Spanish life is not always likeable but it is compellingly loveable.
Christopher Howse: A Pilgrim in Spain*
- The Socialists, says Mark Stücklin, see Podemos as infantile. While Podemos folk see the Socialists as arrogant. To hide their internal coalition bickering, he adds, they've come up a a rental law which will result in the least well-off being the biggest losers in the long run. Details here.
- Some potentially good news.
- Meanwhile, some news that's definitely bad, especially for those of us in or near Valencia.
- To lighten the mood, here's Lenox Napier on the korrupt ex-King.
- At huge social, political and economic cost, the eurozone survived its first existential crisis. With a viral pandemic now sweeping Europe, can it survive a second? My answer may disappoint some Eurosceptic readers, but probably yes. . . So much political capital has already been expended on European monetary union, and so much pain has been suffered trying to make it work, that even though it may not deserve to survive, policymakers cannot allow the latest seizure to succeed where the last one failed. They are too heavily vested in it to let go, so the euro is cursed to stagger on, whatever the coronavirus has to throw at it.
- As if deliberately, Covid-19 has hit the eurozone just where it hurts most – Italy. . . .The crisis measures Italy has been forced to adopt are likely to cause a considerable economic contraction, with serious consequences for the rest of Europe regardless of how the virus itself affects other countries. The coronavirus may therefore be the crisis that finally brings about lasting solutions. Another doom loop would surely either force Italy out of the euro altogether, or more likely result in it agreeing the terms demanded for a properly functioning banking union.
- It may be that the EU’s structures cannot withstand another recession. Alternatively, they may end up strengthened by it. My guess is the latter – that one way or another, the euro is doomed to succeed.
- Fears mount that Italy will require a jumbo global bail-out to stem broader financial contagion. See the Ambrose Evans Pritchard below.
- How's this for an irony . . . For years, Americans have been warned about the dark path that Trump’s authoritarian instincts might cause the country to follow. Ever since he won the Republican nomination, members of the self-styled Resistance have talked up ominous echoes of the 1930s. And yet, faced with just the sort of crisis that could create the appetite for the demagoguery they warned of, it is the President’s nonchalance that could prove to be politically fatal.
- The coronavirus epidemic is coinciding with a disinformation one. See the second article below.
- Throughout the crisis Trump has sounded like a saloon bar bore*. "It’s just flu, we have the best tests, it’ll magically go away in April, it’s Obama’s fault, I shoulda been a research scientis", and so on. All of those are paraphrases but not by much. He has always been a man fond of, as his aide Kellyanne Conway put it, “alternative facts”. How unsuited he is to navigating real ones.
- "We have a test for everyone who wants one. [A blatant lie. There are c. 1m tests for 350m people]. "It's perfect. Just like the Ukraine call. Just like the transcription. Not quite as perfect as them. But pretty good."
- Words of the day:-
- Cuarentena: Quarantine. Based on the Latin for 40.
- Cuaresma: Lent. Ditto, I guess.
- Quarantined Chinese students were sent homework via an app dedicated to this. Until the students realised that, if they gave the app a poor rating on the net, it'd be removed from the Apple Store. And so they did, in their millions. And so it was. End of homework. Kids today, eh? Brilliant.
1. Fears mount that Italy will require a jumbo global bail-out to stem broader financial contagion
Italy needs a precautionary rescue of up to $700bn from the US and the major powers to head off the danger of a global crisis, a bail-out veteran from the International Monetary Fund has warned.
Ashoka Mody, the IMF’s former deputy director in Europe, said economic fall-out from the coronavirus is pushing Italy to the brink of “vicious negative feedback loop”, raising the risk of a financial chain-reaction through the international system. A fully credible firewall would require funding of €500bn to €700bn, orders of magnitude greater than any previous package in history. “The Europeans can’t do it themselves. They’re hopelessly divided and financially much weaker than they were ten years ago. Their instinct will be to punt,” he said.
Professor Mody said Italy’s economy is large enough to trigger a broader world crisis if mismanaged at this critical juncture. The Italian government is being forced to take ever more dramatic steps as the death toll soars to 631, with dire consequences for small businesses and companies already struggling to stay afloat after an economic relapse last year. On Tuesday Rome suspended all normal economic activity in Lombardy and the Veneto, with only pharmacies, food shops, and survival services remaining open. “Time is short. Germany and France are themselves about to experience rapid spread of the virus, and their economic and financial systems are already under acute stress,” said Prof Mody, who led the joint EU-IMF Troika rescue for Ireland during the eurozone crisis.
The European bail-out machinery (ESM) is slow and bureaucratic, and requires the political assent of the German Bundestag under tough conditions. The threat is so big in any case that it would take the firepower of the US Treasury to convince markets, as well as funding from the IMF. Britain might have to take part. “They need to start now,” he said. It could be a credit line rather than actual funding. However, the Trump administration is preoccupied with the Covid-19 crisis at home and is highly unlikely to come to Europe’s aid until matters are already extremely serious.
Italy’s sovereign debt is the world’s third largest in absolute terms at over €2 trillion and is tightly interwoven with the banking system. Italian bank stocks have halved in value since mid-February, almost guaranteeing a credit crunch and again raising the spectre of a sovereign-bank ‘doom-loop’ akin to events in 2011.
The IMF can play a coordinating role but it lacks the money to backstop the Europeans on its own. It used up a shockingly large share of its resources during the joint Troika rescues in Greece, Portugal, and Ireland. This challenge would be much greater. The institution’s firepower has dwindled to 1% of global external liabilities from 4% in the 1980s. “The IMF is not in a position to function as an international lender-of-last-resort. The global financial safety net is too small,” said a recent G20 report by the Robert Triffin forum.
Prof Mody said the Covid-19 crisis will cause an economic contraction of at least 3% in Italy over the first half of this year but the damage could prove much larger. He warned that the country is sliding into a deflationary trap that is pushing up real interest rates and playing havoc with debt dynamics.
Markets are still counting on the European Central Bank to come to the rescue but they may be in for a disappointment. The ECB has run out of ammunition and can “make only cosmetic changes of no real value”.
Citigroup expects the central bank to announce an extra €10bn in bond purchases when the governing council meets on Thursday. The risk is that such a token gesture in the face of a massive exogenous shock will be seens as impotence and cause a further erosion of confidence.
2. A fake news virus is spreading like wildfire Hugo Rifkind
Have you heard? Trump fans don’t believe coronavirus even exists. The US network NBC interviewed one last week outside a rally in North Carolina. “You don’t believe [it] exists?” asked the reporter. “I don’t,” said the woman, stoutly. The clip went online and was rebroadcast by CNN whereupon, in abbreviated form, it thrived online again. So now we all know what Americans think. Or, at least, what one of them thinks. Same thing, right?
It is not only the virus that is going viral. Myths, hoaxes and fake news are, too. If I were to take a deep breath (while any of us still can) and dive right in, I could probably fill the rest of this column with simple lies and untruths about coronavirus which are surging around the global consciousness. According to some, the virus is a chemical weapon. According to Infowars, a wingbat crank site once beloved by the US president, the true villain could be Bill Gates, the Microsoft founder and philanthropist (never trust a philanthropist) who may have unleashed a greater horror on the world than Windows Vista. Others have blamed 5G networks and Canadians.
Last month in China a belief spread around that you could catch it from dogs (about which scientists are dubious) after which various western news sites helpfully published uncertainly sourced images of Chinese-looking men hitting dogs with sticks. In India, there’s a popular idea that garlic helps. (It doesn’t.) A YouTuber has claimed we should all be drinking a combination of minerals found in bleach (no) and a guest on a US televangelist show said we should all be drinking silver (also no). According to the BBC, meanwhile, a hoax message that purported to be from Unicef in Cambodia suggested that the trick was to avoid ice cream.
Then there are the malign actors. Oliver Dowden, the culture secretary, raised the alarm this weekend about state-sponsored nonsense, too. Similarly the foreign minister of Taiwan has blamed China’s “internet armies” for trying to spread panic on his island.
Also, there are the fake malign actors. Yesterday, in early-morning tweets, the US president was to be found blaming “the fake news media and their partner, the Democrat Party” for trying to “inflame the CoronaVirus situation”. Throughout the crisis Trump has sounded like a saloon bar bore. It’s just flu, we have the best tests, it’ll magically go away in April, it’s Obama’s fault, I shoulda been a research scientist, and so on. All of those are paraphrases but not by much. He has always been a man fond of, as his aide Kellyanne Conway put it, “alternative facts”. How unsuited he is to navigating real ones.
Perhaps, though, you too have found yourself cleaving to half-understood half-facts and passing them around, partly through hope and partly just for something to talk about in all of these endless coronavirus conversations we’re now having. Kids don’t get it, or perhaps they do. Masks won’t work, or perhaps they will. A fortnight ago we all thought China’s response had been hampered by its authoritarianism, whereas now I sense we’re on the cusp of thinking that ours will be hampered by our lack of it.
Hugh Grant, who perhaps should be in the “malign actor” section too, this weekend blamed the “careerists, narcissists and ultra right wing nut jobs” of our own government for the lack of checks and tests at Heathrow on flights from Milan. In vain, a few healthcare professionals pointed out that temperature checks aren’t deemed all that useful, but millions saw Grant’s tweet and virtually nobody saw theirs. His is the comforting logic of the conspiracy theorist; the person who yearns for a villain they can imagine punching. Viruses are hard to hate. They don’t care what you tweet, either.
All of this represents the learning curve of the first pandemic of the global information age, so I dare say it’s important to recognise the good stuff, too. I am deeply wary of feigning any authority about the development of tests and vaccines (that’s how fake news starts) but my limited understanding is that both have been happening at unprecedented speed. The spread of myth and misinformation, I suppose, is the flipside of that, accelerated for similar reasons.
Probably, also, we shouldn’t be too pessimistic. Last week Mark Zuckerberg announced that Facebook would give the World Health Organisation as much free advertising as it required, and would aid national health ministries, too. That’s valuable today but if, and, or when we hit a stage of mass infection and mass home isolation, it could become priceless. I don’t think any of us would be happier or safer going into the next few months with only a landline and a Bakelite radio.
We should understand, all the same, that the coronavirus epidemic coincides with a disinformation one. We can all catch both. We can all spread both, too.
- Galicia Living is a new property development outfit in Southern Galicia (As Rías Baixas), owned by a friend of mine. So, if you're looking for a house here, get in touch with them. And, if you're particularly interested in the lovely Miño area down on the border with Portugal, let me know on email@example.com and I'll send you my write-up on it.