washingtonpost--2020-05-23--Analysis | China Is Too Rich to Splurge on Infrastructure

In trying to establish a path out of the current economic slump , those gleaming high-speed rail lines , metro systems , apartment buildings and electricity networks pose a problem .
China has invested so lavishly in infrastructure over the past decade that its endowment of public capital is now richer on a per-person basis than that of Germany , Spain , South Korea or the U.K. — despite economic output that remains many times lower .
Further spending is unlikely to deliver the same kick to gross domestic product as it did in the past .
Indeed , it @ @ @ @ @ @ @ rate of return on future investment .
If it ends up distracting from the problems of a shrinking labor force and lackluster productivity , it could sow the seeds of an economic stagnation that may take decades to escape .
That ’ s one reason the policy announced Friday — issuing 3.75 trillion yuan of local government bonds , and an additional 1 trillion yuan to deal with the coronavirus — looks so modest .
While the aggregate amount is a little more than the 2008 stimulus , China ’ s economy is @ @ @ @ @ @ @ impact will be comparatively slight .
To see how much China ’ s physical infrastructure has changed over the past decade , it ’ s worth looking at the International Monetary Fund ’ s global investment data set .
In the eight years through 2008 , China ’ s public capital stock increased by $ 7.58 trillion , lifting its share of the global total to 26 % from about 19 % .
In the subsequent eight years , that pace nearly doubled : $ 13.39 trillion was added , giving China about @ @ @ @ @ @ @ public capital .
This matters because standard models see long-run economic growth as the sum of labor , capital and productivity .
In the early stages of industrialization , a country ’ s labor force is boosted by migration from the countryside and improving life expectancy , while the building of physical infrastructure allows workers to generate output more effectively .
The result is a headlong rate of economic growth like that seen in 19th-century Europe and America , mid-20th-century Japan and Russia , and China over the past few decades .
That @ @ @ @ @ @ @ grow richer .
The growth in the workforce slows down as rural areas empty out , people begin having smaller families , and the population ages .
China lost 2.5 million workers in 2019 , three times more than Japan and the European Union put together .
Meanwhile , capital investment becomes less productive over time , because more spending is needed to keep up with depreciation , and the return on new investment declines as the stock of infrastructure grows .
If societies fail to use their resources more productively , the @ @ @ @ @ @ @ the middle-income trap that for decades has stopped countries such as Mexico , Russia , Malaysia and South Africa from joining the ranks of rich nations .
China ’ s willingness to invest aggressively in upgrading its infrastructure in recent decades is a welcome lesson to countries such as the U.K. , where run-down public assets have put a brake on economic growth .
At the same time , developed countries aren ’ t entirely wrong in demanding that such spending should pass some sort of cost-benefit analysis .
Capital growth pursued without @ @ @ @ @ @ @ to deliver the wanted boost to growth , while the attendant debt and costs of servicing it crowd out more worthwhile investments .
That can turn glistening infrastructure from an economic boon into a burden , as my colleague Anjani Trivedi has argued .
China ’ s reluctance to pull the trigger on industrial stimulus in recent years is a welcome sign that policy makers are well aware of this risk .
Total debt is running at more than three times GDP , and while the central government accounts for a relatively small @ @ @ @ @ @ @ s ultimately on the hook thanks to the intermingling of its own borrowing with that of provincial and local governments .
That means any ambitious plans for 5G networks , artificial intelligence and other high-tech stimulus should be taken with caution .
China has ridden the tide of aggressive public investment to turn itself from a poor country to a middle-income power .
If it doesn ’ t learn to restrain that habit , though , a middle-income power is all it will ever be .
David Fickling is a Bloomberg Opinion columnist @ @ @ @ @ @ @ and consumer companies .
He has been a reporter for Bloomberg News , Dow Jones , the Wall Street Journal , the Financial Times and the Guardian .


washingtonpost--2020-05-24--Analysis | China’s Trillions Toward Tech Won’t Buy Dominance

Over the next few years , national-level plans include injecting more than 2.5 trillion yuan ( $ 352 billion ) into over 550,000 base stations , a key building block of 5G infrastructure , and 500 billion yuan into ultra-high-voltage power .
Local governments have ideas , too .
They want data centers and cloud computing projects , among other things .
Jiangsu is looking for faster connectivity for smart medical care , smart transportation and , well , all things smart .
Shanghai ’ s City Action Plan alone is supposed to total 270 billon yuan.By 2025 , China @ @ @ @ @ @ @ trillion .
According to a work report released Friday in conjunction with the start of the National People ’ s Congress , the government plans to prioritize “ new infrastructure and new urbanization initiatives ” to boost consumption and growth .
Goldman Sachs Group Inc. analysts have said that new infrastructure sectors could total 2 trillion yuan ( $ 281 billion ) this year , and twice that in 2021 .
Funding is being secured through special bonds and big banks .
The Shanghai provincial administration , for instance , plans to get @ @ @ @ @ @ @ from capital markets , and the rest from central government funds and special loans .
Thousands of funds have been set up in various industries since 2018 , and some goals were set forth in previous plans .
Policymakers are aggressively driving the fiscal stimulus narrative through this new infrastructure lens .
Building big things is a tried and true fallback in China , from the nation ’ s own road-and-rail networks to its most important soft-power foreign policy , the belt-and-road initiative to connect the globe in a physical network for trade @ @ @ @ @ @ @ this will work for technology .
The reality is that the central-government approved projects add up to only around 10 % of infrastructure spending and 3 % of total fixed asset investment .
The plans lack the focus or evidence of expertise to show quite how China would achieve technological dominance .
Thousands more charging stations for electric cars won ’ t change the fact that the country has been unable to produce a top-of-the-line electric vehicle , and demand for what ’ s on offer has tanked without subsidies .
With their @ @ @ @ @ @ @ telecom giants seem reluctant to allocate capital expenditures toward the bold 5G vision .
China Mobile Ltd. Chairman Yang Jie said on a March earnings call that capex won ’ t be expanding much despite the company being at the outset of a three-year peak period for 5G investments .
Analysts had expected it to grow by more than 20 % , compared to the actual 8.4 % .Laying this new foundation for the economy , which includes incorporating artificial intelligence into rail transit and utilities , requires time , not just pledged @ @ @ @ @ @ @ see the returns any time soon , compared to investments on old infrastructure .
These projects are less labor intensive , so there ’ s no corresponding whack at the post-virus jobless rate that would help demand .
State-led firms that could boast big profits from sales of cement and machinery on the back of building projects , for instance , can ’ t reap money as visibly from being more connected.Spending the old way isn ’ t paying off like it used to , either .
Sectors such as automobiles and materials @ @ @ @ @ @ @ funding , have seen returns on invested capital fall .
The massive push over the years gave China the Shanghai maglev and a vast network of trains and roads .
But much debt remains and several of those projects still don ’ t make money .
Add in balance-sheet pressures and spending constraints , and every yuan of credit becomes less effective .
There ’ s also expertise to consider .
Technological dominance may require research more than 5G poles .
China ’ s problem with wide-scale innovation remains the same as it @ @ @ @ @ @ @ comes from the top down .
Beijing has determined and shaped who the players will be .
Good examples are the 2006 innovative society plan and Made in China 2025 , published in 2015 , that intended to transform industries and manufacturing , and have had mixed results .
China is unlikely to get the boost from tech spending that it needs to solve present-day problems , especially in the flux of the post-Covid-19 era .
Ultimately , the country will just fall back on what it knows best : property , cars @ @ @ @ @ @ @ economy is still run by construction , real estate and manufacturing .
Investors should think again before bringing in anything but caution .

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washingtonpost--2020-05-22--Millions of PPP Loan-Forgiveness Requests Are About to Rain on Banks

At Valley National Bancorp , 500 employees out of its 3,200-person workforce were designated to help customers process the loans , and a similar number will probably be needed to deal with forgiveness requests , said Chief Executive Officer Ira Robbins .
The Wayne , New Jersey-based firm has issued more than $ 2.2 billion in PPP loans .
“ Hopefully it doesn ’ t all come at one time and we can stagger it over a period of time , but I do believe there ’ s going to be a lot of hand-holding associated with it as you @ @ @ @ @ @ @ in an interview .
The SBA released an 11-page document last week listing the criteria small businesses must follow to get their PPP loans forgiven .
Among the guidelines are directions on how to calculate payroll costs , which must account for 75 % of loan proceeds spent .
The document is complex , so it will fall to lenders to help borrowers complete it , said Libby Morris , head of U.S. operations at Funding Circle Holdings Plc , a London-based firm that issued PPP loans .
“ I would equate this @ @ @ @ @ @ @ heavier lift to processing the loans themselves , ” Morris said .
“ You pretty much have to build a new loan funnel and reprocess all of these loans again .
For most lending businesses , you may be doing this full-time for no revenue.
” Piermont Bank , which made PPP loans in the greater New York City area , has spent hours deciphering SBA requirements to create a worksheet for borrowers , CEO Wendy Cai-Lee said in an interview .
PayPal Holdings Inc. , provider of about $ 1.6 billion in @ @ @ @ @ @ @ tools to streamline the forgiveness process , Doug Bland , senior vice president of global credit , said in an email .
For all the planning by lenders , the rules could still change .
Next week , the House is set to vote on a proposal that would relax the 75 % payroll requirement and give businesses more time to pay back loans that aren ’ t forgiven .
Businesses are still looking for clarity on whether employee bonuses and some health insurance and retirement plans count as payroll , said Joan @ @ @ @ @ @ @ USA LLP , who has been advising borrowers .
Confusion was also prevalent during the original loan-approval process , when lenders complained about a lack of guidance from the SBA .
Many businesses may find they fail to meet SBA terms for forgiveness , which will leave banks with loans to service and customer issues to resolve , said Josh Knauer , general partner at advisory firm JumpScale .
He estimates that about 50 % of PPP loans won ’ t be forgiven .
“ I see going forward that lenders , all @ @ @ @ @ @ @ have a massive customer-relations problem with the companies they ’ re lending to , ” Knauer said .
“ More time will have to be spent on the phone , more audits are going to have to be done , and a lot more digging into every single line item of expense .
”


washingtonpost--2020-05-25--Analysis | Hong Kong Finance Has a Security Blanket

U.S.-listed Chinese technology companies are lining up to sell stock in Hong Kong , seeking refuge from an environment that has become increasingly less hospitable .
Nasdaq-traded JD.com Inc. and NetEase Inc. are planning secondary listings in the city next month , following a trail blazed by Alibaba Group Holding Ltd. in November .
Optimism that more companies will join them drove shares of Hong Kong ’ s exchange operator up more than 6 % on Monday .
There ’ s every reason to expect these stock offerings to do well , and push Hong Kong back up the rankings @ @ @ @ @ @ @ centers .
So far this year , the city is the sixth-largest market by capital raised .
It topped the table for the whole of 2019 when New York-listed Alibaba sold $ 13 billion of stock , underscoring the existence of a strong local investor base for China ’ s most successful companies .
The reception for Alibaba suggests that Asian institutional investors want to be able to trade China ’ s leading enterprises in their own time zone .
JD and NetEase are also among the nation ’ s technology champions .
@ @ @ @ @ @ @ , while Hangzhou-based NetEase is behind some of the most popular mobile games in China .
Beyond these two , search-engine operator Baidu Inc. is considering delisting from Nasdaq and moving to an exchange nearer home , Reuters reported last week .
The coronavirus has exacerbated tensions between Washington and Beijing , while scandals such as fabricated sales at Luckin Coffee Inc. have spurred politicians to push for tighter regulation , giving Chinese companies an incentive to list elsewhere .
Hong Kong is an obvious choice .
The city burnished its appeal for @ @ @ @ @ @ @ of the city ’ s benchmark Hang Seng Index said it would change its rules to admit secondary listings and companies with dual-class share structures .
Stocks that join the benchmark can expect inflows from passive investors such as exchange-traded funds that track the index .
Citigroup Inc. reckons that 23 of the 249 Chinese stocks traded in the U.S. meet Hong Kong ’ s criteria for a secondary listing , which require companies to have a market value of $ 5.2 billion or , alternatively , a combination of $ 129 million @ @ @ @ @ @ @ billion market cap .
JD tops the group with a value of $ 73 billion .
An even more alluring prize would be inclusion of secondary listings in Hong Kong ’ s stock-trading links with the Shanghai and Shenzhen exchanges , which would enable mainland Chinese investors to buy these shares .
Alibaba wasn ’ t included in the stock connect , to the disappointment of some investors .
China ’ s government could yet decide to make this happen .
It ’ s a reminder that Beijing has levers at its disposal @ @ @ @ @ @ @ s economy and financial industry , which accounts for a fifth of the city ’ s gross domestic product — as it did after the SARS epidemic in 2003 , when half a million people demonstrated against the Hong Kong government ’ s first , aborted attempt to introduce national security legislation .
Hong Kong Exchanges & Clearing Ltd. surged the most in 18 months Monday even as unrest returned to the city .
Listing of American depositary receipts may double the exchange operator ’ s revenue , Morgan Stanley said .
The @ @ @ @ @ @ @ after slumping 5.6 % on Friday .
An exodus of businesses , people and capital may yet imperil Hong Kong ’ s role as an international financial center .
The IPO outlook suggests that , rather than a sudden demise , that ’ s likely to be a long drawn-out process .


washingtonpost--2020-05-25--Analysis | Why China Uses ‘Special Debt’ to Help Economy Recover

Unlike regular government debt , special bonds raise cash for a certain policy or to help solve a particular problem .
They are not part of China ’ s official budget and thus not included in deficit calculations .
At more than 3.6 % of gross domestic product , the 2020 deficit target is already higher than in recent years .
A senior official said increasing debt levels to help the economy are feasible and necessary .
The central government will cover interest payments and 30 % of the principal .
During the Asian financial crisis , China sold 270 @ @ @ @ @ @ @ at the time the country ’ s largest bond issue -- to raise capital for its big state banks and help offset losses from nonperforming assets .
In 2007 , 1.55 trillion yuan of special government bonds were issued to capitalize China Investment Corp. , the sovereign wealth fund .
The bond proceeds were used to buy currency reserves from the People ’ s Bank of China , and those funds then went to CIC .
Like government debt , they will most likely to be purchased by commercial banks and other financial @ @ @ @ @ @ @ .
Ding Shuang , chief economist for Greater China and North Asia at Standard Chartered Bank ( HK ) Ltd. , said the special bonds could eventually “ be part of the PBOC ’ s balance sheet , just like what happened in 2007.
” Analysts point out that the central bank can not legally buy the debt directly , so another route would have to be used .
In one change from the prior two special government bonds , the anti-virus debt will be sold publicly versus to a selected group of @ @ @ @ @ @ @ analyst at Founder Securities Co..
They will be turned over to local governments , mainly for health and pandemic-related spending , said the Ministry of Finance .
Businesses and households in Hubei province and its capital Wuhan , the original epicenter of the outbreak , will likely be major recipients , said Ding .
He added money could also be used to recapitalize smaller banks so they could lend to small and medium-sized businesses .
That approach would fit with a government move to extend loan relief and encourage more lending to China @ @ @ @ @


washingtonpost--2020-05-21--Senators Seek DOJ Probe of Planned Parenthood Stimulus Loans

The Planned Parenthood entities certified on loan applications that they were eligible when they knew they weren ’ t , the senators said .
They cited language in the bill enacted in March creating the program and an implementing rule , as well as a statement at the time from Planned Parenthood Action Fund complaining that the bill gave the Trump administration broad discretion to exclude Planned Parenthood affiliates .
“ The funds in the program are not unlimited , and were depleted once already because of high demand , ” the senators wrote .
“ Planned Parenthood fraudulently taking @ @ @ @ @ @ @ intended to help keep those small businesses and nonprofit organizations afloat can not stand and must be addressed.
” Planned Parenthood Federation of America said its 49 member organizations are independent with separate boards of directors , so they are eligible to apply for PPP loans to deal with the economic impact of the pandemic just like other local nonprofits and health-care providers .
“ This is a clear political attack on Planned Parenthood health centers and access to reproductive health care , ” Jacqueline Ayers , vice president of government relations and @ @ @ @ @ @ @ .
“ It has nothing to do with Planned Parenthood health care organizations ’ eligibility for COVID-19 relief efforts.
” The group , which says its affiliates operate more than 600 health centers nationwide , is a frequent target for Republicans because it provides abortion services .
The Justice Department has received and is reviewing the letter , spokeswoman Kerri Kupec said .
The Small Business Administration didn ’ t respond to a request for information about Planned Parenthood ’ s eligibility .
The PPP offers forgivable loans to small businesses of 500 @ @ @ @ @ @ @ the SBA ’ s size standards for industries .
The law allowed an exception for hotel and restaurant chains as long as each physical location had fewer than 500 employees .
Several industries , particularly in travel , have sought to expand which kinds of nonprofits can qualify , and the House has passed a bill that would allow trade associations , chambers would impose imposes limits on how they can engage in political spending or count their lobbyists as needing funds .
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washingtonpost--2020-04-21--Wealthy Mortgage Borrowers Face Cold Shoulder From Lenders

“ Before this crisis hit us , jumbo loans were pretty attractive , ” Tendayi Kapfidze , chief economist at LendingTree Inc. , said .
“ But because they don ’ t have the government guarantee , a lot of those loans end up on the bank balance sheet.
” Lenders are charging more for jumbos , relative to conventional mortgages , than at any time in almost seven years , according to Optimal Blue , a Plano , Texas-based company that tracks mortgage rates .
They ’ ve also tightened lending standards , making it harder for households , @ @ @ @ @ @ @ qualify for new loans .
David Adler , an aerospace executive in Irvine , California , thought it would be easy to lower the 3.7 % rate on his $ 700,000 home loan .
Adler , 60 , has excellent credit and plenty of equity in the Spanish Mission-style house he bought new eight years ago .
He had watched the Federal Reserve drop its benchmark rate to near zero , but when he called his lender , U.S. Bank , the company ’ s rates were too high to help .
The @ @ @ @ @ @ @ % in March , more than double the drop in the overall home-loan market , according to the Mortgage Bankers Association .
Jumbo loans exceed the limit for government-backed mortgages , which is $ 510,400 in most of the country , but can be as large as $ 765,500 in high-cost real estate markets , such as New York City and coastal California .
Jumbo mortgage rates for 30-year fixed loans early last week were 3.68 % , almost 30 basis points higher than the average conventional rate .
The spread over the @ @ @ @ @ @ @ 2013 , according to data from Optimal Blue .
Before the pandemic , lenders were falling over each other to welcome jumbo borrowers , who generated fat profits even though they were the least likely to default .
The borrowers -- with great credit , money in the bank , valuable collateral and solid income -- were also viewed as lucrative customers for other financial products .
That ’ s why they got the best rates .
Now , banks are concerned about home prices falling in markets that rely on jumbo mortgages @ @ @ @ @ @ @ New York , San Francisco and Seattle -- all of which have been hard hit by the coronavirus , said Vishal Garg , chief executive officer of Better.com , a home-lending startup backed by Citigroup Inc. and Goldman Sachs Group Inc. Few banks better illustrate the souring appetite for jumbos than Wells Fargo & Co .
The bank ranks among the biggest jumbo mortgage holders , making the loans itself and buying them from outside partners through what the mortgage industry refers to as correspondent lenders .
Last year , the bank produced @ @ @ @ @ @ @ more than any lender in the country , according to Inside Mortgage Finance .
In recent weeks , the lender , the nation ’ s fourth-largest bank by assets , has halted purchases from other mortgage banks and limited refinancings of jumbos to customers who currently have at least $ 250,000 parked at the bank , an executive said .
Much of this pullback is because investors who ’ d normally buy these loans no longer want them , said Stanley Middleman , chief executive officer of Freedom Mortgage Corp. , one of @ @ @ @ @ @ @ .
Wealthier buyers are proving to be just as likely to stop paying their mortgages .
Approximately 5.5 % of jumbo loans -- 131,000 borrowers -- have asked to postpone payments due to a loss of income , compared with 6 % of all loans , according to Black Knight Inc .
While lenders aren ’ t required to allow missed payments on loans that aren ’ t government-guaranteed , such as jumbos , they ’ re following the government ’ s lead .
For one thing , they don ’ t want @ @ @ @ @ @ @ recruit back after the crisis .
And foreclosing on Americans during a pandemic risks hurting lenders ’ reputations , LendingTree ’ s Kapfidze said .
A Los Angeles homebuyer he ’ s working with may fall short of qualifying for a mortgage , despite good credit and owning a business that ’ s doing well during the pandemic because it ’ s deemed “ essential , ” Germanides said .
The borrower was ready to pony up 20 % of the home ’ s value for the down payment , but he now @ @ @ @ @ @ @


washingtonpost--2020-04-21--Analysis | Oil for Less Than Nothing? Here’s How That Happened

For some producers , it may be cheaper in the long run than closing down production or finding a place to store the supply bubbling out of the ground .
Many worry that shutting their wells might damage them permanently , rendering them uneconomical in the future .
Then there are the traders who buy oil futures contracts as a way of betting on price movements who have no intention of taking delivery of barrels .
They can get caught by sharp price drops and face the choice of finding storage or selling at a loss .
And the escalating @ @ @ @ @ @ @ scarce , and increasingly expensive .
Either the pandemic or the price war alone would have rocked energy markets .
Together , they have turned them upside down .
As the virus started to spread around the globe , it began eating away at oil demand .
But just as countries like Italy showed what kind of damage a national lockdown could do economically , Saudi Arabia and Russia , the world ’ s biggest oil producers , escalated the price war .
A pact that had restrained production collapsed and both countries @ @ @ @ @ @ @ releasing record volumes of crude into the market .
Yes , one worked out by OPEC , Russia , the U.S. and the Group of 20 countries .
But its call for an overall production cut of roughly 10 % proved to be too little , too late .
Prices initially turned negative just in obscure corners of the U.S. market such as Wyoming , where storage options are few .
Then major hubs began to register negative prices for small streams of selected crudes .
And on April 20 , prices fell @ @ @ @ @ @ @ , which is owned by CME , the world ’ s largest energy market .
The lowest prices came in trades in futures -- contracts in which a buyer locks in a purchase at a stated price at a stated time .
Futures are a tool for users of oil to hedge against price swings , but also a means of speculation .
The contracts run for a set period , and traders who don ’ t want to unwind their position or take delivery generally roll over their monthly contracts shortly before @ @ @ @ @ @ @ future .
Contracts for May delivery were due to expire on April 21 , putting maximum pressure the day before on traders whose contracts were coming due .
For them , selling at a steeply negative price was better than taking delivery of actual oil because nobody needs it and there are fewer and fewer places to put it .
Brent futures , the benchmark for Europe in London , ended April 20 down sharply but still above $ 25 a barrel .
The physical domestic crude market in the U.S. saw negative @ @ @ @ @ @ @ , Mars Blend , Light and Heavy Louisiana Sweet crudes .
Horrified by negative benchmark prices , some U.S. oil producers began offering crude at fixed prices for the first time since an oil rout in 2014-15 .
The WTI futures contract for June delivery changed hands at $ 20 a barrel on April 20 before falling further the next day -- highlighting the extent to which the rout was being caused by the massive glut in the market rather than just a technical quirk .
Ever tightening constraints on storage capacity mean @ @ @ @ @ @ @ , according to one of the top trading houses .
Since the glut began to build and prices began to fall , storage facilities have been moving toward capacity .
Crude stockpiles at Cushing in Oklahoma -- America ’ s key storage hub and delivery point of the WTI contract -- have jumped 48 % to almost 55 million barrels since the end of February .
The hub had working storage capacity of 76 million as of Sept. 30 , according to the Energy Information Administration .
The industry has been accumulating supply @ @ @ @ @ @ @ options such as storing oil in rail tanker cars .
The Trump Administration , which is concerned about the possible ripple effect from oil bankruptcies , is eyeing a proposal , which is still in its infancy , to pay drillers to keep their oil in the ground temporarily .
The idea would be to keep it off the market until prices recovered , giving the Treasury a healthy profit eventually while protecting producers from immediate losses .
Nationwide , the average gasoline price is down more than $ 1 a gallon in @ @ @ @ @ @ @ It ’ s fallen every day since late February .
It ’ ll take a couple more weeks for the declines in futures prices to be reflected at the pump .
And with taxes making up part of the price , there ’ s only so low they can go .


washingtonpost--2020-06-20--Analysis | Monetary Insanity Is No Basis for Common Ground

It postulates that inflation — and not debts or deficits — is the only real constraint on what a modern government not yoked to the gold standard can afford .
Even for those who aren ’ t MMT cheerleaders , its basic contention is worth remembering : A money-printing sovereign that issues debt in its own currency can ’ t run out of funds the same way as a household or a firm .
Pro-labor academics , activists and social workers who think it ’ s morally justified to expropriate private property to support India ’ s pandemic-flattened economy should @ @ @ @ @ @ @ .
The proposal from the fiscally conservative , pro-business side to use people ’ s gold as collateral to raise emergency public resources is also indefensible .
An extended lockdown , still-rising infections and an underwhelming fiscal response are causing the nation of 1.3 billion people to lurch toward self-defeating economic nationalism .
In other ways , too , the crisis of lives and livelihoods is clouding rational thought .
An otherwise well-meaning memorandum by a group of economists and trade unionists asked the government to treat all cash , property , bonds @ @ @ @ @ @ @ or in the country as national resources during the Covid-19 crisis .
Amid trenchant criticism , the idea was quickly dropped .
But an equally bizarre proposal from the other end of the political spectrum , more closely aligned with the Modi government , is far from dead .
An article in the Business Standard last month said that to print money to revive the economy , authorities are contemplating using gold held by citizens or a part of the official $ 500 billion in foreign-exchange reserves .
When Soumya Kanti Ghosh , @ @ @ @ @ @ @ of India , the country ’ s largest lender , sought to deflate the trial balloon this week in an op-ed , it became clear that the idea was gaining traction .
Indians own 25,000 tons of gold , roughly one-eighth of the metal ever mined .
Households usually keep gold in the form of jewelry , not bars , and can pledge it against loans .
Why would they sell family heirlooms and wedding gifts to the central bank to watch them melt in a government furnace ?
The idea of using @ @ @ @ @ @ @ .
Those are already the Reserve Bank of India ’ s assets , matched by liabilities — money — on the other side of its balance sheet .
To create more rupees via this route , the RBI will have to buy more dollars from banks and give them newly minted currency .
The only point of all this rigmarole is to refrain from issuing government debt and save India ’ s credit rating , hovering one misstep away from junk .
However , investors aren ’ t naive .
Swapping people ’ @ @ @ @ @ @ @ a few warm meals and a month or two of rent isn ’ t going to make bondholders optimistic about a revival of growth .
And if , say , $ 100 billion of reserves are somehow sequestered to raise more funds , they ’ ll be unavailable to settle foreigners ’ claims .
This could be problematic , given India ’ s history of current-account shortfalls .
Why not drop the subterfuge , openly run large government deficits , and monetize them ?
Untimely fiscal prudence would cause the debt-to-gross domestic product @ @ @ @ @ @ @ the fiscal year through March 2021 , from an estimated 70.9 % in fiscal 2020 , Bloomberg Economics ’ Abhishek Gupta projected last month .
This week , he slashed his growth estimate to a 10.6 % drop , from 4.5 % previously , and raised his forecast of debt-to-GDP to 91 % .
The more this extra debt gets parked with the RBI , the less the pressure on the bond market to finance it .
Public borrowing doesn ’ t cause a crunch when there ’ s little private credit demand @ @ @ @ @ @ @ country , people ’ s expectations of future inflation aren ’ t anchored to a central bank target .
Labor and capital don ’ t always move efficiently to where they ’ ll be productive .
Also , while advanced nations can withstand large swings in exchange rates , emerging economies rightly worry about a dollar shortage .
Since investors know all this , they want to leave before others do .
If the central bank boldly supports fiscal expansion , the 250 basis point excess yield investors are demanding for preferring 10-year @ @ @ @ @ @ @ — triple the spread from a year ago — could decline .
Lower long-term borrowing costs could even encourage issues of perpetual sovereign debt , an option SBI economists are recommending .
Incomes and consumption are cratering , but as long as the state ’ s power to tax them isn ’ t durably impaired , it doesn ’ t require collateral to borrow .
Even if they don ’ t buy the whole MMT package , skeptics can safely take this one lesson home .
Much better than plotting to beg , @ @ @ @ @ @ @ dip into foreign reserves .


washingtonpost--2020-06-19--Trump Administration Agrees to Disclose Details of PPP Loans

For loans below $ 150,000 , only totals will be released aggregated by zip code , by industry , by business type , and by various demographic categories , the agencies said .
The loans above $ 150,000 account for almost 75 % of the total loan dollars approved , they said .
Lawmakers and business groups had been demanding the release of details about PPP after Treasury Secretary Steven Mnuchin said at a Senate committee hearing June 10 that the names of companies that received forgivable loans and the amounts were proprietary or confidential -- even though the administration @ @ @ @ @ @ @ disclosed and the PPP application says such data will “ automatically ” be released .
“ I am pleased that we have been able to reach a bipartisan agreement on disclosure which will strike the appropriate balance of providing public transparency , while protecting the payroll and personal income information of small businesses , sole proprietors , and independent contractors , ” Mnuchin said in a statement .
The SBA reported that as of Friday night , loans had been approved for almost 4.7 million small businesses totaling $ 514.5 billion .
Critics @ @ @ @ @ @ @ know how taxpayer dollars were used and that more detail is needed to know whether PPP is serving businesses that need help .
“ The administration ’ s decision to hide basic PPP loan data is a disturbing sign of its lack of concern for who gets this funding , how much they receive or why , ” House Speaker Nancy Pelosi said in a June 12 statement .
“ The administration must immediately reverse this decision and uphold its obligation to release this data.
” Republican Senator Marco Rubio of Florida , @ @ @ @ @ @ @ Committee , had signaled that a deal was imminent with a tweet on Friday saying “ we are close to a process on disclosure ” of loans “ that would provide taxpayers the transparency they are entitled to while addressing the concerns raised ” by some owners .
Lawmakers have also called on Treasury and the SBA to provide details about its coronavirus relief loans to the Government Accountability Office , which is preparing a report about how relief dollars were spent .
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washingtonpost--2020-04-08--U.S. Recession, Recovery Plan, Europe Improvisation: Eco Day

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washingtonpost--2020-04-08--Analysis | How’s the Internet Doing? Depends Where You Look

As residents shelter in place to stop the spread of the coronavirus , the surge in demand that internet providers would expect to see gradually over the course of an entire year has instead hit in a matter of weeks .
That ’ s because of all the work-from-home applications , calls and texts to check in with loved ones , Netflix binge-watching and virtual exercise classes and doctor ’ s visits .
AT & T Inc. reported that traffic on its core network was up 23 % on Sunday , April 5 , from a comparable day in February @ @ @ @ @ @ @ jumped more than 30 % in March , and in some larger metropolitan areas , such as Chicago and San Francisco , it climbed as much as 60 % .
While streaming-video consumption is on the rise , data usage for gaming has more than doubled , according to Verizon Communications Inc .
It raises the question , how are these crucial networks faring , and will they be able to keep handling this kind of a load ?
The answer is complicated and even more so the longer the pandemic persists .
@ @ @ @ @ @ @ enough to be able to work remotely and stream Netflix can attest — things seem to be going OK. “ These networks are holding up pretty well to the onslaught of traffic demand that they ’ ve been subject to , ” Steve Alexander , chief technology officer at Ciena Corp. , said during a virtual Zoom interview on Monday — our very own test of the internet ’ s capabilities during the new peak hours .
( Ciena provides the underlying software and equipment used by network operators . )
Still , @ @ @ @ @ @ @ for tracking the state of America ’ s digital connectivity .
Ajit Pai , chairman of the Federal Communications Commission , released a statement last week summarizing the upbeat feedback he ’ s received from internet providers .
“ It appears , ” he said , that networks are performing fine , relying on the data disclosed by those companies .
There are handy third-party sources such as Ookla and BroadbandNow ; however , the different methodologies make it difficult to get a good read .
For example , Ookla has shown a @ @ @ @ @ @ @ download speeds in the U.S .
But BroadbandNow has found that 88 of the top 200 cities have had “ some degree of network degradation , ” with 27 cities experiencing more significant declines .
Part of the problem is that nationwide averages aren ’ t practical when internet infrastructure and reliability can vary immensely from one state or county to the next .
Millions of Americans in rural towns still don ’ t have access to minimum download speeds of 25 megabits per second , as I noted last month .
And @ @ @ @ @ @ @ for households using multiple devices simultaneously for data-intensive tasks such as watching Hulu and joining a work-video conference .
Netflix and its ilk reduced picture quality in Europe to ease network congestion , but the U.S. hasn ’ t needed to resort to such actions .
Another issue is that connections tend to be measured in terms of download speeds , while upload speeds are much slower and are needed for things like video calls .
That ’ s why it ’ s important to look at latency , the amount of time @ @ @ @ @ @ @ which can explain annoying buffering on streaming apps and lags in a FaceTime connection .
The unprecedented demand “ is putting real stress on our networks , and with so much of modern life now dependent on these connections it is fair to ask how providers are managing this new demand , ” FCC Commissioner Jessica Rosenworcel said in a statement responding to questions sent to her office .
“ Getting a few reports using different methods from a handful of companies is useful , but it ’ s not enough.
” Rosenworcel @ @ @ @ @ @ @ daily updates on network status , just as it would during a hurricane or mass power outage , events that activate its Disaster Information Reporting System .
The FCC has at least gotten internet providers such as AT & T , Comcast and Verizon to sign onto its Keep Americans Connected Pledge , agreeing for 60 days not to terminate customers ’ service if they ’ re unable to pay their bills .
An emerging challenge could be the safety of employees who are essential to keeping these networks up and running .
@ @ @ @ @ @ @ work hasn ’ t stopped .
As Ciena ’ s Alexander put it : “ The network is there , kind of like air — it just works , until all of a sudden there ’ s an issue and you notice it.
” For now , all we can really go by is the industry ’ s word .
But you ’ ll know when there ’ s a problem .


washingtonpost--2020-04-07--Analysis | Explaining Kurzarbeit, or Saving Jobs the German Way

Businesses facing a temporary and unavoidable shortfall of orders due to a crisis -- as is the case for many due to the coronavirus -- can apply for the government to subsidize workers ’ salaries while activity is reduced or put on hold .
Kurzarbeit -- pronounced KUHRTS-ahr-bite , and loosely translated as “ short-time working ” -- typically covers 60 % of lost net wages , which rises to 67 % for people with children .
That ’ s far more generous than what ’ s on offer to furloughed workers in the U.S. and elsewhere .
Companies are @ @ @ @ @ @ @ apply to get reimbursed by the state .
The German government has expanded the program to include contract workers and cover social insurance contributions .
Through October , the government also is allowing people who are receiving the wage support to take up additional work in “ systemically relevant ” occupations without any financial disadvantage .
Though smaller companies say it isn ’ t perfect -- as it assumes they have the liquidity to cover personnel costs upfront -- Germany ’ s program has received frequent praise .
It kept about half a @ @ @ @ @ @ @ crisis , the Organisation for Economic Co-operation and Development reported in 2009 .
Germany ’ s labor minister has said it will save millions this time around .
German companies , particularly manufacturers , make routine use of Kurzarbeit even when there ’ s not a global economic crisis going on .
Companies can use it to offset seasonal production swings , such as bad weather affecting construction .
Under special circumstances , it can even be used by companies undergoing restructuring to prevent sudden layoffs .
A record 470,000 companies applied for @ @ @ @ @ @ @ 9 million employees , or 20 % of the German workforce , are affected by the program so far .
Compare that to 2019 , when an average of 1,300 companies applied for support each month .
Big names including Volkswagen , BMW , Daimler , sports-apparel maker Puma and airline Lufthansa have said they plan to make use of the program .
France , Italy , Belgium , and the Netherlands are among other European countries that allow distressed companies to tap government funds to pay salaries in periods when they have @ @ @ @ @ @ @ recently pledged to bolster those programs with additional funds .
To help governments pay for such policies , the European Commission plans to loan up to 100 billion euros to member states to create or extend short-time-work programs .
Bloomberg Economics estimates the extra borrowing could finance 70 % of wages for about a third of permanent employees across the European Union for up to five weeks .
Canada also provides income support to people on a reduced work week , with a well-established program that has helped during previous economic hardships .
@ @ @ @ @ @ @ , other countries are moving to join the club .
Sweden and Denmark introduced support measures specifically in response to the coronavirus .
Denmark ’ s three-month aid program , for instance , is expected to pay partial wages to an estimated 70,000 people by June .
( Nordic populations , those in Denmark , Finland , Iceland , Norway and Sweden , rely on generous welfare states that ensure those dropping off payrolls still get monthly support . )
In the U.K. the government has made an unprecedented move to cover as @ @ @ @ @ @ @ workers whose jobs are at risk .
Not really .
Furloughed employees in the U.S. typically go without pay but retain access to benefits like health insurance .
Under the stimulus package signed into law by President Donald Trump , people receiving unemployment benefits through their state get an additional $ 600 per week from the federal government through the end of July .
The stimulus law also makes more workers eligible for unemployment benefits , including those furloughed rather than laid off .
Nobody has proposed it on any official level .
@ @ @ @ @ @ @ Fox News hosts , Tucker Carlson , on March 16 endorsed Kurzarbeit as “ a model in progress for how we can save work.
” One of Trump ’ s top economic advisers , Kevin Hassett , wrote approvingly of Kurzarbeit in 2009 during the global financial crisis .
And a March 25 policy paper by the conservative Tax Foundation praised the German program , noting that it helped limit job losses after 2008 , has been widely emulated since , and is likely to prove effective in the current slump too .


washingtonpost--2020-01-27--Analysis | What’s Being Done to Limit the Spread of the China Virus

Within China : Officials said they will track down people who left Wuhan , a city of 11 million , ahead of the Lunar New Year holiday , especially the many migrant workers who headed back to the countryside to celebrate with their families .
They will be registered , visited frequently by medical personnel and taken for treatment if symptoms develop .
Xinhua reported that health officials in Beijing asked those returning to Wuhan from anywhere to stay at home for two weeks , record their temperature and seek treatment if they develop a cough or fever .
Airports @ @ @ @ @ @ @ implemented monitoring systems including thermal scanners and questionnaires in an effort to catch cases early .
In the U.S. , arriving passengers from Wuhan were funneled to airports in California , New York , Atlanta and Chicago , where they were checked for signs of a fever .
The drawback to this approach , however , is that it does not catch people who have been infected but are still in the incubation stage , and it may miss those whose primary symptom is a cough , not a fever .
The passengers @ @ @ @ @ @ @ to watch for .
Social media and traditional news outlets have also spread the word .
The first two patients identified in the U.S. sought medical attention on their own accord because they were concerned that they might be infected , showing that awareness levels are high .
When a new case is identified , the patient is put in isolation , often in a hospital , to prevent him or her from spreading the germs .
A medical worker takes a thorough history , trying to identify every person who has been @ @ @ @ @ @ @ of the patient since symptoms emerged .
According to the WHO , Chinese authorities place close contacts ( family members and others living in the patient ’ s home , co-workers , possible care-givers and others ) under medical observation , which may include isolation at home with regular temperature checks .
If there are no symptoms after 14 days , the contacts are released , the WHO said .
Other potential contacts could be neighbors , fellow passengers on public transportation , people who attended the same social events , shopped or @ @ @ @ @ @ @ Breaking the chain of transmission is what officials believe will ultimately curtail the outbreak and prevent a pandemic , which is an epidemic of global proportions .
Isolation is a tricky issue because it ’ s unclear how well it works or if it ’ s been put in place quickly enough .
The most critical time for isolation is when an infected person sheds the virus , essentially putting it out into the world .
Scientists are still trying to determine how this virus sheds .
Often it ’ s when the @ @ @ @ @ @ @ the virus being spread via the droplets spewed from a cough or sneeze .
But Ma Xiaowei , the director of China ’ s National Health Commission , said on Jan. 26 that , “ from our observations , the virus can be contagious during the incubation period , ” which he said was “ very different ” from SARS , or Severe Acute Respiratory Syndrome .
He didn ’ t elaborate on the observations or mode of transmission .
The prospect is a frightening one , since asymptomatic carriers could be widely @ @ @ @ @ @ @ of the most vulnerable people are the health care workers caring for seriously ill patients ; 15 cases occurred among workers at a single hospital in Wuhan .
In the U.S. , people who are flagged for possible concern , including the close contacts of known patients and feverish airline passengers , aren ’ t being kept in formal isolation , though they are asked to limit their exposure to others .
China has imposed a draconian quarantine on Wuhan and more than a dozen other cities in the region , a travel @ @ @ @ @ @ @ people .
The move was likely at least in part a response to the approaching holiday ( Lunar New Year ’ s Eve was Jan. 24 ) , when an estimated 3 billion trips would be made , with about 15 million happening in Wuhan alone .
The mayor estimated about 5 million residents left before the Jan. 23 lockdown , according to media reports .
Almost half of the more than 2,000 cases of 2019-nCoV reported before the Lunar New Year were found outside of Hubei province , of which Wuhan is @ @ @ @ @ @ @ quarantines have yielded limited results .
Toronto ’ s use of quarantine wasn ’ t effective in slowing the SARS epidemic of 2002-2004 there , Richard Schabas , a former public-health physician who was Ontario ’ s chief medical officer from 1987 to 1997 , said in a study in 2004 .
An impoverished neighborhood in Liberia quarantined during an Ebola outbreak in 2014 responded with violent riots .
China sequenced the virus ’ s genome within days of detecting the outbreak and on Jan. 10 posted the information to public databases widely @ @ @ @ @ @ @ the months of delay seen with its response to the 2002 outbreak of SARS .
Speedy access to the new virus ’ s genetic fingerprint allowed health officials in Japan and Thailand to quickly confirm cases that had been exported from China , followed by the U.S. , France and other countries .
Still , the process isn ’ t easy .
Medical staff must take swabs from the nose and throat of potentially infected patients , along with blood samples , and send them to laboratories that are equipped to do genetic @ @ @ @ @ @ @ four to six hours , shipping the swabs to the laboratory can take much longer .
In the U.S. , the only facility currently conducting the work is at the Centers for Disease Control and Prevention in Atlanta .
Researchers at CDC and elsewhere are working to develop a faster process that can be done closer to the patient ’ s bedside .
Antiviral drugs that have shown signs of helping control other types of coronaviruses , such as remdesivir and lopinavir/ritonavir , are being examined to see if they offer any help @ @ @ @ @ @ @ companies including Moderna Inc. and Novavax Inc. say they have begun work on a potential vaccine .
Health officials say a version might be available for the first stages of human testing in as little as three months .
But developing an effective vaccine generally takes years .


washingtonpost--2020-01-27--Analysis | What You Need to Know About China’s Virus Outbreak

The outbreak began in Wuhan , a city of 11 million , in early December and spread to other parts of the country .
As of Jan. 27 there were 2,744 confirmed cases in mainland China and at least 80 people had died .
Some cases have been confirmed elsewhere involving travelers arriving from China as far away as Europe and the U.S .
Initially it seemed the virus wasn ’ t transmitted readily between people .
But on Jan. 20 the World Health Organization confirmed that it could be passed from human to human , not just from animal @ @ @ @ @ @ @ workers had been infected .
There also have been cases reported where the virus has spread along a four-person chain , indicating that it ’ s more easily transmissible than earlier thought .
And a top Chinese health official said it could be contagious before the carrier shows symptoms , which would make the spread much harder to stop .
There is always a concern when a new pathogen emerges in a population because people typically lack immunity to it , and there usually aren ’ t specific treatments or vaccines available .
@ @ @ @ @ @ @ before ) represent a particular concern because they have been known to spark complicated outbreaks that have sickened thousands of people , like SARS did as it swept across the globe from southern China .
As of late January , the virus , labeled 2019-nCoV by the WHO , appears to be less virulent , and less deadly , than SARS .
A report done for the International Journal of Infectious Diseases found it is at least 70 % similar in its genetic makeup to the SARS virus but “ appears clinically milder @ @ @ @ @ @ @ rate and transmissibility .
Of the first handful of deaths linked to the virus , at least some were people who already were seriously ill .
Regular pneumonia , a viral , bacterial or fungal infection that inflames the air sacs in one or both lungs , kills about 50,000 people annually in the U.S .
Influenza has killed an estimated 12,000 to 61,000 each year in the U.S. over the past decade .
Mainly fever , with some patients experiencing fatigue , a dry cough and difficulty breathing .
Chest X-rays have @ @ @ @ @ @ @ the WHO said .
However , almost all the reported cases so far are those requiring hospitalization .
It ’ s very likely other people have been infected and experienced no , or only mild , symptoms .
Many people have recovered and been discharged from the hospital .
The U.S. Centers for Disease Control estimates the incubation period , the time between infection and the onset of symptoms , is around 14 days ; Chinese doctors say about 10 on average .
Unlike during the SARS pandemic , when China was criticized @ @ @ @ @ @ @ made genomic data about the virus publicly available quickly .
That has enabled scientists anywhere to study the genetic fingerprint of the virus for clues about where and how it might have emerged .
Investigators in Wuhan have focused on the seafood and animal market , where most people infected early in the outbreak either worked or shopped frequently .
It has been closed since Jan. 1 , though cases continued to appear , including in people who hadn ’ t gone there .
That raised the possibility that the pathogen is lurking @ @ @ @ @ @ @ President Xi Jinping ordered resolute efforts to curb its spread ahead of the Lunar New Year holiday , which fell this year on Jan. 25 and for which many people typically travel .
Authorities in Wuhan suspended public transport as well as outbound flights and train services , and nearby municipalities restricted the use of transport and public sites .
Authorities dispatched medical personnel from the military to Wuhan to help out at hospitals .
Patients have been isolated to prevent any spread .
Health officials are also looking for , screening and @ @ @ @ @ @ @ , and searching for current and past cases that may have been treated in medical institutions throughout the city .
Outside China , airports have begun screening some passengers for symptoms , including in the U.S. SARS is thought to have spread indirectly from a “ wildlife reservoir , ” believed to be bats , to humans via masked palm civets and other species in live-animal markets .
The SARS outbreak began in late 2002 in Guangdong province and spread across the border to Hong Kong and beyond .
The WHO issued a @ @ @ @ @ @ @ didn ’ t declare the outbreak contained until July 5 that year .
China ’ s tourism , transportation and retail sectors were heavily hit as people stayed home ; domestic consumption fell sharply , as did real estate prices and financial markets .
The epidemic subtracted an estimated 0.8 percentage point from gross domestic product growth in China in 2003 , according to a China Daily report that cited a National Bureau of Statistics official .
A 2003 academic study estimated the global economic cost at close to $ 40 billion or @ @ @ @ @ @ @ crown-like shape .
There ’ s a large family of them .
Some transmit easily from person to person , while others do not .
There ’ s growing recognition of the role of coronaviruses in severe cases of pneumonia .
The WHO says that new coronaviruses emerge periodically in different areas globally , and several known versions are circulating in animals and haven ’ t infected humans .
They tend to morph and mutate a lot , which means the level of risk they pose can change the longer they circulate .
@ @ @ @ @ @ @ sometimes referred to as “ zoonoses , ” comprise a large percentage of all newly identified infectious diseases .


washingtonpost--2020-06-24--Analysis | Germany Quietly Avoids a Disastrous Confrontation

Last month , Germany ’ s constitutional court threw a legal bomb into the firmament of the euro area .
In a sweeping verdict , the red-robed judges in Karlsruhe ruled that a higher authority , the European Court of Justice in Luxembourg , had strayed beyond its remit by giving a green light to the European Central Bank ’ s public sector purchase program ( PSPP ) .
The ECB has used this quantitative-easing instrument to buy 2.7 trillion euros ( $ 3.1 trillion ) in government bonds since 2015 .
The ruling was explosive .
First , it @ @ @ @ @ @ @ ’ s largest shareholder , would be barred from participating in the PSPP if the ECB couldn ’ t prove by Aug. 5 — to the German government and parliament — that the program was “ proportionate ” in weighing economic benefits against costs .
Second , it brought the European Union to the brink of a constitutional crisis , as a national court had overruled the EU ’ s top court , potentially inviting judges in other member states , such as Hungary and Poland , to do the same .
While @ @ @ @ @ @ @ askance at the ECB ’ s easy-money policy , celebrated , those on the extreme right went further .
The Alternative for Germany , a euroskeptic party , is now suing the German government and parliament to stop yet another of the ECB ’ s bond-buying tools , called the “ pandemic emergency purchase program ” ( PEPP ) .
It was adopted in response to Covid-19 and is slated to reach 1.35 trillion euros by next June .
A disastrous confrontation was in the making between the EU ’ s institutions and @ @ @ @ @ @ @ , as so often in Germany ’ s consensus-driven culture , the establishment began speaking up .
First , there were the politicians .
Having understood that Karlsruhe had in effect called a limit to monetary policy , Merkel performed a stunning policy U-turn and , with French President Emmanuel Macron , endorsed a groundbreaking fiscal plan for the EU .
Then German legal scholars and other experts weighed in .
In one notable collaboration , six well-known German economists published a meticulous deconstruction of Karlsruhe ’ s reasoning .
According to their @ @ @ @ @ @ @ a long-running German consensus , reinforced by the court ’ s own precedents and European treaties .
In this tradition , a central bank must be completely independent and have only price stability as its goal , and no other economic objectives .
Before the introduction of the euro , the Bundesbank never proved to Germany ’ s parliament that it had weighed lower inflation against , say , higher unemployment .
Why should the ECB start balancing different goals now ?
Even the constitutional court is suddenly , albeit cautiously , waving @ @ @ @ @ @ @ became one of its judges this week , told a newspaper that , as in “ real life , ” the important thing now is “ how you carry on after a bust-up , ” and that it helps just to say sorry and let bygones be bygones , so that all involved can get over their “ injuries.
” With this consensus taking shape , the end of the saga could be merely procedural .
Jens Weidmann , head of the Bundesbank and thus a member of the ECB ’ s governing @ @ @ @ @ @ @ the messenger .
After the ECB publishes its previous meeting minutes this week — including instances of the council weighing up proportionality in pursuing QE — he will pass those on to the relevant Bundestag committee , which will no doubt be swiftly and utterly convinced .
And so the Bundestag can adjourn at the end of the month for its summer break .
When it returns , the whole sorry mess will probably be sorted out “ without drama , ” as Germany ’ s finance minister has promised .
Until the @ @ @ @ @ @ @ else .


washingtonpost--2020-06-24--Analysis | A 100-Year Bond at Less Than 1%? It’s No Big Deal

The sale may just be the start of a wave of European sovereign issues as governments raise a lot more debt to finance their pandemic economic responses .
What would have seemed like crazily low yields three years ago are just run-of-the-mill now as rates are driven lower by the gush of money flooding Europe ’ s finance system .
While Italy has suffered the most from Covid-19 in the euro zone , its 10-year bond yields have still fallen by nearly 100 basis points over the past two months .
For its part , Austria ’ s new issue @ @ @ @ @ @ @ investors are to snap up highly rated securities that yield something ( anything ) .
Other European nations such as Ireland and Belgium have also issued 100-year debt but only in private placements .
France has sold 50-year maturities , as has Italy .
They might be tempted now to follow Vienna ’ s lead .
With Germany also recently raising its largest amount of 30-year debt , at a negative yield , might Europe ’ s most powerful country finally be tempted to follow its southern neighbor and elongate its bond-maturity profile @ @ @ @ @ @ @ in this yield-starved environment can either take greater credit risk ( by buying junk bonds , for example ) or reach for ever longer duration .
The sensible ones will do a bit of both .
Austria has the second-highest investment grade credit rating of AA+ , hence the strong demand , especially from pension funds and insurance companies looking for ultra-long assets to match their future liabilities .
With long-maturity debt , investors get an additional benefit called “ positive convexity , ” a bit of bond-market math magic that can improve @ @ @ @ @ @ @ with very low coupons is that their prices rise more sharply when yields fall than they decline when yields rise .
This means the price outperforms when interest rates drop ( as they ’ re doing now ) , which is overall good news for investors .
Austria ’ s positive experience with longer debt means more European countries are likely to follow .
At this rate , 30-year debt will soon just be viewed as medium-term maturity .
This column does not necessarily reflect the opinion of the editorial board or Bloomberg @ @ @ @ @ @ @ is a Bloomberg Opinion columnist covering European markets .
He spent three decades in the banking industry , most recently as chief markets strategist at Haitong Securities in London .


washingtonpost--2020-06-24--FCC Chair Urges Phone Companies Not to Cut Service During Covid


washingtonpost--2020-06-24--Analysis | Brexit’s Cliff Edge Is Like ‘No Deal’ All Over Again

Yes , basically .
In the days after his dramatic election victory in December , Johnson ruled out seeking any extension of the 11-month transition period , a sort of standstill agreement during which little changes .
Britain formally confirmed that position on June 12 , days before the deadline for it to seek a delay expired .
Talks between EU Chief Negotiator Michel Barnier and his British counterpart , David Frost , are now scheduled to run until August .
Both sides say October is the cut-off date to reach a deal .
But , if they haven ’ @ @ @ @ @ @ @ ’ s not impossible that if both sides were very close they could sign an outline agreement and set an implementation period -- a delay in all but name -- to work out the details .
They would default to trading on World Trade Organization terms -- meaning the return of tariffs and quotas where none exist today .
Service businesses would face substantial additional paperwork .
In banking and securities trading , the U.K. and EU have rolled out contingency plans to avert financial chaos .
But data-sharing across borders could be @ @ @ @ @ @ @ , in that the “ cliff edge ” brings back fears of chaos at Britain ’ s borders .
To avoid that , the U.K. government has backed down on plans to impose full border controls at the start of next year in an attempt to help businesses already struggling with the coronavirus .
For the first half of 2021 , most companies moving goods into Britain will get six months to file customs declarations and pay any tariffs due .
But the rules won ’ t apply to goods moving the other @ @ @ @ @ @ @ reciprocate .
In all likelihood , yes .
While both sides are still talking , they appear to be far from agreement on key parts of any deal , in particular : fisheries , the role of the European courts and how any final accord should be structured .
A further major sticking point remains the EU ’ s insistence on a level competitive playing field between the two sides , something the U.K. is resisting because it fears it would keep it subject to the EU rules it seeks to escape .
@ @ @ @ @ @ @ keeps the heat on negotiations , both sides know the timetable is tight .
Barnier said in June the U.K. would crash out of the European single market at the end of the year unless the British government scales back opposition to key EU demands , including the bloc ’ s insistence that any deal include provisions on fishing rights , fair competition and dispute settlement .
Johnson struck a more optimistic note after his June 15 call with European Commission President Ursula von der Leyen , saying “ I don ’ t @ @ @ @ @ @ @ ” Close enough to cost real money .
As the Brexit fight dragged on through 2019 , there were stop-start preparations for a “ no-deal ” split .
The U.K. had plans to turn the main highway to the port of Dover into a holding zone for trucks .
There were fears that bottlenecks could bring shortages of everything from fruit and vegetables to manufacturing components and vital medicines .
Britain ’ s “ Operation Yellowhammer ” plan for “ no deal ” -- named after a songbird -- was activated in October @ @ @ @ @ @ @ put a fleet of 80 tankers on standby .
Consumer and companies were stockpiling goods , from medicine and car parts to printing ink and booze .
Yes .
It ’ s disrupted talks and forced meetings to take place by video instead of in person in Brussels and London .
Both Barnier and Frost were forced into isolation in March after showing symptoms of the virus , and Johnson himself went into intensive care .
It ’ s also made governments and officials focus almost full-time on the pandemic , diverting resources @ @ @ @ @ @ @ in particular , has been embroiled in tortuous negotiations to set up a giant fund to help the bloc ’ s recovery from the virus .
On another level , Covid-19 has given both Britain and the EU a glimpse of what shut borders and broken supply chains look like .


washingtonpost--2020-04-19--Senators Propose $500 Billion State and Local Government Rescue

The pair want to establish the half-trillion-dollar fund to help the states hardest hit by the Covid-19 pandemic .
The money would be divided into three tranches and distributed according to formulas that reflect population , infection rates and revenue loss .
Governors and mayors across the country have been pleading with the federal government for additional aid as tax revenues plummet and demands for resources skyrocket .
More than 22 million people have been thrown out of work and businesses have shut or severely curtailed operations .
At the same time , health care infrastructure has been stretched in @ @ @ @ @ @ @ may not know state borders , but it has certainly hit some states and regions harder than others , ” Menendez said in a statement .
“ The proverbial house is on fire and we need to focus the water on the hot spots , because if we don ’ t put the flames out , they will only jump until the entire block is up in smoke.
” “ Senator Menendez ’ s state and mine were hit hard by the Covid-19 epidemic , ” Cassidy said in a statement .
“ @ @ @ @ @ @ @ and local governments can maintain essential services necessary for employees and employers to survive .
We must protect Americans ’ financial future.
” House Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer are in talks with Treasury Secretary Steven Mnuchin to replenish a $ 349 billion fund that allows small businesses to continue to pay their employees amid widespread stay-at-home orders .
Money in that fund ran out on Thursday .
The Democrats want additional aid for states and municipalities in the interim package , but Mnuchin said Sunday that ’ s @ @ @ @ @ @ @ negotiated for quick approval by Congress .
There ’ s general agreement in Congress and at the White House that a so-called phase four comprehensive economic rescue package would be needed , following on the $ 2 trillion package approved late last month .
Maryland Governor Larry Hogan , the NGA ’ s chairman , and New York Governor Andrew Cuomo , its vice-chairman , said on April 11 that without at least $ 500 billion , states would have to curtail essential services .
The pair are Republican and Democrat , respectively @ @ @ @ @ @ @ provides $ 150 billion for municipalities ’ virus expenses but doesn ’ t address budget shortfalls and only helps states and cities with populations greater than 500,000 .
The Federal Reserve announced loans to states and only cities with over 1 million residents .
The fund proposed by Menendez and Cassidy would be divided into three equal tranches .
The first would be would be allocated to states and territories according to their percentage of U.S. population .
All states and the District of Columbia would receive at least $ 1.25 billion from @ @ @ @ @ @ @ populations above 50,000 would also be eligible for aid .
The second and third tranches would be allocated according to a state ’ s share of the U.S. infection rate and loss of revenue funding resulting from shut-downs and stay-at-home orders .
Menendez and other Democrats are also pushing for the Fed to do more for state and local governments .
They ’ re advocating for a permanent change to the Federal Reserve Act that would allow the Fed to purchase municipal debt on the open market under “ unusual and exigent circumstances @ @


washingtonpost--2020-05-15--Lessons From a Quarter We’d Like to Forget

Wall Street analysts expect things to get worse before they get better , with earnings forecast to plunge about 41 % in the second quarter , decline 24 % in the third quarter and drop 11 % in the final three months of the year .
Add them up and Wall Street forecasts a 20 % tumble for the year to $ 127 a share .
Coming into 2020 , the consensus was that members of the S & P 500 would produce earnings of about $ 175 a share .
Bankers are the good guys ?
The message from @ @ @ @ @ @ @ their earnings in mid-April , just as the pandemic was escalating across America ?
We are well-capitalized , made a lot of money from trading in extremely volatile markets , and have the capacity to help our clients get through the crisis .
Unlike the financial crisis just over a decade ago , big banks have a chance to be the good guys now , processing U.S. Small Business Administration loans and allowing individuals and families to delay payments on credit cards , auto loans and mortgages in certain cases .
Yet banks @ @ @ @ @ @ @ U.S. stock markets .
The KBW Bank Index has fallen about 42 % this year , compared with just 12 % for the S & P 500 , suggesting the economic recovery might be slower and more punishing than the broader markets for equities may be signaling .
—Brian Chappatta Gorging on comfort food .
As panic-ridden consumers stock up on essentials , Big Food brands of yesteryear , from Kellogg ’ s Frosted Flakes to Kraft macaroni and cheese , that had been struggling to find their place in a new health-conscious @ @ @ @ @ @ @ explains the resurgence of companies such as General Mills Inc. , whose brands include Betty Crocker , Pillsbury and Totino ’ s pizza rolls .
Its U.S. retail sales surged 45 % in March and 32 % in April .
The question : Is this only a moment ?
We ’ re also noticing some quirky consumer habits .
Unilever NV said we are using less deodorant , skin care and shampoo , as much of this use is associated with work and socializing .
Henkel AG enjoyed strong demand for home hair @ @ @ @ @ @ @ long one , expect these habits to continue .
—Tara Lachapelle and Andrea Felsted Big Tech divergence .
Shares of Facebook Inc. and Google parent Alphabet Inc. rose post-earnings following better-than-feared commentary on April digital ad market trends .
Even so , Facebook cautioned the future economic recovery may be worse than expected .
And Google said not to extrapolate the stabilization that seemed to occur in April .
Both internet ad giants may face business pressures going forward if companies cut their marketing budgets in coming quarters .
In contrast , Amazon @ @ @ @ @ @ @ shift spending to e-commerce and watch more streaming video content .
Finally , Apple Inc. uncharacteristically failed to give sales guidance for its current quarter for the first time since 2003 , signaling the lack of visibility it has for iPhone demand .
—Tae Kim Covid-time tech winners .
Best-of-breed cloud software makers are surging as companies accelerate the spending shift away from traditional on-premise equipment to the cloud ’ s more scalable and cost-efficient offerings .
Some of the biggest earnings winners included Datadog Inc. , Okta Inc. and Twilio Inc. Video-game @ @ @ @ @ @ @ this year as it has become a key in-home entertainment choice under shelter-in-place orders .
Both Activision Blizzard Inc. and Electronic Arts Inc. posted strong results and confirmed accelerating sales for its offerings in April .
Investors also bid up Zoom Video Communications and Slack shares as the two companies benefited from the workforce-collaboration software trend and revealed strong accelerating business metrics .
—Tae Kim Cashing in on Covid cures ?
During Gilead Sciences Inc. ’ s first-quarter earnings call , an analyst asked CEO Daniel O ’ Day if investors should expect @ @ @ @ @ @ @ confirmed Covid treatment remdesivir that the company produces for other drugs .
O ’ Day responded that “ there ’ s been no other time like this in the history of the planet ” and that “ we understand our responsibility.
” In other words , probably not .
Gilead announced on Tuesday a temporary royalty-free license that will allow five generic drugmakers to make a presumably cheaper version for more than 100 low-income nations .
Other companies will face pressure to follow its example and price moderately in developed countries , which @ @ @ @ @ @ @ pandemic-focused drugmakers .
—Max Nisen Going local .
Still spending .
Coronavirus shutdowns have snarled industrial-supply chains already facing strain from the U.S.-China trade war .
While no one envisions an abandonment of China as a manufacturing hub , there are early signs of work being brought back to the U.S .
Unfortunately , this is unlikely to mean much in terms of jobs , at least not for humans .
Rockwell Automation Inc. said it ’ s seen an uptick in interest from companies that might have previously manufactured products out of @ @ @ @ @ @ @ but are now rethinking that economic calculus .
When it comes to investment , discretionary spending on things like travel has been cut across the board at many manufacturers .
Most CEOs and top executives have taken pay cuts .
Buybacks are off the table but for a few brave souls , including Eaton Corp .
But many manufacturers are continuing to fund projects they view as essential to their future growth .
For United Parcel Service Inc. , that means investments in automation that can help make e-commerce deliveries more profitable .
@ @ @ @ @ @ @ services work and expanding its product lineup .
“ I ’ m not planning on sacrificing the future just to cut back on capex , ” Honeywell International Inc. CEO Darius Adamczyk said on a recent earnings call .
—Brooke Sutherland Pink slips or paychecks ?
While aerospace manufacturers such as Boeing Co. and General Electric Co. have moved swiftly to announce large layoffs amid a collapse in the industry , other industrial companies have been more surgical , at least for now .
Caterpillar CEO Jim Umpleby has said his company ’ @ @ @ @ @ @ @ even as revenue climbed the past few years means there ’ s less slack in the system and the company doesn ’ t have to be as ruthless on job cuts during the pandemic .
Others , such as railroad Union Pacific Corp. , are worried about having enough labor at the ready whenever a recovery does occur so prefer furloughs when possible .
“ We don ’ t want to cut the talent so deep that when the recovery happens , we don ’ t have the right people , ” said @ @ @ @ @ @ @ Corp. , whose robust balance sheet and defense business give it more flexibility to weather the commercial aerospace downturn .
Companies can still save costs without cutting employees : Trash-hauler Waste Management Inc. is guaranteeing 40 hours a week of pay for full-time employees through the pandemic , but the redistribution of its workers has helped it reduce more costly overtime hours by half .
—Brooke Sutherland Staying safe .
Most manufacturers have kept their doors open through the pandemic because their work is considered essential .
That has come at a cost @ @ @ @ @ @ @ 3 million in the first quarter on actions to keep its employees safe , including providing them with protective gear and doing enhanced cleaning .
To keep Emerson Electric Co. ’ s factories humming , Chief Operating Officer Steve Pelch had to rent aircraft to bring in crucial supplies and double the number of buses used to transport workers in Mexico so they can safely spread out , according to an interview with Bloomberg News ’ s Thomas Black .
Automated doors have been installed , as have hand-washing stations .
Plexiglass partitions @ @ @ @ @ @ @ Siemens AG digitally redesigned an Airbus SE factory that ’ s been repurposed for ventilator manufacturing to ensure social distancing , and workers must pass through a sanitization tent to gain access .
In what could be a key test for the reopening of other parts of the economy , automakers with large union workforces including General Motors Co. and Ford Motors Co. are bringing their factories back to life this week in preparation for a May 18 official restart .
Ford said it will require face masks for anyone entering its facilities @ @ @ @ @ @ @ side or face shields for those employees whose jobs don ’ t allow for social distancing .
It ’ s spacing out production shifts to allow more time for cleaning and requiring employees to complete daily health and temperature checks .
—Brooke Sutherland Oil , oil everywhere .
At a primeval level , the oil business is all about sinking money into the ground .
When the barrel gods are smiling , even more money comes back up .
In 2020 , it feels like the gods aren ’ t happy .
Hence @ @ @ @ @ @ @ odd .
While exploration and production companies are always careful to talk up efficiency , what really gets the juices flowing are spending plans for new wells .
Not this time .
Parsley Energy Inc. , which fracks in America ’ s oil heartland , the Permian basin , suspended drilling , declaring bluntly ( and correctly ) that right now , “ the world does not need more of our product.
” At the other end of the scale , Exxon Mobil Corp. also slashed spending this year to as little as @ @ @ @ @ @ @ 23 billion !
While Exxon recognizes the immediate impact of Covid-19 , it doesn ’ t think “ events like this change basic human nature or people ’ s wants and desires.
” The jury remains out on that notion .
And in any case , the switch from budget boasting to public prudence offers a glimpse of what peak oil could mean for what ’ s ahead .
Expect dissonance .
—Liam Denning


washingtonpost--2020-05-16--Analysis | J.C. Penney Bankruptcy May Not Buy Enough Time

After securing $ 900 million of financing , J.C. Penney will stay open for now , and its next steps include closing some stores , cutting its debt by several billion dollars and looking at alternatives including a sale .
Despite those planned survival efforts , it ’ s hard to see J.C. Penney having a vibrant future .
Even before the coronavirus crisis , the retailer , with just under 850 stores in the U.S. and Puerto Rico , had battled to be relevant to shoppers .
Changing consumer tastes and incursions from online sellers wreaked havoc on its @ @ @ @ @ @ @ in the case of luxury department-store chain Neiman Marcus Group Inc. , which also filed for bankruptcy this month , there may be little for a potential acquirer to pick up .
The downfall of J.C. Penney — a chain that grew out of a single store opened 118 years ago in Kemmerer , Wyoming by James Cash Penney — is part and parcel with the long , slow decline of the department store .
The concept had its heyday from the end of the Second World War through to the 1980s .
@ @ @ @ @ @ @ to the suburbs , these venerable names followed , opening in newly built malls .
They focused largely on clothing and the items needed to furnish the homes that Americans were buying .
Amid the age of mass car ownership , they were more than happy to drive to these retail attractions .
For many years , J.C. Penney was known as a family department store .
If not somewhere Americans aspired to shop , it offered good value , and solid styles .
In fact , it was a bit like Britain @ @ @ @ @ @ @ , the sort of place you went for back-to-school gear and basics .
But at least M & S sold food — because by the 1980s , the environment for department stores was already darkening .
In 1988 , Walmart opened its first super-center , adding groceries to its non-food selection to encourage more regular visits .
At the same time Target Inc. , another mass merchant that combined clothing , home furnishings and groceries , was quietly expanding across the U.S .
The mid-market , which J.C. Penney had traditionally occupied , @ @ @ @ @ @ @ discounters , but later the internet , which was rapidly displacing department stores as the one-stop shop , and with cheaper , more transparent pricing .
By 2011 , in an effort to reinvent itself , J.C. Penney appointed Ron Johnson , an executive from Apple Inc. who built the tech giant ’ s much-admired retail network .
Some of his ideas – a communal space in stores for yoga classes and coffee bars and food stands dotted throughout – were directionally right , even if they never got off the ground .
@ @ @ @ @ @ @ were disastrous , such as ditching the coupons that had driven much of J.C. Penney ’ s traffic .
When Johnson was ousted in 2013 , the company apologized to customers in a television commercial : “ We learned a very simple thing – to listen to you , ” it said in the ad .
“ Come back to J.C. Penney.
” Unfortunately , they never did to the same extent .
While subsequent leaders Marvin Ellison , now chief executive of home-improvement chain Lowe ’ s Cos Inc. , and current @ @ @ @ @ @ @ company has yet to regain its stride .
It has grappled with messy stores , and a lower proportion of online sales — around 20 % — compared with 26 % at Macy ’ s and 33 % at Nordstrom .
Most recently , Soltau had cut discounting and reduced the amount of stock the chain carries .
She also ditched the electrical appliances that Ellison introduced and sought to strengthen Penney ’ s core clothing offering .
But her efforts , however valiant , were no match for weeks of stores being @ @ @ @ @ @ @ with net debt of $ 4.5 billion , including store lease liabilities of just under 8 times Ebitda as of Feb. 1 .
Penney said late Friday that it owed creditors $ 8 billion .
With the company less constricted by debt , it may be possible for Soltau to turbocharge her recovery plan , which already includes rejuvenating locations .
A store in Hurst , Texas shows the way , with a much-improved layout as well as styling , cafes , a fitness center and a barber shop .
Soltau insists it @ @ @ @ @ @ @ with more investment freedom she may be able to inject elements into other stores .
She also had already begun to pare back J.C. Penney ’ s store base .
More locations will close , in phases .
Stacey Widlitz of SW Retail Advisors estimates J.C. Penney ’ s footprint could shrink to just 150 stores .
Even so , it ’ s hard to see how the retailer can stave off dwindling mall traffic if nervous shoppers stay home .
Distinguishing itself from other mid-market rivals such as Macy ’ s Inc. @ @ @ @ @ @ @ reinvention , will be another challenge .
A financial restructuring isn ’ t a panacea .
For retailers to make it through such a process and flourish , there must be a revival of the operating business , too .
It ’ s far from clear whether J.C. Penney — or any new owner — can pull that off .


washingtonpost--2020-05-16--Trump Administration Keeps Payroll Requirement for PPP Loans

The instructions don ’ t change the requirement that at least 75 % of proceeds must be spent on payroll within the eight weeks after the loan is received , even after small business groups lobbied to open up those restrictions .
Restaurants and other small concerns want to be able to spend more on expenses and want a longer period for spending the proceeds because they won ’ t be ready to re-open or fully in operation during that period .
Borrowers said they needed the guidance because they didn ’ t want to face repaying a loan they @ @ @ @ @ @ @ even holding the money or returning it because of the lack of clarity .
Lenders didn ’ t know how to complete the process or advise clients .
Time is short because funds must be spent within the two months after they ’ re received to qualify for forgiveness .
The SBA and Treasury missed a deadline last month that was outlined in the legislation creating the program .
Guidance and regulations for loan forgiveness was to be issued “ not later than 30 days after the date of enactment of this act @ @ @ @ @ @ @ 26 .
Besides the application and instructions released Friday night , the SBA will also soon issue regulations and guidance to further help borrowers complete their applications for loan forgiveness and to provide lenders with guidance on their responsibilities , the agencies said in a release .
The program provides loans of as much as $ 10 million that don ’ t have to be repaid if proceeds are spent on payroll , rent , utilities and mortgage interest .
The forgivable amount is reduced if owners cut jobs or wages , and @ @ @ @ @ @ @ % interest in two years , with the first payment deferred for six months .
The instructions include what the agencies said was a new exemption from the requirement for maintaining employees for borrowers “ who have made a good-faith , written offer to rehire workers that was declined.
” Some businesses have complained it was difficult rehiring laid-off workers who were earning more in unemployment benefits .
The application also provides the option for borrowers to use an alternative method for calculating payroll costs if their loan disbursement was in the middle @ @ @ @ @ @ @ makes clear that expenses either paid or incurred during the eight-week period can be forgiven .
Restaurants and other small businesses have complained that a rule issued by the SBA and Treasury requiring 75 % of the proceeds must be spent on payroll is unreasonable because they need more money for expenses -- and they don ’ t want to rehire workers only to lay them off .
A report issued May 8 by the SBA inspector general said that based on a review of data from the first round of PPP financing @ @ @ @ @ @ @ ” would not meet the 75 % payroll cost threshold and would have to repay part of their loans .
Treasury Secretary Steven Mnuchin has said the rule reflects the intent of Congress to keep workers on payrolls .
But he indicated on Monday he ’ d be open to “ technical ” revisions if both parties in Congress agree , especially for restaurants that are only now reopening .
“ Ultimately , we ’ re going to have to pass legislative language that provides more flexibility to account for what the crisis @ @ @ @ @ @ @ we don ’ t have a bunch of companies sitting on money for payroll that can never be spent and has to be given back , ” Rubio said in a video posted Wednesday on Twitter .
Lenders wanted more guidance because they make the initial assessment about loan forgiveness and can start asking SBA to reimburse them for that amount starting seven weeks after loans are disbursed , said Paul Merski of the Independent Community Bankers of America .
The application issued Friday will be helpful but is still complicated , he @ @


washingtonpost--2020-04-29--Analysis | Don’t Leave America’s Post-Pandemic Energy Policy to Chance

Remember how the mundane act of having a plan for something became , over the course of that bygone era known as “ 2019 , ” a campaign motto , a meme and ultimately a sneer ?
If the first few months of 2020 have taught us anything , it ’ s to appreciate the mundane things .
Governments exist to plan — more or less , depending on your political proclivities .
And although we are still in the thick of Covid-19 , it is not too early to say that we could have used a better plan , @ @ @ @ @ @ @ same goes for another issue that threatens our well-being : climate change .
President Donald Trump had months of warnings to prepare for Covid-19 and didn ’ t .
On climate , we have had decades to prepare and still lag way behind .
Like so much else in our lives , the energy sector has been thrown into turmoil by the pandemic ( with a timely fillip from an oil price war between Saudi Arabia and Russia that ineluctably drew in the U.S. ) .
Yet with this catastrophic disruption also comes @ @ @ @ @ @ @ better and more sustainable , both for energy consumers and the warming planet we inhabit .
For planet-sized risks , government must lead .
A recent column co-authored by Bloomberg ’ s editor-in-chief John Micklethwait declared “ the Covid-19 pandemic has made government important again.
” It always has been so for the energy sector .
Every major transition in U.S. energy over the past century has involved an essential nudge from government , be it rural electrification , wartime construction of fuel pipelines , the postwar highway project or the development of @ @ @ @ @ @ @ level , your monthly electricity rate is set mostly by regulators in your state capital , not some invisible hand .
For the most recent example of U.S. energy innovation , the shale boom , the conventional image of entrepreneurs spurred on by $ 100 oil is real enough , but incomplete .
Both oil and gas continue to benefit from the large implicit subsidy inherent in letting greenhouse gas emissions go unchecked .
That may sound like small government in action , but it is really just government inaction : a decision @ @ @ @ @ @ @ of profits alongside the silent socializing of pollution .
For a useful recent example of what addled energy policy looks like , consider “ energy dominance ” — a buzzword that Trump elevated into “ a strategic economic and foreign policy goal of the United States ” in the spring of 2016 .
It refashions old fears of U.S. dependence on oil imports into an unstable blend of resource nationalism , protectionism and foreign-policy leverage .
This concept ’ s incoherence reached an apotheosis of sorts last month , when Trump was reduced @ @ @ @ @ @ @ had supposedly cowed while simultaneously gutting fuel-economy standards that would actually limit U.S. import dependence .
Children born during this spring of Covid-19 will likely live to see the year 2100 .
Our objective must be an energy system that is sustainable , competitive and resilient at least through their lifetime .
That means supply and consumption patterns that power prosperity without storing up costs ( or catastrophes ) for future generations .
One might say it ’ s the conservative thing to do .
The aftermath of Covid-19 is a good place @ @ @ @ @ @ @ play a vital part in meeting the economic imperative of getting locked-down Americans back to work .
Roughly half of the 3.3 million Americans directly employed in energy are in the electric power sector outside of the bits that relate to fossil fuels .
An expansion of electric power , with its inherent efficiency advantage over combustion technologies and its ability to use increasing quantities of renewable sources , is the sine qua non of a 21st-century system .
Either we will invest to electrify more of our energy needs , particularly transportation @ @ @ @ @ @ @ of climate change in lives , money and security .
Happily , electrification has always meant building lots of infrastructure .
It ’ s tailor-made for a recovery plan prioritizing employment and investment in new technologies rather than just propping up old industries .
Beyond this , an army of several million more Americans engaged in the fields of autos and energy efficiency are also primed to play their part ; they ’ re agnostic as to whether the energy comes from the burning of a gallon of gas or the turning of @ @ @ @ @ @ @ this initiative isn ’ t the collapse of the fossil-fuel industry .
The ambulances wailing through New York City ’ s suddenly empty streets run on diesel or gasoline ; so , too , do most of the cars and buses people will take when restrictions ease .
Exactly how far demand for these fuels recovers is an open question , but it will certainly rise from today ’ s busted levels .
That doesn ’ t mean there should be a federal bailout , as Trump ’ s various calls or tweets @ @ @ @ @ @ @ have abundant supplies of oil and gas , along with their carbon emissions , and the industry also happens to have just notched up a decade of awful returns .
Throwing more capital at it makes little sense .
Don ’ t take just my word for it , ask Mr. Market : Valuations for frackers collapsed well ahead of Covid-19 ’ s arrival , as investors spotted the weak financial foundations of “ energy dominance.
” The arrival of the disease , alongside the OPEC+ price war , offered a glimpse of @ @ @ @ @ @ @ shares of a static or shrinking market .
The best thing that could happen to the industry would be for it to rationalize and consolidate into a handful of companies better able to manage the risks of energy transition .
As it does so , U.S. oil and gas will not be where many Americans get back to work .
Just look at what happened after the last crash : When it comes to oil , gas and coal , therefore , the immediate objective for energy policy should be alleviating the hardship @ @ @ @ @ @ @ the structural shift toward zero-carbon energy also represents a shock for workers caught on the wrong side of the transition .
Markets move on quickly from old boomtowns ; the people who live there often don ’ t have that luxury .
Funding for retraining , relocation or direct financial aid must be part of the investment required for remaking American energy .
Talk of anything like an industrial policy for U.S. energy is apt to unnerve some folks .
However , more than a decade after the financial crisis blew a hole @ @ @ @ @ @ @ we face another challenge demanding swift and coordinated government action .
All the while , concerns about climate change have been creeping up , especially among younger Americans .
There ’ s a growing cohort , in other words , who are more unnerved at the idea that government won ’ t do anything .
Remember , this sector is no stranger to government influence , overt and otherwise .
The only issue is whether we would prefer that influence to be deployed sensibly and honestly or left as a mish-mash of conflicting @ @ @ @ @ @ @ the recent history of the Texas Railroad Commission , which spent years handing out permits allowing frackers to flare natural gas in the name of supporting the shale boom .
Yet this effective subsidy encouraged ever more fracking , pushing down oil and gas prices and pushing up companies ’ debts .
Hence , we now find the commission ’ s biggest proponent of flaring permits calling on America to get into bed with OPEC on curbing supply in order to — wait for it — “ protect free markets.
” Alongside a @ @ @ @ @ @ @ s energy system , we should harness the power of markets .
That means real markets incorporating the full suite of costs and signals , not a cherry-picked version favoring vested interests .
There is no such thing as “ cheap ” energy if all you ’ re doing is hiding the costs until they are someone else ’ s problem .
The oil industry ’ s proponents of solutions such as carbon capture should not fear a price being put on that substance .
If they mean what they say , they @ @ @ @ @ @ @ gesturing at the governments they have spent decades ( and billions ) lobbying in the opposite direction .
Likewise , politicians dismissive of the Green New Deal , yet struggling to escape its gravitational pull on climate politics , should welcome clear price signals .
The message from the deal ’ s champions is that the alternatives are outright regulation or bans .
And there should be common ground here at least in terms of preserving America ’ s edge .
“ The last remaining bipartisan area of agreement in Washington is concern @ @ @ @ @ @ @ , particularly China , ” says Sarah Ladislaw of the Center for Strategic & International Studies .
A carbon tax would provide an important signal for innovators to shape and build on government-led infrastructure renewal , be it smarter grids or vehicle-charging networks .
Proceeds could be paid back out to Americans to keep it broadly neutral ( though how about reserving some for those communities currently tied to fossil-fuel production ? )
.
Like the anti-lockdown crowd who were agitating for an Easter transmission party , some among us think that dealing @ @ @ @ @ @ @ .
It is , if we don ’ t get ahead of it ; look at California ’ s recent experience with wildfires .
But keep in mind an important distinction .
Spending money ahead of time to mitigate a clear risk is an investment .
Spending money after the fact to clean up the damage , or count bodies — that ’ s just a cost .
Planning pays dividends .
Leaving things to chance is what exacts a heavy price .