Thoughts from Pontevedra, Galicia, Spain: 18.3.21

 Night’s candles are burnt out, and jocund day stands tiptoe on the misty mountain tops.

Spanish life is not always likeable but it is compellingly loveable.  

- Christopher Howse: 'A Pilgrim in Spain'

Covid 

The EU has released details of its plan to set up a travel certificate to help restore freedom of movement within the bloc for those inoculated against Coronavirus. 

Spain: The incidence rate of new cases of Covid-19 has stopped decreasing, and is now above previous levels, at 128 per 100,000 inhabitants for the past 14 days. Thanks largely to laxity in Madrid, I suspect.

As for Galicia, our bars and restaurants now have a later closure hour and higher table occupancy but we've been told that - during the coming holiday weekend and over Semana Santa - we can't have any private meetings with people who don't live with us. So, we can meet with people in bars but not at home. I suspect this irony reflects the fact that the police can check numbers in public places rather easier than they can for private places. A semi-police state now? There's certainly a lot of them on the street. Will they be knocking on house doors next week?

Is there a significant benefit from lockdowns? This article argues that there isn't.

Cosas de España y Galiza   

 

Spain faces one of the world's biggest problems of demographic ageing. By the middle of the century, those over 65 will have risen from 19 to 30% - an increase of more than 6m people. If there's still an EU in 2050, this will its problem as well, of course.

There are some people in Spain who simply can't just talk but need to shout. One has just come into the bar in which I'm having a coffee. It could be worse; the barman she's shouting at could have had the same habit. This does happen. For example when 2 women of a certain age are exchanging information about their personal lives. Simultaneously.

Maria's Tsunami: Day 45 

 

The UK and The EU 

Woe 1: The EU’s precautionary principle was causing problems long before their latest farce over vaccines. See the 1st article below.

Woe 2: Mirabile Dictu: Global capital is leaving Europe and coming to Britain. The eye-wateringly large monetary outflows from the eurozone may accelerate into outright flight.See the 2nd article below.

Stay alert: Troubles usually come in threes . . .

 

The UK and Brexit 

Richard North: [Back in 2016] Predicting an early referendum with "Leave" winning, multiple changes of prime minister, delayed negotiations, and then a botched Brexit, would have been difficult enough to predict. But then throw in the Covid-19 pandemic and you would have needed supernatural powers to be even close to guessing where we would stand. But we now have to add a further element - the ongoing vaccine saga which, rightly or wrongly, it pitching the EU against the UK, and stoking up nationalist sentiment in the baser elements of English society. This is tied up with the suspension by some EU Member States of the use of AZ vaccine, following a number of reports of blood clots in recently vaccinated people.  . . . Johnson keeps referring to our "friends" and "partners" in Europe. It is about time this language was given effect. There were good reasons for leaving the EU, but we are now out. Neither the EU nor its members are our enemies. We can, therefore, do without the bellicose rhetoric. Beating the virus should be our priority – not scoring points in a battle that has already been won.

Sounds about right to me.

The Way of the World 

Writes Joanna Williams here: Truth has become whatever you want it to be. New laws on misogyny or safeguarding women should be based on facts not ‘lived experience’. 

   

Religious Nutters/Crooks Corner

Kat Kerr: St Patrick was a great winner of souls. He is in Heaven, living in a mansion in a field of 5-foot-tall shamrocks that sing to him. They work with Jesus Christ because God has a sense of humor.

He's not the only one . . .

Finally  . . .  

  

My latest funny spam message: My sexual desires make people consider me a slut. Which narrows the field, I guess

THE ARTICLES 

1. Shunning Europe’s ridiculous view of risk has been the making of us: The EU’s precautionary principle was causing problems long before their latest farce over vaccines: Philip Johnston, The Telegraph.

Have the countries suspending the roll-out of the AstraZeneca vaccine against Covid taken collective leave of their senses? Is there something so amiss that merits shutting down a programme of inoculations designed to save thousands of lives and reopen economies without which we will all live in penury anyway?

Conspiracy theorists might conclude that there is a real problem and we are not being told the full truth here in the UK. But, in fact, the Europeans are in thrall to a pernicious concept known as the precautionary principle, which essentially states that if there is something science cannot be certain is safe then don’t do it.

Yet science, as we have seen during the pandemic, is rarely 100 per cent certain about anything. The bizarre aspect of the precautionary principle, however, is that even when the science is almost certain as, say, with the safety of genetically modified (GM) crops, they are still prohibited because there is always a sliver of doubt.

It was the green movement’s efforts to block GM agriculture despite its obvious potential to feed a massively growing world population that led to the promulgation of the precautionary principle. It was a development of something originally called the Vorsorgeprinzip, or foresight principle, and was picked up as a rationale for interventionism.

Since people could never judge for themselves what risks were attached to certain activities, someone would have to do it for them, namely the state. The precautionary principle is a gigantic paternalistic arm around humanity to keep any risk at bay.

In the early part of the century this became central to EU policy making, insinuated into every aspect of regulation, legislation and research. Protecting the public was the justification. Suffocating innovation and common sense was the outcome. It fed into the British public consciousness with the phrase “health and safety gone mad”.

But the implications went far beyond banning conkers in the school playground. Essentially, the precautionary principle is an element of what we would once have called risk management but without the risk, which must be almost entirely removed. The pandemic lockdowns were partly governed by this principle and by another concept called the “reasonable worst case scenario”.

Put the two together with statistical models predicting hundreds of thousands of deaths and politicians are not going to do anything else other than shut down the country. They do not believe people are capable of understanding, let alone managing, risk and in view of the public response to the lockdowns they may be right.

However, while all recent UK governments have subscribed to the precautionary principle they have tended to do so with greater pragmatism than our continental neighbours, reflecting different philosophical heritages, ours Burkean, theirs owing more to Rousseau.

Fortunately, when it comes to the vaccine, pragmatism has won out in Britain with hardly anyone calling for the programme to be halted, though the EU attitude threatens to undermine confidence in the vaccine.

Had the Government followed the precautionary principle slavishly it would not have changed the period between the two jabs from three to 12 weeks to allow for more people to be vaccinated. Yet that decision has been vindicated by real-world data showing that protection is high from the first jab and dramatically reduces fatalities and hospitalisations. As adherents to the precautionary principle we would also be suspending the AstraZeneca programme because of the blood clotting fears associated with it. But we’re not, or at least I hope we’re not.

Elsewhere, in Germany, France, Spain, Italy and a dozen other countries, pragmatic risk management – or even rational thought – seems to have been entirely suppressed by a commitment to the precautionary principle which was embedded in the governance of the EU by the Amsterdam Treaty. Or maybe it is political as more recipients of the Pfizer vaccine have reported blood clotting so why has it not been banned?

Despite the World Health Organisation, the European Medicines Agency and scientists pointing out that the risk from Covid is greater than the risk from thrombosis, their policy makers are incapable of reaching the obvious conclusion.

Since the dawn of time people have had to consider the consequences of taking difficult decisions, from following a mammoth across a swamp to driving along a motorway. There are always risks and assessing them is a matter not only of experience but of circumstance. To err on the side of excessive caution in a pandemic when it comes to using a vaccine known to be safe for the great majority is madness.

No-one suggests it should not have been put through all its regulatory processes. Had thalidomide been as rigorously tested here as it was in the US the birth defects disaster of the early 1960s would not have happened. But the Oxford vaccine was passed for use only after a strict assessment by independent regulators and more than 17 million doses have been administered with hardly any serious ill effects. The 37 cases of blood clotting in people who have received the jab are fewer than would normally be expected.

If we had applied the precautionary principle to mobile phones, as some campaigners wanted, we would still be using the dial up telephone. There were suggestions years ago that heavy use of the phones caused brain tumours and that the masts were responsible for all sorts of ailments. In 2000, the Stewart report on mobile phone safety advocated a precautionary approach, stating that “before accepting a new development we should have positive evidence that any risks from it are acceptably low”.

This suggested that any amount of unknown risk must be regulated away. Had that applied in the 19th century we would have had no trains. Ask William Huskisson, the first railway fatality.

While we have our own home-grown precautionists, risk aversion in Brussels is far greater than it is here. When we were members the battles between the UK and the Commission were more often than not over directives that we considered restrictive and unnecessary but which Eurocrats justified by reference to the precautionary principle. Indeed, it could be said that by repeatedly offending against this country’s innate good sense, it led directly to Brexit.

2.  Mirabile Dictu: global capital is leaving Europe and coming to Britain

The eye-wateringly large monetary outflows from the eurozone may accelerate into outright flight: Ambrose Evans-Pritchard. The Telegraph

Ursula von der Leyen has invoked the nuclear option of the Lisbon Treaty. By threatening to activate emergency powers under Article 122 she has told the world that Europe is no longer a safe place for private capital or inward investment.

The clause allows Brussels to seize factories, take direct control over the production process, and redirect vaccine flows. It enables war-time occupation of companies.

A regime that behaves like this is liable to impose capital controls without compunction, or block energy flows through the interconnectors, as has been threatened three times already (I keep count). And as we have seen, anything can be politicised, even random stochastic blood clots. Will global pharma ever build a plant again on EU territory after this episode?

“We want to see reciprocity and proportionality in exports,” said Mrs Von der Leyen. Delicious. The EU is currently refusing to reciprocate temporary UK waivers to smooth post-Brexit trade flows or to reciprocate on bare-bond equivalence in financial services.

If these daily antics from Brussels and Berlin continue, the eye-wateringly large capital outflows from the eurozone that have already been occurring may accelerate into something closer to outright capital flight.

HSBC says outflows reached half a trillion euros in the fourth quarter, an annualised pace of 20pc of GDP. It quickened to €250bn (£214bn) in the single month of December. The scale is breathtaking. It happened before the vaccine debacle condemned Europe to an extra quarter of economic recession and social despair.

“Relative to GDP, these outflows were the largest we have seen going back 20 years,” said Paul Mackel, the banks’ currency chief. Hedging contracts have prevented this setting off a disorderly slide in the euro but that does not change the fundamental picture.

You can interpret these outflows in many ways but one thing they are not is a vote of confidence in eurozone growth and recovery, or indeed the political management of the EU. The exodus is likely to gather pace this quarter as American reflation and the vast funding needs of the Biden treasury suck capital out of the global system.

But the accelerant is what the German vice-chancellor calls the vaccine “sh-- show”, made more destructive by the failure of every major EU state to heed the lesson from Britain and to let the B117 variant run rampant. The waning epidemic from the old variant and the rising epidemic from the new variant created an illusory stability in case numbers. Epidemiologists issued warnings. Politicians again refused to listen.

Emmanuel Macron is close to admitting that his political gamble has failed and that greater Paris will have to be shut down within days. He took a “Jupiterian” decision to keep France open, overruling his scientists, his health minister and his premier. He now owns a disaster. What baffles me is that an astute technocrat – au fait with numbers, curves and lag effects – could misread the data so badly.

The consequences of a mushrooming third wave in an unvaccinated population, with no herd immunity until September, is to protract what Keynes called the “long dragging conditions of semi-slump” for many more months, inflicting such damage that the recovery may be sickly even when it finally comes.

While the US is spending $2.8 trillion (£2 trillion) or 13pc of GDP in fast fiscal relief – two thirds this year – the EU has nothing of the kind. The Recovery Fund is for rebuilding later. “It is a medium-term investment plan. It doesn’t do much in the short term,” said Lorenzo Codogno from LC Macro Advisors.

The Recovery Fund will in theory dish out €87bn later this year in grants and loans (less relevant) if recipients meet all conditions. That is just 0.7pc of GDP. It is why the European Central Bank’s Isabel Schnabel has warned that the fund may be “insufficient”, opening a political Pandora’s box.

There is fiscal stimulus worth 2pc of GDP at a national level but the Atlantic gap is huge. Washington is “going big” even though the US output gap will be closed by June, so big that the OECD now thinks America will regain its pre-pandemic trajectory by next year – along with China in this elite club.

Yet Europe is “going small” even though the output gap in the eurozone is still a dire 8pc of GDP, reaching 10pc in Italy and Spain (IIF data). It is Atlantic decoupling like never before in modern times.

The story that has yet to gain media traction is cross-Channel decoupling. It is no longer implausible to imagine Britain leaving Europe far behind over the course of 2021, a remarkable thought given the counter-story in the British lay press is that post-Brexit trade has been a calamity.

Markets have shrugged off the 41pc collapse in exports to the EU in January, deeming it transient noise. One cannot infer much from trade flows that month – except that firms were not ready, and the EU aims to be bloody minded. Companies had stockpiled before and were holding back afterwards in case of border chaos. Only if these patterns continue into March will there be serious grounds for alarm.

For now sterling is in rude good health. The pound has hit a one-year high of €1.17 against the euro this week and is nearing the top end of its post-referendum trading range. Bank of America says the pound is undergoing a “cyclical rehabilitation”. Fears that inward investment would dry up have proved unfounded. “There are clear signs of pick-up in flows into UK plc,” it said.

There has been steady buying of sterling during New York opening hours by US funds. Japan’s giant life insurers and pension funds are scooping up gilts. RBC Capital says they purchased a net $5.5bn of UK bonds in January alone, the highest in five years.

BNY Mellon, the world’s top custodian bank with $25 trillion under watch, says its iFlow data is detecting a marked shift into UK assets by global fund managers. “It is not just a one-off story after the Brexit deal. It has been going on since last year. Funds are rotating back into UK equities,” said Geoffrey Yu, the bank’s Europe strategist.

The UK will reopen and return to growth months before the eurozone. The measurement distortion that overstated the UK’s economic contraction by roughly 2pc of GDP last year will flatter growth this year with a mirror-image distortion on the way back up.

All the stars are aligning for what the Bank of England’s Andy Haldane calls a “coiled spring” recovery. That does not in itself validate Brexit but the spectacle of cross-Channel decoupling will profoundly change the global discourse on Brexit. The real test comes later during the hard grind of the 2020s. But my hunch is that the first year of independence will be much better than almost anybody expected.