The biggest victim of coronavirus is the (dis)United States of Europe!

I am grateful, not for the first time, to the highly intelligent Ambrose Evans-Pritchard  (A E-P) of The Daily Telegraph and his remarkable ability to explain complex issues with enough clarity that even an ignoramus like me can understand them.  Today he spells out the economic, financial and political catastrophe that is already shaking the edifice of the European (dis)Union.  

In essence, the enormous gap between the northern EU states and the southern is widening into a chasm.  The former, by and large, run their economies on sensible principles.  The latter, by and large, run theirs on the basis of corruption and utter stupidity!  This has been evident for years but relatively calm economic seas has allowed the rotting hulk to stay afloat.  But not now!

Germany is committing €1 trillion to preserve its industrial and economic core. It is guaranteeing €550bn of corporate debt through the KfW state bank. It is tearing up state aid rules to allow €100bn of equity injections. It is providing €50bn for small business and freelancers. The package amounts to 30pc of GDP.

Italy cannot risk such steps. Direct fiscal measures are a skinny €25bn. This may soon increase but the burden rests on very weak shoulders.  The country has issued guarantees of up to €350bn for banks and loans to avert a credit crunch. This further entwines the "sovereign/bank doom loop" from 2011 - only ever in remission, waiting for the next crisis. 

Well, "the next crisis" has arrived and the question is, will Germany, which has become exceedingly wealthy in the market which they 'fixed' from the beginning, step up to the marker and help the southern states in their agony.  "Nein" is the word I am searching for because I don't know the German for, "I wouldn't piss on those Italians/Spaniards/Greeks if they caught fire!"

'A E-P' refers to Germany's dilemna as "a Hamilton moment" based on the decision taken by Alexander Hamilton in the early days of American independence to allow rich Virginia to join a fiscal union with the other impoverished states to assist with the huge debt that hung over all of them.  Is 'Mutti' Merkel up to that sort strategic thinking?  'We shall see what we shall see' but don't hold your breath!

 

 

 

Comments

[Loz]

Haven't read old "Cry Wolf Ambrose" yet but did he mention that Germany's debt as a percentage of GDP was 61.9% which when you add 30% is just a tickle over Blighty's debt as a percentage of GDP of 85.9% before the C19 crisis!

That's what austerity gets you in the good times: A Panzer division's worth of reserves for the bad times.

The Jerry and Northern European reserves are more than adequate to save the fiscally incontinent southern states, and of course, reap the benefits of the poltitical control that comes with the saving deal.

Shame Blighty isn't part of that deal. The greatest objective Blighty has ever had since the Romans was to avoid a hegemony on continental Europe that we weren't a leading part of. Epic fail on that front then.

Good call 23rd June 2016.

SoD

[Loz]

Here you go ...

https://www.google.com/publicdata/explore?ds=ds22a34krhq5p_&met_y=gd_pc_gdp&idim=country:uk:de:fr&hl=en&dl=en

Read and weep, Capt Mainwaring!

SoD

[Loz]

Sherelle Jacobs puts the "herd immunity" case against "lock-down" ...

https://www.telegraph.co.uk/politics/2020/03/26/lockdown-wests-berlin-wall-moment-elite-managerialism-collapses/

Of course the one response profile she doesn't even mention is the techno-solution - app tracking and testing - delivered in South Korea, Singapore, Taiwan and Hong Kong which softened the lock-down regime and curbed the infection to prevent healthcare systems being overwhelmed.

SoD

[Pat]

But will the voters of Germany continue to support Merkel if she asks them to take on debt on behalf of Italy? Bearing in mind that her support is crumbling anyway and that Germany was flirting with recession before this virus appeared.
And will the voters of Italy be happy if she doesn't/can't? Judging by how close Salvini is to office probably not.
At the last crisis the Greeks were determined to stay in the Euro. I hear they've gone off that idea and might well decide to leave this time round. All it takes is a preponderance of political will and the other problems are soluble.
I guess it comes down to whether or not Germans have enough fellow feeling for the Italians, Greeks etc. to make sacrifices for them just as Germans are start to lose jobs.

[Pat]

Unless and until someone comes up with a cure for Covid, immunity is our only defence. It would be nice if that were acquired by vaccination but that is not yet possible. Personal immunity protects the individual, and should enough individuals acquire it then then we acquire herd immunity and incidence of the disease becomes negligible because transmission slows down. Should a country eliminate the disease without acquiring herd immunity it will simply need one infected visitor to start it up again.
I am hence expecting places like S Korea to be struggling with this for a long time.
We don't know when the disease first reached this country. We don't know how many have been infected so far- estimates range from thousands to tens of millions. We know how many died with it but are less sure how many of those would have died anyway.
Hence we have no idea how fast it is transmitted nor how deadly it is.
We'll never know when the first case arrived, but we need urgently to measure the spread in the general population, which would mean testing for antibodies in a large random sample. Only then can we institute a policy based on evidence rather than fear.

[Loz]

I am hence expecting places like S Korea to be struggling with this for a long time.

Not struggling, but dealing with it for a long time, yes. Forever, in fact.

Once the track and test app gets going the virus can't win, as demonstrated in South Korea, Taiwan, etc.

And in fact, more lives than those taken by C19 will be saved. Those who die from seasonal flu, pneumonia, sepsis all started with a dodgy tummy or the sniffles. If they are immediately isolated and everyone they've seen in the last 2 weeks likewise, all the killer second stage conditions will diminish along with the precursor dodgy tummies and sniffles.

The herd will never become immune because it doesn't need to because diseases cease to exist, or rather, they will only exist very shortly in small chains of people who quickly get isolated.

Even manflu might become a thing of the past.

Here's the potential savings entry in the "ledger of death" in Blighty ...

Sepsis 36,900
Pneumonia 30,000
Seasonal flu 17,000

There may be some overlap there, but that's the C19 death toll predicted at the lowest end (80,000-ish) saved every year forever.

So in descending order of benefit over cost, the strategies are: -

1. App and track
2. Lock-down
3. Herd immunity

And finally, not wishing to be a doom-monger, but what about the next virus after C19: what if it has a death rate of 50% ?

Fancy trying "herd immunity" with that one?

SoD