washingtonpost--2020-06-03--Senate Passes Changes to Small Business PPP Loan Program

The coronavirus program provides forgivable loans to help small businesses make their payrolls during the Covid-19 crisis .
The bill would extend an eight-week period -- when proceeds must be spent for loans to be forgiven -- to 24 weeks or until the end of the year , whichever comes first .
Businesses would also have as long as five years , instead of two years , to repay any money owed on a loan , and they could use a greater percentage of proceeds on rent and other approved non-payroll expenses .
Timing is urgent because the eight-week spending @ @ @ @ @ @ @ first loan recipients after the Small Business Administration program opened April 3 .
Businesses -- especially in the restaurant and hospitality industry , which are only recently getting the green light to reopen -- say they need more time to distribute pay .
Utah Senator Mike Lee had also objected to language he and Johnson said would lengthen the application deadline .
Maine Senator Susan Collins didn ’ t oppose the bill but said she was concerned about the way the House drafted a provision reducing the current requirement that 75 % of @ @ @ @ @ @ @ Restaurants and other small businesses have said they want flexibility to spend more on overhead expenses , especially in high-rent areas .
The bill , H.R .
7010 , would instead require that 60 % of a loan be used on payroll .
The House bill creates a “ cliff , ” Collins said in a statement .
The current PPP program allows partial loan forgiveness if a company uses less than 75 % of a loan for payroll , but the House bill appears to state that none of the loan would @ @ @ @ @ @ @ isn ’ t met .
“ Instead , the employer is saddled with a debt for the entire amount , and no portion of the loan is forgiven or converted to a grant , ” Collins said .
Senate Small Business Chairman Marco Rubio last week sought guidance from Treasury on whether that issue can be addressed through regulation .
Treasury and the SBA haven ’ t responded to requests for comment .
About $ 130 billion remains from the second round of $ 320 billion that Congress approved for PPP .
The @ @ @ @ @ @ @ tapped in just 13 days .
There was broad support during a Senate Small Business Committee hearing Wednesday for extending the eight-week loan forgiveness period and changing the rule that 75 % of proceeds must be spent on payroll.Republican Senator Joni Ernst of Iowa highlighted a sportswear business in her state that kept 27 workers employed with a PPP loan despite a 96 % decline in revenue .
But with ballparks and other venues where the apparel is sold still closed -- and the firm ’ s eight-week period expiring this week – @ @ @ @ @ @ @ said .
Michael Strain , director of economic policy studies at the American Enterprise Institute , called the 75 % payroll rule -- set by SBA and Treasury -- “ a mistake ” because it limits the program ’ s ability to help companies such as those in high-rent cities that need to spend more money on expenses .


washingtonpost--2020-06-03--Analysis | $16 Billion Is a Lot to Pay For a Diamond Ring Right Now

The world has changed since the takeover was agreed in November .
The Covid-19 pandemic has dented luxury goods demand with shops shuttered and sweatpants-wearing consumers locked down with nowhere to go .
Industrywide sales could fall as much as 35 % this year , according to Bain & Co .
The civil unrest in the U.S. is another risk , particularly for an American brand .
So , depending on the fine print in the purchase agreement , Arnault could try to wriggle out altogether .
There are doubts that it will go ahead as planned .
Tiffany shares @ @ @ @ @ @ @ significantly lower than LVMH ’ s $ 135 offer price .
But dropping the deal now , particularly if it led to a lengthy legal battle , could risk some reputational damage .
It could also signal that LVMH , the world ’ s dominant luxury conglomerate , built on a history of strategic , successful acquisitions , isn ’ t so resilient after all .
True , even after the pandemic , LVMH ’ s market capitalization is close to 200 billion euros ( $ 224 billion ) .
So Tiffany is @ @ @ @ @ @ @ French fashion giant won ’ t have escaped the maelstrom , not only in luxury goods , but in cosmetics , with its Sephora chain , and in duty-free travel retail , with DFS .
Tiffany is still a prized asset , with huge potential if it can be elevated from simply affordable luxury to mega-bling .
So Arnault is most likely to try to burnish his standing as a dealmaker by extracting better terms for his shareholders .
Especially since Tiffany already needed some polish to achieve its potential , and the @ @ @ @ @ @ @ .
It will require significant investment both in the company ’ s product range and marketing .
Against this backdrop , trying to save on the purchase price looks sensible .
A precedent has already been set by Sycamore Partners , which tried to extract itself from its $ 525 million deal to buy lingerie brand Victoria ’ s Secret .
In the end , L Brands Inc. ended up terminating the agreement .
But it ’ s hard to see Tiffany doing this — it ’ s unlikely to want to pursue @ @ @ @ @ @ @ difficult environment without a muscular parent .
Given the luxury slump , it ’ s not obvious that Richemont or Gucci-owner Kering SA would step in .
Of course , Arnault could take his chances , withdrawing now — if he can — with the aim of trying to buy Tiffany again later at a lower price .
But that ’ s a risky strategy .
Another friendly deal wouldn ’ t likely be forthcoming , and often once a trophy asset is lost , it doesn ’ t become available again .
@ @ @ @ @ @ @ this bauble , and , like many luxury shoppers right now , trying to negotiate a hefty discount .

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washingtonpost--2020-06-03--Analysis | America’s Job Woes

Analysis | America’s Job Woes

When things are going well , the flexible and mobile nature of the U.S. labor force can be a great strength , making the economy nimble in an atmosphere of creative destruction .
In bad times — during a pandemic , for instance — what becomes clear is how swiftly American employers can and will shed jobs , costing workers not just their salaries but in many cases their health insurance too .
More than 23 million Americans were unemployed as of the April employment report , an additional 8 million are expected to join the tally in the report @ @ @ @ @ @ @ many of those who have managed to avoid layoffs were hit instead by pay cuts .
To soften the blow , the U.S. government passed the largest stimulus package in modern American history to support small businesses and workers , but a strained and patchy system of delivering the promised support led to delays in many Americans actually receiving it .
Some other countries go further to keep workers in their jobs .
Under Germany ’ s Kurzarbeit ( “ short-time working ” ) program , the government reimburses companies to keep paying @ @ @ @ @ @ @ employees whose hours are eliminated or reduced .
Though the program doesn ’ t prevent all layoffs , it helped keep a lid on Germany ’ s unemployment rate in April even as the pandemic caused the U.S. rate to soar to the highest in records dating back to the 1940s .
The pandemic prompted the U.K. government to adopt a similar approach , footing 80 % of the paychecks for 8.4 million British jobs .
Job security was a feature of the post-World War II American labor market .
Many workers could @ @ @ @ @ @ @ a single company , their loyalty rewarded with middle-class wages and guaranteed pensions in retirement .
But the blue-collar jobs that once supported the middle class and many rural economies have been squeezed by automation and globalization .
Automation , which has already affected jobs in manufacturing , is now a specter over millions of other workers — clerks , truck drivers , cooks , receptionists — who could be displaced by machines and artificial intelligence , especially if the pandemic makes companies more cautious about stationing workers side by side .
President @ @ @ @ @ @ @ ” approach has fed off and fueled concern over American jobs lost to global free trade , though that viewpoint doesn ’ t take into account gains from new export markets or service jobs .
Trump ’ s agenda has included both levying tariffs and renegotiating trade deals in an attempt to keep companies — and jobs — from moving to other countries .
Until the pandemic struck at the start of 2020 , job creation had been steady for a decade , but much of the demand was for low-wage jobs .
@ @ @ @ @ @ @ estimated that more than 53 million people in the U.S. — 44 % of workers age 18 to 64 — were earning low wages , a median $ 10.22 hourly .
The rise of low-wage work further squeezed the middle class and increased the popularity of gig work — driving for Uber , delivering food for Grubhub — to pay the bills .
Federal Reserve Chair Jerome Powell warned lawmakers in May that longer-term joblessness is a risk to the economy and said further government intervention , on top of the trillions of @ @ @ @ @ @ @ be needed .
One possible step to stemming long-term unemployment would be for the government to do more to retrain workers to keep up with changing job demands .
Existing U.S. programs to assist workers displaced by globalization have been criticized as disjointed and overly modest in scale .
A possible model is the Danish program known as Flexicurity , which gives employers the flexibility to easily hire and lay off workers but provides laid-off workers government-provided education and training along with up to two years ’ worth of unemployment benefits .
Trump @ @ @ @ @ @ @ will be enough to bring the economy roaring back and employment to surge .
( Some experts say elevated unemployment could linger for years . )
Even before the pandemic , Democrats angling to deprive Trump of a second term were proposing big ( and expensive ) ideas such as offering every citizen a monthly stipend — known as universal basic income — or a government-guaranteed job paying a livable wage in fields such as elder care and construction .
Joe Biden , the presumptive Democratic presidential nominee , is not known for @ @ @ @ @ @ @ prescription for helping the American worker was stronger unions and tuition-free community college — but as the pandemic took its toll , he declared himself open to more transformational change .


washingtonpost--2020-06-03--Extension of Paycheck Protection Loan Program Hits Senate Snags

Johnson said he may consent to the House bill later Wednesday if he gets assurances from leaders of the Small Business Committee that the PPP program is being authorized only through June 30 , rather than the end of 2020 , as some have interpreted the House legislation .
That clarification would let the Senate make more changes to the program later this month .
If the Senate can not get consent to pass the House bill , it could lead to amendments to the House bill .
That could require another vote in the House , which isn ’ @ @ @ @ @ @ @ June 30 .
The coronavirus program provides forgivable loans to help small businesses make their payrolls during the Covid-19 crisis .
The House bill would extend an eight-week period -- when proceeds must be spent for loans to be forgiven -- to 24 weeks or until the end of the year , whichever comes first .
Businesses would also have as long as five years , instead of two years , to repay any money owed on a loan , and they could use a greater percentage of proceeds on rent and other @ @ @ @ @ @ @ could be accepted until Dec. 31 instead of the end of June .
Timing is urgent because the eight-week spending period began expiring Friday for the first loan recipients after the Small Business Administration program opened April 3 .
Businesses -- especially in the restaurant and hospitality industry , which are only recently getting the green light to reopen -- say they need more time to distribute pay .
Utah Senator Mike Lee has objected to the new application deadline and is seeking an Aug. 15 deadline to keep the program temporary .
@ @ @ @ @ @ @ a Wall Street Journal opinion piece this week , saying revisions are needed to ensure the loans go to businesses that truly need them .
Maine Senator Susan Collins said she isn ’ t objecting to the House bill , but she ’ s concerned about the way the House drafted a provision reducing the current requirement that 75 % of a loan be used on payroll .
Restaurants and other small businesses have said they want flexibility to spend more on overhead expenses , especially in high-rent areas .
The bill , @ @ @ @ @ @ @ that 60 % of a loan be used on payroll .
The House bill creates a “ cliff , ” Collins said in a statement .
The current PPP program allows partial loan forgiveness if a company uses less than 75 % of a loan for payroll , but the House bill appears to state that none of the loan would be forgiven if the 60 % threshold isn ’ t met .
A House Democratic leadership aide said that while the House would look at whatever the Senate produces , Democrats want @ @ @ @ @ @ @ unchanged so it can go to the president for signing .
There was broad support during a Senate Small Business Committee hearing Wednesday for extending the eight-week loan forgiveness period and changing the rule that 75 % of proceeds must be spent on payroll.Republican Senator Joni Ernst of Iowa highlighted a sportswear business in her state that kept 27 workers employed with a PPP loan despite a 96 % decline in revenue .
But with ballparks and other venues where the apparel is sold still closed -- and the firm ’ s eight-week @ @ @ @ @ @ @ will be furloughed , she said .
Michael Strain , director of economic policy studies at the American Enterprise Institute , called the 75 % payroll rule -- set by SBA and Treasury -- “ a mistake ” because it limits the program ’ s ability to help companies such as those in high-rent cities that need to spend more money on expenses .


washingtonpost--2020-06-03--Analysis | Big Oil Can Help Renewables by Spinning Them Off

Hard as it is to imagine now , there was a time when pipelines were hot investments .
Master limited partnerships , the tax-advantaged structures that usually housed them , were in huge demand in the years after the financial crisis due to their high payouts and shale-fueled growth .
MLPs traded at almost double the earnings multiple of the wider energy sector .
Some of the easiest money ever made in the history of investment banking involved showing some variation of that chart to an oil producer and saying something like : “ Hey , how about we double @ @ @ @ @ @ @ own by sticking them into a new thing called [ Company Name ] Partners LP and spinning it off ?
That ’ ll be $ 20 million please .
I ’ ll get an analyst started on the lucite.
” Of 188 IPOs of MLPs since 1986 , almost 40 % happened in that five-year period between 2010 and 2014 , according to data from Alerian .
Roughly two-thirds of MLP-dedicated investment funds launched then .
What a time it was .
As is often the way with such things , it got @ @ @ @ @ @ @ turns out steering yield-starved investors toward companies with all the governance of benevolent dictatorships , minus the benevolence , can lead to sub-optimal outcomes .
Even so , the original premise remains valid : taking assets that aren ’ t valued by one set of investors and offering them to another set that might .
Nobody ’ s buying shares in the likes of Royal Dutch Shell Plc or BP Plc because of their solar farms or vehicle-charging ventures — or , given Covid-19 ’ s ravaging of oil demand , buying their @ @ @ @ @ @ @ are serious about maintaining transition strategies once this crisis passes , then spinning off the assets should be a high priority .
Like those MLPs of yore , transition stocks garner higher valuations too .
There are ludicrous extremes such as Tesla Inc. , but more down-to-earth stocks such as Danish wind pioneers Ørsted A/S and Vestas Wind Systems A/S or Florida ’ s NextEra Energy Partners LP also command multiples oil majors should envy .
And as for Tesla , while its four-figure earnings multiple makes no sense , what should unnerve @ @ @ @ @ @ @ its fans and power of its narrative despite all the red ink and red flags .
An analysis just published jointly by London ’ s Imperial College Business School and the International Energy Agency reinforces this in two ways .
Examining portfolios of U.S. and European companies linked to fossil fuels and renewable energy , the authors find the new kids generated both higher and less volatile shareholder returns over five and 10-year windows .
Perhaps more important is the sheer paucity of renewable energy stocks available .
The study ’ s U.S. @ @ @ @ @ @ @ has 163 constituents .
The corresponding renewable power portfolio has only 18 , a couple of which no longer exist and one of which is a regulated utility with an interesting backstory , PG & E Corp .
This gets at a big problem : It ’ s hard for the average investor to gain exposure to pure energy transition themes , as the assets often reside in private-equity-like portfolios or inside bigger companies that do everything from energy to autos to construction .
Even though it ’ s nascent relative to the @ @ @ @ @ @ @ are already large .
Bloomberg NEF ’ s database of clean energy asset financing adds up to $ 3.3 trillion from 2004-19 , with almost half of that in the past five years .
Yet while investors can pick or choose from any number of frackers , miners or majors — and dedicated funds tracking them — participating in renewable energy or other transition themes is much harder .
That ’ s a big problem for the transition itself .
Capital costs can make or break renewable energy projects ; with little running @ @ @ @ @ @ @ upfront .
The IEA , in its latest energy investment report , released in May , noted that getting lower-cost institutional money into a wind project can be the difference between single- and double-digit returns ( and , therefore , whether the project goes ahead ) .
Similarly , without ready access to cheap capital , there would have been no shale boom ( or no Tesla , for that matter ) .
This is where oil majors seeking a relevant role in energy transitions might be useful .
Rolling up a set @ @ @ @ @ @ @ trading on a low multiple is a good way to destroy value .
It also lends credence to accusations of greenwashing : If you ’ re serious , then why obscure the scale and performance of these assets by lumping them in with natural gas or making them a quarterly line item ?
Spinning them out into separate companies instead should provide higher valuations and , therefore , a means to raise cheaper capital for new projects , by expanding the pool of dedicated options for interested investors .
Meanwhile , traditional oil @ @ @ @ @ @ @ dollars heading into renewable energy projects .
The majors could retain large stakes and even co-brand them ; presumably , BP and Shell have retained names such as Lightsource and Greenlots for a reason .
The only imperative is to avoid the conflicts and fetid governance that ultimately undid many MLPs .
A consistent refrain of Big Oil is that its sheer bigness provides an edge .
That doesn ’ t fit neatly with the distributed and modular nature of renewable energy and other transition-related businesses .
But heft could help where it @ @ @ @ @ @


washingtonpost--2020-06-05--Silent No More on Race, America’s CEOs Fumble for Right Words

Yet each social-media post can set off an online skirmish that mimics the battle lines being drawn across the U.S. as people struggle with rapidly changing events and entrenched fears .
Unlike syrupy messages in support of nurses and essential workers fighting the coronavirus pandemic or a call for unity after 9/11 , there is no happy medium for a position on white privilege .
Black Americans , already ravaged by a fatal virus that is two or three times more deadly in their communities , have spread the protests from the streets to social media , contending that corporate @ @ @ @ @ @ @ Their messages have been blasted out under hashtags such as # WeAreDoneDying , urging companies and others to show support for changes .
While Starbucks , JPMorgan Chase and others responded after teenager Michael Brown was shot in 2014 by police in Ferguson , Missouri — sparking protests that spread to other cities — engagement this time has been exponentially bigger .
That ’ s partly because the protests have been more widespread and also because battles over LGBT rights , the polarization of the Trump presidency and Congressional gridlock on social issues @ @ @ @ @ @ @ void .
Among the 50 largest U.S. companies , all but Abbott Laboratories , Berkshire Hathaway , Costco Wholesale , Exxon Mobil and Nvidia had made some sort of public statement in support of black Americans as of June 3 .
( Abbott issued a statement on June 4 . )
Almost $ 1.1 billion has been pledged to Black Lives Matter , the NAACP , community rebuilding or outreach — and this doesn ’ t include monetary promises without a set price tag .
Goldman Sachs Chief Executive Officer David Solomon released @ @ @ @ @ @ @ 28 voicemail he sent employees .
“ I am horrified by continued attacks against the black community , highlighted most recently in the U.S. with the deaths of Ahmaud Arbery and George Floyd , and with what Christian Cooper experienced in Central Park in New York City this past Monday , ” he said .
On June 3 , the company announced the Goldman Sachs Fund for Racial Equity “ to support the vital work of leading organizations addressing racial injustice , structural inequity and economic disparity .
The fund will be launched @ @ @ @ @ @ @ Gives , a donor-advised fund that allows the firm and its current and retired senior employees to direct grants to support underserved communities around the world.
” Other organizations have directed contributions to Floyd ’ s family : UnitedHealth Group created an education fund for his children , along with donating $ 10 million toward helping the businesses and people of Minneapolis-St. Paul .
Bank of America ’ s $ 1 billion commitment over four years is the biggest pledge to date , with funds going mainly toward communities of color — those @ @ @ @ @ @ @ Target — which closed a half-dozen of its hometown Minneapolis stores because of damage and looting — said it will distribute food and other supplies and help local small businesses rebuild through grants from its nonprofit foundation .
Employees affected by store closures will be paid for as many as 14 days of scheduled shifts .
“ As much as I have been saddened seeing these acts of racism across our country , I am also confronted by the fact that our company and our sport are overwhelmingly white , with incredibly low @ @ @ @ @ @ @ Katz wrote in a memo this week .
The reactions played out in fits and starts at some companies .
L ’ Oreal ’ s Maybelline posted support for “ inclusivity , equality and justice ” and promised donations to the NAACP at 2:01 p.m. EDT on May 30 after a night of unrest that left many U.S. cities smoldering .
Urban Decay , another of the French giant ’ s brands , followed that evening with a message of financial support for Black Lives Matter .
It wasn ’ t until two @ @ @ @ @ @ @ put out a morning tweet , that the namesake L ’ Oreal Paris USA brand posted a corporate message.A company memo reviewed by Bloomberg showed that L ’ Oreal USA CEO Stephane Rinderknech let each brand make its own decision about whether to weigh in .
Garnier and Giorgio Armani posted black squares for # BlackOutTuesday on social media .
As of June 3 , Lancome and It Cosmetics — two of L ’ Oreal ’ s most followed brands on Twitter — didn ’ t have a visible statement .
“ Some @ @ @ @ @ @ @ feels totally different ” from the aftermath of other times when black men and women have been killed by police , said Tiffany McGhee , CEO and co-chief investment officer of institutional investment services at Momentum Advisors , which follows retail and other consumer-facing companies .
Brands that are silent have more at risk than those that weigh in because “ people are at home and watching.
” The reactions haven ’ t all been positive .
L ’ Oreal detractors brought up past complaints about its own racism when it fired a @ @ @ @ @ @ @ was tired of the racial violence of white people — “ Yes , ALL white people.
” — on Facebook .
Ben & Jerry ’ s faced backlash from some who claimed it was sowing racial divide by calling attention to white supremacy .
Some companies that want to show their support may have awkward moments if the racial makeup of their c-suite or progress of their corporate culture doesn ’ t match their aspirations , said Boykin-Towns , who is also vice chairman of the NAACP board .
Nike was criticized for @ @ @ @ @ @ @ , white leadership .
If they are “ sincere and authentic ” in outrage and willingness to fix what is wrong within their own companies , “ that will be appreciated , that will be rewarded , ” she said .
“ There ’ s no hiding , and I think most CEOs see that.
” Far fewer CEOs are consistently activist than might be supposed , though , with less than 30 % of those at S & P 500 companies and even fewer at smaller businesses taking controversial positions , according @ @ @ @ @ @ @ tried to quantify the risks and rewards of executive activism .
But pressure is growing for them to take a stand amid the likelihood consumers will notice if they don ’ t , said Kim Wright-Violich , a managing partner at consultant Tideline and adviser on the Stanford report — even though it ’ s guaranteed some will be upset regardless of how they act .


washingtonpost--2020-06-04--Analysis | The Brexit Regulatory Bonfire Begins...in the EU

The end result has been a hit to research spending of as much as 50 % annually as fund managers tighten their belts , and a drop-off in company coverage as the market shrinks .
At the biggest banks , European analyst headcount fell 14 % between 2013 and mid-2018 , according to Coalition .
Today , with the ink on the Brexit deal barely dry and the Covid-19 pandemic shifting the EU ’ s priorities toward boosting growth , the continent is taking back control .
A lobbying push to relax MiFID research curbs led by asset managers , @ @ @ @ @ @ @ such as France and Germany is gathering pace .
EU authorities are mulling special exemptions and incentives to boost research coverage of small-to-medium-sized companies , according to government documents seen by Bloomberg News , in order to help the economy get back on its feet .
While it took the EU seven long years to put MiFID II together , the bloc ’ s 27 member states may be able to agree on key tweaks diluting it within a matter of months .
Bloomberg Intelligence analyst Sarah Jane Mahmud reckons a more relaxed @ @ @ @ @ @ @ by the end of this year , possibly ranging from lighter research-budget reporting requirements for small asset managers to an outright exemption from unbundling for small businesses and independent analysts .
The idea would be to expand the marketplace of ideas and improve competition , with regulators keeping a close eye on how big banks price their research .
More research and more trading would ideally encourage more firms to tap markets for capital and give investors confidence to buy shares .
All this is happening while the supposedly light-touch U.K. sticks stubbornly @ @ @ @ @ @ @ managers and regulators dispute that small-cap coverage is getting worse — they see it as reassuringly selective — and argue that less research spending is a saving for the end investor .
They may have a point about the dubious quality of those ubiquitous PDFs in the pre-MiFID days , but one study suggests the curbs hurt fund performance .
It ’ s also strange that U.K. regulators seem so relaxed about the downsides of the new world , including a pricing out of smaller research shops .
Still , judging by the @ @ @ @ @ @ @ ’ s possible post-Brexit Europe will see Paris cut red tape while London keeps it .
For now , the talk in Brussels is of tweaks , rather than massive deregulation that would raise worries over consumer protection or regulatory whiplash .
What ’ s unclear is how much economic benefit the EU stands to gain .
It ’ s hard to imagine quick fixes to MiFID registering much at all on a pandemic-stricken economy that ’ s going to contract deeply this year .
Given the industry shake-out that ’ s already @ @ @ @ @ @ @ new research structures and analyst staffing numbers in a steady decline , this may be a case of too little , too late .
It ’ s also unclear what it might mean for post-Brexit financial market access between the U.K. and the continent , given so much depends on regulatory alignment between the two jurisdictions .
A more promising regulatory road to growth lies elsewhere .
If the EU were to deliver on its long-promised capital markets union , there would be a potentially much bigger boost to companies and the economy @ @ @ @ @ @ @ markets are still too fragmented when compared to the depth of London ’ s market .
The combination of Brexit and Covid-19 are a reminder of small firms ’ need for diverse and dependable funding sources .
Bonfires have their benefits , but sometimes it makes sense to build something new instead .


washingtonpost--2020-06-05--Analysis | Long Lines at Ikea Don’t Spell Retail Boom

Social-distancing rules governing shops are just one of the reasons why any honeymoon for retailers in the first days of reopening may be short lived .
Many will soon have to confront hard decisions about whether to shut some stores definitively and how to fend off online competition in a world where people may still be hesitant to go out to shop .
Recovery will be a long slog , with more pressure on profits than before the Covid-19 outbreak .
Non-essential stores in England , which were forced to close in March , will be permitted to open from @ @ @ @ @ @ @ .
Ikea stores on the outskirts of London and in the West Midlands drew huge queues when the purveyor of flat-packed furniture ( classified as essential ) reopened earlier this week .
In the U.S. , where some states have moved quickly to reopen for business , signs have been encouraging — at least until the civil unrest that forced some store closures again .
Take TJX Cos. , owner of T.J. Maxx , one of the most touchy-feely retail experiences .
It might seem that treasure hunting for a designer gem would @ @ @ @ @ @ @ But in late May the company said that overall , sales were above the year-earlier period in the 1,100 stores that had been open for at least a week .
Even Macy ’ s Inc. , which got caught in the department-store maelstrom , said sales were moderately higher than anticipated .
It ’ s a similar picture in Europe .
Earlier this week , Primark , owned by Associated British Foods Plc , said that suburban outlets , such as the one in Hilversum in the Netherlands , were comfortably ahead , @ @ @ @ @ @ @ Berlin and Amsterdam were at less than half of what they were a year ago .
There will be pent-up demand when stores open in England , too .
During lockdown , online shopping has flourished .
Initially , demand was for home furnishings and clothing basics , such as underwear and workout gear .
But warm weather , along with a slew of special offers , has encouraged more fashion purchases , such as day dresses , over recent weeks .
More markdowns , needed to clear out unsold spring and summer @ @ @ @ @ @ @ when they can get back out to shop again .
Even if their finances have held up , furloughed workers may be reluctant to spend .
People make the most drastic changes to their spending when they lose their job or see their friends and family being laid off .
Meanwhile , even though economies are gradually reopening , cancelled weddings , parties and overseas holidays will likely mean a lower level of clothing demand for the remainder of this year .
Those who do feel brave enough to splash out may get @ @ @ @ @ @ @ stores or check out .
That could be bad news for discount retailers that rely on a high number of relatively low-value transactions .
Primark could be hardest hit by social-distancing measures at its busiest stores , which accounted for 10-20 % of its total sales before the pandemic , parent Associated British Foods said .
Store closures during lockdown pushed even more people to shop online , a trend that ’ s likely to continue .
The digital share of non-food sales in the U.K. could increase to 41 % over the @ @ @ @ @ @ @ about 30 % at the end of 2019 , according to Richard Hyman , the independent retail analyst .
Shifting business online comes with additional costs too .
All of these forces will make chains think hard about which stores are worth keeping in their networks .
In the U.S. , Nordstrom Inc. said it would close 16 of its 116 department stores .
Expect similar decisions in Europe , especially if the additional costs associated with equipping stores for social distancing can ’ t be shared with landlords in the form of @ @ @ @ @ @ @ poised to make the most of the turmoil .
While Primark may have to deal with some tricky in-store logistics , it should still emerge a winner , given its focus on value , along with cheap-chic rivals Hennes & Mauritz AB and Inditex SA ’ s Zara .
Perhaps that ’ s why Primark , which has shunned online commerce , is actually opening new stores — such as in Manchester ’ s Trafford Centre — rather than closing any .
Online retailers such as Germany ’ s Zalando SE and Britain @ @ @ @ @ @ @ as companies with big digital businesses , such as Next Plc , should also be well placed .
But even for the winners , the next year or so will be testing .
The changes roiling the industry in the space of these five months would have taken five years in normal times .
That ’ s a lot for even the most nimble retailers to deal with .


washingtonpost--2020-06-05--Analysis | Traffic Is Creeping Its Way Back to Normal

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washingtonpost--2020-06-05--Analysis | America’s Job Woes

Analysis | America’s Job Woes

When things are going well , the flexible and mobile nature of the U.S. labor force can be a great strength , making the economy nimble in an atmosphere of creative destruction .
In bad times — during a pandemic , for instance — what becomes clear is how swiftly American employers can and will shed jobs , costing workers not just their salaries but in many cases their health insurance too .
More than 23 million Americans were unemployed as of the April employment report , a number that dropped by more than 2 million in May in a @ @ @ @ @ @ @ recovery .
Even so , unemployment remains extremely high , and many of those who have managed to avoid layoffs were hit instead by pay cuts .
To soften the blow , the U.S. government passed the largest stimulus package in modern American history to support small businesses and workers , but a strained and patchy system of delivering the promised support led to delays in many Americans actually receiving it .
Some other countries go further to keep workers in their jobs .
Under Germany ’ s Kurzarbeit ( “ short-time working @ @ @ @ @ @ @ companies to keep paying about two-thirds of otherwise lost wages to employees whose hours are eliminated or reduced .
Though the program doesn ’ t prevent all layoffs , it helped keep a lid on Germany ’ s unemployment rate in April even as the pandemic caused the U.S. rate to soar to the highest in records dating back to the 1940s .
The pandemic prompted the U.K. government to adopt a similar approach , footing 80 % of the paychecks for 8.4 million British jobs .
Job security was a feature of @ @ @ @ @ @ @ .
Many workers could spend the bulk of their careers with a single company , their loyalty rewarded with middle-class wages and guaranteed pensions in retirement .
But the blue-collar jobs that once supported the middle class and many rural economies have been squeezed by automation and globalization .
Automation , which has already affected jobs in manufacturing , is now a specter over millions of other workers — clerks , truck drivers , cooks , receptionists — who could be displaced by machines and artificial intelligence , especially if the pandemic makes @ @ @ @ @ @ @ by side .
President Donald Trump ’ s “ America First ” approach has fed off and fueled concern over American jobs lost to global free trade , though that viewpoint doesn ’ t take into account gains from new export markets or service jobs .
Trump ’ s agenda has included both levying tariffs and renegotiating trade deals in an attempt to keep companies — and jobs — from moving to other countries .
Until the pandemic struck at the start of 2020 , job creation had been steady for a decade @ @ @ @ @ @ @ for low-wage jobs .
A 2019 study by the Brookings Institution estimated that more than 53 million people in the U.S. — 44 % of workers age 18 to 64 — were earning low wages , a median $ 10.22 hourly .
The rise of low-wage work further squeezed the middle class and increased the popularity of gig work — driving for Uber , delivering food for Grubhub — to pay the bills .
Federal Reserve Chair Jerome Powell warned lawmakers in May that longer-term joblessness is a risk to the economy and @ @ @ @ @ @ @ of the trillions of dollars in stimulus already pledged , may be needed .
One possible step to stemming long-term unemployment would be for the government to do more to retrain workers to keep up with changing job demands .
Existing U.S. programs to assist workers displaced by globalization have been criticized as disjointed and overly modest in scale .
A possible model is the Danish program known as Flexicurity , which gives employers the flexibility to easily hire and lay off workers but provides laid-off workers government-provided education and training along with @ @ @ @ @ @ @ unemployment benefits .
Trump says reopening society after months of quarantine will be enough to bring the economy roaring back and employment to surge .
( Some experts say elevated unemployment could linger for years . )
Even before the pandemic , Democrats angling to deprive Trump of a second term were proposing big ( and expensive ) ideas such as offering every citizen a monthly stipend — known as universal basic income — or a government-guaranteed job paying a livable wage in fields such as elder care and construction .
Joe Biden @ @ @ @ @ @ @ is not known for such liberal policy approaches — his initial prescription for helping the American worker was stronger unions and tuition-free community college — but as the pandemic took its toll , he declared himself open to more transformational change .


washingtonpost--2020-06-05--Fed Vow Boosts Debt Binge as Borrowers Cut Thousands of Jobs

But unlike the Small Business Administration ’ s Paycheck Protection Program , which has incentives for employers to keep workers on the job , the taxpayer-backed facilities that the Fed and Treasury Department created for bigger companies have no such requirements .
To make sure the emergency programs help fulfill one of the Fed ’ s mandates -- maximum employment -- the central bank is essentially crossing its fingers that restoring order to markets will translate to saving jobs .
“ They could set conditions , say to companies , hire back your workers , maintain your payroll to at @ @ @ @ @ @ @ , and we will help , ” said Robert Reich , the former Secretary of Labor for President Bill Clinton who now teaches economics at the University of California , Berkeley .
“ It ’ s hardly clear that if you keep companies afloat they ’ ll hire employees.
” The lending programs -- credit for big companies and the so-called Main Street facilities for midsize firms -- are supported by the CARES Act , a law that passed the House with more than 96 % of the chamber ’ s votes and @ @ @ @ @ @ @ supporters , putting conditions on the assistance was a step too far .
If Congress had intended any , it would have made it explicit in the legislation , they say .
“ Really it ’ s all about creating a context , a climate , in which employees will have the best chance to either keep their job , or go back to their old job , or ultimately find a new job , ” Fed Chairman Jerome Powell said in a May 29 webinar hosted by Princeton University .
“ That @ @ @ @ @ @ @ ” A spokesman for the U.S. central bank declined further comment .
Even as businesses around the country began reopening in May after months of stay-at-home orders , helping a battered U.S. economy add 2.5 million jobs in May , prospects remained grim for millions of Americans who ’ ve been let go since February .
An extra $ 600 a week in unemployment benefits that Congress approved in March is slated to stop on July 31 .
The prohibition against firing workers in the $ 25 billion government rescue of U.S. airlines @ @ @ @ @ @ @ recipients have said they intend to shed employees after that date .
The Fed approached this crisis with the intent of keeping credit flowing everywhere , from municipalities to small businesses to big corporations to households .
Powell said the programs are about lending , not spending -- in other words , they aim to ease a financing pinch rather than stimulate the demand companies need to keep workers on the payroll .
“ For the Fed to second-guess a corporate survival strategy would be a step too far for them , ” @ @ @ @ @ @ @ history professor and author of “ Crashed : How a Decade of Financial Crises Changed the World.
” Putting explicit conditions on program beneficiaries would make the central bank “ a weird hybrid of the Federal Reserve , Treasury , BlackRock and an activist stockholder.
” BlackRock Inc. is the world ’ s biggest money manager and was hired by the central bank to assist with bond programs .
Through the Main Street facilities , which are scheduled to begin operations any day , the Fed will buy as much as $ 600 @ @ @ @ @ @ @ by commercial banks with principal and interest deferred for one year .
The program is aimed at midsize businesses , with 15,000 or fewer employees or annual revenue of $ 5 billion or less in 2019 .
The central bank ’ s credit backstop for larger companies is split in two .
The $ 500 billion primary program is designed to buy slices of syndicated loans or new bonds from companies with investment-grade credit scores or one notch below .
It ’ s available to corporations that can prove they can ’ t @ @ @ @ @ @ @ secondary facility buys individual corporate bonds already on the market and exchange-traded funds that include investment-grade and junk bonds .
The Fed kicked off the program last month ; its balance sheet as of June 2 listed ETF holdings valued at $ 4.3 billion .
Movie theaters were one of the first businesses to close during the pandemic .
Cinemark , which owns 554 of them , shut its U.S. locations on March 17 .
Three days later , the company paid a previously announced dividend .
It has since said it will @ @ @ @ @ @ @ 250 million from the junk-bond market on April 13 , the same day it announced the firing of 17,500 hourly workers .
Managerial staff were kept on at reduced pay , according to company filings .
Cinemark , which is based in Plano , Texas , said it plans to open its theaters in phases starting June 19 .


washingtonpost--2020-06-05--Analysis | Why It Seems Like Everybody’s Getting a State Bailout

Sometimes it ’ s not little at all .
Though state aid can be as modest as tax exemptions or loans at low rates , it can also take the form of massive rescues , such as Germany ’ s 9 billion-euro ( $ 10 billion ) bailout of national flag-carrier Deutsche Lufthansa AG .
Such interventions raise questions on whether it ’ s fair to bail out a business when others have to struggle on without help .
Before the pandemic , hackles were raised over China ’ s cheap loans , Italian bank rescues and dueling state subsidies @ @ @ @ @ @ @ The U.S. presidency of Donald Trump has been marked by accusations that unfair Chinese subsidies held back American firms .
It can be .
Governments now choose which firms or industries to rescue .
Deciding where the aid should go widens political fault lines in the U.S. and increases strains between richer and poorer European Union states .
In March China began assuming control of debt-laden HNA Group Co. , paving the way for a hastened selloff of the once-sprawling conglomerate ’ s remaining assets after it became one of the region ’ @ @ @ @ @ @ @ outbreak .
State help sometimes aims to build global champions , not only helping Chinese firms to expand fast but also companies such as Gulf airlines to build out flight networks .
Chinese aid has stoked calls in Europe and the U.S. for tougher measures to hamper Chinese trade .
Companies can complain about state aid if they see competitors getting aid they can ’ t match , whether those rivals are in China or nearby .
Increasingly , politicians are complaining about potential taxpayer bailouts for firms that may dodge taxes at @ @ @ @ @ @ @ of Europe ’ s largest airlines , says bailouts to former state carriers reward companies that failed to build up cash reserves .
It ’ s planning to challenge Germany ’ s bailout of Lufthansa , as well as seeking to topple France ’ s $ 8 billion rescue package for Air France-KLM .
The World Trade Organization helps its 164 members adjudicate disputes over subsidies such as the decades-long cases involving U.S. and EU aircraft subsidies .
But the WTO ’ s dispute settlement system has been weakened by the U.S. and @ @ @ @ @ @ @ .
The EU supervises subsidies given by member countries in its effort to open up trade , ordering governments to claw back payments that might undermine European rivals .
The EU is now looking at acting against companies that get foreign subsidies to out-compete in Europe .
Subsidies are no longer a special exception for favored firms : almost everyone is getting something .
The virus outbreak has forced governments to shower trillions of dollars on companies to compensate for stalling business activity .
Politicians who advocate free-market policies and criticize other countries @ @ @ @ @ @ @ efforts to shore up the economy with state support .
Britain ’ s Conservative government was forced to move away from decades of selling off or subsidizing state-owned businesses to temporarily cover private railway costs .
The EU had to relax aid rules to allow the state cash floodgates to open .
Don ’ t count on it .
Consider Germany , where Chancellor Angela Merkel ’ s government realized in March that extraordinary measures were needed .
A rescue package totaling 600 billion euros was rapidly put together , to be followed @ @ @ @ @ @ @ .
By the time she leaves office , Merkel will have installed a kind of state capitalism in Germany that borrows heavily from France and even reflects China ’ s success .
It will give officials power to pick winners and losers , seeding new industries and grooming national champions .
Buying stakes in companies is no longer taboo and the balanced-budget policy has been jettisoned .
Governments are choosing to target aid for services they see as important .
Airlines are getting some $ 85 billion euros in bailout funding , much @ @ @ @ @ @ @ .
That help might mean aircraft manufacturers Boeing and Airbus won ’ t need bailouts .
While most carmakers are tapping financial markets and hope they ’ ll be able to make up shortfalls in funding , French President Emmanuel Macron unveiled a raft of measures aimed at reviving France ’ s struggling auto industry .
His package of incentives for purchases of electric cars , cash-for-clunkers and subsidies for struggling car-parts makers totaled roughly 8 billion euros , including 5 billion euros of state-backed loans earmarked for Renault SA .
In Italy @ @ @ @ @ @ @ 6.3 billion-euro state-backed loan to save its operations in its home country .
So far banks around the world generally aren ’ t looking for rescues , a decade after they were bailed out and made changes to bolster balance sheets .
But a long or steep economic downturn that hurts loan repayments could put them under strain .
State spending can pull the economy out of the doldrums -- within limits .
U.S. President Franklin Roosevelt ’ s New Deal to create jobs and restore business confidence is credited with ending the @ @ @ @ @ @ @ didn ’ t fall significantly until World War II stoked demand .
Government banking rescues during the 2008 financial crisis saved the financial system but didn ’ t prevent slow growth and persistent unemployment in some countries .


washingtonpost--2020-04-30--Give Back Your Small-Business Aid. You Know Who You Are.

Thanks to lobbying by the restaurant and hotel industries , someone slipped a loophole into the bill making it possible for big chains to apply for funds .
The companies had banking relationships that all but guaranteed that they would be at the head of the line when it came time to apply .
Besides , they had furloughed employees to consider , just like local hair salons .
In other words , they acted precisely the way companies always acted before the coronavirus outbreak .
They were looking out for themselves , with little regard for anyone else .
@ @ @ @ @ @ @ from the start as aiming to benefit the truly small companies , the ones with no other access to capital .
And yes , it was obvious that the initial $ 349 billion wasn ’ t nearly enough for the tens of thousands of small companies that needed federal help .
And maybe , pre-coronavirus , that would have been the end of it .
But the virus has made Americans acutely aware of inequities that had once been easy — or at least easier — to overlook .
School closings sharpened awareness @ @ @ @ @ @ @ well-to-do kids .
Work-from-home policies helped keep white-collar employees safe while many blue-collar workers had to risk illness and even death because they didn ’ t have that luxury .
It had become obvious that the virus struck the vulnerable harder than people with means .
The way that first round of PPP money was distributed seemed like yet another example of the rich getting richer and the poor getting poorer .
But this time , the hyperawareness brought on by the coronavirus led to an enormous outcry , which included newspaper exposes @ @ @ @ @ @ @ Secretary Steven Mnuchin .
The publicity wasn ’ t just bad ; it was horrible .
Small-business people who had been shut out complained bitterly about how the PPP had been rigged for the bigger companies .
Reporters found recipients with ties to Trump , like Bennett .
Others looked through federal filings , searching for public companies that had taken PPP loans .
( The Wall Street Journal found 124 of them , with a median PPP loan of $ 2.8 million . )
One company that landed a $ 10 million @ @ @ @ @ @ @ paid $ 6.5 million to settle charges brought by the Justice Department .
Critics accused it of using its PPP loan to cover its settlement with the government .
( MiMedx denied this . )
Immediately , Shake Shack , a company founded by Danny Meyer , a highly respected restaurateur , gave back its $ 10 million .
So did a number of other companies , including AutoNation , the Los Angeles Lakers , and , eventually , Ruth ’ s Hospitality .
It wasn ’ t just because of the bad @ @ @ @ @ @ @ ’ t think it was .
It was because executives like Meyer realized that , even though Shake Shack had done nothing wrong , it was unfair that his company , with its $ 2.3 billion market value and $ 600 million in annual revenue , was taking money that so many smaller companies needed more .
Of course , there are also companies that have not given the money back .
In an effort to twist their arm , Mnuchin said that companies that have taken more than $ 2 million would @ @ @ @ @ @ @ forgiven .
( Loans can be forgiven if the companies keep their employees on the payroll for eight weeks . )
He also said that companies that wrongfully took PPP money could face “ criminal liability.
” As threats go , that ’ s pretty weak , given that most of the companies simply took advantage of the language in the law .
And most of the big companies that took loans can well afford to pay them back , thus avoiding the threatened audit .
Nonetheless , they should still give the @ @ @ @ @ @ @ so because they have access to capital — in the equity and debt markets , as well as from banks — that is out of the grasp of the ordinary small-business person .
They should do it because big companies that run into financial trouble can reorganize under Chapter 11 bankruptcy protection , while a corner pizza joint simply goes out of business .
They should do it because small business is a critical element of American life , a source not just of jobs but of community .
There are people who @ @ @ @ @ @ @ a reset of the values that have driven the business world the last quarter-century .
One of the few upsides of the crisis has been a surge in caring for our neighbors and our fellow citizens .
For their part , corporations have talked about putting their employees first , even at the expense of profits .
Many of them raced to supply equipment the country needs to fight the virus .
The companies that have given back their PPP loans are showing that they , too , care for more than just @ @ @ @ @ @ @ to help small companies that will never affect their own bottom lines .
The companies that haven ’ t given the money back ?
They ’ re showing that they ’ re not yet willing to look beyond their narrow self-interest .


washingtonpost--2020-04-30--Analysis | Operation Warp Speed Needs to Waste Money on Vaccines

The group probably can ’ t meet such a tight deadline .
It ’ s practically impossible to develop novel biological products that are both safe and useful that fast , and there ’ s only so much the government can do to speed things up .
But it can help by ensuring that , once a vaccine is ready , millions of doses can be manufactured right away .
Vaccine development is lengthy , expensive and risky because developing a drug that can provide a durable immune response is complicated .
Just look at the number of viruses for @ @ @ @ @ @ @ , and the fluctuating effectiveness of annual flu vaccines .
What ’ s more , any vaccine that ’ s meant to be broadly given to a healthy population has to clear an exceptionally high safety bar .
The fact that multiple candidates are already in human trials is evidence that researchers are working as fast as they can .
Operation Warp Speed may help by better coordinating efforts and facilitating large , standardized trials of multiple candidates .
What it can ’ t do , however , is simplify human biology or @ @ @ @ @ @ @ , many using relatively untested approaches , will fail .
Improving that part of the equation requires a different type of Manhattan Project : a long-term effort to develop pandemic-ready vaccine technology and shift the bad market incentives that have pushed many drug makers away from infectious disease research .
Operation Warp Speed stands to help most by addressing the high risk of failure — by building out “ at-risk ” manufacturing capacity for multiple promising vaccine candidates .
Waiting for concrete proof from clinical trials of any vaccine ’ s effectiveness before @ @ @ @ @ @ @ delay in producing enough doses to inoculate a population .
Ideally , Warp Speed will have robust funding , enough to waste some getting ready to produce vaccines that don ’ t work out .
That could include almost all them now in development , several of which are produced with technology that ’ s never been adapted to population-scale production .
Wasteful spending on the candidates that fail is worthwhile , because the potential benefits of just one that works — whether it arrives next January , March or June — would @ @ @ @ @ @ @ necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners .


washingtonpost--2020-04-30--Analysis | Why ECB Is Stuffing More Free Cash Into Bank Pockets

They ’ re loans aimed at getting financial institutions to boost lending to companies and households , stimulating economic activity and creating jobs .
That in turn should boost demand and drive up prices .
Banks can always borrow short-term from the ECB , but the TLTROs are special : potentially cheaper , and with a longer maturity of three years .
The amount a bank can borrow from the ECB under the program depends on the size of its loan book to the private sector , excluding mortgages .
Initially , the interest rate was set at the ECB @ @ @ @ @ @ @ is currently zero .
If a bank lends enough money to companies and households to meet a goal set by the ECB , it is rewarded with a cheaper interest rate .
Last September , the ECB said the rate could fall to the level of the ECB ’ s deposit rate , which was minus 0.5 % .
Now that rate will fall to minus 1 % .
They are loans that are described as “ non targeted , ” that is , not linked to any specific increase in lending .
@ @ @ @ @ @ @ below the main refinancing rate that presently is zero .
The ECB said PELTROs will effectively provide bridge financing when an older tranche of loans from the central bank begins to expire .
They will also have shorter maturity than the TLTRO program -- from 16 to 8 months .
It ’ s not even disguised .
Former ECB President Mario Draghi himself said that “ if there were no subsidies , then nobody would take up the TLTROs.
” But there ’ s another incentive as well : letting banks borrow at @ @ @ @ @ @ @ that policy makers have inflicted with their negative deposit rate .
Banks make money by charging more for loans than they pay for customer deposits .
Yet the ECB ’ s negative rate has driven all rates lower -- including those on loans .
At the same time , financial institutions must pay to keep their spare cash at the central bank .
To maintain their profit margin , they would ideally impose negative rates on customer deposits .
But that ’ s a radical step and , except in the case of @ @ @ @ @ @ @ it has proved impossible .
To ease the pressure , policy makers last fall introduced a system called tiering , which exempts some of banks ’ overnight deposits at the ECB from the negative rate .


washingtonpost--2020-04-30--Hospitals Will Go Bankrupt in Overlooked Threat, Stifel CEO Says

Just as restaurants are being threatened by the virus , hospitals are similarly grappling with how to serve patients in a setting where it ’ s difficult to maintain social-distancing guidelines , Kruszewski said .
The CEO , whose company is based in St. Louis , cited a decision by a hospital system with operations in the city to furlough workers .
SSM Health said this week that about 2,000 employees would be off for 13 weeks without pay , St. Louis Public Radio reported .
Stifel ’ s Miller Buckfire unit is one of the larger restructuring experts in @ @ @ @ @ @ @ has a business dedicated to municipal financing .
While policy makers have largely focused on the Federal Reserve ’ s Main Street Lending and Paycheck Protection Program , for which Stifel has committed as much as $ 1 billion in financing , Kruszewski said not enough attention is being paid to what happens as businesses begin to re-open .
“ The economic recovery is not going to happen because we allow restaurants to open with 25 % occupancy , ” he said .
“ I ’ m a finance guy .
I ’ @ @ @ @ @ @ @ a restaurant around that ’ s going to make money at 25 % occupancy.
” State leaders have been struggling with the question of how quickly to re-open the economy , while major corporations have been grappling with how they ’ ll allow employees back to work once that happens , especially in densely populated areas such as New York City .
“ Everyone ’ s talking about the back-end solutions .
What is the backstop that the Fed ’ s providing ?
What about PPP loans ?
What about Main Street loans @ @ @ @ @ @ @ think that what we need to be talking about is the front end.
” For more articles like this , please visit us at bloomberg.com


washingtonpost--2020-04-30--Analysis | SocGen’s Traders Deliver an Invaluable Lesson

SocGen lost 200 million euros ( $ 218 million ) on equity derivatives linked to shares and corporate payouts , the bank said on Thursday , confirming a report by my Bloomberg News colleagues .
Essentially , the bank ’ s bet went wrong because companies scrapped their dividend payments as economies shut down .
The firm ’ s equities-trading revenue — typically its biggest source of trading income — was effectively wiped out as counterparty defaults and higher reserves for its structured products also took a toll .
Oudea put this all down to the “ extraordinary dislocation ” @ @ @ @ @ @ @ of March .
BNP Paribas SA , another big French bank , reportedly lost money on similar trades .
Yet Wall Street competitors including JPMorgan Chase & Co. and Citigroup Inc. managed to make more money in equity derivatives amid the mayhem of March .
This is a reminder of how wild market swings can play out very differently between even the most sophisticated investment banks .
Structured trades — complex financial instruments that use derivatives — don ’ t give you a business that you can rely on every quarter .
There @ @ @ @ @ @ @ income , where revenue rose 32 % , in line with peers .
While that cushioned some of the trading blow , there was more pain elsewhere .
Charges on two fraud-related cases — SocGen is one of the banks exposed to troubled Singapore oil trader Hin Leong Trading — and provisions for the probable buildup of bad loans cost the firm 820 million euros .
All told , it posted a 326 million-euro loss , compared to a profit of 686 million euros this time last year .
To protect profitability for @ @ @ @ @ @ @ is eyeing another 700 million euros of net savings .
It will deliver these by banning travel and events , which is not so difficult at present , and by cutting bonuses and freezing recruitment .
The bank has promised not to make any new job cuts until September , however , which does limit its room for maneuver on reducing expenses during this particular economic crisis .
At least the bank ’ s capital has held up .
At 12.6 % , its key common equity Tier-1 ratio still gives SocGen a @ @ @ @ @ @ @ how it can use its capital .
Even if the ratio fell to 11 % , and there were further bad-loan provisions of as much as 5 billion euros this year , that buffer should be preserved , the bank said .
The trouble with SocGen , as I ’ ve argued before , is that under Oudea — the longest-standing CEO among Europe ’ s top lenders — it has made strategic missteps that aren ’ t easily reversible .
Crucially , having scaled back in asset management , it is less @ @ @ @ @ @ @ ’ s traders showed in the quarter that they can ’ t always be relied upon , and pressure is building on SocGen ’ s commercial and consumer banking divisions because of rock-bottom interest rates and recession .
With more bad loans on the way , SocGen is showing exactly where its weaknesses lie .


washingtonpost--2020-04-30--Fed Expands Paycheck Protection Facility to Add More Lenders


washingtonpost--2020-04-30--Powell Voices Worry About Long-Term Economic Damage From Virus

“ My estimate is that the funds rate will be at zero for five years , ” said Jonathan Wright , economics professor at Johns Hopkins University in Baltimore and a former Fed economist .
“ The economy can not be easily restarted and it is going to be a very long slog to get the economy back on its old trajectory.
” In perhaps a sign of how concerned he is , Powell set aside his usual reticence about commenting on fiscal policy and urged lawmakers to come up with further measures to support the economy .
He also @ @ @ @ @ @ @ Republican lawmakers -- about the impact the government spending was having on the nation ’ s debt .
While saying that the Fed was prepared to use all its tools to help the economy , Powell did not spell out any new steps at his press conference even as he stressed the difficulties ahead .
Powell repeatedly called the stance of monetary “ appropriate , ” noting that the Fed has promised to keep rates near zero until it is confident that the economy has weathered the coronavirus crisis and is on track @ @ @ @ @ @ @ goals of maximum employment and price stability .
He hinted that forward guidance might be made more specific at a future Fed meeting without saying how or when .
With financial backing from the Treasury , the Fed has also put forward nine emergency financing facilities to provide up to $ 2.3 trillion throughout the economy , which will deliver help to big and small businesses , state and local governments and even some risky corners of the financial markets .
Only four of the facilities are operational .
Powell said the Fed @ @ @ @ @ @ @ $ 600 billion Main Street Lending Program , though he suggested that it could be later expanded beyond that .
The facility , which is backed by $ 75 billion from the Treasury , is aimed at providing help for small and medium-sized businesses .
As well as the possibility of beefing up some of the programs if needed , Powell also left open the possibility they could be extended , with several currently scheduled to expire on Sept. 30 .
Powell though did stress that there are limits to what the Fed @ @ @ @ @ @ @ can ’ t hand out grants to businesses struggling to survive , for instance .
“ We ’ re going places and providing help in places where we never have and I ’ m glad that we are , ” Powell said .
“ Nonetheless these are lending powers ” not spending ones .
The Fed chairman spent a good portion of the press conference laying out the economic devastation caused by the efforts to contain the spread of the virus .
While economic activity may soon begin to pick up , it @ @ @ @ @ @ @ is back to where it was pre-crisis , he said .
“ I think everyone is suffering here but I think those who are least able to bear it are the ones who are losing their jobs , ” Powell said .
“ It is heartbreaking to see all that threatened right now.
” He also highlighted the potential for longer-term damage to the economy as firms are forced out of business and workers lose their jobs and drop out of the labor force.
“ The Fed is hunkering down for a long @ @ @ @ @ @ @ also against its after effects , which are likely to last for a protracted period of time , ” Roberto Perli , a former Fed official who is now a partner at Cornerstone Macro LLC , said in an email to clients .


washingtonpost--2020-04-29--Gig Workers Get Fiscal Aid as Stimulus Catches Up With Times

With governments bracing for economic contractions and joblessness not seen since the Great Depression , more of them are doling out part of their $ 8 trillion-plus stimulus to prop up the gig economy -- supporting part-time and freelance workers who generally lack a safety net .
Countries like the U.K. , U.S. , France , Singapore and Australia are going well beyond the fiscal aid delivered during the 2008-09 financial crisis to target a part of the labor market that now makes up one-third of the global workforce , according to estimates from the International Labour Organization .
The @ @ @ @ @ @ @ have also allocated support for self-employed people .
It ’ s in part an acknowledgment of the change the labor market has undergone in the past decade as gig jobs surged with the emergence of digital platforms like Uber Technologies Inc. and Airbnb Inc. For governments , the programs are an additional cost pressure on stretched budgets , but ignoring this key part of the workforce would have dire consequences for peoples ’ livelihoods and the wider economy .
“ Considering the number of self-employed people in total employment , their economic contribution @ @ @ @ @ @ @ in informal sector -- if they do not receive targeted support , the economic and social outcomes would certainly be more devastating , ” said Dragan Radic , the head of the small and medium-sized enterprises unit at the Geneva-based ILO .
But even in parts of the developed world , self employment has grown faster than overall employment , with countries already facing calls before the virus to update their social protection models .
In France and the U.K. , the share of the workforce who work for themselves , are members @ @ @ @ @ @ @ unpaid family workers rose from 2007 to 2018 , according to data from the Organisation for Economic Co-operation and Development .
France recently set up a “ solidarity fund ” with contributions from the private sector to help self-employed and small business owners .
The U.K. dedicated 9 billion pounds ( $ 11 billion ) to help self-employed workers in its fourth emergency package , while crisis-plagued Greece , which didn ’ t have a program a decade ago , unveiled financial assistance in response to Covid-19 .
Australia is offering A $ @ @ @ @ @ @ @ for as much as six months for self-employed whose revenue is likely to drop by 30 % or more .
In Singapore , the government estimates that 100,000 self-employed persons will receive cash payments of S $ 3,000 ( $ 2,114 ) each in May , July and October .
And in Japan , where the self-employed make up about 8 % of the working population , freelancers can claim as much as $ 9,300 from the government if they can show a minimum 50 % loss of income in at least one @ @ @ @ @ @ @ dollars thrown at this sector of the labor market , the rollouts have not been without their hiccups .
Among the snags : • The U.S. , with its patchwork of 50 state policies around distributing government aid , is dealing with mass delays and confusion , on top of charges that self-employed were crowded out of funding claimed by larger businesses • In the U.K. , a program to pay the self-employed the same proportion of their average annual earnings from the past three years is taking some time to get set @ @ @ @ @ @ @ June • In Switzerland , some workers like taxi drivers were belatedly added to the program since they were initially seen as not legally forced to stop working -- which hindered their eligibility In Singapore , Paul Lew is running an online business selling wine and is setting up another website to sell medical products .
He ’ s received S $ 600 as a cash handout that the government has paid all adult Singaporeans , and is considering whether and how he should apply for additional support .
He ’ s not @ @ @ @ @ @ @ -- he says he always keeps a “ tight ” control on what he spends -- but believes the extra support is vital for the self-employed and small businesses in Singapore .
“ Singapore depends a lot on this business , ” he said .
“ A lot of them struggle -- they struggle during normal times .
And the package at least will help them over a couple of months .
”


washingtonpost--2020-04-30--Analysis | All Those Parked 747s Herald Peak Oil Demand

That may never happen again .
Folks will still make the trip across the pond ; it just isn ’ t likely to be on one of those old 747s again .
That matters a great deal for the oil market .
Jet-fuel demand has declined more in percentage terms than any other petroleum product , according to the International Energy Agency ’ s initial assessment of the impact of Covid-19 , released Thursday .
That ’ s both for the first quarter and , under current estimates , 2020 as a whole .
Demand for seats has all but @ @ @ @ @ @ @ U.S. Transportation Security Administration checkpoints each day last week , compared with more than 2 million for the same days in 2019 .
Even with jet fuel suddenly much cheaper , the thirstiest planes get grounded first , and those tend to be the oldest .
Of the 141 Boeing 747-400s tracked by Ascend by Cirium , a consultancy , 94 % aren ’ t flying ( including all of BA ’ s ) , versus about two-thirds for the global passenger-jet fleet as a whole .
The average age of those 747s @ @ @ @ @ @ @ over 15 years is getting long in the tooth , and more than a quarter of the world ’ s fleet fall into that cohort .
If the big question is how quickly demand will return , then answering it is all but impossible .
Rob Morris , global head of consultancy at Ascend by Cirium , says he had worked on the assumption that two big supports — business travel driving global commerce and leisure travel stemming from globalization and migration — “ would remain robust.
” Now , given social distancing @ @ @ @ @ @ @ many people work , “ anybody who talks about demand recovery in a year or two is probably being somewhat optimistic.
” Boeing Co. CEO Dave Calhoun echoed that presenting predictably dreadful results on Wednesday , saying passenger traffic might not resume 2019 levels for three years .
He also raises more existential questions .
Will people be happy to go back to sitting cheek-by-jowl , or has the trend of packing people in “ reached its natural Darwinian limit ” ?
Possibly , we ’ ll be fine with that as soon @ @ @ @ @ @ @ say , taking the subway again .
Still , Mann suggests fares must rise anyway to accommodate the extra cost of more stringent cleaning and longer turnaround times at the gate .
He estimates industry capacity in 2022 will be 25-30 % smaller than it was before Covid-19 struck .
The economics and sheer uncertainty mean a generational cull of aircraft is coming .
” Anything that was scheduled to retire over the next five years has an accelerated path towards retirement , just to be very simple and straightforward , ” Delta @ @ @ @ @ @ @ on an earnings call earlier this month .
As our colleague David Fickling writes , Covid-19 has revealed the shortcomings of long-term demand models touted by Boeing and Airbus SE .
In a new report , Barclays Plc analyst David Strauss estimates a roughly 40 % cut in demand for new aircraft over the next three to four years relative to previous expectations .
As and when the market recovers , it will involve more efficient models .
So jet-fuel demand will lag what is already an uncertain recovery in plane trips .
@ @ @ @ @ @ @ seem unwelcome but not terrible for oil .
While the forecast demand decline this year is the biggest in percentage terms , those missing 2.1 million barrels a day pale in comparison to the almost 5 million taken out of the gasoline and diesel pool .
While jet fuel was only 8 % of global oil demand in 2019 , it has an outsize role in expectations of demand growth .
In BP Plc ’ s latest set of long-term projections , released a year ago , aviation accounted for 64 % of @ @ @ @ @ @ @ fuel by 2040 , compared to 2017 .
For oil demand growth as a whole , jet fuel is 44 % , or almost one in two of every incremental barrel .
Now try this number for size : 79 % .
That ’ s jet fuel ’ s share of the projected growth in demand for refined products , rather than other liquids .
In other words , in these projections , aviation is pretty much all of the long-term growth in crude oil demand .
This is a product of two @ @ @ @ @ @ @ emerging-market incomes rise in a globalizing world , and the difficulty of switching planes to alternative energy sources ( other than biofuels ) .
The first assumption has been shot down or , on a very optimistic reading , deferred by many years .
Globalization was breaking down even before pestilence struck , and Covid-19 will leave deep scars on both the idea and the economy beneath it .
Road transportation , which takes almost half the world ’ s oil supply , is already vulnerable to electrification , and that will only @ @ @ @ @ @ @ of demand like aviation or plastics are touted as oil ’ s path to growth from here .
Yet plastics demand growth looks overblown ( see this ) , and now the narrative about jet fuel is similarly damaged goods .


washingtonpost--2020-04-30--JPMorgan Sent Over 225,000 Small-Business Applications This Week


washingtonpost--2020-04-30--Analysis | The Coronavirus Won’t Bring the End of Big Meat

If anything , those figures understate quite how concentrated the slaughter industry is .
About two-thirds of America ’ s pork passes through the 24 giant facilities owned by Smithfield Foods Inc. , JBS SA , Tyson Foods Inc. and Clemens Family Corp. More than 80 % of beef comes from about a dozen abattoirs owned by Tyson , JBS , Cargill Inc. and Marfrig Global Foods SA .
That presents a bottleneck for the American meat trade not unlike the one causing such ructions in the country ’ s oil business .
It ’ s worryingly easy for disease @ @ @ @ @ @ @ who work for low wages , in close quarters , in long shifts , and often share tightly packed break rooms and transportation around the site .
Once one plant becomes a Covid-19 hotspot , the knock-on effects can be profound .
Supply chains aren ’ t configured for pigs and cows to leave the site except in the form of chilled cuts , so it ’ s not easy to move them elsewhere .
Those who expect the current situation will lead to a revival of smaller-scale abattoirs forget how America ’ @ @ @ @ @ @ @ in the first place .
If the current shape of the livestock supply chain is a result of anything , it ’ s been the interplay of more than a century of food-safety regulation , logistics and labor force arbitrage .
The coronavirus will just move that process another step forward .
Scale , and the problems it engenders , has always been a central feature of the industry .
When canals and rail routes through Chicago first joined the Midwestern farm belt to the populous East Coast in the mid-19th century , @ @ @ @ @ @ @ Stock Yards — grew to be the world ’ s largest .
Conditions in the yards were notorious , with little regard for the safety of either the meat produced or the low-wage , immigrant workforce .
Upton Sinclair ’ s 1906 novel “ The Jungle ” attempted to draw attention to the latter , but its most lasting result was the regime of federal slaughterhouse regulations .
Now there ’ s approximately one government food inspector for every 10 employees in slaughtering and packing .
Over the past 40 years , tighter @ @ @ @ @ @ @ scale have driven slaughterhouses out of America ’ s cities to giant facilities across the Midwest , Great Plains and South .
More than a dozen of these little-known sites are about as large as the Union Stock Yards .
Modern slaughter plants are built close to feedlots and the grain and soy fields that supply them .
That means most meat is transported in the form of cuts , which pound-for-pound cost about a hundred times as much as live animals .
Located in rural areas , they can pay their workers @ @ @ @ @ @ @ city , too .
It ’ s hard to see how making these facilities more resilient to infectious outbreaks among workers would reverse the concentration of previous decades .
After all , better hygiene and humane standards for meat , and the ( worthwhile ) regulatory burden that entails , are one of the main reasons so many small-scale slaughterhouses have closed down in recent decades .
The sorts of changes that would be needed post-coronavirus — spacing workers further apart and separated by screens , staggering shift periods and providing more break @ @ @ @ @ @ @ for larger plants to implement .
To the extent that better practices help improve the meager wages of abattoir workers , that , too , will probably benefit the meat producers with the biggest market share and ability to pass on costs to consumers .
Returns at the biggest businesses are sufficient to cover their capital costs , but hardly excessive .
Investors generally prefer grains processors such as Bunge Ltd. and Archer-Daniels-Midland Co. Red meat consumption in the U.S. has fallen by a quarter since the 1970s .
The concentration of America @ @ @ @ @ @ @ a symptom of its weakness , rather than its strength .
( 1 ) We ’ re counting only federally inspected slaughter plants , which make up more than 95 % of the industry , as they ’ re the only ones allowed to transport their product across state lines .
There are also about 300 federally inspected poultry plants , in addition to several thousand downstream plants where carcasses are further jointed and processed .


washingtonpost--2020-06-18--U.S. Lawmakers Propose More Coronavirus Relief for Small Businesses

The bill introductions come as Congress and the White House are expected to negotiate a potential fourth round of stimulus next month for a U.S. economy still battered by the pandemic , with applications for unemployment benefits last week showing only gradual improvement and millions still out of work .
Officials have said the next stimulus measure would include additional aid for small businesses that were left out of earlier rounds or are still trying to re-open and recover .
“ Many small businesses will continue to struggle in the weeks and months to come , ” said Democratic Senator @ @ @ @ @ @ @ Democrat on the Small Business & Entrepreneurship Committee , in a statement .
“ Congress must once again act urgently to support our most vulnerable small businesses through this crisis , so our economy can recover as quickly as possible after the pandemic.
” Cardin and Democratic Senators Chris Coons of Delaware and Jeanne Shaheen of New Hampshire introduced the “ Prioritized Paycheck Protection Program ( P4 ) Act ” that would extend the June 30 deadline to Dec. 30 or longer to apply for a forgivable PPP loan while creating a new @ @ @ @ @ @ @ with 100 employees or fewer that have lost at least half their revenue due to the pandemic .
A companion bill is also being introduced in the House .
The PPP , which offers loans of as much as $ 10 million that can become grants if the proceeds are spent mostly on payroll , is set to expire June 30 .
As of June 12 , the program still had almost $ 130 billion in funds remaining .
Any unused funds would be sent back to the Treasury unless Congress approves another @ @ @ @ @ @ @ use existing PPP funding to make additional targeted loans .
The Small Business Administration has already approved more than 4.6 million loans totaling more than $ 513 billion .
But lawmakers and groups representing small businesses say firms need more help or were unable to tap relief funding , especially independent contractors , the self-employed and minority-owned and other disadvantaged businesses .
The next phase of assistance for small business is going to be very targeted , particularly at minority firms that are struggling more than white-owned businesses , Republican Senator Marco Rubio @ @ @ @ @ @ @ Business Committee , said in a video posted on Twitter on Tuesday .
There was a 41 % decline of Black business owners from February to April , and the number of Latinx owners declined by 32 % during that time compared with a 17 % drop for White owners , according to a study released earlier this month by the National Bureau of Economic Research .
“ These disparities can ’ t stand , ” Rubio said .
“ We have to confront them because what we can not afford as a @ @ @ @ @ @ @ general , is an uneven recovery , a recovery that leaves behind people in many cases along the lines of ethnicity and race.
” The PPP has been successful but didn ’ t adequately meet the need of restaurants , said Republican Senator Roger Wicker of Mississippi , who ’ s offering a measure with Democratic Representative Earl Blumenaur of Oregon and other lawmakers .
The bill , unveiled in a conference call with the Independent Restaurant Coalition , would create a $ 120 billion “ Restaurant Revitalization Fund ” in the Treasury @ @ @ @ @ @ @ or drinking establishments through Dec. 31 .
Wicker said the proposal has bipartisan support that extends to the White House , and that there is a “ strong likelihood ” of the legislation to be part of the next phase of stimulus being considered next month .
The trade group for independent U.S. restaurants released a study last week saying a $ 120 billion industry stabilization fund could generate more than $ 270 billion in economic activity through savings of as much as $ 57 billion on government programs for the unemployed , @ @ @ @ @ @ @ taxes , benefits in the supply chain and tourism spending .
The industry , which says it employs 11 million workers directly , has faced millions of job losses during the shutdowns , severe hits to revenue and the likelihood that occupancy restrictions will imperil firms for months more even as the economy reopens .
Restaurants are trying to make ends meet when they are only allowed to fill 25 % to 50 % of their seats while owing rent with invoices for food that are past due , said National Restaurant Association @ @ @ @ @ @ @ ’ re also paying high prices for safety measures in dining rooms for workers and patrons and “ wondering how they will ever find the money to pay for it all , ” he said in a statement .
Treasury Secretary Steve Mnuchin said last week the U.S. needs additional fiscal stimulus even as the economy starts to rebound , and that a fourth round of fiscal stimulus should include help for restaurants and travel , retail and leisure businesses , as well as possibly more cash for American families .


washingtonpost--2020-06-18--Analysis | Killing Bank Profits Is a Pretty Desperate Move

The latest demands follow a host of aggressive measures by regulators in recent weeks , including moratoriums on repayments and buying new loans from banks , which will help free up a corner of their balance sheets .
That Beijing is now asking financial institutions to effectively forego top-line growth to get money where it should be going anyway points to the ineffectiveness of small lenders , one of the largest direct suppliers of credit to the economy .
That ’ s nowhere more apparent than in the Chinese hinterland , where these regional institutions are a major source of @ @ @ @ @ @ @ They have overextended themselves and become warehouses of bad risk .
On Thursday , Caixin reported regulators were planning to allow local governments to replenish the capital of small and midsize lenders by as much as 200 billion yuan , citing people familiar with the matter .
Of the 4,005 such banks in China , 15 % didn ’ t meet minimum capital requirements .
Authorities are aware that some lenders won ’ t be able to comply with the latest edict — the ones that can are those with enough liquidity and @ @ @ @ @ @ @ had to bail out .
The problem isn ’ t the price or quantity of credit , though .
It ’ s the persistent and well-known challenge of transmission , getting each yuan where it ’ s needed most .
Beijing has always controlled borrowing costs and been able to inject ( or suck out ) gobs of money when necessary .
It has moved rates up when leverage starts rising , and lowered them when it wants to stimulate borrowing .
With the hit from Covid-19 , the ratio of credit to @ @ @ @ @ @ @ as 286 % , HSBC Holdings Plc estimates .
In May , so-called total social financing grew 12.5 % from a year earlier .
Rates have been pushed so low that they have encouraged arbitrage and a buildup of leverage .
But measures to make transmission more effective haven ’ t done much and the financial plumbing remains clogged .
The central bank ’ s various tools , including cutting the reserve ratio requirement , haven ’ t been able to lower rates .
In fact , they have become less effective over @ @ @ @ @ @ @ lending costs .
The loan prime rate , for instance , which has become a de facto benchmark , hasn ’ t had the desired effect , even though officials have tweaked it in recent months .
Things will only get worse from here .
Bank balance sheets , the main channel between the financial system and the real economy , aren ’ t being strengthened or cleaned up .
In fact , asset quality is deteriorating and the ability to digest the non-performing loans is shrinking as capital buffers are eroded .
@ @ @ @ @ @ @ and preferred shares coming to market as these institutions try to safeguard their cushions will have a new layer of risk – one they can ’ t quantify .
Those hefty Chinese bank dividends may also come into question as profit growth is compromised .
For Beijing , pulling on the same levers again and again won ’ t work .
Cleaning up balance sheets will .


washingtonpost--2020-06-18--Analysis | The Most Troubling China-India Conflict Is Economic

He ’ s pushing at an open door , because the relationship already looks to be on increasingly shaky ground .
As my colleague Andy Mukherjee has written , economic nationalism is on the rise in India — and China looks to be the most visible loser .
Last year , the U.S. overtook China to become India ’ s largest trading partner .
That could be a moment as significant as when the U.S. moved ahead of Japan to become China ’ s biggest partner , in 2004 .
In April , New Delhi tightened its foreign investment laws @ @ @ @ @ @ @ at Beijing .
It ’ s looking at restricting share-based investments from China too , according to the Economic Times .
In November , India decided to walk away from the Regional Comprehensive Economic Partnership , a trade bloc backed by Beijing that will bind China to other major Asian economies .
Despite the total value of India ’ s exports growing by nearly half between 2010 and 2019 , the sum going to China shrank 14 % over the period , deepening a trade deficit that ’ s fueling India ’ s @ @ @ @ @ @ @ , because trade relations can act as an important restraint on conflict .
The immediate economic loss that would result from war with a major trading partner is one factor that can stop skirmishes from deteriorating into major battles .
One study of late 20th century conflicts by economists at Sorbonne University in 2008 found that while openness to trade doesn ’ t automatically prevent war , there ’ s a greater risk of conflict when countries grow less economically dependent on each other , as appears to now be happening with China @ @ @ @ @ @ @ globalization can make matters worse : Countries that become more integrated with the world economy are more able to endure the loss of commerce with a single nearby rival .
You can see this most obviously in two of Asia ’ s most worrying military flashpoints .
Trade between North Korea and South Korea approximates to zero , so it ’ s hardly surprising that the demilitarized zone between them is the other spot in the region that ’ s teetering on the brink of war .
More to the point , consider @ @ @ @ @ @ @ At the time of independence in the late 1940s , India took nearly a quarter of Pakistan ’ s exports , which in turn bought about half of its imports from India .
That trade rapidly evaporated through the 1950s , until war in 1965 closed off commerce altogether for nearly a decade .
Relations never recovered .
Just 1.8 % of Pakistan ’ s exports went to its eastern neighbor in 2018 .
India counts Nigeria , Belgium and Mexico as bigger export partners than the country with which it shares a @ @ @ @ @ @ @ ’ s no overarching reason for China and India to be rivals .
Each has its own distinct regional sphere of influence , and a history of staying on the sidelines of grand strategic fights .
The extent to which India is increasingly being drawn into Washington ’ s orbit these days is in many ways a response to its nervousness about the rise of a more aggressive China .
A better policy would be for Beijing to recognize how its Belt and Road projects in Pakistan , Sri Lanka , Bangladesh and @ @ @ @ @ @ @ quite like NATO ’ s expansion into eastern Europe in the 1990s fostered lasting enmity in Russia .
China ’ s big infrastructure investments haven ’ t performed well on their own terms in any case , leaving the subcontinent ’ s smaller countries saddled with debts and , in many cases , a legacy of pollution .
India itself would be a far better destination for Chinese outbound capital .
China should recognize how much it will benefit from India ’ s development , just as richer countries gained from its own @ @ @ @ @ @ @ up its domestic market to key Indian exports such as IT .
Making the approval process for Indian generic pharmaceuticals easier , too , would help to lower China ’ s sky-high drug prices .
New rules were introduced on this front last year , but it ’ s not clear they ’ ll succeed : China ’ s trifling pharmaceutical imports from India actually declined in 2019 .
India would do well to apply its new foreign investment rules sparingly .
While there ’ s justifiable wariness about the involvement of state-owned @ @ @ @ @ @ @ investments that the likes of Alibaba Group Holding Ltd. and Tencent Holdings Ltd. have made in India ’ s burgeoning e-commerce sector should be welcomed .
This is especially true at a time that Covid-19 is likely to amplify long-standing problems attracting overseas capital .
Amid the sugar-rush of nationalism brought on by military hostilities , there ’ s little sign right now that cooler heads will prevail .
Still , a previous 2017 confrontation in the Himalaya didn ’ t reverse the busy diplomatic relationship between the two countries .
In smoothing @ @ @ @ @ @ @ China must further deepen their economic and social links — otherwise the next fight will be still more serious .


washingtonpost--2020-06-18--Analysis | A New York Bet on German Banks Turns Very Sour

Cerberus , run by the low-profile billionaire Stephen Feinberg , has vowed to seek “ alternative paths ” after Commerzbank rejected its request last week to give it two seats on the company ’ s supervisory board .
In a punchy response , Cerberus said it remained committed to “ achieving substantial change to the leadership , ” and that management had failed to meet targets that weren ’ t ambitious enough to begin with .
Commerzbank held its annual shareholder meeting just last month , so pushing for a seat at the table would mean Cerberus getting a German @ @ @ @ @ @ @ , while winning over other investors to nominate the new candidates .
The German bank is indeed in an “ exceptionally difficult and vulnerable position , ” as Cerberus points out .
The pandemic struck just as it was starting to work through its latest restructuring .
The shares have rebounded from a May low but they still value the lender at just 20 % of its tangible book , hardly a sign of strength .
In the European benchmark bank index , only an Italian and a Spanish bank — whose governments @ @ @ @ @ @ @ Germany to support the economy through the pandemic — trade at similar lows .
The frustration is understandable .
Commerzbank ’ s chief executive officer , Martin Zielke , hasn ’ t exactly aimed for the stars and his execution has been slow .
He has targeted a paltry return on tangible equity of 4 % from cutting branches and some jobs .
Deutsche Bank , in the middle of its biggest overhaul in decades , aims for 8 % ( although it ’ s questionable whether that ’ s achievable ) .
@ @ @ @ @ @ @ deeper and faster cuts .
At least two more large Commerzbank investors agree , Bloomberg News has reported .
And the German government , which still owns 16 % of the lender after its crisis-era bailout , replaced its two supervisory board members in May because of similar concerns .
However , Commerzbank ’ s management isn ’ t entirely to blame for Cerberus ’ s losses — even if the investment firm feels its advice fell on deaf ears in the 70 meetings it says it held with the company .
The @ @ @ @ @ @ @ Deutsche-Commerzbank merger last year overlooked the difficulty of bringing together two large German employers , including significant job cuts that labor unions resisted .
The aborted merger was a distraction at a time when both lenders needed to get their own houses in order .
Nor should it have been a surprise that Commerzbank didn ’ t want to employ the consulting services of Cerberus ’ s advisory arm .
While Deutsche Bank hired Cerberus in that capacity , the role was controversial because it gave a division of the private equity firm @ @ @ @ @ @ @ a Chinese wall ) .
In fairness , the banking world did look rather different when Cerberus made its merger gambit .
Interest rates were expected to rise , not head deeper into negative territory , and a redesign of Germany ’ s fragmented banking market wasn ’ t inconceivable .
Cerberus is also an investor in Hamburg Commercial Bank , which was privatized in 2018 .
Unfortunately for Commerzbank ’ s shareholders , banking profitability will remain strained for some time .
Loan losses from its core Mittelstand customers could hit profit @ @ @ @ @ @ @ activity .
Zielke , who has hired McKinsey & Co. to review the business , has pledged deeper cuts .
But getting buy-in to reduce jobs in the aftermath of a pandemic will be tough .
Half of the bank ’ s supervisory board members are employee representatives , and job reductions need to be negotiated with a works council .
Shareholder activism in banking hasn ’ t had much success , with attempts failing at Barclays Plc and UBS Group AG .
Regulators need be won over to the cause , and @ @ @ @ @ @ @ Cerberus going on the attack may be more about saving face with its own investors , but battling a German lender that anyone would struggle to turn around is a thankless task .