Tag Archives: Monetary Policy Committee

THE DEATH OF FREEDOM

A person does a cartwheel in Oxford Circus during rush hour as the spread of the coronavirus disease (COVID-19) continues, London, Britain, March 23, 2020. REUTERS/Dylan Martinez

We have less freedom today than we have had in over 400 years.   And we’ve all consented to this loss of freedom.

Freedom of assembly and the freedom to worship have both suffered.  Even the freedom to go out for a meal or a drink.    Nor can we shake a friend’s hand or give a hug.   Again, with our consent.

As one British paper put it:  “It is no exaggeration to say these are the most extreme powers ever used against citizens in peace time Britain.”

It’s understandable.  We want to live.  We want to survive the coronavirus.

But will we ever get these freedoms back?

Most importantly, what will be the next crisis that makes us so quick to jettison our freedoms?

MR       

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“A heart attack is occurring in the economy”  (Sky News comment, 3/20)

This was a comment about the British economy, but it describes every country right now.   So, let’s take a look at some of the economic consequences of coronavirus.

Argentina’s new government will today publish GDP figures for last year, with economists warning that the covid-19 pandemic could be about to send the country into a deep recession.   GDP is forecast to have contracted by 2.1% in 2019.   But what matters now is the dire situation to come.   One former central banker predicts that the country’s economy could shrink by up to 4% in 2020.   Though weighed down by high inflation and heavy debt, President Alberto Fernández’s government is implementing fiscal stimulus measures worth billions of dollars.   Its treasury minister, Martín Guzmán,  warns that the covid-19 crisis means that it is now impossible to say when, and how, Argentina can return to growth.   That was Mr. Fernández’s primary goal when he took office just four months ago, an aim that looks harder by the day as infections mount in the country.     (The Economist, 3/25/2020)

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For years Germany has run the tightest of fiscal ships, frustrating many in the euro zone and beyond.   Then came covid-19.   Today the Bundestag will approve a €156bn ($168bn) supplementary budget for 2020, under which Germany will issue new debt for the first time since 2013.   The borrowing breaks Germany’s “black zero” balanced-budget policy and exploits an emergency rule in the constitutional “debt brake.”   Yet it is just one part of Germany’s response.   The government has expanded Kurzarbeit support (in which the state partly covers the lost wages of workers who have their hours cut), extended various loan guarantees and even earmarked funds for direct investment in companies.   The package amounts to a potential €750bn, and more may follow.   The scale of the response has surprised observers—but at European level less is happening.   Germany, and the euro area’s other hawks, remain implacably opposed to debt mutualization.   (The Economist, 3/25/2020)

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Today’s meeting of the Bank of England’s Monetary Policy Committee should have been the first with Andrew Bailey in the chair.   But the new governor found himself presiding over an emergency meeting last week, amid what he described as “borderline disorderly” market conditions.   In common with other central banks, the Bank of England is aggressively easing monetary policy to react to a rapid economic slowdown due to the spread of covid-19.   Despite interest-rate cuts, £200bn ($232bn) more quantitative easing (amounting to some 10% of GDP) and more direct support for private-sector lending, the bank is more worried about undershooting its inflation target than overshooting it. Today’s consumer-price statistics show inflation running at 1.7%, below the 2% target.   More monetary easing is likely, but with interest rates already at 0.1%, an all-time low, fiscal policy will have to do most of the heavy lifting.  (The Economist, 3/25/2020)

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Coronavirus lockdown measures implemented in the UK may trigger an economic downturn that could kill more people than the virus itself, a new study warns.

Philip Thomas, a professor of risk management at Bristol University, says that a fall in GDP of more than 6.4% could lead to a devastating recession in which “more years of life will be lost . . . than will be saved through beating the virus,” reports The Times.  (The Week, 3/25/2020)

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The worst outbreak of Coronavirus in the Middle East, so far, is in Iran.  Thousands have died and tens of thousands have been exposed to the virus.   An overlooked developing crisis parallel to Iran’s is the situation of the country’s neighbors across the Persian Gulf.

Beyond the civilian element affecting Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE; tens of thousands of American military personnel are also stationed in these countries.   Once facing the Iranian threat and ISIS, they are now involved in combating the invisible enemy:   Covid-19.      (Greg Roman, MEF, 3/20)

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This is an emergency, track everyone:   If there were ever a time to set concerns about privacy aside, this is it.   Giving public health authorities access to everyone’s location data gives them a better chance of tracking down people who have been in contact with confirmed cases – and helps ensure that those who are already sick stay in quarantine.   Right now, governments need all the help they can get.   Give them the data.   Debates about the privacy implications can wait.

China is in this camp. So are other countries in Asia, like South Korea and Taiwan, that have had better success containing the epidemic – although it’s still too early to say whether access to mobile phone location data was the deciding factor.   (Gzero, 3/25/2020)

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A SURPRISING LETTER FROM HOLLYWOOD

Dear Mr. President, @realDonaldTrump

I wanted to thank you for ur recent decorum, sincerity, & care towards us.   You’re taking charge & leading in a manner needed & wanted for this country.   I highly commend you for ur boundless energy & willingness to solve problems.   Thank you!

— Kirstie Alley (@kirstiealley) March 24, 2020

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TO THE POINT

  • LAGOS — A jihadist group ambushed and killed around 70 Nigerian government troops in Borno state, in the north-east of the country.   The guerrillas used rocket-propelled grenades to attack a vehicle full of soldiers; they also took several captive.  The group they belong to split off from Nigeria’s homegrown Boko Haram in 2016, and now considers itself an Islamic State affiliate. (The Economist, 3/25/2020)
  • BERLIN – A court in eastern Germany convicted eight far-right extremists who were accused of planning to violently overthrow the state.   The regional court in Dresden on Tuesday convicted one of the men on a charge of forming a “terrorist organization” and the other seven of being members of the group, called Revolution Chemnitz.   Five of the man were also found guilty of a serious breach, while one was convicted of bodily harm.  The court sentenced the defendants to prison terms that ranged from 27 months to 5 ½ years.  (Lansing State Journal, 3/25/2020)
  • UNITED NATIONS — UN Secretary-General Antonio Guterres urged leaders of the world’s 20 major industrialized nations on Tuesday to adopt a “wartime” plan including a stimulus package “in the trillions of dollars” for businesses, workers and households in developing countries trying to tackle the coronavirus pandemic.   He said in a letter to the Group of 20 leaders that they account for 85% of the world’s gross domestic product and have “a direct interest and critical role to play in helping developing countries cope with the crisis.”  (Lansing State Journal, 3/25/2020)
  • LONDON – Prince Charles has coronavirus.  Prince Charles, 71, is displaying mild symptoms “but otherwise remains in good health,” a spokesman said, adding that the Duchess of Cornwall, 72, has been tested but does not have the virus.   Charles and Camilla are now self-isolating at Balmoral.   Buckingham Palace said the Queen last saw her son, the heir to the throne, on 12 March, but was “in good health.”   The palace added that the Duke of Edinburgh was not present at that meeting, and that the Queen was now “following all the appropriate advice with regard to her welfare.”
    A Clarence House statement read:   “In accordance with government and medical advice, the prince and the duchess are now self-isolating at home in Scotland.  “The tests were carried out by the NHS in Aberdeenshire, where they met the criteria required for testing.  “It is not possible to ascertain from whom the prince caught the virus owing to the high number of engagements he carried out in his public role during recent weeks.”
  • Germany is the only country in Europe to have currently rejected China’s offer of support in combating the Covid-19 pandemic. According to China’s President Xi Jinping, he informed Chancellor Angela Merkel that the People’s Republic of China “is willing to provide help within our capabilities,” if Germany “is in need.”   Over the past few days, Beijing has sent aid supplies and – in some cases – teams of doctors to provide practical on-site assistance to several European countries including Italy, Spain and France.   Berlin has ignored the offer of support, even though there is, for example, a glaring shortage of respiratory protection masks in Germany.   More than 80 percent of Germany’s registered doctors are complaining that they cannot procure sufficient protective clothing.   Serious accusations for failing to take preventive measures are being raised against the German government, which has been emphasizing that it is “well prepared.”   Leading German media are denouncing China’s aid as a “propaganda campaign” and accuse the country of being “the cause of the pandemic.”  The only thing missing is the use of Trump’s label of a “Chinese virus.” (German Foreign Policy, 3/24/2020)
  • A growing number of businesses and individuals worldwide have stopped using banknotes in fear that physical currency, handled by tens of thousands of people over their useful life, could be a vector for the spreading coronavirus.   Public officials and health experts have said that the risk of transferring the virus person-to-person through the use of banknotes is small.   But that has not stopped businesses in the US from refusing to accept currency and some countries from urging their citizens to stop using banknotes altogether.   (Times of Israel, 3/20/2020)