Wednesday, April 08, 2020

Coronavirus News (36)

When Will the Jobs Return? The number of people filing for unemployment insurance doubled to 6.65 million in the latest weekly report on April 2, taking the two-week total to nearly 10 million. On April 3, the unemployment report for March logged a loss of 701,000 jobs, making it the worst month for unemployment since the last recession. It also took the unemployment rate to 4.4% in March from 3.5% in February, the largest one-month increase since January 1975. ......... Workers are more pessimistic about losing work in the coming year as they expect overall unemployment to be higher ....... workers also expect the growth in their earnings to fall and are less optimistic about finding a new job in the coming year. ....... two-thirds of the jobs lost were in the leisure and hospitality sectors, with restaurants and bars accounting for 417,000 job losses, or nearly 60% of the total. ....... “Lenders are concerned that rising unemployment and a potential recession will send loan defaults soaring,” the report noted. The CARES Act passed last month provides $350 billion in loans for small businesses. “[But] the program, which works on a first-come, first-served basis, likely won’t be large enough to satisfy the needs of all of America’s small businesses” ....... major retailers have announced furloughs and layoffs. “We’re going to see this spread into other areas of the economy .........

Most people who do work sitting at a computer can do that anywhere.

........ bonds formed at the workplace don’t wear out easily ....... “As workers stay idle, their training deteriorates, making them less employable and slowing the recovery for firms.” ...... “You want the combination of the business loans and the generous unemployment benefits to keep people sitting tight” ........ “Kurzarbeit” is an agreement between the state, employers and employees in which employers don’t fire employees who in turn agree to a cut in wages to around 80%. The state reimburses a large portion of compensation directly to the worker, he explained. “[That] was a major factor why recovery in the previous recession in Germany was much faster than in all other E.U. countries.” ........ The advantage of the Kurzarbeit system is that workers can maintain their jobs and the employer-employee relationship is not interrupted along with fringe benefits ..........

Job losses will climb to some 28 million by May, erasing all the jobs gained since 2010





Why are Markets Collapsing? How Bad Will COVID-19 Really Be? Markets are collapsing because investors hate uncertainty. ....... markets are acting as if we are going to encounter the worst-case scenario ...... the market reaction is more extreme than any of the likely possible futures would justify. .......

COVID-19 is a new coronavirus, like the common cold and the flu.

........ Even in a worst-case scenario, in which we all get sick, we are not all going to die. ...... We know COVID-19 has achieved permanence. The virus is established globally. Enough people have the virus in enough locations to ensure that it is not going to vanish on its own. It can no longer be contained. ....... We don’t know how extreme COVID-19 mutation will be. ....... We don’t know how lethal COVID-19 will be. ........ the only combination we would need to worry about is high mutation and high lethal­ity. ........ White-collar professions attain a high degree of virtualization. Executives and their staffs telecommute. Faculty and their students engage in distance learning. Farm work continues largely unchanged. Blue-collar workers mostly are replaced by increasingly intense levels of automation, and social programs are developed to avoid total devasta­tion of low-income populations.......... Would the most disadvantaged populations in the world, Bangladeshis and the residents of Sub-Saharan Africa, perish in vast numbers while other parts of the world escape relatively unscathed? Mass migrations and floods of refugees would be unprecedented; think in terms of half the world’s population under­taking migrations on a level comparable to the Irish migrations during the Potato Famine of the late 1840s, while the other half of the world experiences the worst economic crisis in a century. ............ Class war­fare erupts between wealthy and impoverished populations throughout the developing world. Mass migration and ethnic warfare erupts between the Third World and the more fortunate segments of the population. Lack of effective leadership does not save the wealthy nations of the West. ...... The markets are reacting as if the most likely scenario — indeed the inevitable scenario — is Pale Horseman: I am Death. This actually is the least likely scenario. .........

the most likely scenario is a more extreme version of Take Two Aspirin and Call Me in the Morning. COVID-19 will be like the common cold, only worse.

......... This would be expensive for business and would require governmental support for businesses that are increasingly paying absent workers. And we are going to require increased public health spending, so that every­one, insured or not, legal resident or not, can have safe and anonymous testing for COVID-19. ........

Any attempt to limit testing so that only insured legal residents could be tested would make the virus impossible to control.

....... If you are light in equities now or have available cash, it might be a reasonable time to invest. But you need to be patient, since recovery will not be immediate. Do not invest money you will need soon. ......

Don’t panic. And remember to wash your hands.



COVID-19 Pandemic: What Will the Next Six Months Bring? the markets have been reacting to uncertainty rather than to expectations. .......

We’ve never faced a threat like the coronavirus pandemic, and governments have never tried to implement the same set of responses before.

.......... In the absence of vaccines and medications, the most promising way to limit the damage is to slow the spread of the virus, mostly through voluntary social distancing. ....... social distancing and shutting down vast segments of the economy may be the only way to slow the spread. .......

We’ve never had a self-imposed, instant and long-lasting recession before.

.........

War Against an Invisible Enemy

.......... We would see enormous income taxes on the truly wealthy, as we have seen in times of national crisis before, though they may never need to approach the 94% top marginal rate of 1944. ...... Revenues are used to support small business owners and their employees, providing basic income and ensuring individual survival. We develop safe door-to-door delivery, which enables small stores and restaurants to keep operating. The bottom does not fall out of the economy, and the middle class does not become alienated, to the extent that they did in Europe in the 1930s, which accelerated the growth of fascism. ........... We are a more ethnically and economically diverse nation today, and political divisions are worse than they have been at any time since the Civil War.



What the COVID-19 Curve Can Teach Us about Climate Change the pandemic offers an opportunity to increase people’s awareness of another major global risk. ......... In examining the exponential growth curve of COVID-19, Kunreuther realized there is a teachable moment about the dangers of climate change. ....... Like the person-to-person transmission of coronavirus, climate change is happening in smaller increments that can be easy to ignore until the cumulative effects can be measured: a rise in average yearly temperatures, melting glaciers, more destructive hurricanes, more intense wildfires, droughts, species extinction — the list goes on. ........

“Aside from the coronavirus pandemic, the biggest, most destructive exponential growth processes that we must grapple with today are those associated with global climate change.”

.......... the human mind “doesn’t easily grasp the explosive nature of exponential growth.” ....... As with the coronavirus, we need to anticipate the climate crisis and act quickly and aggressively to minimize further damages before they overwhelm us. ......... In 1958, the federal government measured damaging carbon dioxide emissions at 315 parts per million (ppm). By February 2020, that number had risen by 31% to 414 ppm. .........

The time to flatten the curve on climate change is now

....... But it’s challenging to shake citizens and policymakers out of complacency. That’s evident in the early attitudes toward coronavirus. ........ it’s imperative that everyone recognize the “social responsibility” in preventing disasters, whether the next pandemic or the existential threat of climate change. .... the world must turn its attention to reducing CO2 emissions and stopping the further exponential havoc that climate change will wreak, far sooner than we expect.”



Coronavirus: 68 per cent of cases confirmed in China in past eight days had no symptoms
As other economies panic over Covid-19, China can bide its time and stimulate its way to the future why the calmness? First, China didn’t see a near-collapse of its equity market, an evaporation of liquidity in its money and credit markets, or a plunge in oil prices that threatened to wipe out its shale gas industry. The resiliency of its capital markets could have removed the urgency of a large policy response aimed at shoring up market confidence, as was the case in the United States and Europe. ........ the Chinese economy has already hit rock bottom and is starting to bounce back, while most developed economies are still in free fall. .......... China has suffered a great deal because of side effects of its previous all-out stimulus : rising debt, mounting overcapacity and decelerating growth over the past decade. The scars of that experience might have made Beijing more cautious about taking a “whatever it takes” approach again. ....... the economy has yet to fully resume. Policy stimulus is less effective when the economy is running below its normal capacity. ........ infrastructure investment is quite effective as a tool for spurring growth and generates results straight away, unlike tax cuts or cash handouts that could increase savings more than spending. ..........

focus on new infrastructure, including 5G, big data, artificial intelligence, smart cities, and of course, health care equipment

... they can also lay the groundwork for the next phase of China’s economic upgrade.

Coronavirus: Japan’s major cities go quiet after state of emergency declared
Hong Kong’s paltry coronavirus relief is cold comfort to the jobless and needy If officials think that with a HK$10,000 cash handout, they have done their duty, they are sadly mistaken. When bad times hit, the poor are hit the hardest, and many are now in dire straits, with no social safety net to keep them afloat
Coronavirus: Bangkok’s lockdown, curfew leave vulnerable Thai residents struggling

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