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An Evaluation and Prediction on COVID-19 Pandemic Development in the U.S.

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The COVID-19 outbreak in the United States continues to worsen recently. From July 1 to 3, the number of new infections in the United States exceeded 50,000 per day, setting a record high. As of July 3, more than 132,000 people in the United States died of coronavirus, accounting for 24.8% of all COVID-19 deaths worldwide. This means that one out of every four COVID-19 deaths worldwide is American. In view of this, it is now necessary to make a mid-term basic judgment and prediction on the development of the pandemic in the United States.

Researchers at ANBOUND believe that although the U.S. economy and capital markets are now facing a multitude of problems, the main impact at the current stage is due to the pandemic. The impact of the pandemic on the U.S. economy is huge, and the capital market is affected by the development of the pandemic. In addition, another major issue of concern is the reaction of the U.S. Congress on the pandemic. If the pandemic continues, the U.S. Congress is bound to increase the appropriation to save the economy, and such appropriation under the modern monetary system is likely to influence and interfere with the interest rate policy of the Federal Reserve.

American society’s attitude towards the pandemic is sometimes inconceivable to Asians. CNN reported on July 2 that a cluster of infections had occurred in a bar near the Michigan State University campus. At least 152 confirmed cases are linked to the bar, according to Ingham Health Department spokeswoman Amanda Darche. The cases that were traced to the bar includes 128 primary cases and 24 secondary cases; secondary cases here refer to those infected by people who have been to the bar. American media reported that the bar that caused the mass infection was “Harper’s Restaurant & Brew Pub”, officially opened on June 12. Although signs to wear masks were posted in the bar, few of its patrons actually doing that. Photos posted on social media by some netizens showing that there was a long queue in front of the bar and no one was wearing a mask. After the incident, the local health authority has requested self-isolation of those who visited the bar between June 12 and June 20.

On July 1, Michigan Governor Gretchen Whitmer announced a ban on indoor bar service in most of the state. Several states, including Texas and California, have also ordered the bars to close. America’s top infectious disease expert, Anthony Fauci, has warned that people in bars are at great risk of infection during a “virus pandemic”. “Congregation at a bar, inside, is bad news. We really got to stop that right now,” he added.

Based on various pandemic information, researchers at ANBOUND concluded that although countries have different control policies in the face of the pandemic, the impact of the virus pandemic always exists, and this is especially true for the United States. The United States is a federal country, the power of social control lies in the state government, and each state government is different in government leadership, hence the extent of pandemic control is also different. From an objective point of view, the contribution of the scientific community in the United States to public policy is rather limited. The major contribution of the scientific community is in the research and development of pharmaceutical products. Therefore, based on our comprehensive prediction, it is estimated that the effective control of the pandemic in the United States will come when the vaccine development is completed and the vaccine is promoted and wildly applied. Judging by the timing, the fastest time for the vaccine to be available is around the summer of 2021. As for the United States’ reliance on effective public policy, governance power, and social control to limit the spread of the pandemic, that is highly unlikely. Therefore, the core issue of pandemic control in the United States has to be the development and application of vaccines.

On this basis, the outlook for the world economy around the summer of 2021 is highly uncertain. Overall, European economies are more confident and likely to remain stable. In addition to China, the situation in Asia will be more stable. China’s economy has been affected by both the pandemic and control policies. Excessively strict and unnecessary control measures may have negative effects and consequences. Therefore, it is expected that the Chinese economy will maintain a steady downward trend. The U.S. economy, due to the recurrence and continuation of the pandemic, is likely to stimulate the U.S. Congress to further implement the economic stimulus package. Chan Kung, the chief researcher at ANBOUND, predicts that the Federal Reserve will have no alternative but to accept negative interest rates if the future stimulus package from the U.S. Congress exceeds USD 5 trillion.

A negative interest rate in the U.S. would have a huge impact on the U.S. financial market and may even lead to a structural adjustment. In particular, the financial industry of the United States is based on the insurance industry, which is very sensitive to negative interest rates. Moreover, a Joe Biden victory in this year’s election would make it more likely for him to launch a new economic stimulus package in order to win the Democratic Party’s new political landscape. Whether this new stimulus package will be passed in the Congress, and whether it will exceed the USD 5 trillion, all these depend on the more conventional political attitude of the Republican Party.

Final analysis conclusion

The COVID-19 pandemic has become a major factor affecting the U.S. economy and capital markets. If the pandemic in the U.S. continues to flare up and worsen, the U.S. Congress might roll out economic stimulus totaling more than USD 5 trillion, and the Federal Reserve could very well implement negative interest rates.

Founder of Anbound Think Tank in 1993, Chan Kung is now ANBOUND Chief Researcher. Chan Kung is one of China’s renowned experts in information analysis. Most of Chan Kung‘s outstanding academic research activities are in economic information analysis, particularly in the area of public policy.

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The hegemony of knowledge and the new world order: U.S. and the rest of the world

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In today’s world, knowledge and technological advantages determine – to a large extent – differences in the management of international policy. The increase in a country’s intellectual power directly defines an increase in its economic power, thus changing its position in the international competition for dominance.

The power policy, first in the agricultural age and later in the industrial age, was characterised by military and then economic hegemony, while the power policy in the information age gradually reveals the characteristics of knowledge hegemony at both the scientific and intelligence levels.

The hegemony of knowledge in contemporary international relations manifests itself specifically as unequal exchange in international trade, exploitation of high-value information and various conditions related to technological production. Hence, we see the transfer of polluting industries from privileged to poor countries: energy-consuming and high-intensity activities.

Western culture and values are disseminated vigorously, through the so-called soft power in information and mass media, and take on obsessive and oppressively hypnopedic forms.

Developed countries have patents in the use of outer space, as well as in the development of deep sea resources and in the production of environmental resources that pollute, while developing countries can only sigh as they look at other’s oceans and satellites, which fly around, do reconnaissance activities and monitor them.

The resources of the great and deep seas – which should be shared by mankind as they belong to everybody like the air, the moon and the sun – are instead exploited by the developed countries. On the contrary, they freely and ‘democratically’ share with the wretched ones only the evil consequences of environmental pollution.

With specific reference to sanctions and armed interference in international relations, the technique of violent and conscious bullying is adopted: whoever is militarily stronger imposes the validity of their interests, also at legal level.

The root cause for generating knowledge hegemony lies in the polarisation of the intellectual status of the nation-State. Western developed countries have already crossed the threshold of an information society, while developing countries are still struggling to climb towards industrial civilisation from the most primitive and closed state of existence. Although developing countries hold most of the world’s natural and human resources (just think of Africa), they are far behind in science and technology. Just look at the continental histogram of the 207 Nobel Prizes in Physics from 1901 to 2017 (winners are counted by country of birth except for the Algerian Nobel Prize winner Claude Cohen-Tannoudji [1997], who was born when Algeria was a French territory):

Source: Nadua Antonelli <<Africana>> XXIII (2017) page 12

If they have no means to study, even the greatest and most brilliant brains cannot make discoveries or file patents, looking only at the sky and the earth.

About 80 per cent of science and technology staff and their achievements are concentrated in developed countries. The knowledge advantage gives developed countries the right to set the rules of the game and of communication for all global knowledge production and dissemination. In particular, the developed countries’ knowledge advantages in the military and high-tech media enable them to expand their influence on the civil and military fronts and achieve their strategic objectives.

Developing countries wander between traditional society, modern industrial civilisation and post-industrial civilisation, and are often challenged and oppressed by the third party’s hegemony of knowledge.

The new economy created by the information revolution is still a ‘rich-country phenomenon’, the core of what is called ‘advantage creation’, under the cover of ‘competitive advantage’, or rather: competitive towards those who cannot compete.

The country leading the information revolution is the United States, which is the biggest beneficiary of these achievements. The digital divide highlights the status of the US information superpower. In the global information sector, in 2000 the central processing unit production in the United States accounted for 92%, and software production for 86%.

IT (Information & Technology) investment in the United States was 41.5% of global investment, Microsoft’s Windows system accounted for 95% of global platform applications, while the US Internet users accounted for more than half of global Internet users, and 58% of all e-mail goes through US servers.

E-commerce is worth 75% of the global total and US commercial websites account for 90% of the planet.

Currently, there are almost three thousand large-scale databases in the world, 70% of which are in the United States. There are 13 top-level domain name servers in the world and 10 of them are located in the United States.

The above figures far exceed the share of US GDP, which is 28% of the world total. The United States is far ahead of all countries in the world, including the other developed countries. The leading position in information technology allows the United States to control the basics in the field of information with its strong economic and talent advantages, as well as to master the actual rights, and to set standards and formulate rules and regulations.

The status as cradle of the information revolution has brought enormous wealth and development benefits to the United States. Since the 1990s, the development of information technology and the rise of the related industry have become an accelerator of further economic advancement in the United States.

In the growth of US GDP – from 1994 (the beginning of the Internet) to 2000 – the share of the information industry in the value of the country’s total output has caused the economy to rise from 6.3% to 8.3%, and the contribution provided by the information industry development to the actual US economic growth is estimated at 30%.

At the beginning of the 21st century, the United States – with its strong national-global power and the relative hegemony of knowledge/information – was already ready to build a new world order.

Knowledge is also the soul of military hegemony. Since the 1990s the United States (after the USSR’s demise) has taken advantage of its absolute leadership in information technology to vigorously promote a new military revolution and equip its armed forces with a large number of modern sophisticated weapons, especially cyber weapons: an overwhelming advantage in the conventional field, clearly overtaking the Third World, as well as its Western allies.

The US superiority in equipment ranges from one to two generations (i.e. from 15 to 30 years) over developing countries and from 0.5 to one generation over allies. All this has established the hegemonic status of the United States as the world’s number one military power.

Gulf Wars II (1991) and III (2003) (the first was the Iran-Iraq War in 1980-88), the Kosovo War (1999), the Afghanistan War (2001- still ongoing), and the Iraq War (2003-2011) were four localised wars that the United States fought to establish a new world order after the Cold War. During those events, the US hegemony was strengthened on an unprecedented scale and its attempt to establish a new order made substantial progress.

Moreover, backed by strong military advantages (scattering the planet with its own bases and outposts), as well as economic and technological advantages, those events ensured that the United States had and still has a leading position in the world, thus making the White House a planner and defender of the new world order. (1. continued)

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Hardened US and Iranian positions question efficacy of parties’ negotiating tactics

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The United States and Iran seem to be hardening their positions in advance of a resumption of negotiations to revive a 2015 international nuclear agreement once Iranian President-elect Ebrahim Raisi takes office in early August.

Concern among supporters of the agreement to curb Iran’s nuclear program which former US President Donald J. Trump abandoned in 2018 may be premature but do raise questions about the efficacy of the negotiating tactics of both parties.

These tactics include the Biden administration’s framing of the negotiations exclusively in terms of the concerns of the West and its Middle Eastern allies rather than also as they relate to Iranian fears, a failure by both the United States and Iran to acknowledge that lifting sanctions is a complex process that needs to be taken into account in negotiations, and an Iranian refusal to clarify on what terms the Islamic republic may be willing to discuss non-nuclear issues once the nuclear agreement has been revived.

The differences in the negotiations between the United States and Iran are likely to be accentuated if and when the talks resume, particularly concerning the mechanics of lifting sanctions.

“The challenges facing the JCPOA negotiations are a really important example of how a failed experience of sanctions relief, as we had in Iran between the Obama and Trump admins, can cast a shadow over diplomacy for years to come, making it harder to secure US interests,” said Iran analyst Esfandyar Batmanghelidj referring to the nuclear accord, the Joint Comprehensive Plan of Action, by its initials.

The Biden administration may be heeding Mr. Batmangheldij’s notion that crafting sanctions needs to take into account the fact that lifting them can be as difficult as imposing them as it considers more targeted additional punitive measures against Iran. Those measures would aim to hamper Iran’s evolving capabilities for precision strikes using drones and guided missiles by focusing on the providers of parts for those weapon systems, particularly engines and microelectronics.

To be sure, there is no discernable appetite in either Washington or Tehran to adjust negotiation tactics and amend their underlying assumptions. It would constitute a gargantuan, if not impossible challenge given the political environment in both capitals. That was reflected in recent days in Iranian and US statements.

Iranian Spiritual Leader Ayatollah Ali Khamenei suggested that agreement on the revival of the nuclear accord was stumbling over a US demand that it goes beyond the terms of the original accord by linking it to an Iranian willingness to discuss its ballistic missiles program and support for Arab proxies.

In a speech to the cabinet of outgoing President Hassan Rouhani, he asserted that the West “will try to hit us everywhere they can and if they don’t hit us in some place, it’s because they can’t… On paper and in their promises, they say they’ll remove sanctions. But they haven’t lifted them and won’t lift them. They impose conditions…to say in future Iran violated the agreement and there is no agreement” if Iran refuses to discuss regional issues or ballistic missiles.

Iranian officials insist that nothing can be discussed at this stage but a return by both countries to the nuclear accord as is. Officials, distrustful of US intentions, have hinted that an unconditional and verified return to the status quo ante may help open the door to talks on missiles and proxies provided this would involve not only Iranian actions and programs but also those of America’s allies.

Mr. Khamenei’s remarks seemed to bolster suggestions that once in office Mr. Raisi would seek to turn the table on the Biden administration by insisting on stricter verification and US implementation of its part of a revived agreement.

To achieve this, Iran is expected to demand the lifting of all rather than some sanctions imposed or extended by the Trump administration; verification of the lifting;  guarantees that the lifting of sanctions is irreversible, possibly by making any future American withdrawal from the deal contingent on approval by the United Nations Security Council; and iron-clad provisions to ensure that obstacles to Iranian trade are removed, including the country’s unfettered access to the international financial system and the country’s overseas accounts.

Mr. Khamenei’s remarks and Mr. Raisi’s anticipated harder line was echoed in warnings by US officials that the ascendancy of the new president would not get Iran a better deal. The officials cautioned further that there could be a point soon at which it would no longer be worth returning to because Iran’s nuclear program would have advanced to the point where the limitations imposed by the agreement wouldn’t produce the intended minimum one year ‘breakout time’ to produce enough enriched uranium for a bomb.

“We are committed to diplomacy, but this process cannot go on indefinitely. At some point, the gains achieved by the JCPOA (Joint Comprehensive Plan of Action) cannot be fully recovered by a return to the JCPOA if Iran continues the activities that it’s undertaken with regard to its nuclear program…The ball remains in Iran’s court, and we will see if they’re prepared to make the decisions necessary to come back into compliance,” US Secretary Antony Blinken said this week on a visit to Kuwait.

Another US official suggested that the United States and Iran could descend into a tug-of-war on who has the longer breath and who blinks first. It’s a war that so far has not produced expected results for the United States and in which Iran has paid a heavy price for standing its ground.

The official said that a breakdown in talks could “look a lot like the dual-track strategy of the past—sanctions pressure, other forms of pressure, and a persistent offer of negotiations. It will be a question of how long it takes the Iranians to come to the idea they will not wait us out.”

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Wendy Sherman’s China visit takes a terrible for the US turn

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Photo: Miller Center/ flickr

US Deputy Secretary of State, Wendy Sherman, had high hopes for the meeting in China. At first, the Chinese side did not agree to hold the meeting at all. The reaction had obvious reasons: Antony Blinken’s fiasco in Alaska left the Chinese disrespected and visibly irritated. This is not why they travelled all the way.

So then the State Department had the idea of sending Wendy Sherman instead. The US government actually needs China more than China needs the US. Sherman was in China to actually prepare the ground for Biden and a meeting between the two presidents, expecting a red carpet roll for Biden as if it’s still the 2000s — the time when it didn’t matter how the US behaved. Things did not go as expected.

Instead of red carpet talk, Sherman heard Dua Lipa’s “I got new rules”. 

That’s right — the Chinese side outlined three bottom lines warning the US to respect its system, development and sovereignty and territorial integrity. In other words, China wants to be left alone.

The bottom lines were not phrased as red lines. This was not a military conflict warning. This was China’s message that if any future dialogue was to take place, China needs to be left alone. China accused the US of creating an “imaginary enemy”. I have written about it before — the US is looking for a new Cold War but it doesn’t know how to start and the problem is that the other side actually holds all the cards

That’s why the US relies on good old militarism with an expansion into the Indo-Pacific, while aligning everyone against China but expecting the red carpet and wanting all else in the financial and economic domains to stay the same. The problem is that the US can no longer sell this because there are no buyers. Europeans also don’t want to play along.

The headlines on the meeting in the US press are less flattering than usual. If the US is serious about China policy it has to be prepared to listen to much more of that in the future. And perhaps to, yes, sit down and be humble.

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