International Forecaster Weekly


The debts are so large, the lack of “dollars” so big, that they have no choice but to do all this madness. But the fact is that the minute they don’t, the WORLD markets crash.

Bob Rinear | February 15, 2020

World trade is a wonderful thing. There’s been trade between continents and nations for thousands of years, creating better societies, and better life for all. But there comes a time, when things you don’t think about, should maybe NOT be outsourced.

The Chinese corona-virus has awoken many people to the fact that supply chains are going to be disrupted. China has locked down 400 million people. Factories are down. Even when China demanded that 200 people return to work at one particular factory, the officials met them at the gates and quarantined them all.

But usually, the first thing that people think about is “okay, I might not be able to get that cheap auto part for a while.” Or, a manager at a Walmart might think “how am I going to stock these shelves, with all shipments out of China shut down?

Auto makers are shutting down production lines, because they have no parts. Airlines are laying off flight crews, and suspending airplane orders. Shipping companies, especially sea-freight, are sitting idle, and the Baltic dry index is at historical lows.

For the most part, ( if of course this virus doesn’t turn into a total global pandemic) most of this is simply a “bother.” You can always try to “do without” what you wanted, until all this dies down and things get back to normal. But for many thousands, this sort of shut down is life changing. They might not have the time to wait this out. What about them?

Consider this: About 60 percent of factories manufacturing drug ingredients and finished medicines for U.S. patients are located overseas with China and India accounting for 40 percent of them.

What happens if you’re one of the millions of people that need a constant supply of life saving drugs, but unfortunately they’re produced in China?? If this shut down lasts considerably longer than we were immediately told, is the loss of the Chinese supply of these drugs, going to be offset by imports from Other countries? Don’t bet on it.

We’ve relied on “just in time” supply chains for so long, there’s no great back-stock of millions of items. That includes medicines. Even if they tried to create a “work around,” there could be a significant gap between when there’s no supply left, and when new supply comes on line.

Should people be worried? Maybe worried isn’t the right word yet, but if I was a person that needed maintenance medicine to keep myself alive, I’d certainly be considering asking the pharmacists where else I could find my med’s and I’d be asking my doctor for prescriptions to “stock pile” what’s available right now.

On top of the supply of lifesaving medicines being interrupted, a viral shut down like this also keeps our regulators out of Chinese factories, the very factories that have horrible manufacturing safety records.

During the last 23 months, the FDA has had to announce more than 50 recalls of blood pressure medications because the active ingredient valsartan contained jet-fuel contaminants estimated to cause cancer in one out of every 8,000 pill takers. Who supplies it? China.

The FDA’s Janet Woodcock advised that it’s less risky to take the contaminated pills than to stop taking blood pressure medication altogether. Holy crap! Patients shouldn’t have to choose between not taking their stroke reducing medicine, or taking medicine that might be contaminated with friggen jet fuel.

In 2008, a contaminated blood thinner from China, heparin, killed 81 American patients. Heparin is made from the mucous membranes of pig intestines. In China, slaughtered pigs are often cooked in unregulated family workspaces to begin the process.

Think about that. Family kitchens with no oversight process the pig guts and send the resulting goo to the pharma company that is seriously unregulated and they turn it into high priced medicines for US consumption.

Now, because of Corona virus, virtually all our FDA inspectors are out of the Country. Even if they restart production, it’s going to be “questionable” how good the quality is.

I’m not trying to fear monger here folks, this is a fact. For the insane prices we pay for medicines here in the US, it should be built in state of the art factories, here in the states.

This is something that’s been brewing for years, and now it’s hit home. I pray that this virus gets contained, and things get back to normal, but I’m not hopeful this prayer will be answered.

Moving along, people ask me “how on earth can the market keep moving higher, when it’s clear that corona virus is disrupting economies around the world?”

I could give the standard BS, and say that “well, these sort of things are usually short lived and the market is looking towards that.” That’s the kind of baloney that Wall Street shills spew.

The real reason is considerably darker. What choice do they have?? For years on end the central banks have created QE programs, stimulus programs of every type, printed trillions of dollars, had the foreign CB’s buy up stocks, and for the past few months, been providing “liquidity” to the tune of 50 - 100 billion a night in Repo’s ( overnight and longer term) just to keep the wheels from coming off.

Remember folks they started Repo operations long before this virus scare. Well, you don’t do 100 billion a night if things were good to start with. That’s not good, that’s last ditch resort style stuff.

So if you had to do all that to keep the plates in the air BEFORE the virus scare, the very virus complications that are taking GDP out of most of the developed nations, what would happen if they let on that the virus is worse than truly thought? How bad would the global crash be if they let things truly correct?

I felt strongly that the Central banks of the world were going to let markets correct, and blame the virus on it. But so far they have put their nose to the grindstone and ‘bought up every dip”. In some respects it’s even more blatant than before the virus news.

Could it be that they’re pushing this as hard as they can, so that as more and more bad news comes out, they’ve got headroom built in? Could it be that they’d rather see the market fall from 30K to 20K, rather than 20K to 10k?

Don’t forget, these central banks are desperate. You don’t take rates negative, and pump hundreds of billions a month in a “normal” marketplace/economy. The debts are so large, the lack of “dollars” so big, that they have no choice but to do all this madness. But the fact is that the minute they don’t, the WORLD markets crash.

So that’s where we’re at. They cannot stop or we blow up. Now with the virus it’s worse. Think about it like this: For 100 years we’ve been told we need the Feds. If we crash, while the Central banks are in control of the money, after the crash, the chant will be “what do we need them for? Hang em!”

They can’t have that, and so, they print and pray. What a way to run the world.