China, after reporting no new infections on March 19, said the virus had been contained. Since then, Beijing has been reporting dozens of new cases each day but has maintained that virtually all of them were "imported" -- in other words, the infected were individuals arriving from other countries.

Of the very few in-country transmissions, most, Beijing maintained, were transmissions from the imported cases.

China's official numbers of deaths and new infections, however, must be bogus. Chinese officials are taking actions that are, as a practical matter, inconsistent with the no-new-infection reports.

For instance, on March 27 Beijing closed all theaters nationwide, after re-opening them just the previous week.

In Shanghai, tourist attractions that had just resumed operations were shut again. For instance, the municipality re-closed the observation deck of the Shanghai Tower, the tallest building in China, and the nearby Oriental Pearl Tower. The Jin Mao Tower is now shuttered "to further strengthen pandemic prevention and control." Madame Tussauds, the Shanghai Ocean Aquarium, and the Shanghai Haichang Ocean Park are now dark, along with the indoor portions of another 25 attractions.

Shanghai Disneyland? "Temporarily Closed Until Further Notice."

Shanghai is not the only metropolis turning out the lights. In Chengdu, karaoke bars and internet cafes were also shut just days after Sichuan province opened up all entertainment venues.

Fuyang in Anhui province ordered the closure of "entertainment spots" and indoor swimming pools. Henan province locked down internet cafes.

Henan even quarantined an entire area, Jia county, as doctors there tested positive for the bug.

On March 31, ESPN reported that the Chinese central government had delayed the resumption of team sports.

The nationwide university-entrance exams, the gaokao, have been postponed a month, to July.

The regime has also not rescheduled its premier political events, the annual meetings of the National People's Congress and the Chinese People's Political Consultative Conference, both originally scheduled for early March.

Finally, the authorities in Jiangxi province are not allowing people from next-door Hubei to enter, indicating they do not believe the epidemic in that disease-ridden province is over.

Does any of this matter? It does: Xi Jinping thinks he should rule the planet.

"China, the country where the virus first appeared and claimed its first several thousand lives, is now using the global spread of the disease to bolster an increasingly vocal, assertive bid for global leadership that is exacerbating a yearslong conflict with the U.S.," the Wall Street Journal wrote on April 1.

As the Communist Party's Global Times on March 30 triumphantly put it, "COVID-19 Blunders Signal End of 'American Century.'"

To push America aside and seize global leadership, China got Tedros Adhanom Ghebreyesus, the director-general of the World Health Organization (WHO), to say that China's response to the coronavirus showed the "superiority of the Chinese system and this experience is worthy of emulation by other countries." Then Beijing set about making a big show of "donating" medical equipment and diagnostic kits, most notably to stricken Europe.

Finally, Xi Jinping, beginning around the first week of February, forced China back to work to demonstrate that China had ended the epidemic.

None of these showy displays will convince anyone, however, if the virus ravages China again. Unfortunately for Xi, that is what is happening: people in China are re-infecting each other. For instance, in industrial Dongguan in southern Guangdong province, workers returning to their jobsites have been carrying the coronavirus, and this has forced health officials to quarantine other workers. China's leader can jump-start the economy or throttle the coronavirus, but he cannot do both at the same time.

When the second wave of coronavirus infections hits China hard, Xi Jinping's boasts about the superiority of Chinese communism will begin to sound hollow, absurd even.

Xi's initial policies turned a local outbreak into a pandemic, and now they are making even more people sick and forcing China into another pit of disease. China's inaccurate diagnostic kits and substandard protective gear donated around the world along with the new infections will show the truth: communism is incompetent if not downright malign.

Incompetent and malign communism in turn means Xi's predicted decline of America will again have to be pushed back to another day.

China can lie with statistics, but the virus gets the last word. "Victory" over both COVID-19 and the United States is still far out of sight.

Speaking at a White House news conference on Thursday, Treasury Secretary Steven Mnuchin said energy companies squeezed by the oil-price war can turn to the Federal Reserve’s lending facilities for aid but won’t get direct loans from his department.

“I have very limited ability to do direct loans out of the Treasury,” he said, suggesting that distressed shale companies should instead beg the Fed.

As Bloomberg notes, the $2.2 trillion coronavirus-related economic package authorizes the secretary to provide loans and grants to passenger airlines, cargo airlines, contractors and companies important to national security, Mnuchin said. Other companies must turn to the Fed, which is authorized to inject $4 trillion into the U.S. economy through various lending facilities approved by Congress.

"Our expectation is the energy companies, like all our other companies, will be able to participate in broad-based facilities, whether it’s the corporate facility or whether it’s the main street facility, but not direct lending out of the Treasury,” he said, leaving the Fed as the only option.

And now we look forward to the populist backlash when a line of insolvent shale CEOs forms outside the Marriner Eccles all begging to have their junk bonds taken out at par, and refinance with a Fed loan yielding, well, nothing and ideally forgiveable if the new round of cheap debt manages to bankrupt Saudi Arabia as the price of oil goes negative.

By the end of March 2020, the global framework had changed sufficiently to become — behind the headlines about COVID-19 — about which system and ideology would triumph in the decades after the watershed. That meant a race by each of the major antagonists to determine how quickly national productivity could be resumed.

Even so, the failure of most major societies, including the PRC, to prepare for health pandemics, natural disasters, and associated contagions of fear was a significant function of the transformed realities of the “globalist”-dominated political structures over the earlier lessons of national self-reliance. I made this point in a report in Defense & Foreign Affairs Special Analysis on November 24, 2008:

The unintended, or unforeseen, consequences of economic dislocation — as this writer has repeatedly noted — can be expected to lead to a rise in globalized (or at least regionalized) pandemic health challenges at a time when societies are weakened. These will lead to wealthier societies becoming more nationalistic and isolated, in some respects, merely to protect themselves. Pandemics will be matched by similar anomic social responses, including rising crime, of which the new era of maritime piracy is merely one aspect

Indeed, it is clear that the best avenue which nation-states can take is one marked by gaining as much control over their own destinies as possible. That requires a growing focus on domestic food self-sufficiency, and domestic market bases for manufactured goods and services. In other words: a return to a sense of the nation. The age of globalization is ending; it was a brief window in which the technologies which were created to fight the Cold War became the technologies of global social integration. Now, again, the luxury of internationalism is ending, and survival is based around the extended clan: the nation.

It was a year later that the global H1N1 pandemic emerged, fortunately without triggering the associated fear pandemic which acted as a force multiplier to the impact of the 2019-20 COVID-19 epidemic.

By 2020, a dozen years later, the transformed strategic landscape meant that information dominance (ID) warfare was far more enabled, particularly as social media evolved as a conduit for mass mobilization to force government actions in Western societies. So there was a general transformation in the social and technological context which prevailed when the panic arose around COVID-19.

But, in order to gain the post-epidemic political high ground, the PRC was first to “declare victory” in managing the COVID-19 epidemic and to send its population back to work, despite the reality of evidence which defied the national statistics on the continuing levels of contagion in the PRC. However, it was clear that the epidemic, having its origins in Wuhan in the PRC, would peak first and begin to recover first. Still, it was the degree of top-down control which PRC Pres. Xi Jinping enjoyed — in contrast to Western heads of government — which enabled the PRC to “declare victory”, and to resume his offensive against the West in a now fairly blatant fashion.

Even so, it was clear that the overall nature of the restructured strategic balance would be less affected by a few weeks (or even months) in the battle to restart economic activity than by underlying fundamentals in systems. Meanwhile, as the information dominance (ID) wars between the PRC and (particularly) the US ramped up, both sides were careful to ensure that the risk of actual physical challenge was minimized.

What were some of the fundamental immediate outcomes and questions raised by the 2020 Fear Pandemic?

1. The global economy and the economies of most states have been dramatically weakened, and they will remain relatively weakened and transformed for some years; in many cases for decades. This means that economic deprivation will reach more pervasively down into the mass of society, reversing the trend of the past seven decades. It will exacerbate the polarization of societies, but seems likely to push the trend toward forms of nationalism more than it will reinforce the ideology of globalism;

2. The power of central governments has been dramatically increased, and the rights and freedoms of individuals constrained. By late March 2020, the situation in most Western societies had approached a quasi-martial law environment, with little social resistance;

3. Funding for R&D, national security, and consumer spending will decline, further exacerbated by the reduction in core size/wealth of most populations in advanced economies. The question is whether the limitation in wealth will exacerbate or constrain inflammatory populism and social action;

4. The role of global bodies has been weakened, as have alliances. This will lead to a rethinking of alliance structures and how to manage them. It will, even if only for reasons of fiscal constraints, lead to an increasing momentum toward the bilateralization of trade, even to the point, once again of thinking in terms of structured barter or counter-trade dealings;

5. The reach of formal military structures will be inhibited by funding, and will this open seams in the global power framework? Will it allow space for more independent, regional actions?;

6. While the Communist Party of China (CPC) probably has the strength to enforce control over the People's Republic of China (PRC), will the European Union (EU) have sufficient cohesion to enforce control over its member states? If the EU cannot "hold it together", would this create a space for Turkey to revive its neo-Ottomanist expansions in the Eastern Mediterranean and Balkans? Did the United Kingdom escape from the EU just in time to preserve its economic base? Did the EU’s poor handling of the crisis end forever the chance of bringing Serbia into the Union? And what will this new dynamic do for the encouragement of separate geopolitical alignments, such as the creation of the Three Seas Initiative as a potentially viable successor to part of the EU? Can Three Seas gain traction if Serbia is excluded, given its regional hub importance for the north-south infrastructural needs of the Alliance?;

7. What skills will be necessary in the post-2020 environment? Has the economy sobered enough to embrace the restoration of practical skills training instead of ideological education which has no market, while an impetus toward revived domestic manufacturing (rather than foreign-sourced manufacturing) will see significant demand for trained personnel?;

8. There was a widespread belief that the crisis had caused a collapse in petroleum and gas prices to the point where the US domestic shale industry would be forced from the marketplace, re-opening the US to the need for imported energy. But this is likely both untrue and irrelevant, and the US would remain considerably less vulnerable to energy exposure than the PRC;

9. The PRC would continue to see extreme vulnerability to food and water shortages, which can only be ameliorated by (a) dependence on imported food and agricultural products, most of which would need to come from the United States (given that other suppliers cannot meet the demand), and (b) reduction in the lifestyles and numbers of the PRC population, a factor which could have significant social-political ramifications;

10. The longer the constraints on societies imposed by the crisis, the more pro-found were the likely post-crisis attitude changes likely to be. In other words, if the crisis lingered in various forms through 2020, it was likely that the year would be seen by society and historians as a breakpoint equivalent to the world wars of the 20th Century;

11. Nowhere in the world have we seen the development of economic theories or approaches to managing societies in decline in terms of economics as well as in terms of the downward transformation of market size and demand. Studies of recent-term lessons from Japan, Russia, and Germany would be helpful, even though these examples all predicated their economic thinking — despite market size decline — on growth in economic opportunity, but with notable shortcomings;

12. Africa, which had moved from a Continent gradually modernizing within the framework of a Western model to one dependent almost solely on the PRC, was likely to be left in an almost ruinous situation by late 2020 and beyond. African societies would themselves be forced to evolve new economic models. There was a likelihood that the US would strongly move, in the post-crisis period, to strengthening its dominance in the Americas (where the PRC, in particular, had built a strong presence), and also in Central Asia, as a means of providing an alternate path in the Eurasian Silk Road complex.

The COVID-19 pandemic will do little to impact the demographic trends in global population numbers. The trend toward population decline was set in place in the second half of the 20th Century and is only now becoming evident. Similarly, the disruption to the global economy also began before the COVID-19 crisis, largely as a result of the global demographic transformation, but the 2020 crisis became an iconic breakpoint.

The post-COVID-19 world would thus be markedly different, structurally, than the world which preceded it. But most significantly, the perception of that "new" world would have changed, ensuring that a linear extrapolation of older remedies or progressions of earlier thinking would no longer be acceptable.

It is important to stress that the two underlying strategic trends impacting the US-PRC competition had begun well before the 2020 pandemic scares. The PRC economy had been essentially in decline for several years, disguised by ongoing state-sponsored investments in infrastructure projects, which boosted the appearance of growth in the gross domestic product (GDP). Moreover, the PRC’s water shortage and quality problems had reached almost panic levels over that same timeframe.

In a talk in Perth, Western Australia, on October 23, 2019, I noted:

[The PRC] has almost 20 percent (18.4 percent) of the world’s population, and yet only seven percent of its water, and of that water some 25 percent, at least [as the PRC Government acknowledges], is polluted, along with much of its agricultural water table [to a far greater degree than the PRC Govt. acknowledges]. And the problem is getting worse. The great water source, the aquifers flowing from the melting snows of the Tien Shan Mountain range in Central Asia, is reducing for the moment.

The result of this, and the fact that Chinese agriculture has not modernized to any great degree, is that the People’s Republic of China is perhaps more strategically dependent on imported food than any great power since Rome. And Rome, arguably, collapsed, finally, for that very reason: its foreign sources of food became less dependable. The PRC Bureau of Statistics in the 1980s recorded that there were some 50,000 rivers in mainland China. But by 2017, there were only some 23,000. Beijing, serviced by the so-called “Three Gorges Dam”, recorded in 2017 that 39.9 percent of its water was so polluted as to be unusable. Tianjin, a principal port city of the north (and with a population of 15-million), had only 4.9 percent of its water in a potable state.

The growing urbanization of the constituent populations of the PRC have made the food and water crises more and more urgent. Urban populations use far more water than rural societies. They also demand more water-intensive food, such as pork and beef, especially as the city-dwellers become more prosperous. And the PRC’s urbanization rate continues apace: by the end of 2017, some 58.52 percent of its population was urbanized, compared with only 17.92 percent in 1978.

You can see where this is going. And we have not even touched on the impact of air quality on health in the PRC, or the fact that urban-related diseases, such as diabetes, are rising at a higher rate than in other industrial economies; or the fact that a rapidly-aging population is transforming the economic viability of the state.

And by late 2019, it became clear that the PRC was unable to continue the pursuit of military equivalence with the US. Minnie Chan, writing in The South China Morning Post on November 28, 2019, noted that the PRC Government had canceled plans for the People’s Liberation Army-Navy (PLAN) to build two nuclear-power very large aircraft carriers to compare with the capability of US carriers. The PLAN has two carriers afloat with two more abuilding; all conventionally-powered. The reasons for the cancelations of the prestige super-carrier program were cited as “technical challenges and high costs”.

The PRC has significant technologies which had briefly leapfrogged the US, particularly in the areas of hypersonic weapons and space, but belatedly a more resilient US economy was beginning to redress the years of neglect by all US presidents between Pres. Ronald Reagan (1981-89) and Pres. Donald Trump (2017- ). The US was slowly beginning to compensate for the sense of smugness and hubris which pervaded its global thinking after the end of the Cold War in 1990.

But the US had, along with most European powers, subcontracted most of its manufacturing to the PRC in the post-Cold War era, and the COVID-19 epidemic — and the US-PRC “trade war” which immediately preceded it (and which was likely to resume significantly in late 2020) — saw the extent of global dependence on mainland China factories. Beijing was counting on this dependence to restart its economic push in the second quarter of 2020.

But will that manufacturing/export revival be sufficient to restart the PRC economy, which was essentially already hollowed out?

And was the US (and Western) dependence on the PRC manufacturing sector likely to be the same as pre-COVID-19? Unlikely, given the reality that global demand would have declined substantially for at least the remainder of 2020 because of the economic impact of the crisis, and because a number of efforts to restore domestic manufacturing of key products had already begun in the US, Canada, Australia, the UK, and the like.

Moreover, the weakness of the PRC position, economically, seems to be borne out by the understanding that it had made dramatic cuts in the first quarter of 2020 to its investment in its Belt & Road Initiative (BRI) global supply chain. BRI had, in its origins, been conceived merely as a material and transactional form of maoist globalist ideology; a way to bind foreign states to the PRC as “tributary” states and to provide the PRC with its resource needs and markets. But most of the BRI contracts and loans to foreign states had not been calculated on a realistic market basis.

Reports from Beijing indicated that funding for BRI projects had dropped in early 2020 by some 80 percent over the same period a year earlier. But some of these cuts were already well underway by the time the COVID-19 crisis struck.

The Hong Kong-based newspaper, The South China Morning Post, reported on October 10, 2019, that investment in BRI had begun to drop in 2018. It noted: "The value of new projects across 61 countries fell 13 percent to US$126-billion in 2018 [compared with the previous year], with the figure falling further in 2019." In fact, it said that investment had fallen a further 6.7 percent in the seven months leading up to August 2019, and existing contracts were reduced by 4.2 percent in the first eight months of 2019.

The Post article continued: “[I]n the first half of 2019, China’s investment and construction activity around the world plunged by over 50 percent compared to the first half of 2018, while new projects under the belt and road plan dropped sharply, according to a report published in July by Derek Scissors, resident scholar at the China Global Investment Tracker from the American Enterprise Institute. Scissors said Chinese SOEs were still moving car and steel capacity overseas and building new motorways and cement plants in developing economies, but that is now “on a smaller scale” compared to the 2016 investment peak.”

The cutbacks were not only caused by Beijing. By late 2019 and early 2020, a significant number of major programs in the BRI which had received commitments from foreign countries were canceled or scaled-back. These were particularly evident in Pakistan (which has a major strategic need to depend on Beijing), Malaysia, Myanmar, Bangladesh, and Sierra Leone. The arrival of the new Government in Ethiopia in April 2018 had already seen that country sour on involvement with new BRI projects.

To a degree, all this decline in the PRC’s economic reach was likely to see the PRC attempt to regain global market share by dumping of goods onto the global marketplace in a bid to ensure that nationalistically-oriented commitments in the US, Europe, Australia, and the like did not attempt to rebuild their own manufacturing sectors. So the response by client states to PRC attempts to recapture markets and prevent the rise of national or sovereign independence would be a measure as to how much Western leaders learned from the crisis period of early 2020.

For this reason, strategically, it was critical for the Communist Party of China (CPC) to ensure that US Pres. Donald Trump was not re-elected to the US Presidency on November 3, 2020, and that the Democratic Party in the US would strengthen its position in the US Congress. As a result, the CPC’s information dominance warfare against the US was geared specifically toward the downfall of Pres. Trump, and in this it sought to enlist the support of the anti-Trump sections of the US polity. There were clearly some elements of the US political community which were prepared to align with Beijing — albeit not overtly — in order to ensure the removal of Donald Trump and the ascendance of Democratic Party presumed candidate Joe Biden.

So the US elections would become the next major breakpoint in the now overt US-PRC war.

That said, it wasn't all bad on Friday - with some business owners such as small business owner Kyle Stewart, who told Bloomberg that the process was "surprisingly seamless" when he applied for a loan to keep his batting-cage and baseball training business afloat.

After spending two hours gathering the payroll and business information required and completing the Paycheck Protection Program application Thursday night, Kyle found uploading the form to the bank’s portal Friday morning was “surprisingly seamless” and automated.

After San Francisco announced a shelter-in-place order on March 16, Stewart told his five hourly workers he wouldn’t be able to pay them going forward. The timing couldn’t have been worse, as his company makes 60% of its profit in the month of March ahead of the baseball season. He’s hoping the loan will help keep them on until the business is able to reopen. -Bloomberg

"We are still stuck on second base with 2 outs in the ninth inning," said Stewart. "Here is to hoping for a clutch hit from the Feds."

Cute.

Others, such as Ohio hair salon owner Clara Osterhage found the process to be a "nightmare." After gathering documents in preparation to be one of the first in line with her application on Friday, she was told by her small regional bank at 11 a.m. that they weren't going to be able to submit applications that day, and that 'even big banks weren't able to do it.'

"This is a nightmare," she said, adding that she doesn't have a clue when she'll gain access to the funds she needs.

"How do I feel? Uncertain with a capital ‘U.'"

Goat's milk soap maker Theresa Richard of Arnaudville, Louisiana was "at a loss" after trying to obtain a loan for her Youngsville store, Bain Amour Bath & Body Co., which has been shut since the state's March 22 stay-at-home order, which has left her lone employee without work.

Richard's local bank, Farmers and Merchants Bank & Trust Co. of Beaux Bridge told her they're still waiting on more information about the program. Her other bank, Chase, sent her an email notifying her that they wouldn't be ready for the program's Friday morning launch.

"Nobody has a real clear idea of what they need in place to start doing the loans," she said.

Community bankers are “rightfully frustrated and, in many cases, livid” after promised online portals never went live on Friday, said Rebeca Romero Rainey, chief executive officer of Independent Community Bankers of America.

It was “a nightmare situation,” Rainey said. “Media reports continue to indicate successful launches through the country by community banks, few of which we have been able to confirm.” -Bloomberg

Robin Schultz, who operates Birmingham, Alabama commercial lighting company Quality Electric, says that despite using the same lender for over two decades that she was surprised to receive an email from them Thursday night notifying her that it hadn't received guidelines from the feds.

After trying to apply at 4 a.m. Friday morning, she received an email around noon to let her know that the site was operational. Moments later, it was down, and she still wasn't able to file paperwork for the loan.

More tales of woe and optimism (via Bloomberg):

‘Eight Weeks Is Ten Years’

Erik Bruun owns SoCo Creamery, an ice cream shop and wholesale supplier in Great Barrington, Massachusetts. Foot traffic into his store is slower this time of the year, but is down 60% from where it typically is.

Wholesale ice cream sales, which make up the majority of revenue during the off-season, have completely stopped.

Bruun applied for an emergency loan last week but has yet to hear back. He tried to apply to the paycheck protection program as well, but his local bank told him the application changed and he’d have to wait until they receive instructions to proceed.

The application made it sound like the money would be dispersed in 72 hours. Time is critical right now, and even if his paycheck protection application is approved he’s not sure if the duration will be enough.

“Eight weeks? Eight weeks is ten years right now,” he said. “Eight weeks ago we lived in the allegedly good times. Now we live in the Great Depression.”

One small perk with the lockdown: as people hunker down, pint sales in local grocery stores are up.

‘So Much Confusion’

Wahid Nassar, who runs a restaurant in Highlands, New Jersey, tried going online Friday morning to apply for the loan through his lender, Bank of America, but repeatedly got error messages.

“There’s so much confusion and hard to get a straight answer from anyone right now,” he said.

‘Bringing Hope’

At 9:30 a.m. Friday, the paperwork, so utterly confusing at times, was finally in order for Jason Maxwell. The CEO of MassPay, a payroll and human resources firm that employs 59 people in Beverly, Massachusetts, faxed his application for an SBA loan to his banker in nearby Salem.

Late Thursday, Maxwell was told the federal loan program had tweaked its application. Luckily, Maxwell has a good relationship with his banker, Ed Lomasney, a senior vice president at Salem Five Bank. Lomasney contacted Maxwell, who immediately filled out the new form.

Maxwell has worked with Lomasney for seven years, even switching lenders when the banker relocated to a new financial-services institution three years ago.

“He’s the kind of guy who would knock down doors for us,” Maxwell said of his financial guru, who was too busy Friday with applications to comment.

Maxwell has also been helping other business owners navigate the programs and loans available. He called the owner of his favorite coffee shop, who is not a client, when he heard the man was feeling utterly hopeless, and offered information and advice on how to get some relief.

The programs “are bringing hope to a pretty grim situation,” Maxwell said.

‘Somewhat Optimistic’

Steve Vernetti, owner of Vernetti, an Italian restaurant in Los Angeles that’s a favorite of Mayor Eric Garcetti, said he had to fill out multiple applications because they kept changing, including as recently as Friday morning.


“It seems like the program is being fleshed out in real-time,” Vernetti said.


Vernetti said his business manager has a close relationship with his bank that’s keeping them in the loop, and that “I can only imagine what the confusion is like for those who don’t have the advantages we have.”


The restaurant owner said he’s been paying his 20 employees for two weeks out of his own pocket but won’t be able to continue. If he gets some confirmation of the SBA funding, he’ll consider opening for pickup and delivery services in two weeks.


“I am starting to see a way through this, and I am feeling somewhat optimistic,” Vernetti said.

Let's see what next week brings in the land of struggling business loans...

Envision's Colorado headquarters

During the latter part of the Democratic primary campaign, Bernie Sanders and Elizabeth Warren primed the pump by extolling the evils of private equity to the public every chance they got, helping impress the term into the memory banks of legions of twentysomethings how the industry had contributed to America's health-care crisis, along with a multitude of other societal ills. Now, with the world in the grip of an unprecedented crisis, the industry is about to get pilloried once again - but this, much, much bigger than before, we suspect - as private equity-backed health-care companies, loaded down from their LBO debt binges, are forced to make cutbacks including slashing pay for doctors and nurses in the middle of a pandemic that has already killed nearly 9,500 Americans.

And now the KKR-backed Envision Healthcare Corp., one of the biggest medical providers backed by private equity, is poised to become the poster-child for Wall Street greed as it informs hundreds of doctors in its employ will not be receiving the bonus checks they had been expecting in April. Though we suspect this isn't a complete surprise, the cuts will deprive hundreds of doctors of roughly one-third of their total comp during an already extremely difficult time for them and their families. The company has promised to repay them at a later date once their financial situation has improved.

The move risks igniting a blowback that could make KKR one of "the most hated companies in the world. Just ask Martin Shkreli.

But the reason the company's financial position is so poor in the first place is because Envision carries more than $7 billion of debt. This debt was amassed during what was, according to data compiled by Bloomberg, the third-largest health-care LBO ever.

In a statement, Envision said it's "100% focused" on saving lives during this crisis, even though its business (ambulatory surgical centers and medical staffing) shrank more than 75% in two weeks, Bloomberg said. With so many Americans hiding at home and fearful of entering hospitals and doctor's offices, people are delaying elective and non-emergency care at unprecedented rates.

"We are on the front lines caring for patients during this unprecedented public health and economic crisis," the Nashville, Tennessee-based company said. "Envision Healthcare is 100 percent focused on saving lives and sustaining the nation’s fragile health-care system. The safety net we provide for millions of patients must remain fully intact for when we get to the other side of this national crisis."

Like many companies, Envision completely drew down its two credit lines to provide financial flexibility in recent weeks (apparently it didn't listen to Larry Kudlow and Mnuchin). The company spends about $1.5 billion on compensation for physicians quarterly, an insider reportedly told BBG. The company has about $140 million to $150 million in debt payments due in the next two weeks, according to Mike Holland of Bloomberg Intelligence, and has $650 million of cash on its balance sheet. It has warned investors that it might need to raise more financing if circumstances continue to deteriorate.

The biggest problem for KKR, is that some of the physician groups are planning to sue the company; litigation could draw unwanted attention to KKR at a time when public anger is dangerously high.

But as the 'cockroach' theory suggests, Envision isn't alone: The boom in LBOs (part of the binge on corporate debt that also fueled the surge in buybacks) left many companies, especially in the health-care space, where many companies were built via a series of costly mergers and acquisitions.