This Top 5 COVID-19 Alert Level 1 special comes from interest.co.nz's Gareth Vaughan.
As always, we welcome your additions in the comments below or via email to david.chaston@interest.co.nz. And if you're interested in contributing the occasional Top 5 yourself, contact gareth.vaughan@interest.co.nz.
Cartoon:Steve Breen.
1) US anti-mask protesters' new weapon: wearing masks that offer no COVID-19 protection.
During a holiday last week I had a Zoom call with a friend in New Jersey. He is very downbeat about the struggles with COVID-19 in the US, including the economic fallout. He reckons they won't hit their nadir until next winter, - our coming summer. One of the reasons for this is the attitude towards the virus among some Americans. He subsequently sent me this article to emphasise his point.
As more communities and businesses adopt mandatory mask orders, supporters of an “anti-mask” movement are looking to make a statement. They are wearing masks that cover their nose and mouth but provide no ability to slow the spread of disease.
"I wore a mask that is designed for protecting your face in a paintball battle. You can easily breathe through it. I walked all around the store, talked to employees, and other shoppers, and every one of them could see my mouth," said a Florida man who posted a video showing him wearing a mesh mask to a Tampa Walmart. "It was almost like not wearing a mask at all. Nobody cared. That's because it's not about safety. It's all about compliance."
Other social media posts show anti-mask advocates wearing mesh masks intended to comply with the letter – but not the spirit – of municipal and corporate rules mandating face coverings.
And masks made of mesh, crochet (yarn) or lace are now popular items being offered by internet retailers. Most include warnings stating the items “are NOT intended for protection or COVID use.” But protection is not what anti-mask protesters are looking for.
“Make your own Anti Mask!” said the seller of a pattern to create your own anti-mask. The description of the product states: “Stylish, breathable and don't protect you from a darn thing! Masks required? No problem! Breath free while making a statement.”
2) The leveraging of American corporates.
The Financial Times (non-paywalled) puts a spotlight on American corporate debt. There's lots of it. According to the FT, US companies now owe a record US$10 trillion, equivalent to 49% of economic output. When other forms of business debt such as loans to partnerships and small businesses are added, this increases to an eyewatering US$17 trillion.
Even before the pandemic, the level of corporate leverage was beginning to cause alarm. At the end of last year, the IMF issued a striking warning: as much as $19tn of business debt in eight countries led by the US — or 40 per cent of the total — could be vulnerable if there were a “material slowdown” in the economy, a scenario that, if anything, now seems tame.
The FT argues the COVID-19 crisis has highlighted the fragility of an economy built on corporate debt.
This addiction to debt has developed over five decades. Encouraged by the tax system, and perhaps with an eye on their own pay, corporate leaders were quick to embrace the trend. Pension funds and insurance companies bought the debt in bulk, while private equity firms — including Clayton, Dubilier & Rice, which acquired Hertz in 2005 — put together leveraged buyouts as if they were running an assembly line.
The result has been a dramatic change in how the US economy channels savings into the financial capital that fuels growth. Arguably, it made America more competitive, as public companies have slimmed down or gained focus, while private equity firms perfected the art of eliminating fat from company payrolls — as well as equity from their balance sheets. Yet critics believe that the huge focus on financial engineering in recent decades also contributed to the weak productivity of the US economy.
The pandemic has underscored the fragility of an economy built on corporate debt in a time of crisis. Many companies now risk digging themselves a deeper hole: new loans might help them through the worst period of lockdowns, but it means they will be entering a potentially weaker phase of economic growth with even higher debts.
3) A government job guarantee.
The COVID-19 crisis has caused a spike in unemployment in many parts of the world. In their regular podcast series Bloomberg's Joe Weisenthal and Tracy Alloway talk to Bard College economist Pavlina R. Tcherneva, who is the author of a book called The Case for a Job Guarantee. Tcherneva points out there are already all sorts of government guarantees out there, but not one for jobs.
What are the jobs? This is a question of administration and management. In my conception these are public service jobs because it is really a public service programme. You don't want the public sector to compete with the private sector. We're not going to be building electric cars and doing things for commercial return. If it is a public objective to provide an employment safety net it should create something of social value and we have lots of neglected areas.
So I think the obvious place to go is really green work, community rehabilitation, environmental projects, dealing with things like flood control, fire prevention, the damage from hurricanes and other natural disasters. In other words we can borrow from FDR's playbook and we can use some of that experience but really adjust it for the modern day.
A lot of environmentalists talk about trees as the lungs of urban spaces. It seems like a pretty easy, straight forward thing to do but it has huge effects on our living environment. So that would be where I would go to create employment opportunities.
But broadly I talk about care work. We have shortages in care for the elderly, for at risk youth. So anything and everything from after school activities, to classes and training, to recycling initiatives, urban campuses, to community gardens...to dealing with the fires in California.
4) Why COVID-19 might not change our cities as much as we expect.
Writing for The Conversation, Christian Nygaard, Iris Levin and Sharon Parkinson of the Swinburne University of Technology, argue COVID-19 might not change our cities as much as some of us think they might. They use examples of major turbulence and tragedy from the past to support their argument.
Right now, COVID-19 impacts are front of mind. In thinking ahead, we might therefore overemphasise what a crisis will do to how we live in cities. To put it simply, history shows us that the ways we organise our cities are often resistant to abrupt change – even in response to catastrophic events.
In Japan, changes to population distribution as a result of the bombing of Hiroshima and Nagasaki in 1945 had disappeared by the early 1960s.
Almost 40% of Europe’s population died during the Black Death (1347-1352). Much of Europe’s urban hierarchy nevertheless returned to its pre-plague distribution over time.
Even the collapse of the urbanised Roman civilisation had little lasting effect on the urban hierarchy in France. It did lead, though, to a resetting of the urban network in England.
The reason for this urban inertia is that momentary change often does little to change the fundamentals of our cities. It doesn’t greatly change locational advantages, built environment legacy, property rights and land ownership.
London, for instance, has experienced slum clearance, Spanish flu, wartime bombing and the introduction of greenbelts and planning over the past 100 years. However, the location of the city’s rich and poor continues to be shaped by infrastructure investments in the Victorian era. And the Roman-period road layout has strongly influenced the street layout of central London today.
5) Japanese not enthusiastic about holding the Olympics even next year.
COVID-19 caused the Tokyo Olympics, scheduled for this year, to be delayed until 2021. Now a survey in Japan suggests less than a quarter of the population is enthusiastic about holding them, even in a year's time. As Kyodo News reports, people are more focused on tackling COVID-19 than on sport.
As the world has been engulfed by the pandemic for months, 36.4 percent of respondents to the nationwide opinion poll think that the Summer Games should be postponed again, while 33.7 percent said they should be canceled.
With about one year until the scheduled opening of the Olympics, 75.3 percent of those backing either a further delay in the games or their cancelation believe the virus cannot be contained anytime soon.
That main reason was followed by 12.7 percent who said the government should put priority on its fight against the spread of the virus in Japan and 5.9 percent citing additional costs to host the sporting extravaganza.
The Tokyo Games' organizers and the International Olympic Committee have agreed to simplify the rescheduled event, now due to kick off July 23 next year, to ensure safety from the virus.
How to cognitive pic.twitter.com/YM51OJ58qA
— Sarah Cooper (@sarahcpr) July 10, 2020
38 Comments
'The pandemic has underscored the fragility of an economy built on corporate debt in a time of crisis. Many companies now risk digging themselves a deeper hole: new loans might help them through the worst period of lockdowns, but it means they will be entering a potentially weaker phase of economic growth with even higher debts'
More debt and lower earnings - great combo.
Debt is the key word.
We are in a vicious cycle with debt.
Are we not just delaying the inevitable ?
More the delay, Bigger The bubble, More the pain - Path we all are following as a country.
No one knows how to get off the QE, knowing the moment is removed everything will collapse.
Are we keeping a terminal ill patient in pain on life support ?
Wonder, now 6 months into panademic, does any agency/experts have a blueprint to deal with it with confidence or just raying and hoping for it to fade away by itself but will it !
You forget. The only alternatives to Trumpie were the 7 Republican Wall St thieves, all with the same suit and haircut, or Hillary. Adolf or Joe or chairman Mao would have had a good show against that lot. And this time, as Trumpie said, he is not running against Sleepy Joe, he is running against the Deep State, MSM narrative, etc.
sit23,
I haven't forgotten. However unpalatable Clinton was, the US would be in a better place now had she won. He will now do everything in his power-whether legal but immoral or just plain illegal, to avoid defeat in Nov. and My real fear is that if/when he loses, he will seek to provoke a civil war to avoid the consequences.
Trump knows that he faces an avalanche of lawsuits and the real possibility of gaol once outside the White House.
Again where do you get this idea from that Trump is capable or has any intent of starting a civil war? I know there is a narrative in MSM that he promotes white supremacy or Fascism but wheres the idea, logic or narrative from that someone from NZ believes that Trump could influence enough people to take up arms to keep him president?
Where do revolutions start from? There are more than enough wacko's in America and around the world who will take the opportunity. and in the US - they all have guns and ammo - lots of it!
Personally i would argue that it won't happen, but I certainly can see the possibility, as can clearly a few other reporters.
Total UK deaths for June below the average. Not a bad outcome for a raging pandemic.
"CORONAVIRUS fatalities could be “less than half the official toll”, a former World Health Organisation chief has said.
Prof Karol Sikora claims that doctors may have marked the virus as the cause of death on certificates if there was "any hint" Covid played a part.
...Prof Sikora highlighted that daily death comparisons were sending the nation into panic and in some cases were inaccurate.
...Prof Sikora said deaths for the month of June were already below the average for this time of year and said those who died in the peak of the pandemic may have died in the summer months anyway."
https://www.thesun.co.uk/news/11837547/coronavirus-deaths-half-official…
https://www.reddit.com/r/dataisbeautiful/comments/htgq14/oc_uk_deaths_2…
Nice chart of UK deaths for the last 10 years so you can clearly see the increase due to Covid
Former World Health Organisation chief corroborated by June ONS data vs. some reddit post.
"The rate of deaths from all causes in June 2020 was 742.0 deaths per 100,000 persons in England and 837.5 deaths per 100,000 persons in Wales; both mortality rates were significantly lower than the five-year average (860.5 for England and 924.0 for Wales), though small increases in rates are expected over time as more deaths that occurred in June are registered."
https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarr…
Re:2) The leveraging of American corporates.
The pandemic has underscored the fragility of an economy built on corporate debt in a time of crisis. Many companies now risk digging themselves a deeper hole: new loans might help them through the worst period of lockdowns, but it means they will be entering a potentially weaker phase of economic growth with even higher debts.
Hmmm..Monetary authorites hoping to inflate it away?
Bloomberg: "The Fed is Setting the Stage for a Major Policy Change"
Translation: The Fed Is About to Admit that it is responsible for the serious inflation about to happen, but will try to sell this as policy success, not as the failure it is. Link
Not this again. When you really have run out of ideas, just set something aside for a time and then when it comes time again simply dust it off and pretend it is new and inspired. You can make it sound great, so long as no one remembers and realizes just how tired and ridiculous it actually is.
It’s almost as if officials at the Fed are making another major, concerted inflation push. I doubt very much this is coincidence that Lael Brainerd, a member of the Board of Governors, and Patrick Harker, President of the Philly Branch, over the last few days both spoke of letting inflation run hot for a long time regardless of how quickly the economy recovers.
Here’s Harker a couple days ago:
"We’ve been saying for a long time that the 2% inflation goal is symmetric, which means we should overshoot it. We were having a difficult time doing that, like all developed economies."
You’d think all that “money printing” would’ve spoken for itself. It should have done all the speaking required – if it was anything like money printing. Link
#1 people putting their personal freedoms over someone else's right to not get infected! Perhaps there should be a law that makes them culpable if they spread the (a) virus?
#2 While I am a great fan of MMT, this is one area that it should NOT be used for. Business should be allowed to stand or fall based on it's viability.
#3 Was it FDR who built Americas highways? They need rebuilding now, through decades of neglect. Most are built of reinforced concrete, so there lies an opportunity?
#4 Humans are a social species. Cities will always survive.
Be well. Do no harm.
What I have seen in regard to the virus is moderately intelligent people that I expected better from throwing their objectivity out the window. There is pretty much only one reason for this, they are personally at risk. Thus their reason for being so vocal is entirely self centered. So just for you, Andrewj's link from yesterday again https://www.youtube.com/watch?v=Z3plSbCbkSA
These guys deal with evidence, medical evidence, that is their craft. Summary, there isn't any. It doesn't even qualify as an epidemic. The world has been sold a fraud, not since WWII have we seen a propaganda campaign of such scale.
The comment about a law is really pretty out there in terms of that loss of objectivity. It shows not only that you don't understand the law, but you have no regard for evidence based decisions. Just in case you have forgotten, our justice system still operates on an evidence basis. There is also the presumption of innocence as a foundation principle. What you are arguing for is to throw out the foundation principles that underpin out society. Hence you want to start deconstructing our society. I'm sorry to say that I really don't think you can put all those dots together.
So you think you're being objective when you are arguing that the Government should not have written into law the ability to lockdown the country to stop the spread and impact of this virus? How many lives were you prepared to sacrifice for that, Scarfie? Were they all willing sacrifices? And i do understand the need for evidence. But if it can be proven that an individual failed to comply with imposed rules to stop the spread of a virus, and then others caught it because of their action, then why should they not be prosecuted for the harm they caused? Do you not agree with drink driving and similar laws?
Wuflu IFR:
0-20yrs ~1 in 100,000
20-30yrs ~1 in 15,000
30-40yrs ~1 in 5000
40-50yrs ~ 1 in 1500
50-60yrs ~1 in 500
60-70yrs ~1 in 100
70-80rys ~1 in 40
80-90yrs ~1 in 10
For most of population the risk is tiny, a few months of normal risk of death. Under 30's have greater risk of dying in a car accident. We're really only protecting retirees. Also a number of effective drug treatments being found now will more than halve these risks in next few months (steroids, hydroxychloroquine, ivermectin, interferon and many others).
Scarfie, you still don't get it. From a purely statistical perspective you can create an argument that there is minimal risk, but go ask one of the people who caught it and nearly died, or the family of someone who did, especially a child and then tell me it was worth it. It is only money, and you are clinging too tightly onto an old world.
You risk death every day of your life, if you are so paralysed by fear of such a minor risk that you cannot step out the front door - or as a country condemn everyone to suffering through a depression that will take years to recover from then you are being irrational to the point of self-harm. Risk perception is heavily (irrationally) skewed by novelty, eg fear of flying, heights, spiders, but soon (coming year) people will start to disregard the tiny risk of wuflu - it will become a mundane part of life, like far higher risks of inactivity, motorbike riding and obesity that are ignored.
The media are largely responsible. And what a story it’s been for them. I know people under 40 who were genuinely scared to leave the house and having anxiety attacks! This was pre lockdown; when I tried to tell them that they had more chance of dying from a car crash than Covid they didn’t believe me (“haven’t you seen the news from Italy?”). Even showing them a breakdown by age group where only 8 people under 40 had died at the time in Italy who have 10x our population didn’t convince them. Some people just can’t understand logic and statistics.
Sorry mate, statistics are evidence. Sure they can be bent, but in the background I have a professor of statistics whose job is the ensure the veracity of them. All you bring to the table is anecdotes. Yet you want to trash founding principles with them. Check yourself man, that is dangerous territory. Not just for you, but your kids and grand kids have to live in the world you trash.
statistics are not evidence, they are numbers. I know that people regular and use them as evidence, but they are just a bet on an outcome based on an analysis of data, complete or incomplete. If you still think there is almost no risk from COVID, try explaining that to the woman in the UK who lost both her children and a niece to COVID. And it is not just the risk of death which may be low, but of lasting adverse health impacts even if you survive it. This is not just the flu or a cold, but something much more serious. And to Foyle above, yes we do risk death every day from our activities, but for the most common and likely causes there are myriad laws to protect us from our own and others stupidity, which many of us choose to ignore to some degree.
The thing with COVID is that our knowledge even now is still limited and still evolving. To argue that there is no risk, even coming from a professor of statistics is to base that on incomplete and flawed data.
murray86,
I am intrigued. What makes you such a fan of MMT? I have spent some time looking at it and its history including Chartalism and its just too good to be true.
It appears to be able to solve all sorts of issues; infrastructure, poverty and education issues-think student debt forgiveness-. I am sceptical. From what I see for example, MMT ignores money velocity.
I have read a lot of articles, but especially those who analyse and include criticism of Stephanie Kelton's proposition. And frankly it is much better than the current capitalist system that has done nothing but create division, made a small minority very rich at the expense of a great many more, it has allowed Governments to abrogate their responsibilities in serving their people and surrender power to banks and large corporations.
As to money velocity; it doesn't ignore it as it will always be there. A Government creates the amount of it's own currency it needs to implement it's policies. To achieve this it will be letting contracts that fund salaries and so on. Money velocity will appear as inflation, and that is where taxation comes in. But make no mistake it is not this simple.
With MMT there can be no 'free market'. Comprehensive regulation will be required across the board ensure that people, and business behave themselves at all levels. The Government will not just be able to 'create jobs' out of thin air. Consideration will be needed for environmental impacts, markets, people themselves, societal needs and so on. A part of this discussion will also need to be population size. But in the end MMT provides the best most comprehensive pathway to a fair and equitable society, simply because any Government will have the funds to do all it needs to do.
Its true that debt has contributed a lot to the problem , and here its debt at all levels of society , individual and household debt be it for morttages or consumer debt , as well as Companies , corporations , Local Government and Central Government .
In NZ we would often read until recently how central Government debt was low and manageable , but private debt = Big problem , and Municipal debt (Auckland ) a potential problem .
Now we have everyone in debt up to their eyeballs .
It cannot end well
We've so many folk with so much debt so accustomed to living off other people's money that the RBNZ has to keep feeding in more to protect them, keep making it easier to sustain the debt, and keep making it so others have to pay more and more.
Many of who are the first to look down their noses at poor people receiving a more traditional "benefit".
I think the main thing with current levels of debt (I feel like I am in this position) is that it just doesn’t seem to make sense to pay it off. If we scrimped and saved we wouldn’t really pay off much and we’d still have enough debt to be vulnerable. It’s like having a ship with lots of holes and knowing you can only patch one up per year.
The alternative, I guess, is for the government and central bank to inflate it all away. Given they will be inflating away savings and wages at the same time, they need to prop those people up. So bailing out speculators simply becomes a genesis of universal welfare.
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