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EIR Daily Alert Service, Tuesday, March 31, 2020

TUESDAY, MARCH 31, 2020

Volume 7, Number 66

EIR Daily Alert Service

P.O. Box 17390, Washington, DC 20041-0390

  • Bigger Challenge: The Developing Nations Must Have a New World Health System to Survive
  • Increasing Signs of U.S.-China-Russia Collaboration
  • Military Hospitals Come Online in New York, Los Angeles, and Seattle
  • Fed QE Frenzy Disrupts Derivatives Markets–Close Them Down!
  • China May Begin New Stilmulus Measures in April
  • A Franco-Chinese Air Bridge to Help France Deal With Disease Pandemic
  • China Continues to Provide Aid to Greece and Servia in Coronavirus Crisis
  • Rosatom Plans RITM-200 Land-Based, Small-Scale Nuclear Reactor
  • NASA Opens Major Participation in Moon-Mars Mission for SpaceX

EDITORIAL

Bigger Challenge: The Developing Nations Must Have a New World Health System To Survive

March 30 (EIRNS)—The increasing shift toward real cooperation in fighting the pandemic between the United States and China, and now potentially including Russia, means the great challenge on their agenda is providing modern public health and hospital facilities in scores of developing countries which lack means to combat the virus’s deadly sweep. The issue of forming an international development bank, right now for this great purpose, waits to be put on the agenda.

On March 29 the United Nations Commission on Trade and Development (UNCTAD) published a report and proposal on first steps toward such a purpose. It called for a decision by industrial nations to unlock $2.5 trillion in total “for developing countries to deal with the coronavirus shock.” They proposed some $1 trillion in debt be cancelled on the model of the 1953 conference on German debt. In that case it was half of all German debt which was cancelled to enable postwar reconstruction. This UNCTAD idea immediately supports proposals in recent days from Argentina, and the demand on the G20 from 15 African countries, for a general debt-forgiveness.

UNCTAD also proposes reassigning IMF special drawing rights to give more SDRs to developing countries; and a $500 billion Marshall Plan for public health. The $2.5 trillion total, as UNCTAD points out, is half of what the G20 leading countries, in their March 26 teleconference, agreed they would be spending on their own economies’ survival and recovery. It is, again, half of what one central bank, the Federal Reserve, is frantically printing to try to save tens of trillions of now-toxic assets in speculative markets which should, instead, be shut down for the duration of the crisis.

Crucially, UNCTAD’s report also calls for allowing and encouraging capital controls, by which developing nations can stop the capital flight.

“The economic fallout from the shock is ongoing and increasingly difficult to predict, but there are clear indications that things will get much worse for developing economies before they get better,” UNCTAD Secretary-General Mukhisa Kituyi said. In February and March capital has run like a thief out of every developing nation without exception; their currencies have rapidly depreciated; their export earnings have plunged; the effective interest rates on their sovereign debt have jumped; they’ve lost tourism; and their commodities have plunged in price. Ethiopia’s Prime Minister Abiy Ahmed Ali spoke for them when he said—representing the necessity of debt forgiveness—that these nations absolutely lack the means to mount the big programs of hospital-building and -supplying and of economic recovery, which the developed countries are carrying out.

We see the industrial countries leaders scrambling mightily to create overnight, the hospital beds and public health infrastructures and equipment which their monetarist mental disease of the past 50 years has robbed from their people. A real new economic order must emerge, based on entirely different economic axioms than the worship of me first, “alpha,” and the MBA degree.

An international development bank which can take on the job of world health and development, which UNCTAD is only implying in its proposal, must be launched by, at least, the leading scientific and technological powers. These are China, the United States, Russia, and India; and their increasing tendencies to cooperate in the face of this great crisis, must lead them to create a new international credit system—a New Bretton Woods reawakening President Franklin Roosevelt’s intention to develop the underdeveloped world with exports of capital goods.

The Schiller Institute will hold an international internet conference, “Mankind’s Existence Now Depends on the Establishment of a New Paradigm!” on April 25-26 to bring this about, as the conference invitation explains.

U.S. POLITICAL AND ECONOMIC

Increasing Signs of U.S.-China-Russia Collaboration

March 30 (EIRNS)—China-U.S. collaboration after the March 26 G20 and phone discussions between Presidents Donald Trump and Xi Jining may now fundamentally change the materials-logistics situation in the coronavirus fight at least in the United States and probably internationally. President Trump spoke at his Monday afternoon press conference today about additional day-to-day cooperation with Russia after a phone discussion with President Vladimir Putin; and of another conversation with Prime Minister Giuseppe Conte of Italy, a destination for increasing U.S. aid against the coronavirus.

Vice President Mike Pence and President Trump on March 29 in the Rose Garden spoke of 50-60 big cargo planes full of medical equipment coming from all over the world in April and landing at JFK Airport in New York and Los Angeles Airport—“the Project Airbridge.” The President repeated the formulation Monday afternoon, but “all over the world” probably means largely from China. On Monday Trump also named Russia as having sent a “very, very large planeload” of medical supplies to the United States; and he added that planes will be going back out with aid for other nations, naming Italy, Spain, and France.

In a statement released Sunday night, the U.S. Department of Health and Human Services announced that it had received “30 million doses of hydroxychloroquine sulfate and 1 million doses of chloroquine phosphate donated to a national stockpile of potentially life-saving pharmaceuticals and medical supplies.”

Presidents Vladimir Putin and Trump spoke on Monday morning. The White House and Kremlin statements said they agreed on the importance of stabilizing the global energy markets, and that they would work through the G20 nations to combat the coronavirus and reinvigorate the global economy. Just a day before, Kirill Dmitriev, CEO of the Russian Direct Investment Fund, had implied in a March 27 interview with Reuters, that a new oil production agreement could be reached between Russia and Saudi Arabia if President Trump and other “OPEC-plus” leaders became involved, telling the news agency: “Efforts to restore relations between Russia and the United States are now as important as ever, we will take all the efforts our side and hope the United States will also understand that this is necessary.”

And President Trump, talking to Fox News early Monday morning about his upcoming call with Putin, stressed the World War II fighting alliance between America and Russia, something almost banned from public discourse by major U.S. media today.

Otherwise the Sunday, March 29 press conference saw the President drop entirely the idea of opening up the economy quickly, and defer to medical advisors Drs. Anthony Fauci and Deborah Birx, and other epidemiological experts who met with him Sunday morning and presented a new model of the virus curve in the United States. This model evidently foresaw 2.2 million American deaths from COVID-19 without the current mitigation strategy; and between 160,000 and 220,000 deaths if the full mitigation strategy is continued, with testing being rapidly increased further and contact tracing beginning in less hard-hit areas. Trump said: “We had an aspiration of Easter.  But when you hear these kind of numbers and you hear the potential travesty, we don’t want to do anything where … we don’t want to have a spike up. … This—again, 151 countries.  And we’re going to do it.  We’re going to have a great victory.  We’re going to have a great victory.”

Military Hospitals Come Online in New York, Los Angeles, and Seattle

March 30 (EIRNS)—The mobilization of military assets in response to the coronavirus pandemic continued, both in the deployment of military medical capabilities to support state and local authorities and also in logistical movements to back up those and other deployments, with new updates reported by the Pentagon today.

In terms of deployments, the Department of Defense daily update reported today that the hospital ship USNS Mercy took on its first three patients in Los Angeles, yesterday, while the USNS Comfort arrived in New York City today. “Both ships will provide a spectrum of medical care that will allow local hospitals to focus on COVID-19 patients,” the update reports.

The update also reports that the Army Corps of Engineers alternate care facility constructed at the Javits Convention Center in New York City is expected to reach full operational capability today. The makeshift hospital will house up to 2,910 beds, relieving some of the demand placed upon local hospitals combating the COVID-19 pandemic. Army Chief of Staff General James McConville, after touring the Javits Center yesterday, told National Public Radio in an interview that the Army Corps has now conducted 181 assessments of structures that could serve as alternate care locations.

McConville also reported that the Army has sent two field hospitals to Seattle, to set up a 150-bed hospital in the CenturyLink Arena. A lot of what the Army is doing, in support of FEMA, is “just making sure that the states have the capacity to offload their critical care units so they can focus on the COVID-19 virus,” he said.

On the logistical side, the Pentagon update reported the following:

 The Defense Threat Reduction Agency helped deliver six C-17 shipments, totaling 3 million COVID-19 test kit swabs, to support U.S. medical professionals stateside, and military members in Europe.

 The Defense Logistics Agency will spend $84.4 million to buy 8,000 ventilators, with delivery of an initial 1,400 by early May. This is in addition to supporting USNS Comfort and USNS Mercy with over $2 million in medical supplies and 975,000 gallons of fuel for their transit to New York City and Los Angeles.

COLLAPSING WESTERN FINANCIAL SYSTEM

Fed QE Frenzy Disrupts Derivatives Markets—Close Them Down!

March 30 (EIRNS)—Schiller Institute President Helga Zepp-LaRouche, so far alone among political leaders, has demanded the speculative stock and bond and derivatives markets be closed down immediately now, so that massive losses can be stopped, Wall Street banks reorganized, and lending banks protected from a crash. Events of the past week further vindicate her proposal.

American mortgage bankers are now demanding that the Federal Reserve stop buying mortgage-backed securities (MBS). The U.S. Mortgage Bankers Association (MBA) wrote a letter to regulators March 29 complaining that the mortgage market is “in danger of large-scale disruption,” because the Fed bought $250 billion in MBS in two weeks, including $183 billion last week. The purchases blew up mortgage bankers’ derivatives—interest-rate swaps—and left them with margin calls into the tens of millions each. The list of large commercial mortgage-financing real estate investment trusts (REITs) which defaulted on margin calls just last week, includes Invesco Mortgage Finance; MFA Financial; AG Mortgage Investment Trust; TPG RE Finance Trust; and ED&F Man Capital. Since commercial mortgage-backed securities are derivatives to begin with, the Federal Reserve in the REITs’ case has blown out their derivatives on their derivatives!

The MBA said: “The dramatic price volatility in the market for agency mortgage-backed securities over the past week … is leading to broker-dealer margin calls on mortgage lenders’ hedge positions that are unsustainable for many such lenders….

“Margin calls on mortgage lenders reached staggering and unprecedented levels by the end of the week. For a significant number of lenders … these margin calls are … threatening their ability to continue to operate.”

Meanwhile, a first mid-size regional bank in the United States has needed a bailout of its derivatives exposure—and gotten one, of course. The bank is Capital One, headquartered in McLean, Virginia; on paper it has $372 billion in assets. It, too, was hit with large margin calls it may not have been able to meet—i.e., it may have defaulted—on oil-price and interest-rate swaps. So the Commodity Futures Trading Commission (CFTC) stepped in and exempted it from meeting the margin calls! But this came with conditions which, as Reuters reports, may now restrict the bank’s ability to keep lending, so it remains in some trouble. A CFTC spokesman was quoted admitting they had bailed Capital One out: “We have actively encouraged all market participants to identify regulatory relief or other assistance that may be needed to help support robust, orderly and liquid markets in the face of this pandemic.”

The Federal Reserve’s planned new $4 trillion quantitative easing spree—with more trillions to follow—is not for the purpose of “helping U.S. businesses,” as media constantly put it. Even Treasury Secretary Steven Mnuchin and Presidential National Economic Council Director Larry Kudlow are more forthright—it is to “preserve financial markets” and is being backed with $450 billion in taxpayers’ funds to help the Fed do that presently destructive task. Wall Street must be quarantined to fight the coronavirus.

China May Begin New Stimulus Measures in April

March 30 (EIRNS)—China may begin to carry out new stimulus measures as soon as April, China’s top leadership implied in comments made at a key meeting, Zhou Lanxu reports in China Daily today. The aim would be to achieve economic development goals and to shore up domestic demand, economists said March 29. Their comments were the meeting of the Political Bureau of the Communist Party of China Central Committee, which urged further macroeconomic policy measures to protect China’s economy against the coronavirus shock.

Four measures were outlined in which China will 1) modestly raise its budget deficit ratio; 2) issue special sovereign bonds; 3) bolster the scale of local government special bonds; and 4) guide lending rates lower, the leadership said in a statement on March 27.

Wu Chaoming, chief economist at Chasing Securities, said the authorities may carry out the announced policies soon, to minimize economic losses and achieve this year’s economic and social development goals.

“Two or three of the following policy tools will likely come out soon: guiding the benchmark lending rate lower, reducing the amount of cash banks must hold as reserves and lowering the benchmark deposit rate, which has remained unchanged since late 2015,” Wu said. All these measures will “encourage social lending, ease cashflow pressure among small businesses, and help proactive fiscal policies take effect, Wu said,” wrote Zhou.

Zhang Bin, senior researcher with the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, said issuing special sovereign bonds would be able to play a key role on the fiscal front, in alleviating the financial problems of households and companies. Money raised by special sovereign bonds can also be used in infrastructure investment, especially in public or quasi-public projects, such as investments in transportation networks, public health, sanitation projects, and environmental protection. “The urgency to issue special sovereign bonds is clear. The earlier the issuance, the more effective it will be in stabilizing growth,” Zhang said.

Some analysts, Zhou reports, predict the government may issue special sovereign bonds worth $141 billion or more this year, while the deficit-to-GDP ratio may be raised to 3-4% from last year’s 2.8%.

While the stimulus package will push up government debt, according to Zhang, “If debt is to be used effectively in stabilizing economic growth, debt sustainability will improve, instead of worsen.”

Chen Yongjun, a senior researcher at Renmin University of China’s Chongyang Institute for Financial Studies, admonished policymakers to focus on domestic conditions when formulating detailed stimulus measures rather than following what’s done overseas. “China has adequate policy tools and space to deal with potential scenarios. The Chinese economy can achieve around a 5% GDP growth this year on strengthened policy support,” said Chen.

THE NEW GLOBAL ECONOMIC ORDER

A Franco-Chinese Air Bridge To Help France Deal with Disease Pandemic

PARIS, March 30 (EIRNS)—Criticized by all sides, threatened with a lawsuit for negligence by various medical professional associations, the French government seems to be finally discovering the full extent of the healthcare crisis threatening France and the world. On March 28, Prime Minister Edouard Philippe, Health Minister Olivier Veran, and the Health Agency Director Jérôme Salomon organized a 90-minute internet briefing to reassure the French people and explain what they are doing to ensure that the government will secure millions of masks, and thousands more ICU beds with respiratory ventilators, in order to protect the population in the weeks ahead.

A very good thing is that President Emmanuel Macron, following the G7 videoconference on March 16, his phone conversation with Xi Jinping on March 23, and the March 26 G20 online summit, has strongly reinforced coordination with China to get greatly needed equipment, despite the opposition of U.S. Secretary of State Mike Pompeo to such collaboration.

On March 28, Prime Minister Philippe announced that France has ordered 1 billion masks from various providers. First, an “air bridge” has been set up between France and China, for the delivery of 600 million face masks, and also 74 million FFP2 respiratory masks (equivalent to N95 masks), to cover the weekly need of 40 million. Four aircraft have been chartered which will deliver 10 million masks at a time, in addition to the 8 million weekly that France has begun to produce. Philippe also announced that France had worked to double the number of ICU beds to 10,000, and further expand that to 14-15,000, all equipped with respiratory ventilators bought from Germany. In the meantime, existing ICU patients in the center of the crisis—Alsace and greater Paris—are being transported to hospitals throughout France, by fast trains, helicopters and airplanes.

The key, however, is the reinforced Franco-Chinese cooperation, which displeases Le Monde, which reported: “But the importance of the deal arranged by the French government goes well beyond specific humanitarian-type aid measures. The political contacts between the two countries have been numerous these last days. In the beginning of the week, Emmanuel Macron talked to President Xi Jinping. Foreign Minister Jean-Yves Le Drian also had an exchange with his counterpart Wang Yi, on March 26. Beijing acknowledged France’s opposition during the G7 videoconference the day before, to the incriminating statements proffered by U.S. Secretary of State Mike Pompeo. He wanted participants to use the expression ‘Wuhan virus’ [to refer to COVID-19] in the final communiqué…. According to Pompeo, to not acknowledge [China’s] responsibility would be equivalent to a passive complicity, a French source told Le Monde, which explains the extremely tense nature of the discussion behind the scenes.”

China Continues To Provide Aid to Greece and Serbia in Coronavirus Crisis

March 30 (EIRNS)—China continues assistance to Greece and Serbia in their fight against the coronavirus. On March 30 an Aegean Airlines cargo plane delivered more than 1.7 million surgical masks, face shields, and uniforms, from China. The supplies were donated by the Onassis Foundation and Greek shipowners. Two more flights are expected this week carrying medical supplies, including a total of 13.5 million surgical masks.

Serbian President Aleksandar Vucic, in an interview with TV Prva on March 29, said China has helped Serbia to fight the coronavirus. “If you are asking who helped us most, it was China and not Europe. We expect greater assistance from Europe. We are on the European path, but we are neither deaf or blind; we will protect Serbian interests and cooperate with China, Russia, the United States, and everyone, because this is where Serbia’s interests are,” he said. Asked about Russian aid, he replied, “We expect help from Russia as well, but Russia, our sincere friend, also has its own problems now.”

Another critic of the EU’s failure to live up to minimal solidarity in the crisis, Greek Prime Minister Kyriakos Mitsotakis will continue to insist that the European Union take steps following the failure of the last EU summit, according to Kathimerini.

SCIENCE AND INFRASTRUCTURE

Rosatom Plans RITM-200 Land-Based, Small-Scale Nuclear Reactor

March 30 (EIRNS)—Russia’s state-owned nuclear corporation Rosatom has announced its plan to start construction of RITM-200, a 200 MW land-based reactor, in 2024 and hopes to commission it in 2027, Nuclear Energy International reported on March 24. Although Rosatom does not provide details of its SMR design, its website site says the “design is scalable.”

Ryan Collyer, acting CEO of Rosatom Central and Southern Africa, presented details of the RITM-200 reactor at the March 3-4 Africa Energy Indaba, telling the delegates that “Rosatom SMRs could be a good alternative to diesel generators, providing reliable power supply and preventing harmful emissions at a competitive price. They could also be used for desalination, heat production and supply of electricity.” He also pointed out that Rosatom has already constructed six RITM-200 reactors and two of those onboard the Arktika icebreaker have already attained criticality.

Rusatom Overseas President Evgeny Pakermanov said in an interview with Rosatom Country that low-power nuclear plants have good prospects in different countries, including in Europe. “We are already seeing serious competition in this segment from leading vendors and are ready to offer cost-effective and reference technologies,” he said.

The designed RITM-200 has a dual circuit with four steam generators integrated into the body of the reactor. The integrated layout reduces the material consumption and dimensions of the installation, reduces the risk of leaks from the primary reactor loop, and facilitates installation and dismantling of the installation. Four main circulation pumps are located around the reactor vessel. It uses uranium fuel enriched to 20% with a fuel reload every seven years.

NASA Opens Major Participation in Moon-Mars Mission for SpaceX

March 30 (EIRNS)—SpaceX has won a major contract for the Artemis lunar project for the first time, pertaining to work on the Lunar Gateway—even as NASA has raised the likelihood that that Gateway will not be part of Artemis phase I, but rather of Artemis phase II, which envisages the development of a lunar settlement.

This is reported in Ars Technica March 27, as well as other science media. SpaceX has won a logistics contract for delivery of cargo to the Gateway. It would use a modified Dragon spacecraft called Dragon XL.

“This contract award is another critical piece of our plan to return to the Moon sustainably,” NASA Administrator Jim Bridenstine said in a news release. “The Gateway is the cornerstone of the long-term Artemis architecture, and this deep space commercial cargo capability integrates yet another American industry partner into our plans for human exploration at the Moon, in preparation for a future mission to Mars.”

So this is at the same time a reaffirmation of the Lunar Gateway—after NASA Human Exploration chief Doug Loverro had had to delay it, due to funding shortage and technical problems against the 2024 Artemis I deadline—and a first major entry of a new private space corporation into the Moon-Mars mission.

EDITORIAL

Bigger Challenge: The Developing Nations Must Have a New World Health System To Survive

March 30 (EIRNS)—The increasing shift toward real cooperation in fighting the pandemic between the United States and China, and now potentially including Russia, means the great challenge on their agenda is providing modern public health and hospital facilities in scores of developing countries which lack means to combat the virus’s deadly sweep. The issue of forming an international development bank, right now for this great purpose, waits to be put on the agenda.

On March 29 the United Nations Commission on Trade and Development (UNCTAD) published a report and proposal on first steps toward such a purpose. It called for a decision by industrial nations to unlock $2.5 trillion in total “for developing countries to deal with the coronavirus shock.” They proposed some $1 trillion in debt be cancelled on the model of the 1953 conference on German debt. In that case it was half of all German debt which was cancelled to enable postwar reconstruction. This UNCTAD idea immediately supports proposals in recent days from Argentina, and the demand on the G20 from 15 African countries, for a general debt-forgiveness.

UNCTAD also proposes reassigning IMF special drawing rights to give more SDRs to developing countries; and a $500 billion Marshall Plan for public health. The $2.5 trillion total, as UNCTAD points out, is half of what the G20 leading countries, in their March 26 teleconference, agreed they would be spending on their own economies’ survival and recovery. It is, again, half of what one central bank, the Federal Reserve, is frantically printing to try to save tens of trillions of now-toxic assets in speculative markets which should, instead, be shut down for the duration of the crisis.

Crucially, UNCTAD’s report also calls for allowing and encouraging capital controls, by which developing nations can stop the capital flight.

“The economic fallout from the shock is ongoing and increasingly difficult to predict, but there are clear indications that things will get much worse for developing economies before they get better,” UNCTAD Secretary-General Mukhisa Kituyi said. In February and March capital has run like a thief out of every developing nation without exception; their currencies have rapidly depreciated; their export earnings have plunged; the effective interest rates on their sovereign debt have jumped; they’ve lost tourism; and their commodities have plunged in price. Ethiopia’s Prime Minister Abiy Ahmed Ali spoke for them when he said—representing the necessity of debt forgiveness—that these nations absolutely lack the means to mount the big programs of hospital-building and -supplying and of economic recovery, which the developed countries are carrying out.

We see the industrial countries leaders scrambling mightily to create overnight, the hospital beds and public health infrastructures and equipment which their monetarist mental disease of the past 50 years has robbed from their people. A real new economic order must emerge, based on entirely different economic axioms than the worship of me first, “alpha,” and the MBA degree.

An international development bank which can take on the job of world health and development, which UNCTAD is only implying in its proposal, must be launched by, at least, the leading scientific and technological powers. These are China, the United States, Russia, and India; and their increasing tendencies to cooperate in the face of this great crisis, must lead them to create a new international credit system—a New Bretton Woods reawakening President Franklin Roosevelt’s intention to develop the underdeveloped world with exports of capital goods.

The Schiller Institute will hold an international internet conference, “Mankind’s Existence Now Depends on the Establishment of a New Paradigm!” on April 25-26 to bring this about, as the conference invitation explains.

U.S. POLITICAL AND ECONOMIC

Increasing Signs of U.S.-China-Russia Collaboration

March 30 (EIRNS)—China-U.S. collaboration after the March 26 G20 and phone discussions between Presidents Donald Trump and Xi Jining may now fundamentally change the materials-logistics situation in the coronavirus fight at least in the United States and probably internationally. President Trump spoke at his Monday afternoon press conference today about additional day-to-day cooperation with Russia after a phone discussion with President Vladimir Putin; and of another conversation with Prime Minister Giuseppe Conte of Italy, a destination for increasing U.S. aid against the coronavirus.

Vice President Mike Pence and President Trump on March 29 in the Rose Garden spoke of 50-60 big cargo planes full of medical equipment coming from all over the world in April and landing at JFK Airport in New York and Los Angeles Airport—“the Project Airbridge.” The President repeated the formulation Monday afternoon, but “all over the world” probably means largely from China. On Monday Trump also named Russia as having sent a “very, very large planeload” of medical supplies to the United States; and he added that planes will be going back out with aid for other nations, naming Italy, Spain, and France.

In a statement released Sunday night, the U.S. Department of Health and Human Services announced that it had received “30 million doses of hydroxychloroquine sulfate and 1 million doses of chloroquine phosphate donated to a national stockpile of potentially life-saving pharmaceuticals and medical supplies.”

Presidents Vladimir Putin and Trump spoke on Monday morning. The White House and Kremlin statements said they agreed on the importance of stabilizing the global energy markets, and that they would work through the G20 nations to combat the coronavirus and reinvigorate the global economy. Just a day before, Kirill Dmitriev, CEO of the Russian Direct Investment Fund, had implied in a March 27 interview with Reuters, that a new oil production agreement could be reached between Russia and Saudi Arabia if President Trump and other “OPEC-plus” leaders became involved, telling the news agency: “Efforts to restore relations between Russia and the United States are now as important as ever, we will take all the efforts our side and hope the United States will also understand that this is necessary.”

And President Trump, talking to Fox News early Monday morning about his upcoming call with Putin, stressed the World War II fighting alliance between America and Russia, something almost banned from public discourse by major U.S. media today.

Otherwise the Sunday, March 29 press conference saw the President drop entirely the idea of opening up the economy quickly, and defer to medical advisors Drs. Anthony Fauci and Deborah Birx, and other epidemiological experts who met with him Sunday morning and presented a new model of the virus curve in the United States. This model evidently foresaw 2.2 million American deaths from COVID-19 without the current mitigation strategy; and between 160,000 and 220,000 deaths if the full mitigation strategy is continued, with testing being rapidly increased further and contact tracing beginning in less hard-hit areas. Trump said: “We had an aspiration of Easter.  But when you hear these kind of numbers and you hear the potential travesty, we don’t want to do anything where … we don’t want to have a spike up. … This—again, 151 countries.  And we’re going to do it.  We’re going to have a great victory.  We’re going to have a great victory.”

Military Hospitals Come Online in New York, Los Angeles, and Seattle

March 30 (EIRNS)—The mobilization of military assets in response to the coronavirus pandemic continued, both in the deployment of military medical capabilities to support state and local authorities and also in logistical movements to back up those and other deployments, with new updates reported by the Pentagon today.

In terms of deployments, the Department of Defense daily update reported today that the hospital ship USNS Mercy took on its first three patients in Los Angeles, yesterday, while the USNS Comfort arrived in New York City today. “Both ships will provide a spectrum of medical care that will allow local hospitals to focus on COVID-19 patients,” the update reports.

The update also reports that the Army Corps of Engineers alternate care facility constructed at the Javits Convention Center in New York City is expected to reach full operational capability today. The makeshift hospital will house up to 2,910 beds, relieving some of the demand placed upon local hospitals combating the COVID-19 pandemic. Army Chief of Staff General James McConville, after touring the Javits Center yesterday, told National Public Radio in an interview that the Army Corps has now conducted 181 assessments of structures that could serve as alternate care locations.

McConville also reported that the Army has sent two field hospitals to Seattle, to set up a 150-bed hospital in the CenturyLink Arena. A lot of what the Army is doing, in support of FEMA, is “just making sure that the states have the capacity to offload their critical care units so they can focus on the COVID-19 virus,” he said.

On the logistical side, the Pentagon update reported the following:

 The Defense Threat Reduction Agency helped deliver six C-17 shipments, totaling 3 million COVID-19 test kit swabs, to support U.S. medical professionals stateside, and military members in Europe.

 The Defense Logistics Agency will spend $84.4 million to buy 8,000 ventilators, with delivery of an initial 1,400 by early May. This is in addition to supporting USNS Comfort and USNS Mercy with over $2 million in medical supplies and 975,000 gallons of fuel for their transit to New York City and Los Angeles.

COLLAPSING WESTERN FINANCIAL SYSTEM

Fed QE Frenzy Disrupts Derivatives Markets—Close Them Down!

March 30 (EIRNS)—Schiller Institute President Helga Zepp-LaRouche, so far alone among political leaders, has demanded the speculative stock and bond and derivatives markets be closed down immediately now, so that massive losses can be stopped, Wall Street banks reorganized, and lending banks protected from a crash. Events of the past week further vindicate her proposal.

American mortgage bankers are now demanding that the Federal Reserve stop buying mortgage-backed securities (MBS). The U.S. Mortgage Bankers Association (MBA) wrote a letter to regulators March 29 complaining that the mortgage market is “in danger of large-scale disruption,” because the Fed bought $250 billion in MBS in two weeks, including $183 billion last week. The purchases blew up mortgage bankers’ derivatives—interest-rate swaps—and left them with margin calls into the tens of millions each. The list of large commercial mortgage-financing real estate investment trusts (REITs) which defaulted on margin calls just last week, includes Invesco Mortgage Finance; MFA Financial; AG Mortgage Investment Trust; TPG RE Finance Trust; and ED&F Man Capital. Since commercial mortgage-backed securities are derivatives to begin with, the Federal Reserve in the REITs’ case has blown out their derivatives on their derivatives!

The MBA said: “The dramatic price volatility in the market for agency mortgage-backed securities over the past week … is leading to broker-dealer margin calls on mortgage lenders’ hedge positions that are unsustainable for many such lenders….

“Margin calls on mortgage lenders reached staggering and unprecedented levels by the end of the week. For a significant number of lenders … these margin calls are … threatening their ability to continue to operate.”

Meanwhile, a first mid-size regional bank in the United States has needed a bailout of its derivatives exposure—and gotten one, of course. The bank is Capital One, headquartered in McLean, Virginia; on paper it has $372 billion in assets. It, too, was hit with large margin calls it may not have been able to meet—i.e., it may have defaulted—on oil-price and interest-rate swaps. So the Commodity Futures Trading Commission (CFTC) stepped in and exempted it from meeting the margin calls! But this came with conditions which, as Reuters reports, may now restrict the bank’s ability to keep lending, so it remains in some trouble. A CFTC spokesman was quoted admitting they had bailed Capital One out: “We have actively encouraged all market participants to identify regulatory relief or other assistance that may be needed to help support robust, orderly and liquid markets in the face of this pandemic.”

The Federal Reserve’s planned new $4 trillion quantitative easing spree—with more trillions to follow—is not for the purpose of “helping U.S. businesses,” as media constantly put it. Even Treasury Secretary Steven Mnuchin and Presidential National Economic Council Director Larry Kudlow are more forthright—it is to “preserve financial markets” and is being backed with $450 billion in taxpayers’ funds to help the Fed do that presently destructive task. Wall Street must be quarantined to fight the coronavirus.

China May Begin New Stimulus Measures in April

March 30 (EIRNS)—China may begin to carry out new stimulus measures as soon as April, China’s top leadership implied in comments made at a key meeting, Zhou Lanxu reports in China Daily today. The aim would be to achieve economic development goals and to shore up domestic demand, economists said March 29. Their comments were the meeting of the Political Bureau of the Communist Party of China Central Committee, which urged further macroeconomic policy measures to protect China’s economy against the coronavirus shock.

Four measures were outlined in which China will 1) modestly raise its budget deficit ratio; 2) issue special sovereign bonds; 3) bolster the scale of local government special bonds; and 4) guide lending rates lower, the leadership said in a statement on March 27.

Wu Chaoming, chief economist at Chasing Securities, said the authorities may carry out the announced policies soon, to minimize economic losses and achieve this year’s economic and social development goals.

“Two or three of the following policy tools will likely come out soon: guiding the benchmark lending rate lower, reducing the amount of cash banks must hold as reserves and lowering the benchmark deposit rate, which has remained unchanged since late 2015,” Wu said. All these measures will “encourage social lending, ease cashflow pressure among small businesses, and help proactive fiscal policies take effect, Wu said,” wrote Zhou.

Zhang Bin, senior researcher with the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, said issuing special sovereign bonds would be able to play a key role on the fiscal front, in alleviating the financial problems of households and companies. Money raised by special sovereign bonds can also be used in infrastructure investment, especially in public or quasi-public projects, such as investments in transportation networks, public health, sanitation projects, and environmental protection. “The urgency to issue special sovereign bonds is clear. The earlier the issuance, the more effective it will be in stabilizing growth,” Zhang said.

Some analysts, Zhou reports, predict the government may issue special sovereign bonds worth $141 billion or more this year, while the deficit-to-GDP ratio may be raised to 3-4% from last year’s 2.8%.

While the stimulus package will push up government debt, according to Zhang, “If debt is to be used effectively in stabilizing economic growth, debt sustainability will improve, instead of worsen.”

Chen Yongjun, a senior researcher at Renmin University of China’s Chongyang Institute for Financial Studies, admonished policymakers to focus on domestic conditions when formulating detailed stimulus measures rather than following what’s done overseas. “China has adequate policy tools and space to deal with potential scenarios. The Chinese economy can achieve around a 5% GDP growth this year on strengthened policy support,” said Chen.

THE NEW GLOBAL ECONOMIC ORDER

A Franco-Chinese Air Bridge To Help France Deal with Disease Pandemic

PARIS, March 30 (EIRNS)—Criticized by all sides, threatened with a lawsuit for negligence by various medical professional associations, the French government seems to be finally discovering the full extent of the healthcare crisis threatening France and the world. On March 28, Prime Minister Edouard Philippe, Health Minister Olivier Veran, and the Health Agency Director Jérôme Salomon organized a 90-minute internet briefing to reassure the French people and explain what they are doing to ensure that the government will secure millions of masks, and thousands more ICU beds with respiratory ventilators, in order to protect the population in the weeks ahead.

A very good thing is that President Emmanuel Macron, following the G7 videoconference on March 16, his phone conversation with Xi Jinping on March 23, and the March 26 G20 online summit, has strongly reinforced coordination with China to get greatly needed equipment, despite the opposition of U.S. Secretary of State Mike Pompeo to such collaboration.

On March 28, Prime Minister Philippe announced that France has ordered 1 billion masks from various providers. First, an “air bridge” has been set up between France and China, for the delivery of 600 million face masks, and also 74 million FFP2 respiratory masks (equivalent to N95 masks), to cover the weekly need of 40 million. Four aircraft have been chartered which will deliver 10 million masks at a time, in addition to the 8 million weekly that France has begun to produce. Philippe also announced that France had worked to double the number of ICU beds to 10,000, and further expand that to 14-15,000, all equipped with respiratory ventilators bought from Germany. In the meantime, existing ICU patients in the center of the crisis—Alsace and greater Paris—are being transported to hospitals throughout France, by fast trains, helicopters and airplanes.

The key, however, is the reinforced Franco-Chinese cooperation, which displeases Le Monde, which reported: “But the importance of the deal arranged by the French government goes well beyond specific humanitarian-type aid measures. The political contacts between the two countries have been numerous these last days. In the beginning of the week, Emmanuel Macron talked to President Xi Jinping. Foreign Minister Jean-Yves Le Drian also had an exchange with his counterpart Wang Yi, on March 26. Beijing acknowledged France’s opposition during the G7 videoconference the day before, to the incriminating statements proffered by U.S. Secretary of State Mike Pompeo. He wanted participants to use the expression ‘Wuhan virus’ [to refer to COVID-19] in the final communiqué…. According to Pompeo, to not acknowledge [China’s] responsibility would be equivalent to a passive complicity, a French source told Le Monde, which explains the extremely tense nature of the discussion behind the scenes.”

China Continues To Provide Aid to Greece and Serbia in Coronavirus Crisis

March 30 (EIRNS)—China continues assistance to Greece and Serbia in their fight against the coronavirus. On March 30 an Aegean Airlines cargo plane delivered more than 1.7 million surgical masks, face shields, and uniforms, from China. The supplies were donated by the Onassis Foundation and Greek shipowners. Two more flights are expected this week carrying medical supplies, including a total of 13.5 million surgical masks.

Serbian President Aleksandar Vucic, in an interview with TV Prva on March 29, said China has helped Serbia to fight the coronavirus. “If you are asking who helped us most, it was China and not Europe. We expect greater assistance from Europe. We are on the European path, but we are neither deaf or blind; we will protect Serbian interests and cooperate with China, Russia, the United States, and everyone, because this is where Serbia’s interests are,” he said. Asked about Russian aid, he replied, “We expect help from Russia as well, but Russia, our sincere friend, also has its own problems now.”

Another critic of the EU’s failure to live up to minimal solidarity in the crisis, Greek Prime Minister Kyriakos Mitsotakis will continue to insist that the European Union take steps following the failure of the last EU summit, according to Kathimerini.

SCIENCE AND INFRASTRUCTURE

Rosatom Plans RITM-200 Land-Based, Small-Scale Nuclear Reactor

March 30 (EIRNS)—Russia’s state-owned nuclear corporation Rosatom has announced its plan to start construction of RITM-200, a 200 MW land-based reactor, in 2024 and hopes to commission it in 2027, Nuclear Energy International reported on March 24. Although Rosatom does not provide details of its SMR design, its website site says the “design is scalable.”

Ryan Collyer, acting CEO of Rosatom Central and Southern Africa, presented details of the RITM-200 reactor at the March 3-4 Africa Energy Indaba, telling the delegates that “Rosatom SMRs could be a good alternative to diesel generators, providing reliable power supply and preventing harmful emissions at a competitive price. They could also be used for desalination, heat production and supply of electricity.” He also pointed out that Rosatom has already constructed six RITM-200 reactors and two of those onboard the Arktika icebreaker have already attained criticality.

Rusatom Overseas President Evgeny Pakermanov said in an interview with Rosatom Country that low-power nuclear plants have good prospects in different countries, including in Europe. “We are already seeing serious competition in this segment from leading vendors and are ready to offer cost-effective and reference technologies,” he said.

The designed RITM-200 has a dual circuit with four steam generators integrated into the body of the reactor. The integrated layout reduces the material consumption and dimensions of the installation, reduces the risk of leaks from the primary reactor loop, and facilitates installation and dismantling of the installation. Four main circulation pumps are located around the reactor vessel. It uses uranium fuel enriched to 20% with a fuel reload every seven years.

NASA Opens Major Participation in Moon-Mars Mission for SpaceX

March 30 (EIRNS)—SpaceX has won a major contract for the Artemis lunar project for the first time, pertaining to work on the Lunar Gateway—even as NASA has raised the likelihood that that Gateway will not be part of Artemis phase I, but rather of Artemis phase II, which envisages the development of a lunar settlement.

This is reported in Ars Technica March 27, as well as other science media. SpaceX has won a logistics contract for delivery of cargo to the Gateway. It would use a modified Dragon spacecraft called Dragon XL.

“This contract award is another critical piece of our plan to return to the Moon sustainably,” NASA Administrator Jim Bridenstine said in a news release. “The Gateway is the cornerstone of the long-term Artemis architecture, and this deep space commercial cargo capability integrates yet another American industry partner into our plans for human exploration at the Moon, in preparation for a future mission to Mars.”

So this is at the same time a reaffirmation of the Lunar Gateway—after NASA Human Exploration chief Doug Loverro had had to delay it, due to funding shortage and technical problems against the 2024 Artemis I deadline—and a first major entry of a new private space corporation into the Moon-Mars mission.

Reach us at eirdailyalert@larouchepub.com or call 1-571-293-0935

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