Monday, March 30, 2020

Thoughts from Pontevedra, Galicia, Spain: 30.3.20

Spanish life is not always likeable but it is compellingly loveable.   
- Christopher Howse: A Pilgrim in Spain*

The Coronavirus: The Bad News You May Already be Aware of
Life in the Time of Something Like Cholera
  • How to get injections of culture while confined to your couch.
  • The impressive Art of War on the coronavirus.
  • Maria's Day 15, with an interesting observation on our drug smuggling activities. [I'll just add that, when the speedboats are run up onto the sand, the usual practice - time permitting, I guess - is to set fire to them.]
  • As for me . .  . My normal routine involves coffee around 6.30 and then the reading of papers and articles in my news feed before I write my blog between, say, 9 and 10.30. Yesterday, I slept late and rose at 7.50/6.50 for my coffee. But I started reading the papers at 6.10pm. In other words 12 hours later than usual. Where the day went, I'd struggle to tell you. Time was just frittered away. The result, I've suggested, of having no fixed points - other than meal times - in the day. But, then, it was Sunday, and so my official Day of Rest. Today has started better.
  1. Why their death rate is much lower than Italy's.
  2. An open letter to Mrs Merkel raising some very pertinent questions.
The EU
  • M Macron warns that the future of the project is at stake. He not only wants to keep it alive but to make it bigger and 'better', of course.
  • Says Ambrose Evan Pritchard in the 1st article below: Germany's refusal to embrace 'coronabonds' amid the crisis could threaten the European Union's very survival  . . . Europe’s pandemic strategy – every man for himself – may have unstoppable centrifugal consequences. That said, AEP ends on what might be called an optimistic note: For the past 60 years Europe’s leaders have always found a way to overcome bitter divisions and keep the show on the road. They will probably do so again this time. But they have no margin for error.
  • Other journals jump on the EU disarray/End of Europe? bandwagon here and here.
The Way of the World
  • Effie Deans is Scottish but a fierce - and very articulate - opponent of Scottish independence on her blog Lilly of St Leonards. She believes this virus crisis has just rendered both the Scottish government and the EU irrelevant. Click here for her attack on nationalism in Scotland, Spain and elsewhere, ending with the confident statement that: People all over Europe are going to realise quickly that neither the sub-national (Scotland, Catalonia etc), nor the supra-national (EU, UN etc) did much to help.
  • Classic Fart - Ignore the message and (character) assassinate the messenger.
  • Astonishingly, the OFC's ratings are rising among even 'independents' and Democrats. But the (relatively) good news is that this has happened for every President during previous crises, but to a much greater extent than in Fart's case now. Allegedly, it's all down to getting massive air-time. You and I might thing he's making a fool of himself at every press conference - not to mention showing his total lack of qualification for his office -  but others clearly don't.
  • Try to catch the 'attack ads' which the Republican Party is trying to have banned. For obvious reasons. Starting here, with the lovely Ana.
Nutters Corner 
  • This El PaĆ­s article reveals that Spanish lacks a word for both accountability and whistleblower. It ends with the peroration: It’s time to start expanding Spanish with words that pay homage to decency and honesty. I can't say I'm all that surprised at the lacunae in Spanish, given the low level of ethics and the high level of institutional corruption here. Which may or may not be connected with the Catholic emphasis on Confession (if caught) and forgiveness.
Finally . . .
  • My - suddenly super-active - younger daughter has made a 3rd vlog on staying motivated during the lockdown. Catch it here, if interested.

1.  The EU project is in mortal danger if Italy and Spain are abandoned: Ambrose Evans Pritchard. Daily Telegraph

Germany's refusal to embrace 'coronabonds' amid the crisis could threaten the European Union's very survival

Italy’s political leaders from Left to Right have erupted in fury over the EU’s minimalist, insulting, and cack-handed response to the Covid-19 pandemic, warning that lack of economic solidarity risks pushing the bloc’s festering divisions beyond the point of no return.

“Don’t make a tragic mistake. The whole European edifice risks losing its raison d’etre,” said the Italian premier, Giuseppe Conte, demanding a giant Marshall Plan funded on the EU’s joint credit card to relaunch the productive system once the current nightmare is over.

Conte said anybody who thinks they can force Italy to accept disciplinary terms as a condition for loans – a sort of "Troika" regime – have gravely misjudged the mood of his nation. Italy will not take the money. “We will do it alone,” he said.

The message is that if there is no EU solidarity when it matters, then it no longer makes sense for Italy to accept EU surveillance and constraints, or for Italy to forgo use of its own sovereign policy instruments in self-defence. Europe’s pandemic strategy – every man for himself – may have unstoppable centrifugal consequences.

The warning was echoed by Jacques Delors, former Commission chief and euro godfather, who stepped back into the fray this weekend, denouncing Europe's paralysed response to the greatest crisis since the Second World War as a “mortal danger” to the European project.

Delors launched monetary union in the early 1990s on the implicit assumption that it would be the federalysing catalyst, leading – by means of crises – to full fiscal and political union.

This did not happen in 2011-12 when the banking/debt crisis exposed the euro's unworkable structure. Northern creditor states blocked moves towards joint debt issuance and a proto-EU treasury, precisely because such moves have huge constitutional implications. They imposed the stick of disciplinary controls but never delivered on the other side of the political bargain, a banking union and more fiscal sharing.

This has left the European monetary union system acutely vulnerable to the coronavirus shock. The European Central Bank lacks the instruments – and legal authority – to rescue the euro project on its own in an economic crisis of this kind.

The fundamental issue, ducked for two decades, is coming to a head as the eurozone productive system freezes for months. This earthquake makes the long-simmering showdown between North and South far more dangerous.  Whether the EU survives may be determined by decisions made over the coming weeks.

Delors and French president Emmanuel Macron are seizing on events to ram through their arch-integrationist ambitions. But they have run smack into the equally entrenched views of the "frugals", or the Hanseatic bloc.

Dutch premier Mark Rutte has become the spokesman for the hardliners - giving political cover to Germany – categorically ruling out emergency "coronabonds"  or other forms of debt mutualisation. “It would bring the eurozone into a different realm. You would cross the Rubicon into a eurozone that is more of a transfer union," he said. “We are against it, but it’s not just us, and I cannot foresee any circumstances in which we would change that position.”

Enrico Letta, Italy’s former-premier and an ardent EU integrationist, accused the Netherlands of leading the pack of “irresponsibles” and trying to “replace the United Kingdom in the role of ‘Doctor No’”. The reflexive use of the UK as a rhetorical foil evades of the true issue. It was not London that blocked moves to fiscal union over the last decade; it was Germany.  

What is new this time is the emergence of a united "Latin Front" across southern Europe, with both Italy and Spain refusing to sign the EU summit conclusions on Thursday night after six hours of surreal discussions. They issued an ultimatum instead, giving Brussels 10 days to come up with a solution or face dire consequences.

Portugal’s premier said Dutch demands for stringent conditions on any credit line were “disgusting” at a time when Europe is facing both a humanitarian disaster and an economic shock beyond anybody’s control.

This Latin alliance never got off the ground in 2011-2012. Conservative Spanish ministers – aspiring to be the "Prussians of the South" – refused to be linked with Italy. Chancellor Angela Merkel was able to impose Germany’s austerity doctrines by divide and rule, and through control of all key policy instruments.

While some in the creditor bloc are resorting to the same misplaced "morality" rhetoric of that episode – blaming the victim nations for being ill-prepared because they are supposedly feckless – the emotional reaction this time is ferocious and the reserves of pro-EU sentiment are thinner after a decade of austerity and and worse unemployment than the 1930s.

Lega strongman Matteo Salvini called the EU a “den of snakes and jackals”, warning that mounting rage would soon explode into an Italian national revolt. There will be a settling of scores when the virus is defeated, he said. Italy will wave goodbye to Europe if it has to – and “we won’t be saying thanks”.

Brussels is used to hot words from the Lega and the Fratelli d’Italia, the nationalist "Italy First" government in waiting. It may be more worried by warnings from a string of pro-European statesmen is that this crisis is testing Italian political consent for the EU project itself.

“I hope that everybody understands the grave threat facing Europe,” said President Sergio Mattarella in an address to the nation. “There has to be a common EU instrument before it is too late.”

Even former premier Mario Monte – the voice of Europeanism in Italy – wrote in Corriere della Sera that it is time for his country to issue a threat: Rome should tell the Germans that unless there is a move to joint EU action they must assume that the ECB will instead do the job by printing money and unleashing a second “Weimar hyperinflation”.

The hyperbolic tone is bizarre from a man of such cultivated statecraft, but it shows how quickly events are moving. Monte is in effect warning that the Latin Front and its allies will use their majority power over the ECB to ram through fiscal union by the back door.

By all accounts, the summit on Thursday night was extraordinary. Angela Merkel, who is self-isolating, posted a picture of herself instead of appearing on the videolink screen and was eerily absent for most of the discussion. Faced with vehement demands, she icily reproached the Latin Front for raising hopes for coronabonds that can never be fulfilled.

Merkel warned that no such proposal would make it through the Bundestag even if she agreed. Germany’s top court has already ruled that eurobonds would require a change to the German constitution – near impossible in the current fractured political landscape.

Macron told the gathering that Europe cannot go on as it is. Something will break. He tried to persuade Merkel that the amount of joint issuance is not important. It can be a token sum – what matters is the gesture.

But in arguing this, he gave the game away. His ulterior purpose is to exploit the pandemic to establish a new fact on the ground: fiscal union. That is why Germany is digging in its heels.

Italy’s official death toll has surpassed 10,000 but mayors from the hotspots of Brescia and Bergamo say the real figure is multiples of this number.

Germany is airlifting the critically ill from Italy to hospitals in German regions with spare capacity. Solidarity is coming through at last. But the damage done from the early EU reflexes will endure.

When Italy invoked the EU’s formal disaster procedure with desperate calls for protective gear and ventilators, no country responded. Germany and France instead imposed export bans. The EU’s single market did not exist when push came to shove.

For the past 60 years Europe’s leaders have always found a way to overcome bitter divisions and keep the show on the road. They will probably do so again this time. But they have no margin for error.

2. Coronavirus: Donald Trump the risk-lover is gambling with lives: Niall Ferguson, Sunday Times

Year after year, each of us pays hundreds if not thousands of pounds in premiums to insurance companies. We do not think of it this way, but we are essentially betting that our houses will burn down, our cars will crash, our health will fail or our holidays will be cancelled. Insurers know that all these mishaps are predictably rare and take the bet. We lose our money, over and over again, but have “peace of mind”.

We who only gamble in such unsophisticated ways are fascinated by true gamblers: those who frequent not only casinos and stock markets, but also the pages of history. We normal folk tend to think of two types of gambler. There is Fyodor Dostoevsky’s compulsive gambler, who cannot resist the lure of the roulette wheel — who ruins himself by betting and betting, despite knowing that, in any gambling establishment, the house is more likely to win than not.

Then there is the gambler as master speculator: Charles Dickens’s Merdle, Anthony Trollope’s Augustus Melmotte — both loosely based on Nathan Rothschild — or our own age’s George Soros. This kind of gambler calculates the odds of each bet very carefully. He scales each wager according to the strength of his conviction and the ratio of reward to risk. The speculator doesn’t always win, but he wins much more often than he loses, and sometimes he wins big. This second kind of gambler becomes very, very rich.

Yet there is a third kind of gambler, who lies between these two extremes. This gambler neither ruins himself nor becomes as rich as Croesus. He wins some; he loses some. He does not gamble to become a billionaire. He gambles for the sheer love of gambling.

The risk-lover does not calculate as Soros does. He bets every day on the basis of his intuition — his gut. To him, the bet is an act of will, intended as much to dominate the counterparty as to make money. The bravado is the point, regardless of the size of the bet. I’ll bet you I win this round of golf. I’ll bet I can make this casino more profitable if you lend me the money to buy it. I’ll bet I can become president of America. I’ll bet this coronavirus is nothing bigger than the normal flu.

Donald Trump, as you will have guessed, is a type-three gambler. He did not blow the money he inherited from his father; nor did he turn it into a mega-fortune. He has made many a disastrous business bet, as his creditors have learnt the hard way. Yet Trump has gambled his way from property to reality TV to real power. And now he is making the biggest bet of his entire life.

He is betting that the number of Americans who die of Covid-19 will be about 40,000 — in other words, approximately the number who die of influenza each winter. (That was the number cited by one of his Wall Street friends last week, after a call with the president, as a “worst-case scenario”.)

Very obviously, Trump’s chances of re-election now hinge on how severely the pandemic hits America. Natural disasters, if they seem to be mishandled, can be political disasters, too — think of George W Bush’s loss of popularity after Hurricane Katrina. And recessions reliably spell doom for incumbents.

America is now in a pandemic-induced recession. The stock market, despite last week’s remarkable rally, is still more than 20% below its February high, effacing most of the gains investors have made since Trump’s election. The combination of public panic, rational social distancing and state-level orders to “rest in place” has thrown the US economy off a cliff. Jobless claims soared last week to nearly 3.3 million, the biggest jump — by a factor of almost five — since records began.

The president’s bet is not as crazy as you might think. It is, as I said last week, unlikely that America as a whole will have as disastrous an encounter with Covid-19 as Italy. Americans are less crowded together, use less public transport and kiss one another less than Italians. It is also possible the virus will claim many more victims in the big Democratic-voting states of the American coasts — New York and California — than in the smaller, Republican-voting states of the heartland. Thus far, only 19% of Covid-19 deaths are in counties Trump won in 2016.

Those writing the obituaries of this presidency have written them many times before and been wrong. They must have read with incredulity the results of last week’s Gallup poll, which showed a majority of voters — and in particular a majority (60%) of registered independents — approve of Trump’s handling of the pandemic.

The problem is that this time Trump is gambling with people’s lives on the basis not of calculated risk but of total uncertainty. We simply do not know enough about the virus Sars-CoV-2 to have any conviction about how many Americans it will kill. In the absence of adequate testing around the world, we still don’t quite know how many people may already have caught the virus and be just fine. We don’t know just how infectious it is. And we can only guess at how lethal it is, on the basis of widely divergent case fatality rates from around the world.

Pandemics are not like house fires or car crashes: they are not normally distributed along a bell curve but governed by a power law, which means we cannot attach a probability to the timing or scale of a pandemic. Covid-19 could kill 40,000 Americans. But if the virus spreads as far as H1N1 — swine flu — did in 2009, so that 20% of us get it, and the US has the (very low) German case fatality rate of 0.7%, we could have 400,000 dead. As my near namesake, the epidemiologist Neil Ferguson, demonstrated last week, small changes to the variables in an epidemiological model can produce mortality projections that differ by an order of magnitude.

All we can say with any certainty is that most of east Asia and most of Europe have taken much more drastic steps to contain Covid-19 than America has yet taken. And the president wants to see even those restrictions lifted in a mere two weeks’ time.

Such is Trump’s gamble with American lives. The one thing to be said in his defence is that, like his British counterpart — who very nearly gambled on a strategy of herd immunity and has now tested positive for Covid-19 — he has skin in the game. Trump too will be at risk if this gamble goes wrong. In Italy, the case fatality rate for the president’s age group is one in 20.

*A terrible book, by the way. Don't be tempted to buy it, unless you're a very religious Protestant.

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