided to hit on the old expedient, namely seeking out a foreign enemy to distract from what is going on in the nation’s hospitals. The tale of malevolent foreigners has been picked up by a number of mainstream media outlets and has proven especially titillating because there is not just one bad guy, but instead at least four: China, Russia, North Korea and Iran.
The accepted narrative is that America’s enemies are now taking advantage of a moment of weakness due to the lockdown response to the coronavirus and have stepped up their attacks, both physical and metaphorical, on the Exceptional Nation Under God.
The most recent claim that the United States is being targeted involves an incident in mid-April during which a swarm of Iranian gunboats allegedly harassed a group of American warships conducting a training exercise in the Persian Gulf by crossing the bows and sterns of the U.S. vessels at close range. The maneuvers were described by the Navy as “unsafe and unprofessional” but the tiny speedboats in no way threatened the much larger warships (note the photo in the link which illustrates the disparity in size between the two vessels).
Donald Trump characteristically responded to the incident with a tweet last Wednesday: “I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.” Although no context was provided, the president commands the armed forces and the tweet essentially defined the rules of engagement, meaning that it would be up to the ships’ commanders to determine whether or not they are being harassed. If so, the would be able to open fire and destroy the Iranian boats. Of course, there might be a physical problem in “shooting down” a gunboat that is in the water rather than in the air.
In the Mediterranean the threat against the U.S. consisted of two Russian jet fighters flying close to a Navy P8-A submarine surveillance plane. The Russian fighters were scrambled from Hmeymim air base in Syria after the U.S. aircraft approached Syrian airspace and Russian military facilities. One of the fighters, a SU-35 carried out an “unsafe” maneuver when it flew upside down at high-speed 25 feet in front of the Navy plane.
Also in mid-April, North Korea meanwhile fired cruise missiles into the Sea of Japan amidst rumors that its head of state Kim Jong Un might be dead or dying after major surgery. President Trump was unconcerned about the missiles and also commented that he had received a “nice note” from the North Korean leader.
Wars and rumors of wars notwithstanding, China continues to be the principal target for Democrats and Republicans alike on Capitol Hill. GOP congressmen are reportedly urging sanctions against China while there are already a number of coronavirus lawsuits targeting Chinese assets in U.S. courts, at least one of which has a trillion dollar price tag. Theories about the deliberate weaponization of the Wuhan virus abound and they are also mixed in with stories of how Beijing unleashed the weapons and is now engaged in Russia style social media intervention to promote the notion that the United States has proven incapable of handling what has become a major medical emergency. However, those who are pushing the idea that the Chinese communist party has declared war by other means fail to explain why the government in Beijing is so keen on destroying its largest export market. If the U.S. economy goes down a large part of the Chinese economy will go with it, particularly if China’s second largest export market Europe is also suffering.
The craziness of what is going on in the context of the disruption caused by the coronavirus has apparently increased the normal paranoia level at the top levels of the U.S. government.Pentagon plans to fight a war with Russia and China simultaneously, first mooted in 2018, are still a work in progress in spite of the fact that Washington has fewer cards to play currently than it did two years ago. The economy is down and prospects for recovery are speculative at best, but the war machine rolls on. Many Americans tired of the perpetual warfare are hoping that the virus aftermath will include demands for a genuine national health system that will perforce gut the Pentagon budget, leading to an eventual withdrawal from empire.
In spite of the hysteria, it is important to note that no Americans have been killed or injured as a result of recent Iranian, Russian, Chinese and North Korean actions. When you station ships and planes close to or even on the borders of countries that you have labeled as enemies it would be reasonable to expect that there will be pushback. And as for taking advantage of the virus, it is the United States that has suggested that it would do so in the cases of Iran and Venezuela, exerting “maximum pressure” on both countries in their times of troubles to bring about regime change.
If those countries that are accustomed to being regularly targeted by the United States are taking advantage of an opportunity to diminish America’s ability to intervene globally, no one should be surprised, but it is a fantasy to make the hysterical claim that the United States has now become the victim of some kind of vast international conspiracy.
Deutsche Bank Capitulates: Starts Charging Negative Rate On All New Deposit Accounts Over €100,000
It has been a long time coming and it’s finally here.
When the ECB first unleashed negative rates across Europe in 2014, banks were loathe to match the central bank’s deposit rates for their clients to those charged by the ECB over fears depositors would simply take their money and go elsewhere. After all, the premise of paying a bank for the privilege of holding your money is still absolutely insane to most normal people.
However, as the years went by, and as the ECB’s negative rates kept rising – or rather dropping – banks were forced to quietly admit they had no choice and starting at the very top, targeting only corporate clients and the biggest depositors, European banks started imposing negative deposit rates while hoping they could avoid going all the way to the smaller savers.
Indeed, just last November, Deutsche Bank vowed that it would pass on negative interest rates only to larger corporate customers or the deposits of wealthy individuals and spare most retail clients, Deputy Chief Executive Officer Karl von Rohr said, explaining that German banks have already paid several billion euros in penalty rates for their deposits with the European Central Bank and Deutsche Bank’s payments amount to “several hundred million euros for 2019.”
Now, less than half a year later, the Frankfurt-based bank – which itself is in dire financial straits – has capitulated and to avoid paying the ECB’s punitive rate will soon introduce negative interest rates for even its medium depositors.
A Deutsche Bank spokesman told Handelsblatt that “The ongoing pressure from negative interest rates makes it necessary for Deutsche Bank to charge custody fees for new accounts exceeding €100,000 starting May 18, 2020.” The “deposit rate” of -0.5% is equal to the rate the ECB charges banks for money parked there.
“This helps us on the earnings side, but above all it helps to prevent further inflows of particularly high deposits that cost us money,” wrote Manfred Knof, head of the bank’s German private customer business, to his employees. This applies “especially in the event that other banks further adjust their conditions and their customers are looking for an alternative for their deposits with us.”
In other words, with the ECB flooding the European financial system with a tsunami of liquidity – one which it expanded today with yet another meaningless long-term refi operation as if that will do anything to help banks who can no longer earn a net interest margin arb become solvent – Europe’s banks no longer need deposits, and in fact will do everything they can to push away all but the smallest depositors. The good news, for now, is that “existing account contracts are not affected” however we expect that to change soon.
So with European banks finally cracking down on the bulk of their depositors instead of just the top 1% and corporate clients, what happens next?
Well, savers who collectively owns trillions in European bank deposits that are now non grata have two options: either pull the money out, convert it to cash and store it in a safe (something Germany has a lot of experience with especially in late 2016 when Deutsche Bank was on the verge of collapse, sparking a rush to buy safes) where it is outside of the financial system – this is precisely the alternative the ECB prepared for several years ago when it stopped printing the €500 banknote, or more likely, buy alternative physical assets which – in a time of pervasive deflation and negative rates – do not charge a penalty rate, such as gold or even cryptos.
So if over the next few months a wave of “mysterious” buying emerges and lifts all non-cash assets, we will know why: the real great rotation will have begun.
LatAm Bailout Veteran Says Emerging Market Crisis Is The “Worst He’s Ever Seen”
With the Nasdaq set to erase all of its 2020 losses after strong earnings from the tech giants, and stocks generally surging on the assumption that, as UBS put it, “lockdowns are lifted by the end of June and do not need to be re-imposed”, especially with today’s favorable if conflicting remdesivir news, it is easy to forget that emerging markets are facing their private hell as a result of widespread economic shutdowns, poor healthcare conditions which will only exacerbate the coronavirus pandemic, the dollar’s relentless strength, and trillions in dollar-denominated debt maturing in the next few years which the chronically strong US dollar will make prohibitively impossible to repay.
But don’t take our word for it: according to Bill Rhodes, CEO of Rhodes Global Advisors and a veteran of countless international bailouts in the 1980s and 1990s, the debt crisis that’s erupted across the world’s emerging markets is “the worst he’s ever seen.”
Rhodes, 84, is perhaps the world’s foremost expert on emerging markets in peril: the former Citigroup executive is a veteran of the 1980s Brady Plan that re-set the clock for Latin America’s struggling economies by creating a new debt structure for developing nations that’s largely in place to this day.
“It’s going to be difficult,” Rhodes said in an interview with Bloomberg discussing the coming EM crisis. “You need to have some sort of coordination between the private and the public sectors.”
The problem: three decades after a coordinated rescue of emerging markets orchestrated by US Treasury Secretary Nicholas Brady (the person responsible for the term Brady Bonds) the global pandemic is again challenging the world for a solution, and this time a raft of private bondholders must also be on board. More than 90 nations have already asked the IMF for help amid the pandemic.
The first challenge is that the $ 160 billion debt renegotiated during the Brady Plan pales next to the $ 730 billion that the Institute of International Finance says must be restructured by the end of 2020; the final number could be far greater.
Adding to the difficulties of the next global bailout, unlike 1989, when the loans were mostly held by banks and defaults had already happened, now it’s split between hundreds of creditors ranging from New York hedge funds to Middle Eastern sovereign wealth funds and Asian pension funds. Getting them all in the same room will be a challenge, forget about getting them all to agree on one outcome.
Following in the footsteps of forbearance protocols enabled across the US, academics and officials are pushing for steps that would allow developing nations to pause bond payments through at least 2020, if not even longer, until the coronavirus fades and economies stabilize enough to analyze debt sustainability. And since one’s debt is always someone else’s asset, that proposal is upsetting creditors on Wall Street who depend on those funds to keep their portfolios afloat and to generate current income.
Meanwhile, G-20 leaders and multilateral organizations are already working toward relief for nations to stay current on debt. The IMF and Paris Club asked the Washington-based IIF to coordinate a standstill, and the United Nations is calling for a new global debt body.
The other big challenge is that bureaucrats have to not only reach a solution, they have a strict time limit in which to do so: dollar-denominated debt from 18 developing nations already trades at spreads of at least 1,000 basis points over U.S. Treasuries. While the top three insolvent outliers – Venezuela, Argentina and Lebanon – were grappling with their own problems before the pandemic, others are fast approaching those levels amid currency sell-offs and record-shattering outflows.
Rhodes’ dire warning echoes that of another EM expert: Anna Stupnytska, Fidelity International’s head of global macro and investment strategy, told Bloomberg “I’m really worried about emerging markets,” adding that Brazil, Mexico, Colombia, South Africa, India and Indonesia may be among the most vulnerable to a virus-related crisis. She expects the coming months to be critical.
Stupnytska, who isn’t expecting a V-shaped economic recovery anywhere, said that weak public health systems, political worries and doubts on central bank independence are “really unhelpful” for EM nations, and that other than parts of Asia, large sections of developing nations are yet to see a peak in coronavirus cases.
“So we are potentially looking at some emerging markets crisis even over the next few months.”
With the clocking ticking, some sort of forbearance on debt payments – currently the most popular idea to help emerging markets – has to be agreed upon and soon; it would also need to extend beyond 2020, according to Anna Gelpern, a law professor at Georgetown University who spent six years at the Treasury. A coordination group could offer standardized terms to all of a country’s creditors that automatically push out payments, however how all creditors will get on the same page is unclear. After all, with memories still fresh of the massive profits Elliott Management earned by holding out on the Argentina debt restructuring early this century, what is to prevent all creditors to pursue this path?
Bloomberg agrees, noting that “it will be no easy task to convince private creditors, especially those with large emerging-market exposure, to take a hit by deferring debt payments.”
Zambia has started talks to postpone its arrears, while Argentina has proposed a plan to restructure its debt that includes a three-year payment moratorium. Neither country has found much traction with its creditors who demand a payment and in full upon maturity.
“Countries that look to markets and are willing to engage market participants have found success in bridging the Covid financial shock,” said an optimistic Hans Humes, CEO of Greylock Capital Management, which has been involved in most emerging-market restructurings over the past quarter-century. Many would disagree with his cheerful assumption.
Then again maybe creditors will find it in their bank accounts, if not hearts, to grant a reprieve: bondholders already granted Ecuador a delay on coupon payments until August, which may save the government as much as $ 1.35 billion this year, as it deals with one of the region’s worst virus outbreaks and a sell-off in oil.
Alternatively, “the time and resource costs of pursuing market debt relief may outweigh the benefits,” especially if a country plans to default anyway, Goldman’s Dylan Smith wrote in an April 17 note. Plus, “it is not clear that the fiduciary duties of large bondholders toward their investors would allow them to provide lenience to debtors, even if they privately support the initiative.”
And you thought OPEC deals were complicated.
Lee Buchheit, a four-decade veteran of the restructuring world, said forcing each nation to renegotiate on its own would only exacerbate the pain. “Here we have a planet-wide phenomenon that is going to make a number of countries have to face unsustainable debt positions.”
Pompeo Demands Countries Block Airspace To Iran’s ‘Terrorist Airline’ After Venezuela Deliveries
The US is going on the offensive once again against Venezuela, this time attempting to break up growing Iranian cooperation and assistance to Caracas. The two so-called ‘rogue states’ recently targeted for US-imposed regime change are helping each other fight coronavirus as well as Washington-led sanctions. Specifically Tehran has ramped up cargo deliveries related getting Venezuela’s derelict oil refineries fully operational.
Secretary of State Mike Pompeo in new statements has called on international allies to block airspace specifically for Iran’s Mahan Air, currently under US sanctions, and which has in recent days delivered cargoes of “unknown support” to the Venezuelan government, according to Pompeo’s words.
Late last week it was revealed Venezuela received a huge boost in the form of oil refinery materials and chemicals to fix the catalytic cracking unit at the 310,000 barrels-per-day Cardon refinery, essential to the nation’s gas production.
Repair of the refinery is considered essential to domestic gasoline consumption, the shortage of which has recently driven unrest amid general food and fuel shortages, especially in the rural area.
Mahan Air is considered to have close ties to the Islamic Revolutionary Guard Corps (IRGC), and its deliveries to Caracas are expected to continue.
“This is the same terrorist airline that Iran used to move weapons and fighters around the Middle East,”Pompeo asserted in his Wednesday remarks.
Pompeo demanded the flights “must stop” and called on all countries to halt sanctioned aircraft from flying through their airspace, and to further refuse access to their airports.
Mahan Air first came under sanctions in 2011 as Washington alleged it provided financial and non-financial support to the IRGC.
April Will Be The Worst Month On Record For Auto Sales
In a world breaking economic records left and right, we can add one more: April is set to be the worst month ever for auto sales.
According to the car shopping experts at Edmunds, April will be a record down month for the auto industry – for obvious reasons – forecasting that just 633,260 new cars and trucks will be sold in the U.S. for an estimated seasonally adjusted annual rate (SAAR) of 7.7 million. This reflects a 52.5% decrease in sales from April 2019, and a 36.6% decrease from March 2020.
Edmunds analysts note that this would be the lowest-volume sales month on record; the second worst month for sales in the past 30 years was January of 2009, when 655,000 vehicles were sold.
“April auto sales took the biggest hit we’ve seen in decades,” said Jessica Caldwell, Edmunds’ executive director of insights. “These bleak figures aren’t just because consumers are holding back on their purchases — fleet sales are seeing an even more dramatic drop as daily rental business has dried up. Like many other industries, the entire automotive sector is struggling as the coronavirus crisis continues to cripple the economy.”
Edmunds experts note that plans for easing shelter-in-place orders across the country in May could open up opportunities for automakers and dealers to capture some deferred demand, but there is still economic uncertainty ahead.
“April is likely the bottom for auto sales, so hopefully there’s only room for improvement from here,” said Caldwell. “But with employment and consumer confidence at new lows, the question remains: Will people be in the position to purchase new cars? Although automakers are doing their part by offering landmark incentives, those might not be enough if consumers cannot recover financially from this crisis.”
Edmunds estimates that retail SAAR will come in at 6.7 million vehicles in April 2020, with fleet transactions accounting for 13.0% of total sales.