The unknown is scary. So much so that panic driven people begin to lose sight of logic and act irrationally. From panic buying supplies to panic selling the markets, such actions done in a void of information can cause systemic issues to explode. I will try to bring some reason and logic into explaining the COVID-19 “pandemic”.
In studying China’s BRI, I had run across an obscure but incredibly influential demographic from Wenzhou. The Wenzhounese are China’s outlets into both Europe(Italy and France specifically) and the Middle East. This small group of global entrepreneurs allow for China to penetrate markets, set up factories and facilitate BRIoperations. Why is this fact important? Virus transmission.
Northern Italy is a hotspot for Chinese factories. January-February Wuhan coronavirus infections rates spread to Wenzhou during Chinese New Year and the Wenzhounese diaspora began to travel back to Italy, France, Iran and Spain bringing back with them COVID-19. Infections and mortality rates skyrocketed both in China and Italy, whereas South Korea, Germany and others had much lower figures that contradict the apocalyptic predictions, whichhave now reverberated around the global financial system setting off panic selling and triggering Central Bank actions.
Why are the mortalities off the charts in Italy and China but not anywhere else? We could not really understand why until the EU space agency published a pollution satellite image showing before and after pictures that highlight manufacturing decline. Pollution. Well known are the effects of long-term pollution exposure and respiratory ailments. Add that variable with the lack of respirators and intensive care beds per 100,000 residents in Italy and you start to clear the fog of misinformation floating around social media on COVID-19 infection and mortality surges.
Comparative Mortality Rates:
South Korea: 0.7%
*EU MRSA Outbreak in 2015 killed 33,000 Europeans with 1/3 of that number coming from Italy, over 65 yr of age -updated 3/17
Italian official statistics support this theory, noting as of March 13 only 3 people have died of the virus with no other pathologies, 2 under the age of 40 with one other pathology. The average ages of victims is 82.5 years old and above 3 comorbidities.
The rate of mortality and infection rates being quoted is assuming the Chinese had noticed the new Coronavirus on day 1 of its existence in October of 2019. Anyone who has dealt with China knows that transparency and accuracy of data flowing out of Beijing cannot be relied upon. It is more plausible that this 6th Coronavirus has been floating around the world for up to 18 months which is in line with both French and Italian sources privately admitting they were aware of a new “flu-like” strain in their populations the previous year. If that is the case, every projection of mass infections overwhelming the global health system has been wildly overblown.
Narratives, Scapegoats and Justifications
The question becomes “Why?” at this point and starting with China is the logical place. As the tariff/trade drama has accelerated between the US and China, Xi has been dealing with a growing opposition domestically. The situation needed to be dealt with before it became critical and the coronavirus hysteria provided a solution for two issues. Project your power on the population while weakening opposition to his power base and warn the world over decoupling with China.
Enter viral social media and the transmission of fear faster than the actual virus can infect. Panic of the unknown quickly gripped the public and the halting of supply chains only exacerbated the negative effects on the weakening fundamentals of global trade. Keenly aware of the impending financial “discomfort” coming, governments had inadvertently found a scapegoat for explaining away a reversal of market growth. Is it possible that the principle of “blaming the dead guy” has become policy and not only shields politicians from blame, but also now provides justification for new rounds of liquidity injections without the associated criticism that usually follows.
Media and the public so absorbed with this hysteria have completely ignored key events in the market, focusing simply on stock market moves rather than the explosive shortage of dollars affecting corporate credit. Trillions of dollars of liquidity flowing via Repo, QE, CPFF and multiple more abbreviations unknown to the general public as unemployment figures have yet to catch up to the meltdown of the financial system ongoing.
It’s beginning to look like Draghi’s “whatever it takes” mantra is going global, especially in the US. Expect the Fed to cut aggressively (75 bps) perhaps not QE immediately, but instead possible activation of Section 13(3) of the Fed Reserve Act and aggressive use of the facilities enabled therein. Looking ahead for the real “whatever it takes” moment, Congress needs to avoid creating obstacles to full-blown and broader QE, as this is not merely a Wall Street bailout, but part of a whole-economy solution.
Update 3/16: We are looking into information that most European figures are inaccurate as they do not test patients, but rely on physicians questionnaires with patients at hospitals.
Update 3/17: “NO2 and SO2 concentrations had a significant association with incidence of pneumonia.“
Wonjun Ji, Yu Rang Park, Hae Reong Kim, Hwan-Cheol Kim, Chang-Min ChoiEuropean Respiratory Journal 2017 50: OA467; DOI: 10.1183/1393003.congress-2017.OA467
Nicholas H Glinsman
The Belt Road and Beyond: State-Mobilized Globalization in China: 1998–2018