Defaults raise concerns on financial markets over Chinese debt

Nick Beams

A series of defaults over the past month on loans by companies that were thought to have state backing for their debts has sent a tremor through Chinese capitalism’s financial markets and raised significant questions for international investors.

According to Fitch Ratings, state-owned firms defaulted on a record $6.1 billion worth of bonds between January and October, an amount as much as the previous two years combined. But in November the problems significantly worsened, with defaults by three major companies.

The first sign of deeper trouble surfaced last month when the state-owned coal company Yongcheng Coal and Electricity Holding Group, located in central China, defaulted on a bond worth $152 million.

Two weeks later the high-profile state-owned technology group Tsinghua Unigroup said it would default on a domestic bond worth the equivalent of $199 million.

Yet worse was to come. Last week the company announced that it did not expect to pay interest or principal on $450 million worth of bonds. This would also trigger cross defaults on a further $2 billion of dollar bonds coming due between 2021 and 2028.

Tsinghua Unigroup is a major player in China’s drive to achieve self-reliance in the supply of semi-conductors. It is majority owned by Tsinghua University, one of China’s most prestigious academic institutions. The company has enjoyed backing from the government and in 2015 made a $23 billion bid for the US chip-maker Micron Technology.

People look at semiconductors on display from the Tsinghua Unigroup at the China Beijing International High Tech Expo in Beijing, Saturday, Sept. 19, 2020. (Credit: AP Photo/Mark Schiefelbein)

The third major default by a state-backed firm was by Brilliance Auto Holdings, which is linked to the major German auto company BMW. It failed to repay a domestic debt due in November.

The defaults have triggered concerns in money markets about the degree to which the Chinese government and financial authorities are prepared to let market forces run their course so as to put the country’s financial system on a sounder footing without sparking a general crisis.

Following the Tsinghua Unigroup default, Chinese Vice-Premier Liu He, who has been tasked with cleaning up the financial system, warned companies that Beijing would take a “zero tolerance” approach to misconduct in financing deals or attempts at debt evasion.

The Financial Times reported that the attitude of authorities had “rattled China’s nearly $4 trillion debt market of which state-owned enterprises are estimated to account for more than half.” It noted that in the week after the default by Yongcheng Coal at least 20 Chinese companies suspended plans for new debt issues totalling $2.4 billion, citing “recent market turmoil.”

The state sector of the Chinese economy is a major component of the financial system. State-owned enterprises account for about a third of gross domestic product (GDP) but more than half of bank loans in China and some 90 percent of corporate bonds. They have been regarded as sound investments because of what were seen as implicit government guarantees.

In comments reported by CNN last week, Logan Wright, director of market research at the Rhodium Group, noted: “The credibility of government guarantees has been the most important bulwark against [financial] crisis so far. Now we are seeing signs that this credibility is eroding.”

It appears that the government is prepared to allow at least some previously-backed firms to collapse. There are major risks involved, however.

Wright wrote in a recent research note: “Although authorities want market discipline for riskier firms, they cannot know how much credit risk might create broader contagion. No one can know this line clearly, given that there is no precedent for this risk in China’s financial system.”

The slowdown in the Chinese economy due to the coronavirus—growth is expected to come in around 2 percent this year compared to more than 6 percent last year—is the proximate cause of the debt problems. But debt in major Chinese enterprises has been building since the massive expansion of credit launched in response to the global financial crisis of 2008.

In a recent report, analysts at the Japanese financial firm Nomura said they viewed the recent defaults as “inevitable” as the government had been propping up enterprises with billions of dollars’ worth of stimulus. However, one of the problems for the government is that the stimulus measures are not generating the GDP increases they did in the past, so the debt burden on the economy becomes progressively greater.

In a report on the growing debt crisis, the Financial Times (FT) noted that a decade ago Yongcheng Coal was regarded as one China’s leading energy companies. But today its financial difficulties are seen as the harbinger of major problems.

According to an FT report published last week, Yongcheng Coal’s defaults have “ricocheted through China’s financial system,” with analysts saying that state-linked companies face difficulties in raising capital because the assumption that the government will always bail them out no longer applies.

The newspaper cited one analyst who warned that Yongcheng’s failure could be replicated by any state-owned enterprise with “weak fundamentals” and that a “lot more defaults could be in the pipeline.”

The debt problems are not confined to major companies. Moody’s Investor Services, which tracks local government debt in China, issued a report earlier this month putting a “negative outlook” for local and regional government debt for next year.

A report in the South China Morning Post last week cited comments by former vice-finance minister Zhang Hongli who said that local authorities had “relied on new borrowing to repay old debts” in about 60 percent of cases for the first 10 months of 2020.

This is a sure sign that local governments cannot generate enough revenue to cover debt repayments. There have been warnings that there could be a significant increase in defaults on loans raised through so-called local government financing vehicles in the coming year.

Canada’s pandemic wage subsidy: A slush fund for wealthy shareholders and corporate executives

Omar Ali & Roger Jordan

Several recent news reports have exposed how Canada’s ruling elite is using government pandemic support programs ostensibly intended for working people to award themselves lavish bonuses and shareholder payouts. At the centre of the scandal is the Canada Emergency Wage Subsidy (CEWS), which is expected to cost over $68 billion by the time it winds up in June 2021. Under this program, employers who can show significant revenue losses can obtain a federal government wage subsidy of up to 75 percent of their workers’ wages.

(Credit: Department of Finance Canada, Twitter)

 

Investigations conducted simultaneously by CBC and the Financial Post revealed that the CEWS is being used by large companies as little more than a slush fund to boost payouts to shareholders and executive bonuses. The Post found that 68 companies received a total of $1.03 billion in CEWS while paying upwards of $5 billion in dividends to stockholders. The reports were limited to publicly traded companies using information disclosed as part of routine financial reporting, indicating that the true extent of such blatant theft of public funds is far greater. In the face of inquiries from reporters, Justin Trudeau’s Liberal government has steadfastly refused to make public the names of all the corporations who have taken part in the wage subsidy program.

The companies cited in the exposés are not the corner stores, restaurants and other small businesses touted by the government as the beneficiaries of CEWS during its rollout, but large, well-known corporations with enormous revenues. Take Imperial Oil, the 140-year-old petroleum giant with large stakes in the Alberta oil sands and majority-owned by the United States-based Exxon Mobil. It collected $120 million in wage subsidies, while issuing $320 million in dividends.

Some companies undertook massive layoffs even while obtaining these handouts from the public treasury. For example, Leon’s, a large furniture retail chain, was able to report impressive numbers even while the coronavirus has ravaged the industry at large. It received $29.8 million in wage subsidies while paying its investors $9.8 million in dividends. The company also spent $36.2 million on stock buybacks. Despite being clearly flush with resources, it furloughed 6,000 workers at the various chains it owns, which include The Brick and Appliance Canada. Of these, 5 percent still haven’t been hired back, according to the company.

The trucking company TFI International sent home 1,500 workers when the virus began taking hold in the spring. The $63 million in subsidies were instead spent on $45 million in dividends and $9 million in buybacks that sent the share price rocketing. Its CEO dismissed any thought of not taking the subsidy as akin to thinking one is “more Catholic than the Pope.”

Perhaps the most egregious example of profiteering with public funds comes from the for-profit long-term care industry. For years, executives, enabled by the active support of all political parties for the privatization of elder care, siphoned off wealth intended to ensure care and dignity to patients into the pockets of private investors. The result has been devastation once the virus got into long-term care facilities. This has not chastened management into directing resources elsewhere, however. The CBC reported that two large providers, Extendicare and Sienna Senior Living, received a combined $157 million in wage subsidies while shelling out $74 million to shareholders this year. In Ontario alone, 480 residents and staff of their facilities have succumbed to COVID-19.

The CEWS program constitutes only a fraction of the millions funneled into the coffers of the corporate elite by the ruling Liberal government and the Bank of Canada during the pandemic. All told, the policy of market-bailouts, buybacks and tax write-offs will transfer well over $650 billion to the wealthiest Canadians. The entire process has been enacted with few restrictions or transparency. The Bank of Canada has flatly declared it will not publish the list of companies benefiting from its “quantitative easing” program until many years hence, if ever.

Unlike other countries, the government has not predicated subsidies on recipients refraining from issuing dividends or engaging in share buybacks. Nor have they demanded that profitable companies pay back the money they’ve received. Responding to criticism last week, Finance Minister Chrystia Freeland said that the money was earmarked for workers and that “[we] expect companies to comply with that.”

The government’s indifference to corporate profiteering is in marked contrast with its approach to the Canadian Emergency Response Benefit (CERB), which sent $2000 per month directly to Canadians unable to work due to COVID-19 lockdowns or loss of work. Having ended the program, it has shifted workers to other benefit packages with stricter requirements in order to pressure them to accept low-wage or substandard employment. On top of this, in recent weeks the Canada Revenue Agency has sent letters to more than 400,000 Canadians informing them that they must repay the benefits they received as they have been deemed ineligible for COVID-19 relief.

The optics of the government trying to claw back cash from jobless workers while corporations reap record profits using public funds has troubled even some of the most fervent advocates of the capitalist “free market.” The same media outlets that spent the better part of the spring, summer and fall denouncing the CERB payouts as a “moral hazard” that risked turning “workers into welfare slackers,” which was a key ideological argument in the homicidal back-to-work campaign, are now nervously pointing out that the corporate elite’s brazen self-enrichment through CEWS could trigger a social explosion.

The neoconservative Financial Post wrote, “The sight of large, relatively healthy corporations feasting on sustenance meant for weaker employers during a once-in-a-lifetime catastrophe is emblematic of why Canada’s style of capitalism is in trouble.” Revealing the mindset within a besieged ruling class, which sees the threat of social anger erupting on all sides, the Post commentator continued, “Change is coming, and I only hope those of us who are fans of (capitalism) get to take part. That’s far from assured.”

The CEWS scandal is not just a devastating exposure of the criminality that pervades the Canadian capitalist class, which has responded just as ruthlessly as its American counterpart to the pandemic. It also thoroughly exposes the role played by the New Democrats and the trade unions, which touted the CEWS, CERB, and other support programs as generous gestures from a “worker friendly” Liberal government.

On April 11, the same day the CEWS was unanimously approved in parliament, including with the votes of the New Democrats, the Canadian Labour Congress issued a statement enthusing over the measure. “Parliamentarians are clearly sensing the need to act decisively to protect jobs and to help keep Canadian households afloat,” asserted CLC President Hassan Yussuff. “This bill ensures that workers will continue to receive wages and also have access to workplace benefits in the short term.”

Behind this rhetorical bluster, Yussuff and his fellow union bureaucrats knew full well what was going on. One month earlier, Yussuff had appealed for a “collaborative front” between unions, employers and the Liberal government. The unions kept mum about the more than $650 billion bailout of the financial oligarchy and banks, while using phoney “progressive” rhetoric about the CERB and CEWS to cover up the fact that they were holding consultations with big business on how to reopen the economy as quickly as possible and helping impose sweeping attacks on workers to ensure the “global competitiveness” of Canadian capitalism. A joint statement signed by the CLC, Canadian Chamber of Commerce and Unifor, among others, from this time infamously declared that it was necessary to help businesses “come roaring back” after the crisis.

The implementation of these anti-worker policies over the past eight months has led to a vast accentuation of already deep-rooted social inequality. While the fabulous enrichment of the ultra-wealthy has resulted in Canada’s top 44 billionaires being $53 billion better off than they were when the pandemic hit in March, millions of working people have seen their incomes slashed. Moreover, the reckless reopening of the economy and schools has exposed workers to the risk of contracting the deadly virus in workplaces where virtually no safety measures have been implemented.

The unions’ complicity in the looting of society’s resources by the super-rich and the risking of workers’ lives on a daily basis underlines the fact that working class opposition to the disastrous handling of the pandemic can only develop independently and in opposition to these pro-capitalist, corporatist organizations. What workers need are their own organizations of struggle, rank-and-file safety committees in every workplace and neighbourhood, to fight for the impounding of the ill-gotten gains of the super-rich. The funds can then be used to pay workers and their families their wages in full during a shutdown of all nonessential production and schools until the pandemic is brought under control, and to provide billions to the health care system to ensure free, high quality care for all.

GM Korea workers narrowly approve new contract

Ben McGrath

Auto workers at General Motors Korea narrowly approved a new contract on Friday after previously rejecting a similar deal on December 1 negotiated by the Korean Metal Workers Union (KMWU). The vote took place under threats by GM that it would close factories and move substantial parts of its production out of the country if workers did not accept the contract.

Workers of GM Korea stage a rally against the U.S. carmaker's plan to close the plant near the U.S. Embassy in Seoul, South Korea, Wednesday, Feb. 28, 2018. (AP Photo/Ahn Young-joon)

The contract passed supposedly with 54.1 percent approval, indicating that there is still substantial opposition to the sellout agreement. Out of 7,774 union members, 94 percent took part in the vote. The deal maintains the wage freeze imposed on workers by the company and the union since 2018 while offering four million won ($US3,643) per worker in bonuses. The company also stated it would drop a lawsuit against the union for losses incurred during strikes and a vague, noncommittal pledge to maintain production at its Bupyeong No. 2 plant for as long as possible.

Under pressure from workers, the union had initially demanded a 120,000 won ($109) monthly raise and 22 million won ($20,037) in bonuses. In addition, it called for concrete plans for future production at the Bupyeong No. 2 plant. The KMWU’s agreement to a deal without such a plan is a clear indication that it will not fight future plant closures. In 2018, it agreed to the shutting down of GM Korea’s Gunsan plant without a struggle.

GM Korea is the third auto company to reach an agreement with its union this year following deals at Hyundai and Ssangyong. It comes as Kia workers strike this week, with the KMWU consciously driving a wedge between workers in the auto industry in order to better impose the demands of the companies. That the union at GM Korea approved continuing the wage freeze will only further embolden Kia to demand the same of its workers.

There is however no lack of will to fight among autoworkers, especially among the irregular workers at GM Korea and other companies. These workers are heavily exploited, lacking job protections, any social safety net if they are fired, and typically make 40 to 50 percent less than their regular counterparts doing the same jobs.

Statistics Korea, part of the Ministry of Economy and Finance, regularly reports that irregular workers comprise as much as one-third of the total labor force. However, this involves a drastic undercounting. In reality, when all forms of non-regular work are included, such as short term, hourly, dispatch, and temporary workers, nearly 50 percent of the work force can be considered irregular.

This section of the working class has been particularly hard hit during the COVID-19 pandemic. Hundreds of thousands of temporary workers and day laborers have lost employment in the course of this year. In November alone, there were 206,000 fewer temporary positions and day labor jobs compared to the previous year. Irregular workers have seen their disposable income fall by at least 3.4 percent.

Companies like GM Korea regularly use this labor illegally to cut costs. In July, the company’s CEO Kaher Kazem, along with four other GM Korea executives and 13 from other companies, was indicted on charges of illegally hiring 1,810 temporary workers. The law requires companies to hire workers only through authorized human resource agencies. However, GM Korea hired workers from at least 27 unauthorized agencies.

What has been the KMWU’s response to this? It fosters divisions between regular and irregular workers. At this same time, the union falsely claims that President Moon Jae-in and his ruling Democratic Party of Korea (DPK) can be made to implement policies beneficial to the working class if only enough pressure is applied.

On December 3, two days after GM Korea workers first rejected the sellout contract, union bureaucrats from GM Korea’s irregular workers’ union staged a sit-down protest outside of the offices of Hong Yeong-pyo, a DPK lawmaker in the National Assembly from Incheon, where the company headquarters is located.

Bae Seong-do, one of the union leaders involved in the protest, appealed to the lawmaker stating, “If Representative Hong Yeong-pyo feels the slightest bit of responsibility for the situation at GM Korea, he will work hard to reinstate irregular workers at GM Korea. If he does not act, workers have no choice but to continue their struggle.”

Bae further called on Hong to immediately come out against “labor reform” currently being pushed by President Moon and the DPK. Those “reforms” would make it illegal for workers to occupy factories and extend collective bargaining agreements from two to three years.

No section of the KMWU intends to launch a genuine struggle against the government or GM Korea as Bae claims. The purpose of his sit-down strike is to give the appearance of militancy to GM Korea workers who rightly fear for their jobs while diverting their anger behind such stunts in the hopes of preventing workers from walking off the job. At the same time, the unions beg capitalist politicians to present a façade of defending auto workers so that the unions can continue to tie the working class to a non-existent “progressive” section of the DPK.

In reality, Moon and the ruling DPK have overseen growing social inequality. As a result of the pandemic, 23 percent of all workers have lost their jobs this year while an additional 26.7 percent have had their wages cut. At the same time, the wealthiest layers of society have seen their incomes increase. When the pandemic began, Moon’s government immediately made clear that his administration would provide unlimited bailouts to the banks and major corporations. Workers, on the other hand, have been left in the lurch.

The union appeals to the very forces responsible for the destruction of workers’ livelihoods demonstrating that the KMWU, and the Korean Confederation of Trade Unions of which it is a part, are the enemies of the working class. Workers must break with these organizations that continually sell out their struggles and form rank-and-file committees completely independent of the capitalists and their stooges in the unions. South Korean auto workers must reach out to their class brothers and sisters throughout the country and internationally and take up a unified fight for socialism.

Cyclone Yasa leaves thousands homeless in Fiji

Tom Peters

Fiji’s government declared a 30-day state of national disaster after the Pacific island nation, with a population of 934,000, was devastated by Tropical Cyclone Yasa on Thursday. Two people have been confirmed dead, a three-month-old baby and a man in his 40s. Prime Minister Frank Bainimarama yesterday told the media, “We sadly expect fatalities to rise.”

The powerful category five storm has been more damaging than Tropical Cyclone Harold, which hit Fiji and several other countries in April, causing flooding and millions of dollars in damage in Nadi and parts of the capital Suva.

A house destroyed by Cyclone Yasa (Source: Tropical Cyclone Yasa Fiji Update Facebook page)

Bainimarama said the damage from Yasa would likely surpass 2016’s Cyclone Winston, one of the most destructive ever in the Pacific, causing $1.4 billion worth of damage. He tweeted that since 2012 the country has suffered 12 cyclones, adding: “This is not normal. This is a climate emergency.”

Fiji’s second-largest island of Vanua Levu, with a population of 136,000, bore the brunt of Yasa, with wind gusts of up to 350kph (217mph). Local journalist Lice Movono told Newstalk ZB that it was “absolutely terrifying, never seen anything like it before, it was so long and just so ferocious.” Boats disappeared from the water and houses were flattened.

The storm has made thousands homeless. There were 23,430 people in designated evacuation centres yesterday. Save the Children’s Fiji chief Shairana Ali told Agence France-Presse: “quite a few villages… are reporting that all homes have been destroyed.”

The full scale of the damage is still becoming clear. Some villages had not been contacted by today due to severely damaged roads as well as power and communications outages. Flood warnings remain in place due to continuing rain; the Rewa river near Suva is reportedly rising.

The destruction of crops that have been flattened or covered by floods and landslides will compound the hardship facing families. Half the population, and almost everyone in rural areas, depends on small-scale agriculture for food and income.

A damaged house on Koro Island (Source: Tropical Cyclone Yasa Fiji Update Facebook page)

The government has pointed out that climate change is leading to more frequent and intense storms. Bainimarama has repeatedly criticised Australia, New Zealand and other regional powers for failing to take action to halt carbon emissions and to assist Pacific islands, which are particularly vulnerable to natural disasters.

In Vanuatu, the worst-hit country from Cyclone Harold, isolated parts of the country went several weeks without any aid. Eight months later, rebuilding is still slow.

The impact of the cyclones is also made worse by social inequality and poverty, which has soared due to the global coronavirus pandemic. Many families live in poorly constructed shacks that cannot withstand severe storms.

The United Nations found that at the start of 2020 nearly 211,000 people in Fiji, 24.2 percent of the population, lived in poverty, earning less than $5.5 per day. It estimated that in the worst-case scenario this could increase to 37.5 percent of the population due to the pandemic.

Fiji has reported only a small number of COVID-19 cases, but the closure of borders and the global economic crisis triggered by the pandemic has had a severe impact on workers and farmers.

Tourism and travel, which previously accounted for 34 percent of gross domestic product and employed 40,000 people, a quarter of the workforce, has been completely wiped out. Many who lost their jobs have been forced back into reliance on subsistence agriculture. Overall, one third of workers had lost their jobs or had their hours cut by mid-2020.

Remittances from family members working abroad, which contributed 5.5 percent of household income prior to the pandemic, have also been impacted by the global downturn and a wave of redundancies internationally.

Like other small Pacific countries, Fiji, which only became independent from Britain in 1968, remains extremely underdeveloped. Its population is exploited as a source of cheap labour, particularly for agricultural industries in Australia and New Zealand. The closure of borders means even this seasonal employment has been closed off to Pacific workers.

Severe damage to Daku Primary School, Labasa (Source: Tropical Cyclone Yasa Fiji Update Facebook page)

So far, international aid has barely begun to trickle into Fiji. Radio NZ reports that the Red Cross will distribute $140,000 worth of supplies over the next month in the worst affected areas. UNICEF says it is helping to distribute “water, sanitation and hygiene items… medical supplies and equipment.”

The New Zealand and Australian governments view the disaster as an opportunity to further strengthen military ties with Fiji. Both countries have sent air force planes to survey the damage without making actual funding announcements. NZ Foreign Minister Nanaia Mahuta said New Zealand would distribute “emergency relief kits,” and funding would be made available as requested by Fiji.

Australian Foreign Minister Marise Payne similarly stated on Saturday that leftover aid from Cyclone Harold was being distributed. She declared that “Fiji and Australia have become more than just neighbours—we are family.”

The regional imperialist powers have zero interest in the welfare of the Fijian people. Their aim is to ensure close relations with Bainimarama, a former military leader who was installed in a coup d’état in 2006.

The government rules through anti-democratic methods, including attacks on freedom of the press, the banning of municipal elections, and intimidation of political opponents. Last month the Fiji Law Society wrote to Acting Police Commissioner Rusiate Tudravu to express concern about hundreds of reports of police brutality since 2015, including the recent death of 46-year-old Mesake Sinu, who witnesses say was severely beaten by police officers.

The state is enforcing extreme levels of inequality and deepening austerity measures, including cuts to the health system. The country is unprepared for a serious outbreak of COVID-19 and many other diseases.

Retired surgeon Dr Eddie McCaig told a State of Human Rights panel, hosted by a number of non-government organisations, that there was a severe shortage of essential medicines, including an absence of drugs for HIV patients. According to the Fiji Times, he said that “80 percent of our diabetics are poorly controlled because they have no drugs, they have no laboratory testing, and the list goes on and on.” Diabetes affects 15 percent of the population.

Yesterday Bainimarama tweeted: “These storms may be getting stronger, but they will never be stronger than we are as a people. Resilience is in our bones.” The reality is that his government, backed by the imperialist powers, has protected the wealth and privileges of a few, while masses of ordinary Fijian workers and farmers remain more vulnerable than ever to natural disasters, poverty and disease.

The global surge in COVID cases and deaths requires an immediate international response

Benjamin Mateus

Last week, during the World Health Organization (WHO) press brief, Dr. Mike Ryan, executive director for the WHO emergencies program, observed, “We are not in an epidemiologically stable situation. The virus is still working its way through the human population. A vast majority of people remain susceptible. So, it has not settled down in a pattern that we can predict.” He also highlighted that though the pandemic is raging across Europe and North America, most of the world’s population remains susceptible to the coronavirus.

Brooklyn's Green-Wood Cemetery adorned with tributes to victims of COVID-19 in New York City, May 28, 2020. (AP Photo/Mark Lennihan)

This week saw the highest number of cases and deaths globally. On Wednesday, 13,579 people succumbed to the infection, and on Thursday, almost three-quarters of a million people were infected. Of the 75.7 million cases of COVID-19, 20.9 million were active cases of infection, with more than 107,000 in critical condition. There are have been 1.676 million deaths thus far.

Europe has registered 22.884 million cases. After a sharp rise in October, cases peaked at 333,344 on November 7. However, limited restrictions and piecemeal non-pharmaceutical interventions employed to turn the curve have led to a tepid decline that has seemed to stall at around 244,663 cases per day. Since November 9, weekly deaths have exceeded 30,000 and over 35,000 per week since November 23.

Long touted as the country that fared better than its European neighbors, Germany has now become the epicenter of the pandemic in Europe with more than 30,000 cases yesterday for a new one-day high. Deaths have also dramatically followed the surge. On December 15, there were around 800 deaths alone, and the seven-day average has seen more than 500 fatalities per day.

Given its experience in the spring with its health system intact, the government enacted the mildest lockdown during the winter surge, leaving shops, offices and factories open. This left the country vulnerable to the devastation being wrought by the pathogen. Christian Kleber, an emergency room physician from Dresden who is in charge of coordinating the redistribution of COVID patients across the region, told the Wall Street Journal, “Our hospitals are at the limit of what they can manage.” The health system is expected to reach capacity at the current pace of infections. In Hanau, Germany, bodies are being kept in metal shipping containers as morgues have reached capacity. The government has moved to impose “a harder” lockdown at least until January 10.

On Wednesday, the United States experienced its single worst day with 250,173 cases of COVID-19 and 3,561 fatalities. With 17.8 million cases, the death toll has rapidly reached 320,000. Yet, no effort is being employed to quell this deluge of death sweeping across the nation. The life-saving vaccines being ushered in as the panacea to the virus are now facing glitches in distribution. Several states have been told that they would be receiving fewer doses of the Pfizer vaccine next week, which means that states have to readjust plans to deliver the vaccines to their citizens.

Governor Gretchen Whitmer of Michigan complained, “Where are our doses? What is holding them up? There are millions of Pfizer vaccines, many right here in Portage, Michigan, that are waiting to be shipped, but the feds are slow-walking the process of getting addresses to Pfizer for some reason I cannot get an answer to.”

Meanwhile, California has seen an unprecedented surge in cases that has led to daily record highs and an announcement that Southern California’s intensive care beds are wholly occupied. Nearly 400 deaths were reported on Thursday, with over 60,000 new cases on Wednesday. There are more than 15,000 people in hospitals and over 3,000 in the ICUs. Across the state, fewer than 1,300 ICU beds remain open. Speaking to CNN, Dr. Brad Spellberg, chief medical officer at LA County and USC Medical Center, said, “We’re getting crushed. I’m not going to sugarcoat this. We are getting crushed.”

Despite a slow decline after the summer peaks, Mexico has seen a rapid climb in cases that has reached new highs. There have been close to 1.3 million reported cases and over 116,000 deaths. The seven-day moving average in fatalities has climbed close to 600 a day. However, these figures are known to be severely underestimated.

In an official survey conducted in Mexico City, Juan Rivera, the general director of the National Institute of Public Health, explained during a news conference that seroprevalence studies suggested that a quarter of Mexico’s population, around 31 million people, have been exposed. The blood tests that detected antibodies to the coronavirus were collected between August and November, which involved 9,400 households.

With cases soaring again, Mexico City will shut down all nonessential activities commencing this weekend until January 10. These measures are being driven as the hospital occupancy has exceeded 75 percent, and limited actions have done little to stop hospital admissions nor fatalities. Dr. Marta Patricia Mancilla, who works at Mexico City’s Ajusco Medio hospital, named as one of the few exclusively COVID-9 hospitals, said, “The worst is still to come. And unfortunately, it is going to catch us very tired.” The patient capacity runs at 122 percent, while the ICU is at 116 percent and emergency units at 100 percent. Additionally, almost 2,000 Mexican health care workers have thus far died from COVID.

Brazil has shown that the virus has little to do with seasonality. With its summer approaching, cases of COVID have reached their July highs. On Wednesday, it registered over 70,000 new cases. Daily deaths have followed in kind, reaching a one-day high of more than 1,000 just yesterday. This staggering figure was last reported on September 15. During the pandemic, there have been 7.16 million cases of COVID and 185,650 deaths in the country.

These figures do not include the number from São Paulo state, which has reported technical issues with uploading their numbers. São Paulo state, the nation’s most populous region, has been the epicenter of this wave. The government has thus far resisted issuing lockdowns or restrictions, which have contributed to this present crisis.

Brazil’s supreme court issued an order that imposed time limits on when bars and restaurants could serve customers. The court also noted that if individuals refused to take the vaccine, they could face sanctions or imposition on their liberties. At odds with the court, Jair Bolsonaro, Brazil’s fascistic president, has repeated that he refuses to take the vaccine and that ordinary citizens would not be required to do so.

Like in the United States, COVID has become the leading cause of death in the Americas. It now surpasses coronary heart disease as the number-one cause of death in Brazil, Chile, Ecuador and Panama. Latin America accounts for 48 percent of the COVID-19 deaths. The endemic poverty, crowded living conditions, and underfunded and fragmented health care systems have primarily contributed to these developments.

Carissa Etienne, the head of the Pan-American Health Organization, told NPR, “The many millions who rely on the informal economy for their livelihood didn’t have the option to stay home. And for people in marginalized settings and remote areas—like our indigenous communities and migrants—proper health care was often out of reach.”

South Korea and Japan, which had been held up as examples of employing strong public health measures, have been sidelined by the coronavirus’s sudden resurgence within their communities. South Korea has seen cases jump to over 1,000 per day, while in Japan, new cases reached a one-day high of more than 3,000 yesterday.

Still, on the deadliest day of its experience with the pandemic, South Korea has reported 22 deaths. But experience has shown that these developments can rapidly escalate. There are 12,209 active cases, and 242 are in serious or critical condition. The majority of these cases are located in the densely populated metropolitan area of Seoul. As the AP noted, “The viral resurgence came after months of pandemic fatigue, complacency and government efforts to breathe life into a sluggish economy ” (emphasis added). While the government is agonizing over placing restrictions in place that would impact more than 1.2 million businesses, the health ministry data indicated that the greater Seoul area’s critical care capacity is reaching its limit.

The Tokyo Metropolitan Government has raised its health care alert to the highest level as the number of new cases reached a single-day high. In the meantime, Japan’s Prime Minister Yoshihide Suga has apologized for attending a dinner with friends and celebrities while the country was seeing a surge in cases.

Masataka Inokuchi, the vice-chair of the Tokyo Medical Association, explained at a news conference attended by the Tokyo Governor Yurike Koike, “We fear a serious dysfunction of the medical system in two weeks, on December 31, if the number of new daily infections keeps growing at the current pace.”

According to the IMF’s latest projections, per capita growth in 170 out of 190 economies will be negative for 2020. According to the Brookings report from November, for the first time in 50 years, “the global consumer class will shrink.” Even more concerning, extreme global poverty is expected to rise for the first time in 20 years, pushing an additional 27 million, or a total of 115 million, into destitution. This is expected to rise to 150 million by 2021 due to economic contractions.

The present surge across the globe is a byproduct of lifting restrictions on commerce by every major nation whose economy faces stagnation. Yet, these actions are leading to mass infections and deaths. According to the World Bank, “the pandemic and global recession may cause over 1.4 percent of the world’s population to fall into extreme poverty.” Only the international working class has the means to address the pandemic and social misery being inflicted on the planet’s population.

More than 30,000 daily infections in Germany and war-like conditions in hospitals

Gregor Link

The effects of the COVID-19 pandemic are becoming more dramatic every day in Germany. After a new record death toll of 952 was reported on Wednesday, the number of those infected also reached a new all-time high on Thursday, exceeding the 30,000 mark for the first time. Across Germany, the positive test rate is currently around 12 percent—more than double the value that epidemiologists cite as the threshold beyond which the infection incidence runs out of control.

Refrigerated container for coronavirus dead at the main cemetery in Hanau (AP Photo/Michael Probst)]

Thursday, the Robert Koch Institute (RKI) announced just under 27,000 new infections, reported a further 3,500 cases from Baden-Württemberg, which had initially not been communicated “for technical reasons.” On Friday again more than 30,000 cases were reported. Compared to the previous week, the number of newly infected persons grew by 14 percent. According to Worldometer, another 767 people died of COVID-19 on Friday. This brought the number of coronavirus deaths in Germany to over 25,900. More than 1.46 million people have been infected with the virus since the outbreak of the pandemic.

The “80-plus age group” is particularly hard hit, accounting for 12.3 percent of infections. Reports of deadly mass outbreaks in old people’s homes are piling up from all over Germany, most recently in the district of Düren, where 30 cases of infection and two deaths were mourned after a St. Nicholas party.

“We know that the number of deaths and seriously ill people always lags about four to five weeks behind the infection figures,” World Medical Association President Frank Ulrich Montgomery told broadcaster n-tv yesterday. At the current death rate, this would mean between 30,000 and 35,000 additional deaths by mid-January. But the overloading of hospitals could lead to many more people dying: clinics all over Germany would have to decide who receives life-saving treatment and who does not, the physician said.

Conditions at German hospitals already resemble those in a war. Medical director Mathias Mengel from Saxony reported to news portal t-online that at Zittau hospital, several times in the past few days, “we had to decide who gets oxygen and who doesn’t.” Ingo Autenrieht, chief medical director of Heidelberg University Hospital, also told the press that nurses and doctors had “adjusted” to making such life-and-death decisions: “We haven’t experienced a situation like this in Heidelberg or anywhere else in Germany in the last 50, 60 years.”

Meanwhile, Germany’s leading university hospital, Berlin’s Charité, is considering transferring non-COVID patients to other cities for the first time. Berlin alone—where state education minister Sandra Scheeres (Social Democrat, SPD) is pushing particularly hard for schools to return to regular operations as soon as possible—reported 1,473 new cases and 30 deaths Thursday, a 31 percent increase on the previous week.

Almost 30 percent of all intensive care patients in the capital are COVID-19 sufferers, who increasingly have to be treated with ECMO machines, which temporarily take over the work of the heart and lungs. To do this, thick tubes are inserted into the veins of the patient’s legs to artificially circulate the blood and enrich it with oxygen. Of the 35 specialist machines at the Charité, only three were still available on Monday, Tagesspiegel reported. The newspaper quotes a COVID ward doctor saying, “We don’t have a single free place here at the moment ... Nobody is placed on the artificial lung anymore just because they are seriously ill.” “Hopeless cases” could “simply no longer be treated.”

Given the impending overload, the Charité had already turned to university hospitals in Dresden, Leipzig and Magdeburg for help. “But they need help there themselves at the moment,” writes Tagesspiegel. “Since the East German university hospitals are not available, [Charité vice-chairman] Ulrich Frei has now made calls throughout a 400-kilometre radius.” The emergency transfer of severe non-COVID cases to Lübeck, Kiel, Hanover, Göttingen is being discussed. At the beginning of the pandemic, Frei had declared the country was facing the “greatest medical challenge in the history of the Federal Republic of Germany.”

Throughout Germany, the virus is ravaging nursing homes. At the end of November, the state of Hesse reported that two-thirds of coronavirus deaths in the autumn were in nursing homes. The Süddeutsche Zeitung described a situation in Munich, where first staff, then more and more residents, tested positive in October. However, there was no separation of the infected and non-infected, so that the spread of the virus continued unhindered. A relative of an affected resident said, decisions impacting life and death were “going on here before a doctor even gets involved.”

The Munich Health Council and Bavarian Ministry of Health reacted dismissively to his open letter to politicians and the authorities warning of the “potentially lethal danger” in the home. It was supposedly impossible to implement safe distance rules for dementia patients, they said.

After almost a year of the pandemic, there is still no proper supply of protective equipment for nursing homes. The federal government’s grandiose announcement to supply homes with FFP2 protective masks has turned out to be a mockery. The Workers’ Welfare Association (AWO) in western Westphalia has received 30,000 masks from the federal government, but they consider them medically unsuitable and therefore cannot use them in their homes.

The government, which brought about these conditions with its profits-before-lives policy, expects the situation to worsen many times over in the coming weeks and months. “The next three months will be by far the toughest months in the entire course of the pandemic,” said Karl Lauterbach, the SPD’s health policy spokesman, in an interview with the daily Welt. Chancellery Minister Helge Braun (Christian Democrat, CDU) also threatened that the population would face three “particularly difficult months.” In the government’s view, tens of thousands of deaths are inevitable. According to Lauterbach, the current measures were “the maximum we can decide at the moment.”

How consciously the government prepared for mass deaths is glaringly evident in Hanau, Hesse. Mayor Claus Kaminsky (SPD) announced Thursday on Twitter that the city was using a “refrigerated container for coronavirus dead for the first time because the Hanau clinics are overloaded,” It was “good that we took precautions for this very early on,” Kaminsky said.

By “early precautions” the SPD politician does not mean taking timely measures to protect the population but making arrangements for the temporary storage of their bodies. According to a report in the Frankfurter Allgemeine Zeitung, the refrigerated container had been set up “as early as April.”

Opposition is growing among the population to the murderous policy that brought about the disaster by keeping businesses and schools open for months. “If they had taken the right measures early on, they would not need a refrigerated container, which they are apparently still proud of. It’s macabre. My sympathies go out to all the relatives,” commented Twitter user Tigerlutz on Kaminsky’s tweet.

U. Lancier writes, “‘early provisions made’—a bitter mockery for the relatives of the thousands who died too early. Early precautions would have been a hard lockdown after the end of the holiday season, with schools closed for at least three weeks. [What is being done now is] ‘The wrong thing, too little, too late’.”

Another adds, “A cynical statement and slap in the face of the relatives. Precaution would have been a timely lockdown and sensible schools’ policy. Instead, this decision has been delayed and protection in schools prevented.”

Numerous students, educators and parents express their anger that the federal and state governments continue to refuse to consistently shut schools and non-essential businesses.

“Day-care centres are still open in Berlin, not only for essential workers but also for parents who have a need. In my centre, several educators, children and parents are COVID-positive. I’m glad I’ve been able to keep my child out of it for months,” Jesse, a teacher in Berlin, wrote on Twitter.

Franziska from Mecklenburg-Western Pomerania criticises the fact that the state government there, made up of the SPD and CDU, also refuses to consistently close day-care centres and schools. “The day-care centres are open normally. There are still many children going to school. I think they should have closed everything until January 10, including schools and day-care centres. It’s all useless like this,” she writes in the Facebook group “School Strike.”

Marie-Luise from Brandenburg/Oberhavel, who is active in the same group, writes: “We have an incidence of 177—and rising. Despite the abolition of compulsory attendance since Monday, schools and day-care centres are still full. Graduating classes and special schools have compulsory attendance.” And Lisa M. explains, “In Potsdam, the incidence value is 193—yet the schools are full and the final year classes and special classes even have compulsory attendance. I’m so pissed off!”

Clemens from Munich, who is undertaking voluntary service in a day-care centre and is a member of the Action Committees for Safe Education network, told the WSWS, “The thousand coronavirus deaths per day are the tragic result of the criminal policies of the ruling class. The federal and state governments have known that it could come to this and have deliberately accepted it to be able to keep businesses open. To do that, they also had to keep schools and kindergartens open.”

“There are 10 children again today” in his kindergarten group. “Our protection amounts to wearing masks all the time—until recently they were FFP2 masks, but they are all gone. Now we only have disposable masks, which we can’t change regularly.”

On the political tasks facing workers and youth in this situation, Clemens said, “Chancellor [Angela] Merkel and other government politicians have made clear they want to keep our facilities open at all costs. The price for this policy is thousands of deaths, to which more will be added if the working class does not take action and form rank-and-file committees everywhere and fight for their demands based on a socialist perspective.”

One in five US prisoners has contracted COVID-19, 17,736 have died

Kate Randall

As the coronavirus pandemic continues to surge across the US bringing with it a wave of death, a forgotten section of the population is being especially ravaged: prisoners in state and federal prisons. The Marshall Project has been tracking inmate cases and deaths since mid-March.

Bars inside a prison [Credit: Robert Crow/vividcorvid - Fotolia]

The non-profit news organization, in coordination with the Associated Press, reports that by December 15 at least 276,107 people in prison had tested positive for the illness, a 10 percent increase over the week before, far outpacing the previous peak in early August. As testing for the virus is limited, and all cases are not reported, this number is undoubtedly much higher.

The following number of new cases were reported on the last week studied:

• California: nearly 6,000
• Federal Bureau of Prisons: more than 3,000
• Michigan and Pennsylvania: more than 2,000 each
• Arizona and Nevada: more than 1,000 each

These staggering figures show that the ruling elite’s policy of “herd immunity” is even more concentrated within prison walls, where prisoners are confined to close quarters and social distancing is nearly impossible. As with workers sent into auto, meat processing and other factories, the lives of prisoners are seen as expendable. Prisoners, moreover, are viewed as a drain on the resources of the capitalist state, which receives limited cash value from their incarceration.

Federal prisons have had 33,410 cases, more than any one state prison system, and 175 deaths, second only to Florida, which has seen 189. The number of federal cases has been boosted by the Trump administration’s pursuit of executing as many federal prisoners as possible before Joe Biden is to be sworn as president on January 20. Biden has said he will move to end federal executions.

The Department of Justice, under the direction of Attorney General William Barr, is on track to carry out 10 executions on Trump’s way out of office, more than have taken place over the previous three decades. Barr, who directed the Bureau of Prisons (BOP) last year to reinstate capital punishment for federal inmates after what had been an essential moratorium on federal executions, will leave his post before Christmas, washing his hands of the final three executions scheduled in January.

One of these inmates is Dustin John Higgs, 48, who is scheduled to be put to death on January 15 in connection with the kidnapping and killing of three women in Maryland in 1996. The BOP notified Higgs’s attorneys on Thursday that their client had tested positive for the coronavirus. The news comes amid prisoner concern about an exploding number of cases of the virus at the complex in Terre Haute, Indiana, where the only federal death row is housed.

Dustin John Higgs, contracted COVID December 17 [Source: change.org]

After the November 19 execution of federal prisoner Orlando Hall, 49, it was reported that eight prison employees who had taken part in his execution at the Terre Haute facility had contracted COVID-19. Despite this, five of these employees were scheduled to work during the executions of Brendon Bernard, 40, on December 12, and Alfred Bourgeois, 55, the following day.

Another federal inmate in Terre Haute, James Lee Wheeler, tested positive for the virus on November 17. He was evaluated by medical staff at the prison on November 25 for decreased oxygen saturation on November 15 and was transferred to a local hospital for further treatment.

James Lee Wheeler died December 7 [Source: TampaBay.com]

Wheeler had long-term, preexisting medical conditions placing him at increased risk for developing severe COVID-19 disease. On December 9, he was pronounced dead by hospital staff. Wheeler, 78, was serving a life sentence following convictions in Florida and Ohio for obstruction of justice, racketeering and drug charges.

James Frazier, 79, Ohio’s oldest death-row inmate, died November 19 from a likely case of coronavirus. He was convicted and sentenced to death in 2005 for the murder of Mary Stevenson, 49, of Toledo. One hundred eighteen Ohio prisoners have died due to COVID-19, according to the Marshall Project, the fourth largest death toll following Florida, the federal government and Texas. More than 8,000 Ohio inmates have been infected.

On November 14, 2017, authorities found Frazier in his cell at the Chillicothe Correction Institution following what doctors called multiple minor strokes, according to Frazier’s attorneys. He was later transferred to a local hospital.

James Frazier, died November 19 [Credit: Death Penalty Information Center]

Frazier’s attorneys filed a notice of insanity in Lucas County Common Pleas Court to stop his execution, scheduled for October 20, 2021. They said he suffered from dementia and had little idea where he was.

In addition to Higgs’s January 15 execution, there are three other federal executions scheduled before Inauguration Day, January 20.

Lisa Marie Montgomery, 52, is scheduled to be put to death January 12. Her December 8 execution was temporarily stayed after her attorneys contracted COVID-19, most likely from visiting her in prison, and could not prepare her clemency petition. US District Judge Randolph Moss signed a court order blocking the federal government from executing her before the end of the year.

Montgomery was convicted and sentenced to death for the 2007 strangling of a Missouri woman who was eight months pregnant and taking her unborn baby, who survived. Sandra Babcock, one of the lawyers representing Montgomery against Barr, said, “Mrs. Montgomery’s case presents compelling grounds for clemency, including her history as a victim of gang rape, incest and child sex trafficking, as well as her severe mental illness.”

If Montgomery’s execution does go forward, it would be the first federal execution of a woman in almost seven decades. Ethel and Julius Rosenberg were executed by electrocution on June 19, 1953. They were framed up and prosecuted at the height of the Cold War under the Espionage Act of 1917 on charges of conspiracy to commit espionage on behalf of the Soviet Union.

Cory Johnson, 52, is scheduled for execution January 14 for the 1992 killing of seven people as part of a drug trafficking conspiracy based in Richmond, Virginia. Johnson’s attorneys argue that he has an intellectual disability and needs to present evidence of this in court.

Since the US Supreme Court reinstated the death penalty in 1976 after a brief hiatus, the US has sent 1,529 people to their deaths, including 13 federal prisoners. These have included the mentally impaired, foreign nationals denied their consular rights, individuals sentenced to death for crimes committed while minors, and women.

On November 27, the Justice Department published a new regulation that permits the federal government to perform executions using any form of lethal injection “or by any other manner prescribed by the law of the state in which the sentence was imposed or which has been designated by a court” in accordance with federal death penalty statutes.

Methods of state killing in the 28 states that still have the death penalty on the books include lethal injection, electrocution, lethal gas, hanging and the firing squad.