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How China combined authoritarianism with capitalism to create a new communism

What does communism 2.0 mean for democracy?

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2 years ago

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After the 1989 fall of communism in the Soviet bloc, five self-declared communist states remain today: China, Cuba, Laos, North Korea and Vietnam. Belarus and Venezuela can also be added to the mix as they fulfil the criteria of a communist state – even though they do not officially invoke the ideology. So, at present, the number stands at seven. The question is, now that capitalism is the engine of China’s economy, what is communism today? And if the number of communist states is poised to grow in the near future, as some predict, what does this prospect mean for democracy?

My interest in communism goes beyond my work as a historian – it’s personal. I was born and raised in communist Poland in the 1970s and 1980s. It was a grey country where people seemed to have lost all hope. All essentials, including shoes and coffee, were rationed. But rationing cards did not mean you would get what you wanted, or even needed. Queuing for hours (sometimes even days) to buy anything that had just been delivered to a shop was a regular occurrence.

I have no doubt that my upbringing shaped my life and inspired my career. My research has examined modern central and eastern Europe, nationalism and the politics of language – particularly in the region’s totalitarian and authoritarian regimes during the past two centuries.

During my youth in the 1980s, bartering became more common, while scarce goods could only be bought with US dollars. You could exchange a summer dress two sizes too large for a T-bone steak (kotlet), or a record player that you did not need for a large can of baby formula. Only vinegar seemed to be in constant supply on the near-empty shop shelves – perhaps accounting for the sour faces and almost permanent lack of smiles. Western scholars came up with an apt term to describe this existence. They called it the “economy of scarcity” – the impact of central planning on production and the population.

And it wasn’t just a lack of food. Freedom was scarce, too. Poland, like all Soviet bloc countries, was kept under a “double lock” – meaning it was even difficult to travel to another socialist country, be it neighbouring Czechoslovakia or East Germany. You needed to apply for a particular kind of passport to travel to the “people’s democracies” (that is, Soviet bloc countries) in Europe. And after coming back home from your travels, this precious document had to be returned to a local militia headquarters (the police was then known by this militarised sobriquet).

If you wanted to visit a European capitalist country, like West Germany, you needed a another kind of passport. But only a single member of any family would be allowed to go to the “rotten capitalist west” (as it was often referred to). So the rest of your family remained as the state’s hostages to ensure you wouldn’t dare to defect. I never once saw the passport that permitted travel to all the countries of the world, which allowed the lucky few to travel to the US or Australia.

This story is part of Conversation Insights
The Insights team generates long-form journalism and is working with academics from different backgrounds who have been engaged in projects to tackle societal and scientific challenges.

To me, and many others, my home country felt like one big prison. Stringent censorship of publications, films and television aimed to convince us that life in Poland and the Soviet bloc was much better than in New York or Paris. But few believed the propaganda. People clandestinely listened to Radio Free Europe and Voice of America (despite the state attempting to jam them). And during the 1980s, it became easier to buy banned books in the form of samizdat (uncensored, underground publications).

Among the youth, the dream was to escape this prison and enjoy a “normal life” in a “normal country”. In a place with no rationing cards and well-stocked supermarkets, where working a single job you would be able to afford a decent standard of living, an apartment and summer holidays in the Canaries. The slang Polish name for this Spanish archipelago, “Kanary”, became colloquial shorthand for the unattainable.

Pie in the sky, our parents warned us. Their advice was to be quiet, to do what we were told by teachers or overseers – and to never say what we thought. After all, refusing to toe the Communist Party’s line, not praising Poland’s socialism – let alone opposing the system – might cost you a coveted place at a university, the loss of an apartment, or land you in prison. In the 1950s, at the height of Stalinism, people were even executed for such ideological misdemeanours.

For people who did succeed to escape the regime, the journey was fraught with complications.

But, unexpectedly, the cold war between the western democracies and the communist Soviet bloc came to an end in 1989, followed, two years later, by the collapse of the Soviet Union itself. This communist superpower simply and peacefully (at least in Europe) vanished into thin air, causing communism as a political and economic system to disappear from much of the world.

We were free. The last General Secretary of the Soviet Union Mikhail Gorbachev was the good fairy, who made our heartfelt dream come true. The Soviet leader decided that starving his own people in order to keep up with the west in the arms race was no way forward. The subsequent systemic transition, in the span of a decade and a half, enabled former Soviet bloc states, from Poland and Hungary to Romania and Bulgaria, to accede to NATO and the European Union.

With my newfound freedom, I continued my education in South Africa and the Czech Republic. I researched in Italy, the US and Japan, before finding university positions in Ireland and Scotland.

But in the case of the 15 countries that emerged from the defunct Soviet Union, only the Baltic republics of Estonia, Latvia and Lithuania became truly western and democratic. Most, Russia included, became autocracies – even if they stuck to the pretence of parliamentary elections.

Georgia, Moldova and especially Ukraine are tantalisingly close to becoming genuine democracies with the prospect of EU and NATO membership. Yet, Turkmenistan is almost as oppressive as North Korea, while Azerbaijan and Uzbekistan are seen as textbook examples of repressive and kleptokratic dictatorships.

But at present, not a single post-communist or post-Soviet state declares itself to be communist.

China leads the autocracies

With the economic and political demise of Soviet-style communism, most of the communist regimes supported by the Soviet Union across the world, like Ethiopia, Afghanistan and South Yemen also collapsed. Communist Cuba is a lone exception to this trend. The Caribbean island has been a permanent thorn in the side of the US since 1961.

Present-day communism, then, is led by China – the world’s second largest economy. Beijing has been proudly communist since 1949 and is now taking on the US, which still leads – though falteringly – the globe’s shrinking camp of democracies. Since 2010, an increasing number of states have parted with democracy.

Over the past decade, democracy has been quickly reversed in post-genocide Rwanda. The same also happened in Ethiopia after the civil war in Tigray (2020-present day), while the Arab Spring’s democratic gains have been squashed across the Middle East. As in Putin’s Russia, electoral autocracies were installed in Bulgaria (2009), Hungary (2010), Serbia (2014), Turkey (2015), Poland (2016) and Slovenia (2020).

On July 1, 2019, China’s Communist Party celebrated its 100th birthday. From www.alamy.com

China’s population of 1.4 billion means that a fifth of all humankind lives under its communist regime. The other three self-declared communist states – Laos, North Korea and Vietnam – all border China. A new communist – and Sinic (Chinese influenced) – bloc, indeed.

So, after the two decades of decline in the wake of the 1989 collapse of the Soviet bloc, is the turbocharged Chinese-style communism 2.0 – which embraces capitalism – going to take over?

The rise and fall of democracy

The looser post-cold war definition of communism marries capitalism with socialism, as understood in the former Soviet Union. The overarching principle of socialism (seen as communism in the west) says: “From each according to his ability, to each according to his contribution.” In practice, this unorthodox mix of Soviet-style socialism and capitalism means an authoritarian, or even totalitarian, regime under a single party’s full and (these days) AI-enhanced control. This control extends over the now capitalist-style economy, too. Through this mono-party, the invariably male leader single-handedly rules.

Often a cult of personality is developed for him and the deal is sweetened with a modicum of a welfare state. In most cases these states advertise themselves as being communist. Others, like Belarus and Venezuela may not actually call it “communism” and a different name may be given to this ideology.

For example Bolivarianism in Venezuela, national unity in Belarus or Juche in North Korea. The mono-party political system makes the Communist Party into the state and its leader into the de-facto dictator. Unchecked collectivism, or the ruling dictator’s self-serving and populist rhetoric of prioritising masses (referred to as “nation or people”) over individuals, “justifies” his rule and the system. In places like Belarus and China, this has led to dissenters being repressed and concentration camps being built to remove them from “healthy society”.

Like the pre-1989 communist states, all these countries’ ruling regimes are anti-western in their official rhetoric, and often in their actions too. This anti-western aggression was another important defining feature of the communist states of the 20th century.

But will this number rise or fall in the 21st century? During the two decades following the fall of communism in Europe, democracy as the doctrine of human and political rights steadily spread across the world. Dictators felt pressured to keep up at least the appearance of working electoral democracy in their countries. Amnesty International and Freedom House successfully shamed autocrats into mending their notorious ways and freeing political prisoners.

But after 2010, this trend was incrementally reversed. Symbolically, in this year the Chinese writer and pro-democracy dissident Liu Xiaobo was awarded the Nobel Peace Prize. Beijing felt offended by the west and took steps to suppress Liu, his family and friends. The authorities denied Liu cancer treatment and he died prematurely seven years later.

Liu’s ashes were scattered in the sea to prevent the establishment of a grave for a person many saw as a democratic hero and martyr. That would have been a focal point for China’s democrats, who might have gone on pilgrimages to pay respect to Liu’s unwavering loyalty to liberty and democracy.

Then, in 2020, the pandemic created an ideal opportunity for Beijing to dismantle democracy in Hong Kong, and a place that was once a beacon of political and economic freedom fell. Autocrats of all stripes took note.

‘To get rich is glorious’

But isn’t the whole idea of capitalism and profit anathema to the central tenets of communism? And if so, how did these two opposites attract? In the wake of then Chinese leader Deng Xiaoping’s 1978 reforms, a great discovery of applied politics was made in China: that you can have capitalism without democracy. Spotting a gap in the market of ideas, Deng decreed that “to get rich is glorious”, meaning that capitalism was ideologically neutral and could serve the needs of a communist regime.

The current marriage of capitalism and communism is a lesson for democrats not to trust in their wishful thinking. Instead, the often touted hypothesis about capitalism’s democratising effects must be put to the test. It is clear that capitalism does not make authoritarian or totalitarian Belarus, China, Laos or Vietnam any less authoritarian or more pro-democratic or pro-western. Cuba, North Korea and Venezuela ditched capitalism once before, when they became communist, in 1948 and 1959 and 1999 respectively, and they are reluctant to re-embrace it. But China’s enthusiasm for undemocratic capitalism since 2004 – known as the Beijing consensus in the west – may compel them to follow suit soon.

China’s economic success, if it lasts for several generations, may lead to the fortification of nascent communism 2.0, with capitalism as an integral part of this ideology. Communist-capitalism is not an oxymoron any more, as long as the ruling communist party keeps entrepreneurs subservient to its ideology and governance.

So what are the specific characteristics of the new communist 2.0 state? Perhaps, the self-declaration of being a communist state is the most obvious and that this features in the constitution. Even if some states give it a different name.

Civic and human rights are seriously limited and often denounced as a “western ploy”. For instance, no individual right to vote exists in China, while the state actually owns citizens’ bodies to do with them as it pleases.

A similar level of abuse is observed in North Korea and Vietnam. And growing repression has also been observed in Belarus and Cuba.

Recently, the west woke up to the dangers that its liberal and democratic values may face and the fact that capitalism alone cannot guarantee freedom and human rights. The fear that the age of communist China’s imperialism has already arrived motivated Australia, the UK and the US, for example, to form a new military pact. Imperfectly – and probably to Beijing’s delight – AUKUS agreement excludes the EU.

Technological totalitarianism

In China, the traditional features of totalitarianism have become irretrievably combined with the system’s appetite for hi-tech conditioning and surveillance. For example, the total control of Xinjiang’s Muslims is made possible through the region’s mass database of the population’s DNA and irises.

Technology and AI are communism 2.0’s largely bloodless methods for extending total control over the population, making sure that every individual toes the party’s line. This compliance is also enabled by the emerging military surveillance industrial complex, which is going to be at the core of successful communist-capitalism.

More control means more job openings in this complex, directly translating into economic growth, that in turn will go back into financing that control – totalitarianism’s perfect feedback loop, with no way out. And so repression becomes recognised as the engine of the economy; a guarantee of prosperity for most (though not all).

The seismic shift from Soviet-style communism 1.0, based on heavy industry, to China’s AI-supported communism 2.0 can be observed to different degrees across those seven communist states. North Korea remains an outlier and a squarely communism 1.0 state. To this day, Pyongyang refuses to follow the communism 2.0 path, despite Beijing’s quiet nudges in that direction (although there are signs that could be changing). Cuba and Venezuela, meanwhile, are also closer to communism 1.0, still making non-pragmatic choices informed by idealism and ideology. At the other end of the spectrum, Belarus, Laos and Vietnam are using whatever works economically (as long as the ruling party controls production and profits). They are China’s conscientious pupils, bent on implementing communism 2.0.

Democratic alternatives

Unless the world’s democracies come up with attractive and effective solutions to socioeconomic ills such as unemployment, falling living standards and income, and inaccessible medical care, then I am afraid that communism 2.0 is going to win hands down. In this scenario, the number of communist states is bound to grow and individual and political freedoms will diminish.

China’s Belt and Road Initiative (BRI) is exactly the type of ambitious project that the world’s democracies acutely lack at this moment in time. The plan is to link and build a coordinated network of railway, road and maritime corridors to span all of Africa, Asia and Europe for the seamless export of products from China and the easy import of raw materials to this communist powerhouse.

Not only does the BRI already facilitate China’s exploitation of Eurasia and Africa, but it also functions as the main conveyor belt for spreading communism 2.0 globally.

Adoptions of the Chinese model’s signature mix of welfare state policies with growing authoritarian tendencies and a single party’s aspiration to seize all power have been observed in present-day Europe since 2015, be it in Bulgaria, Hungary, Poland or Serbia. Unsurprisingly, these countries’ pro-authoritarian leaders are enamoured with Chinese economic and political success. They hope to establish privileged links and collaboration with the communist superpower and they may not be the last western states to fall under its spell.

To curry favour with Beijing, Europe’s aspiring autocracies are busy dismantling democracy and putting curbs on political rights and freedoms at home. Since 2015, Poland has repeatedly been risking tens of billions of Euros in developmental aid from the EU by rejecting the basic principle of EU legal primacy. Facing growing censure, in 2017, incredulously, the Polish prime minister said that it did not matter, because in such a case China would offer Poland more money than Brussels.

I fear that, after my childhood in communist Poland, I may have to live out my old age under a communist 2.0 regime of renewed oppression. However colourful and hi-tech its façade may be, the enforcement of the ruling party’s line in this possible future will be swifter and more totalitarian than in the Soviet bloc’s pre-cyberspace past.

Vast databases of citizens’ DNA and irises will make personal identifications impossible to fake, while ubiquitous online, mobile and CCTV monitoring will liquidate privacy and any possibility of organised dissent.

In the state’s gaze, each person will stand naked with no choice but to do the autocrat’s bidding or be vanished and die, forgotten by all, out of sight in a “black jail” or in an officially non-existent concentration camp.

Even the memory of such an ideological miscreant will be erased from people’s minds, thanks to the rise of the state-controlled “sovereign internet”. As George Orwell predicted in 1984: “Who controls the past, controls the future.”

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Tomasz Kamusella does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Four Years Ago This Week, Freedom Was Torched

Four Years Ago This Week, Freedom Was Torched

Authored by Jeffrey Tucker via The Brownstone Institute,

"Beware the Ides of March,” Shakespeare…

Published

12 mins ago

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March 12, 2024

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Four Years Ago This Week, Freedom Was Torched

Authored by Jeffrey Tucker via The Brownstone Institute,

"Beware the Ides of March,” Shakespeare quotes the soothsayer’s warning Julius Caesar about what turned out to be an impending assassination on March 15. The death of American liberty happened around the same time four years ago, when the orders went out from all levels of government to close all indoor and outdoor venues where people gather. 

It was not quite a law and it was never voted on by anyone. Seemingly out of nowhere, people who the public had largely ignored, the public health bureaucrats, all united to tell the executives in charge – mayors, governors, and the president – that the only way to deal with a respiratory virus was to scrap freedom and the Bill of Rights. 

And they did, not only in the US but all over the world. 

The forced closures in the US began on March 6 when the mayor of Austin, Texas, announced the shutdown of the technology and arts festival South by Southwest. Hundreds of thousands of contracts, of attendees and vendors, were instantly scrapped. The mayor said he was acting on the advice of his health experts and they in turn pointed to the CDC, which in turn pointed to the World Health Organization, which in turn pointed to member states and so on. 

There was no record of Covid in Austin, Texas, that day but they were sure they were doing their part to stop the spread. It was the first deployment of the “Zero Covid” strategy that became, for a time, official US policy, just as in China. 

It was never clear precisely who to blame or who would take responsibility, legal or otherwise. 

This Friday evening press conference in Austin was just the beginning. By the next Thursday evening, the lockdown mania reached a full crescendo. Donald Trump went on nationwide television to announce that everything was under control but that he was stopping all travel in and out of US borders, from Europe, the UK, Australia, and New Zealand. American citizens would need to return by Monday or be stuck. 

Americans abroad panicked while spending on tickets home and crowded into international airports with waits up to 8 hours standing shoulder to shoulder. It was the first clear sign: there would be no consistency in the deployment of these edicts. 

There is no historical record of any American president ever issuing global travel restrictions like this without a declaration of war. Until then, and since the age of travel began, every American had taken it for granted that he could buy a ticket and board a plane. That was no longer possible. Very quickly it became even difficult to travel state to state, as most states eventually implemented a two-week quarantine rule. 

The next day, Friday March 13, Broadway closed and New York City began to empty out as any residents who could went to summer homes or out of state. 

On that day, the Trump administration declared the national emergency by invoking the Stafford Act which triggers new powers and resources to the Federal Emergency Management Administration. 

In addition, the Department of Health and Human Services issued a classified document, only to be released to the public months later. The document initiated the lockdowns. It still does not exist on any government website.

The White House Coronavirus Response Task Force, led by the Vice President, will coordinate a whole-of-government approach, including governors, state and local officials, and members of Congress, to develop the best options for the safety, well-being, and health of the American people. HHS is the LFA [Lead Federal Agency] for coordinating the federal response to COVID-19.

Closures were guaranteed:

Recommend significantly limiting public gatherings and cancellation of almost all sporting events, performances, and public and private meetings that cannot be convened by phone. Consider school closures. Issue widespread ‘stay at home’ directives for public and private organizations, with nearly 100% telework for some, although critical public services and infrastructure may need to retain skeleton crews. Law enforcement could shift to focus more on crime prevention, as routine monitoring of storefronts could be important.

In this vision of turnkey totalitarian control of society, the vaccine was pre-approved: “Partner with pharmaceutical industry to produce anti-virals and vaccine.”

The National Security Council was put in charge of policy making. The CDC was just the marketing operation. That’s why it felt like martial law. Without using those words, that’s what was being declared. It even urged information management, with censorship strongly implied.

The timing here is fascinating. This document came out on a Friday. But according to every autobiographical account – from Mike Pence and Scott Gottlieb to Deborah Birx and Jared Kushner – the gathered team did not meet with Trump himself until the weekend of the 14th and 15th, Saturday and Sunday. 

According to their account, this was his first real encounter with the urge that he lock down the whole country. He reluctantly agreed to 15 days to flatten the curve. He announced this on Monday the 16th with the famous line: “All public and private venues where people gather should be closed.”

This makes no sense. The decision had already been made and all enabling documents were already in circulation. 

There are only two possibilities. 

One: the Department of Homeland Security issued this March 13 HHS document without Trump’s knowledge or authority. That seems unlikely. 

Two: Kushner, Birx, Pence, and Gottlieb are lying. They decided on a story and they are sticking to it. 

Trump himself has never explained the timeline or precisely when he decided to greenlight the lockdowns. To this day, he avoids the issue beyond his constant claim that he doesn’t get enough credit for his handling of the pandemic.

With Nixon, the famous question was always what did he know and when did he know it? When it comes to Trump and insofar as concerns Covid lockdowns – unlike the fake allegations of collusion with Russia – we have no investigations. To this day, no one in the corporate media seems even slightly interested in why, how, or when human rights got abolished by bureaucratic edict. 

As part of the lockdowns, the Cybersecurity and Infrastructure Security Agency, which was and is part of the Department of Homeland Security, as set up in 2018, broke the entire American labor force into essential and nonessential.

They also set up and enforced censorship protocols, which is why it seemed like so few objected. In addition, CISA was tasked with overseeing mail-in ballots. 

Only 8 days into the 15, Trump announced that he wanted to open the country by Easter, which was on April 12. His announcement on March 24 was treated as outrageous and irresponsible by the national press but keep in mind: Easter would already take us beyond the initial two-week lockdown. What seemed to be an opening was an extension of closing. 

This announcement by Trump encouraged Birx and Fauci to ask for an additional 30 days of lockdown, which Trump granted. Even on April 23, Trump told Georgia and Florida, which had made noises about reopening, that “It’s too soon.” He publicly fought with the governor of Georgia, who was first to open his state. 

Before the 15 days was over, Congress passed and the president signed the 880-page CARES Act, which authorized the distribution of $2 trillion to states, businesses, and individuals, thus guaranteeing that lockdowns would continue for the duration. 

There was never a stated exit plan beyond Birx’s public statements that she wanted zero cases of Covid in the country. That was never going to happen. It is very likely that the virus had already been circulating in the US and Canada from October 2019. A famous seroprevalence study by Jay Bhattacharya came out in May 2020 discerning that infections and immunity were already widespread in the California county they examined. 

What that implied was two crucial points: there was zero hope for the Zero Covid mission and this pandemic would end as they all did, through endemicity via exposure, not from a vaccine as such. That was certainly not the message that was being broadcast from Washington. The growing sense at the time was that we all had to sit tight and just wait for the inoculation on which pharmaceutical companies were working. 

By summer 2020, you recall what happened. A restless generation of kids fed up with this stay-at-home nonsense seized on the opportunity to protest racial injustice in the killing of George Floyd. Public health officials approved of these gatherings – unlike protests against lockdowns – on grounds that racism was a virus even more serious than Covid. Some of these protests got out of hand and became violent and destructive. 

Meanwhile, substance abuse rage – the liquor and weed stores never closed – and immune systems were being degraded by lack of normal exposure, exactly as the Bakersfield doctors had predicted. Millions of small businesses had closed. The learning losses from school closures were mounting, as it turned out that Zoom school was near worthless. 

It was about this time that Trump seemed to figure out – thanks to the wise council of Dr. Scott Atlas – that he had been played and started urging states to reopen. But it was strange: he seemed to be less in the position of being a president in charge and more of a public pundit, Tweeting out his wishes until his account was banned. He was unable to put the worms back in the can that he had approved opening. 

By that time, and by all accounts, Trump was convinced that the whole effort was a mistake, that he had been trolled into wrecking the country he promised to make great. It was too late. Mail-in ballots had been widely approved, the country was in shambles, the media and public health bureaucrats were ruling the airwaves, and his final months of the campaign failed even to come to grips with the reality on the ground. 

At the time, many people had predicted that once Biden took office and the vaccine was released, Covid would be declared to have been beaten. But that didn’t happen and mainly for one reason: resistance to the vaccine was more intense than anyone had predicted. The Biden administration attempted to impose mandates on the entire US workforce. Thanks to a Supreme Court ruling, that effort was thwarted but not before HR departments around the country had already implemented them. 

As the months rolled on – and four major cities closed all public accommodations to the unvaccinated, who were being demonized for prolonging the pandemic – it became clear that the vaccine could not and would not stop infection or transmission, which means that this shot could not be classified as a public health benefit. Even as a private benefit, the evidence was mixed. Any protection it provided was short-lived and reports of vaccine injury began to mount. Even now, we cannot gain full clarity on the scale of the problem because essential data and documentation remains classified. 

After four years, we find ourselves in a strange position. We still do not know precisely what unfolded in mid-March 2020: who made what decisions, when, and why. There has been no serious attempt at any high level to provide a clear accounting much less assign blame. 

Not even Tucker Carlson, who reportedly played a crucial role in getting Trump to panic over the virus, will tell us the source of his own information or what his source told him. There have been a series of valuable hearings in the House and Senate but they have received little to no press attention, and none have focus on the lockdown orders themselves. 

The prevailing attitude in public life is just to forget the whole thing. And yet we live now in a country very different from the one we inhabited five years ago. Our media is captured. Social media is widely censored in violation of the First Amendment, a problem being taken up by the Supreme Court this month with no certainty of the outcome. The administrative state that seized control has not given up power. Crime has been normalized. Art and music institutions are on the rocks. Public trust in all official institutions is at rock bottom. We don’t even know if we can trust the elections anymore. 

In the early days of lockdown, Henry Kissinger warned that if the mitigation plan does not go well, the world will find itself set “on fire.” He died in 2023. Meanwhile, the world is indeed on fire. The essential struggle in every country on earth today concerns the battle between the authority and power of permanent administration apparatus of the state – the very one that took total control in lockdowns – and the enlightenment ideal of a government that is responsible to the will of the people and the moral demand for freedom and rights. 

How this struggle turns out is the essential story of our times. 

CODA: I’m embedding a copy of PanCAP Adapted, as annotated by Debbie Lerman. You might need to download the whole thing to see the annotations. If you can help with research, please do.

*  *  *

Jeffrey Tucker is the author of the excellent new book 'Life After Lock-Down'

Tyler Durden Mon, 03/11/2024 - 23:40

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Red Candle In The Wind

Red Candle In The Wind

By Benjamin PIcton of Rabobank

February non-farm payrolls superficially exceeded market expectations on Friday by…

Published

6 hours ago

on

March 11, 2024

By

Red Candle In The Wind

By Benjamin PIcton of Rabobank

February non-farm payrolls superficially exceeded market expectations on Friday by printing at 275,000 against a consensus call of 200,000. We say superficially, because the downward revisions to prior months totalled 167,000 for December and January, taking the total change in employed persons well below the implied forecast, and helping the unemployment rate to pop two-ticks to 3.9%. The U6 underemployment rate also rose from 7.2% to 7.3%, while average hourly earnings growth fell to 0.2% m-o-m and average weekly hours worked languished at 34.3, equalling pre-pandemic lows.

Undeterred by the devil in the detail, the algos sprang into action once exchanges opened. Market darling NVIDIA hit a new intraday high of $974 before (presumably) the humans took over and sold the stock down more than 10% to close at $875.28. If our suspicions are correct that it was the AIs buying before the humans started selling (no doubt triggering trailing stops on the way down), the irony is not lost on us.

The 1-day chart for NVIDIA now makes for interesting viewing, because the red candle posted on Friday presents quite a strong bearish engulfing signal. Volume traded on the day was almost double the 15-day simple moving average, and similar price action is observable on the 1-day charts for both Intel and AMD. Regular readers will be aware that we have expressed incredulity in the past about the durability the AI thematic melt-up, so it will be interesting to see whether Friday’s sell off is just a profit-taking blip, or a genuine trend reversal.

AI equities aside, this week ought to be important for markets because the BTFP program expires today. That means that the Fed will no longer be loaning cash to the banking system in exchange for collateral pledged at-par. The KBW Regional Banking index has so far taken this in its stride and is trading 30% above the lows established during the mini banking crisis of this time last year, but the Fed’s liquidity facility was effectively an exercise in can-kicking that makes regional banks a sector of the market worth paying attention to in the weeks ahead. Even here in Sydney, regulators are warning of external risks posed to the banking sector from scheduled refinancing of commercial real estate loans following sharp falls in valuations.

Markets are sending signals in other sectors, too. Gold closed at a new record-high of $2178/oz on Friday after trading above $2200/oz briefly. Gold has been going ballistic since the Friday before last, posting gains even on days where 2-year Treasury yields have risen. Gold bugs are buying as real yields fall from the October highs and inflation breakevens creep higher. This is particularly interesting as gold ETFs have been recording net outflows; suggesting that price gains aren’t being driven by a retail pile-in. Are gold buyers now betting on a stagflationary outcome where the Fed cuts without inflation being anchored at the 2% target? The price action around the US CPI release tomorrow ought to be illuminating.

Leaving the day-to-day movements to one side, we are also seeing further signs of structural change at the macro level. The UK budget last week included a provision for the creation of a British ISA. That is, an Individual Savings Account that provides tax breaks to savers who invest their money in the stock of British companies. This follows moves last year to encourage pension funds to head up the risk curve by allocating 5% of their capital to unlisted investments.

As a Hail Mary option for a government cruising toward an electoral drubbing it’s a curious choice, but it’s worth highlighting as cash-strapped governments increasingly see private savings pools as a funding solution for their spending priorities.

Of course, the UK is not alone in making creeping moves towards financial repression. In contrast to announcements today of increased trade liberalisation, Australian Treasurer Jim Chalmers has in the recent past flagged his interest in tapping private pension savings to fund state spending priorities, including defence, public housing and renewable energy projects. Both the UK and Australia appear intent on finding ways to open up the lungs of their economies, but government wants more say in directing private capital flows for state goals.

So, how far is the blurring of the lines between free markets and state planning likely to go? Given the immense and varied budgetary (and security) pressures that governments are facing, could we see a re-up of WWII-era Victory bonds, where private investors are encouraged to do their patriotic duty by directly financing government at negative real rates?

That would really light a fire under the gold market.

Tyler Durden Mon, 03/11/2024 - 19:00

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Trump “Clearly Hasn’t Learned From His COVID-Era Mistakes”, RFK Jr. Says

Trump "Clearly Hasn’t Learned From His COVID-Era Mistakes", RFK Jr. Says

Authored by Jeff Louderback via The Epoch Times (emphasis ours),

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March 11, 2024

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Trump "Clearly Hasn't Learned From His COVID-Era Mistakes", RFK Jr. Says

Authored by Jeff Louderback via The Epoch Times (emphasis ours),

President Joe Biden claimed that COVID vaccines are now helping cancer patients during his State of the Union address on March 7, but it was a response on Truth Social from former President Donald Trump that drew the ire of independent presidential candidate Robert F. Kennedy Jr.

Robert F. Kennedy Jr. holds a voter rally in Grand Rapids, Mich., on Feb. 10, 2024. (Mitch Ranger for The Epoch Times)

During the address, President Biden said: “The pandemic no longer controls our lives. The vaccines that saved us from COVID are now being used to help beat cancer, turning setback into comeback. That’s what America does.”

President Trump wrote: “The Pandemic no longer controls our lives. The VACCINES that saved us from COVID are now being used to help beat cancer—turning setback into comeback. YOU’RE WELCOME JOE. NINE-MONTH APPROVAL TIME VS. 12 YEARS THAT IT WOULD HAVE TAKEN YOU.”

An outspoken critic of President Trump’s COVID response, and the Operation Warp Speed program that escalated the availability of COVID vaccines, Mr. Kennedy said on X, formerly known as Twitter, that “Donald Trump clearly hasn’t learned from his COVID-era mistakes.”

“He fails to recognize how ineffective his warp speed vaccine is as the ninth shot is being recommended to seniors. Even more troubling is the documented harm being caused by the shot to so many innocent children and adults who are suffering myocarditis, pericarditis, and brain inflammation,” Mr. Kennedy remarked.

“This has been confirmed by a CDC-funded study of 99 million people. Instead of bragging about its speedy approval, we should be honestly and transparently debating the abundant evidence that this vaccine may have caused more harm than good.

“I look forward to debating both Trump and Biden on Sept. 16 in San Marcos, Texas.”

Mr. Kennedy announced in April 2023 that he would challenge President Biden for the 2024 Democratic Party presidential nomination before declaring his run as an independent last October, claiming that the Democrat National Committee was “rigging the primary.”

Since the early stages of his campaign, Mr. Kennedy has generated more support than pundits expected from conservatives, moderates, and independents resulting in speculation that he could take votes away from President Trump.

Many Republicans continue to seek a reckoning over the government-imposed pandemic lockdowns and vaccine mandates.

President Trump’s defense of Operation Warp Speed, the program he rolled out in May 2020 to spur the development and distribution of COVID-19 vaccines amid the pandemic, remains a sticking point for some of his supporters.

Vice President Mike Pence (L) and President Donald Trump deliver an update on Operation Warp Speed in the Rose Garden of the White House in Washington on Nov. 13, 2020. (Mandel Ngan/AFP via Getty Images)

Operation Warp Speed featured a partnership between the government, the military, and the private sector, with the government paying for millions of vaccine doses to be produced.

President Trump released a statement in March 2021 saying: “I hope everyone remembers when they’re getting the COVID-19 Vaccine, that if I wasn’t President, you wouldn’t be getting that beautiful ‘shot’ for 5 years, at best, and probably wouldn’t be getting it at all. I hope everyone remembers!”

President Trump said about the COVID-19 vaccine in an interview on Fox News in March 2021: “It works incredibly well. Ninety-five percent, maybe even more than that. I would recommend it, and I would recommend it to a lot of people that don’t want to get it and a lot of those people voted for me, frankly.

“But again, we have our freedoms and we have to live by that and I agree with that also. But it’s a great vaccine, it’s a safe vaccine, and it’s something that works.”

On many occasions, President Trump has said that he is not in favor of vaccine mandates.

An environmental attorney, Mr. Kennedy founded Children’s Health Defense, a nonprofit that aims to end childhood health epidemics by promoting vaccine safeguards, among other initiatives.

Last year, Mr. Kennedy told podcaster Joe Rogan that ivermectin was suppressed by the FDA so that the COVID-19 vaccines could be granted emergency use authorization.

He has criticized Big Pharma, vaccine safety, and government mandates for years.

Since launching his presidential campaign, Mr. Kennedy has made his stances on the COVID-19 vaccines, and vaccines in general, a frequent talking point.

“I would argue that the science is very clear right now that they [vaccines] caused a lot more problems than they averted,” Mr. Kennedy said on Piers Morgan Uncensored last April.

“And if you look at the countries that did not vaccinate, they had the lowest death rates, they had the lowest COVID and infection rates.”

Additional data show a “direct correlation” between excess deaths and high vaccination rates in developed countries, he said.

President Trump and Mr. Kennedy have similar views on topics like protecting the U.S.-Mexico border and ending the Russia-Ukraine war.

COVID-19 is the topic where Mr. Kennedy and President Trump seem to differ the most.

Former President Donald Trump intended to “drain the swamp” when he took office in 2017, but he was “intimidated by bureaucrats” at federal agencies and did not accomplish that objective, Mr. Kennedy said on Feb. 5.

Speaking at a voter rally in Tucson, where he collected signatures to get on the Arizona ballot, the independent presidential candidate said President Trump was “earnest” when he vowed to “drain the swamp,” but it was “business as usual” during his term.

John Bolton, who President Trump appointed as a national security adviser, is “the template for a swamp creature,” Mr. Kennedy said.

Scott Gottlieb, who President Trump named to run the FDA, “was Pfizer’s business partner” and eventually returned to Pfizer, Mr. Kennedy said.

Mr. Kennedy said that President Trump had more lobbyists running federal agencies than any president in U.S. history.

“You can’t reform them when you’ve got the swamp creatures running them, and I’m not going to do that. I’m going to do something different,” Mr. Kennedy said.

During the COVID-19 pandemic, President Trump “did not ask the questions that he should have,” he believes.

President Trump “knew that lockdowns were wrong” and then “agreed to lockdowns,” Mr. Kennedy said.

He also “knew that hydroxychloroquine worked, he said it,” Mr. Kennedy explained, adding that he was eventually “rolled over” by Dr. Anthony Fauci and his advisers.

President Donald Trump greets the crowd before he leaves at the Operation Warp Speed Vaccine Summit in Washington on Dec. 8, 2020. (Tasos Katopodis/Getty Images)

MaryJo Perry, a longtime advocate for vaccine choice and a Trump supporter, thinks votes will be at a premium come Election Day, particularly because the independent and third-party field is becoming more competitive.

Ms. Perry, president of Mississippi Parents for Vaccine Rights, believes advocates for medical freedom could determine who is ultimately president.

She believes that Mr. Kennedy is “pulling votes from Trump” because of the former president’s stance on the vaccines.

“People care about medical freedom. It’s an important issue here in Mississippi, and across the country,” Ms. Perry told The Epoch Times.

“Trump should admit he was wrong about Operation Warp Speed and that COVID vaccines have been dangerous. That would make a difference among people he has offended.”

President Trump won’t lose enough votes to Mr. Kennedy about Operation Warp Speed and COVID vaccines to have a significant impact on the election, Ohio Republican strategist Wes Farno told The Epoch Times.

President Trump won in Ohio by eight percentage points in both 2016 and 2020. The Ohio Republican Party endorsed President Trump for the nomination in 2024.

“The positives of a Trump presidency far outweigh the negatives,” Mr. Farno said. “People are more concerned about their wallet and the economy.

“They are asking themselves if they were better off during President Trump’s term compared to since President Biden took office. The answer to that question is obvious because many Americans are struggling to afford groceries, gas, mortgages, and rent payments.

“America needs President Trump.”

Multiple national polls back Mr. Farno’s view.

As of March 6, the RealClearPolitics average of polls indicates that President Trump has 41.8 percent support in a five-way race that includes President Biden (38.4 percent), Mr. Kennedy (12.7 percent), independent Cornel West (2.6 percent), and Green Party nominee Jill Stein (1.7 percent).

A Pew Research Center study conducted among 10,133 U.S. adults from Feb. 7 to Feb. 11 showed that Democrats and Democrat-leaning independents (42 percent) are more likely than Republicans and GOP-leaning independents (15 percent) to say they have received an updated COVID vaccine.

The poll also reported that just 28 percent of adults say they have received the updated COVID inoculation.

The peer-reviewed multinational study of more than 99 million vaccinated people that Mr. Kennedy referenced in his X post on March 7 was published in the Vaccine journal on Feb. 12.

It aimed to evaluate the risk of 13 adverse events of special interest (AESI) following COVID-19 vaccination. The AESIs spanned three categories—neurological, hematologic (blood), and cardiovascular.

The study reviewed data collected from more than 99 million vaccinated people from eight nations—Argentina, Australia, Canada, Denmark, Finland, France, New Zealand, and Scotland—looking at risks up to 42 days after getting the shots.

Three vaccines—Pfizer and Moderna’s mRNA vaccines as well as AstraZeneca’s viral vector jab—were examined in the study.

Researchers found higher-than-expected cases that they deemed met the threshold to be potential safety signals for multiple AESIs, including for Guillain-Barre syndrome (GBS), cerebral venous sinus thrombosis (CVST), myocarditis, and pericarditis.

A safety signal refers to information that could suggest a potential risk or harm that may be associated with a medical product.

The study identified higher incidences of neurological, cardiovascular, and blood disorder complications than what the researchers expected.

President Trump’s role in Operation Warp Speed, and his continued praise of the COVID vaccine, remains a concern for some voters, including those who still support him.

Krista Cobb is a 40-year-old mother in western Ohio. She voted for President Trump in 2020 and said she would cast her vote for him this November, but she was stunned when she saw his response to President Biden about the COVID-19 vaccine during the State of the Union address.

“I love President Trump and support his policies, but at this point, he has to know they [advisers and health officials] lied about the shot,” Ms. Cobb told The Epoch Times.

“If he continues to promote it, especially after all of the hearings they’ve had about it in Congress, the side effects, and cover-ups on Capitol Hill, at what point does he become the same as the people who have lied?” Ms. Cobb added.

“I think he should distance himself from talk about Operation Warp Speed and even admit that he was wrong—that the vaccines have not had the impact he was told they would have. If he did that, people would respect him even more.”

Tyler Durden Mon, 03/11/2024 - 17:00

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