This hasn’t been the new government’s first nationwide crisis. That was widespread flooding hitting many regions of the UK. As I explained here, that was partly a disaster created by the Conservative party (with a little help from their coalition partners). Journalists had their chance to make a story out of this by using the hook of Johnson’s non-appearance at any of the flooded towns, but it didn’t happen, just it didn’t happen on all the previous occasions we have had widespread flooding. Which is why spending on flood defences continues to be inadequate. Lack of criticism encourages a certain laziness, but also gives politicians the courage to do things that those in democracies with more accountability would not do. I think we can see both … [Read More...]
Locking down too late but ending lockdown too early
The major reason we have one of the highest death rates as a result of the coronavirus pandemic is that Johnson/Cummings had an intense aversion to imposing a lockdown, and an unusual disregard for human life. Any decent politician, after being told at the end of February that 500,000 of their citizens might die, would have moved heaven and earth to stop that happening. Anyone watching the recent Despatches documentarywould have heard about scientists worrying about how to stop the pandemic, with little pressure from politicians to do so. It may have been an ultimatum from French president Macron that finally forced Johnson/Cummings to enact a full lockdown on March 23rd. Unfortunately the same factors that delayed a lockdown have led Johnson/Cummings to relax the … [Read More...]
Why does this government get away with murder?
In the government’s final press conference Chris Whitty, the Government’s chief medical officer, said““I would be surprised and delighted if we weren’t in this current situation through the winter and into next spring.” The significance of that statement cannot be overstated. Deaths in the UK from the virus are currently running 100 every day. (The true total may be higher.) The chief medical officer is saying don’t expect to see deaths running at an order of magnitude lower before the Spring of next year. I fear we have become desensitized over coronavirus deaths. We keep being told by the government that they are at a much lower level than they used to be, every graph shows deaths are much lower than they were at the peak, … [Read More...]
Did the scientists advising the government on COVID-19 make serious mistakes?
The government has now said it will begin to wind down the lockdown with an extensive test, trace and isolate (TTI) regime in place. Containment, having been abandoned on March 12th, is back but this time the UK government is serious about it. It has a much greater chance of success not just because there is more testing capability available, and there will be an app to help with tracing, but also because it will take place with a degree of social distancing. We can only hope that this works, and that government actions match their words. But what seems very puzzling to me is why the scientists advising the government seem to have been preoccupied with moderated herd immunity as the only way to deal with … [Read More...]
Global cases of the coronavirus have passed 10 million as US cases top 2.5 million
With more than 2.5 million COVID-19 cases reported, the US has more cases of the novel coronavirus than any other country in the world. [Read More...]
Market Insights Podcast (Episode 118)
Jazz FM Business Breakfast presenter Jonny Hart looks back on the week’s markets news with OANDA Senior Market Analyst Craig Erlam. This week they discuss the market wobble as coronavirus cases spiked, the economy as it reopens, the US-China trade deal and the week ahead. There’s also a little football chat after Liverpool won the English Premier League for the first time in 30 years. [Read More...]
The momentum for fiscal stimulus is building
US President Trump is calling for a payroll tax relief until after the US elections. Australia just announced a EUR 11 billion package to counter the adverse impact of the coronavirus. The European Commission set up a fund yesterday with EUR 25 billion to tackle to economic shock caused by the virus. The UK raised already anticipated fiscal stimulus by another GBP 18 billion. And these are just a selection of the number of measures that is being announced. Most measures are, however, disappointingly limited. The European Commission’s investment fund represents just 0.2% of GDP, and are taken from existing resources. Hence, the reluctance of governments to really open the tabs increases the odd of a global recession. Forecasts for 2020 GDP growth are around 2.0% (2.4% by the OECD) … [Read More...]
Daily Coronavirus Fatality Increase Alarms US Equity Futures
The equity markets are still moving lower this morning with the futures trading lower in the overnight session on concerns of a resurgence of COVID-19 cases. Yesterday’s fatalities saw the first increase in deaths in the US since June 7th. Bearish momentum has increased during the day trading session so I want to attempt to capture this downward move. Call me if you need assistance with executing this trade! I recommend the following: SELL ESU20 @ 3080.00 or @ Market BUY STOP @ 3095.00 ($750 risk per contract) BUY LIMIT @ 3060.00 ($1,000 profit per contract) The MICRO contract is 1/10th exposure per contract. *Risk/reward are calculated before commissions and fees* 60 MIN ES – Bearish TAS Navigator and TAS Vega = SELL Jace Jarboe | Commodity Futures Broker: … [Read More...]
The government is responding to pressure and not thinking clearly about defeating coronavirus
In this articlein the Guardian I lay out what the optimal strategy for handling COVID-19 should be for a country like the UK. How does the Prime Minister’s statement on Sunday evening compare to that strategy? The key to relaxing a lockdown is having a test, trace and isolate infrastructure in place, and very low infection levels. We do not have either. So why was Johnson talking to the nation on Sunday? He set out a general framework for relaxing the lockdown, all conditional on some function of infection levels and R. (He didn’t specify what the function was.) To set out an approach makes sense. To not tell anyone what exactly the conditions for relaxation are does not make sense, but it gives him flexibility … [Read More...]
Why the media in UK and US has moved beyond manufacturing consent, and why that has led to a war about reporting COVID-19
Manufacturing Consent: The Political Economy of the Mass Media (hereafter MC) was a book published by Edward Herman and Noam Chomsky in 1988. From my point of view the key idea behind MC was that media organisations select the news and opinion that they show to viewers in a way that supports the existing economic, social and political system. This could be summed up as saying the mainstream media (MSM) is not subversive. The book talks about the “propaganda model for manufacturing consent” as involving various elements: the ownership structure and for profit goal, the importance of advertising, the importance of particular news sources, sensitivity to organised criticism, and organising filters like the cold war or terrorism. So, for example, in my idea of mediamacro you see the … [Read More...]
Some myths about government debt and how it is financed
That the Bank of England was temporarily eliminatingthe limit on the Ways and Means Facility caused a bit of a stir last Thursday (9th April). It in effect meant that the Bank of England could credit the government with as much money as it needed in the current crisis. That it should cause such a stir illustrates how pervasive many of the myths are around government debt. Here are three familiar examples. It doesn’t matter that we are in a developing economic crisis, like a recession or a health pandemic, we still need to worry about what is happening to government debt.This is false for any country that prints its own currency, like the UK. In a crisis you should worry about dealing with the … [Read More...]
What lockdowns do and what they don’t do
Just a short post to advertise my Guardian article‘Fear of coronavirus, not lockdown, is the biggest threat to the UK’s economy’. The key point I make is that the economy would suffer badly even if there was no lockdown. People, once they realised the extent of the threat, would stay at home. The three reasons I give for imposing a lockdown are classic reasons in economics for state intervention. The state has an information advantageThe government, because it talks directly to top scientists, can see the pandemic coming a lot faster than the majority of people. That didn’t work out too well in the UK, where people were leading the government, but if the state functioned well this would be true. The state deals with externalitiesWhile the … [Read More...]