COVID19

[bookiebasher]

Look at DTD for an example .

Independent , superbly run high quality business.

Not many leeks in his operation.

Through no fault of his own it’s obviously very difficult for it to continue.

Rob must look at the cards he has been dealt and see 27 off suit every time
while the virus holds all the aces.

At some stage you just run out of chips no matter how good you are at adjusting.

[Doobs]

I wouldn’t say they are hobbies.

Retail was already difficult and many Independent sole traders/partnerships were
just scraping by and with decrease in foot fall over the next 12 months they can’t survive.

No one is going to replace them.

The biggest winner out of all this is surely Jeff Bezos.

All those old and vulnerable people getting taught by their kids how to order stuff online and
finding out how simple , quick and efficient the process is.

I get that the leaner more efficient businesses will survive and prosper but for consumers
It will mean less choice less diversity and the high street declining at a far greater pace
than currently.

This pandemic will exacerbate the already huge wealth inequality in society.

Pretty much this.  I'd far rather have these people providing a useful service, enjoying themselves, paying taxes and making enough to get by than sat at home miserable and on benefits. 

Amazon is more efficient, but they  barely pay taxes and rates, and it is allegedly a really shit place to work.  A lot of their stuff is pretty low grade tat too.  I don't think efficient and better for us are really interchangeable.

And this isn't going to cause bad businesses to go bust, good businesses in bad sectors will go too.   If you run the best travel business with the best ratings and decent margins, you can still go bust here.  Same with the best restaurants and so on.  If you run the worst corner shop in the country you may well survive.  I am sure there are plenty of scumbags selling Covid related nonesense that have been coining it in too. 

[Doobs]

 

there were 626 deaths yesterday. We’ve been in 600+ deaths for many days on a very shallow decline from the pesk

One of the government’s five tests for ADJUSTING (not lifting) the lockdown is a “sustained and consistent fall in daily deaths”.

It feels mad that the PM is even adjusting lockdown on Sunday no?

It is noticeably busy around my village today. Those midweek happy Monday tabloid headlines also seemed nuts to me.

Agree on this.  If it takes 3 weeks to halve the numbers and 3 days to double them when unrestricted it seems clear that any removal of restrictions is going to be difficult.

I have noticed the same with the public.  My garden is getting a near constant flow of traffic past it in daytime from barely a car for weeks.  You'd see maybe 10 or 20 people in the country park on a run, but am dreading dodging people when I go out for my run in a few minutes.  I suspect just the talk of easing has made it difficult to do any further easing, we may well have got to equilibrium just by saying Boris will speak tomorrow.  If we aren't at equlibrium now, I'd say we have got significantly closer.

[TightEnd]

UK to repair stable door, still no sign of horse.

UK 'to bring in 14-day quarantine for air passengers' https://bbc.in/3fvGKq4

[nirvana]

Really no rationale to continue this lockdown. It's just nonsensical to continue to mandate behaviours when we all know the score. Companies and people can work this out for themselves. Probs concede that care homes should remain very restricted - hospitals, after all it's the NHS (our NHS, the greatest achievement in Britain's history etc) should be able to figure out how to use testing to make things safe.

What can't be done won't be done. If people want to stay in, fine. Let the rest go out and about their business

[Karabiner]

I wouldn’t say they are hobbies.

Retail was already difficult and many Independent sole traders/partnerships were
just scraping by and with decrease in foot fall over the next 12 months they can’t survive.

No one is going to replace them.

The biggest winner out of all this is surely Jeff Bezos.

All those old and vulnerable people getting taught by their kids how to order stuff online and
finding out how simple , quick and efficient the process is.

I get that the leaner more efficient businesses will survive and prosper but for consumers
It will mean less choice less diversity and the high street declining at a far greater pace
than currently.

This pandemic will exacerbate the already huge wealth inequality in society.

Pretty much this.  I'd far rather have these people providing a useful service, enjoying themselves, paying taxes and making enough to get by than sat at home miserable and on benefits. 

Amazon is more efficient, but they  barely pay taxes and rates, and it is allegedly a really shit place to work.  A lot of their stuff is pretty low grade tat too.  I don't think efficient and better for us are really interchangeable.

And this isn't going to cause bad businesses to go bust, good businesses in bad sectors will go too.   If you run the best travel business with the best ratings and decent margins, you can still go bust here.  Same with the best restaurants and so on.  If you run the worst corner shop in the country you may well survive.  I am sure there are plenty of scumbags selling Covid related nonesense that have been coining it in too. 

Speaking of travel-agents imagine how the family-business that saved Thomas Cooks and bought all of their shops is feeling now.

[TightEnd]

Really no rationale to continue this lockdown. It's just nonsensical to continue to mandate behaviours when we all know the score. Companies and people can work this out for themselves. Probs concede that care homes should remain very restricted - hospitals, after all it's the NHS (our NHS, the greatest achievement in Britain's history etc) should be able to figure out how to use testing to make things safe.

What can't be done won't be done. If people want to stay in, fine. Let the rest go out and about their business

I have no problem with the libertarian instinct, but we have 55,000 dead (FT estimate), 6,000 new cases every day after seven weeks of lockdown, an outsourced test, trace, isolate fiasco, and a disastrous March 12 herd immunity strategy that has led to public health and economic chaos.

R0 is just under 1, maybe as low as 0.7....they simply cannot end the lockdown apart from tweaks around the edges (garden centres, outdoor spaces, more exercise) yet without leading to a big second wave can they?

All that said, as the public led us into lockdown (I was one of many locking down before the official instruction) it appears the public is leading us out of it in their behaviour, its certainly not the science

[nirvana]

Really no rationale to continue this lockdown. It's just nonsensical to continue to mandate behaviours when we all know the score. Companies and people can work this out for themselves. Probs concede that care homes should remain very restricted - hospitals, after all it's the NHS (our NHS, the greatest achievement in Britain's history etc) should be able to figure out how to use testing to make things safe.

What can't be done won't be done. If people want to stay in, fine. Let the rest go out and about their business

I have no problem with the libertarian instinct, but we have 55,000 dead (FT estimate), 6,000 new cases every day after seven weeks of lockdown, an outsourced test, trace, isolate fiasco, and a disastrous March 12 herd immunity strategy that has led to public health and economic chaos.

R0 is just under 1, maybe as low as 0.7....they simply cannot end the lockdown apart from tweaks around the edges (garden centres, outdoor spaces, more exercise) yet without leading to a big second wave can they?

All that said, as the public led us into lockdown (I was one of many locking down before the official instruction) it appears the public is leading us out of it in their behaviour, its certainly not the science

I've been to B and Q earlier, totally workable and almost zero chance of catching anything if you're sensible. Can't see why this can't be applied sensibly by most businesses whether business or conusmer facing, those that are obviously not 'safe' won't be used by people who are concerned.

Agree we need to do a lot more to protect certain places, ie hospitals and care homes but test capacity, PPE should make this plausible as a scenario. As for the rest of the people who aint gonna die from this -ie, most, just get on with it imo.

tbf, this consigns the vulnerable and just scared (for want of a better word) to an undefined period of doing nothing much until vaccines etc but I think that's better than what I view as a ludicrous situation today where most people could pretty safely keep calm and carry on.

[bookiebasher]

https://amp.ft.com/content/2c5ddbd0-8e09-11ea-9e12-0d4655dbd44f?segmentID=635a35f9-12b4-dbf5-9fe6-6b8e6ffb143e&__twitter_impression=true

Interesting read and that Eccles chap seemed to be ahead of the game.

What’s your thoughts on the article Richard or anyone and do you see us making the same
mistakes as before when coming out of a recession.

[bookiebasher]

https://amp.ft.com/content/2c5ddbd0-8e09-11ea-9e12-0d4655dbd44f?segmentID=635a35f9-12b4-dbf5-9fe6-6b8e6ffb143e&__twitter_impression=true

Try this link

It’s behind a pay wall  

Theirs a bit extra info with charts n stuff but good old copy n paste has got most of it.

[bookiebasher]

May 5, 2020 5:14 pm by Martin Wolf
“It is utterly impossible . . . for the rich to save as much as they have been trying to save, and save anything that is worth saving.” Marriner Eccles, Congressional testimony 1933.

Debt creates fragility. The question is how to escape from the trap. To answer it, we need to analyse why today’s global economy has become so debt-dependent. That did not happen because of the idle whims of central bankers, as many suppose. It happened because of an excessive desire to save relative to investment opportunities. This has suppressed real interest rates and made demand far too reliant on debt.

Two recent papers illuminate both the forces driving this rise in leverage and its consequences. One, directly related to the views of Eccles, who chaired the US Federal Reserve from 1934 to 1948, is on “The Saving Glut of the Rich and the Rise in Household Debt”. The other, on “Indebted Demand”, explains how debt overhangs weaken demand and lower interest rates, in a feedback loop. The authors of both include Princeton’s Atif Mian and Chicago’s Amir Sufi, well known for their fine past work on debt.


As Eccles said so clearly, beyond a point, inequality weakens an economy by driving policymakers into a ruinous choice between high unemployment or ever-rising debt. The paper on the savings glut makes two points. First, rising inequality in the US has resulted in a large increase in the savings of the top 1 per cent of the income distribution, not matched by a rise in investment. Instead, the investment rate has been falling, despite declining real interest rates. The rising savings surplus of the rich has been matched by the rising dissaving, or consumption above income, of the bottom 90 per cent of the income distribution.

Line chart of Total debt as a % of GDP, weighted average of 14 advanced economies*  showing The ever-rising global debt mountain
The savings of the rich might have led to a current account surplus, as in late-19th-century UK. But the rich of the rest of the world have sought to accumulate US assets, and so generated a persistent US current account deficit. Except when the pre-financial crisis housing bubble drove up private ­investment, this has also remained too weak. The chief users of excess foreign and domestic savings have been less well-off households and the government.

There is a clear link between the saving of the rich and dissaving of the less rich, and the accumulation of credit and debt. Since 1982, the decline in net indebtedness of the rich has been matched by the rise in indebtedness of the bottom 90 per cent. This is why the argument that low interest rates hurt the less well off is absurd. The less well off are not large net creditors. The rich hold claims on the less rich, not only directly, via bank deposits, but via equity holdings in businesses that also hold such claims. This phenomenon of rising household debt and rising inequality is not unique to the US. It is widespread.

Line chart of Per cent showing The progressive fall in real interest rates
Why does the rising debt matter? One answer, as David Levy argues in Bubble or Nothing, is that the economy becomes increasingly driven by finance and fragile, as borrowers become ever more overburdened. Another is the idea of “indebted demand” — a close relative of the idea of “balance-sheet recessions” propounded by the Japanese economist, Richard Koo. As debt soars, people are ever more unwilling to borrow still larger amounts. So interest rates have to fall, to balance supply with demand and avoid a deep slump. In these ways, we have ended up where we were even before Covid-19, with real interest rates at zero. This is one mechanism driving what Lawrence Summers has called “secular stagnation”.

Line chart of Shares of US national income (1982=100) showing The domestic rich and foreigners are equally big savers for the US
We must focus on the US first, because that is where global demand and supply tend to balance. But similar phenomena of rising inequality and soaring savings are to be seen in other big economies, notably China and Germany. The former used to export its excess savings to the US, but now absorbs it in wasteful investment at home. The latter has driven trading partners into rising debt in the eurozone and beyond.

Line chart of Savings of groups in the US income distribution, as a % of national income showing The savings glut of the US rich has grown enormously, while the majority increasingly dissaves
So, how are we to escape from the debt trap? One step is to diminish the incentive to finance businesses with debt, rather than equity. The obvious way to do so is to eliminate the preference of the former over the latter in almost all tax systems. It is also possible, as Profs Mian and Sufi argued in an earlier book, to shift from debt to equity financing of housing. In addition, we have a huge opportunity now to replace government lending to companies in the Covid-19 crisis with equity purchases. Indeed, at current ultra-low interest rates, governments could create instantaneous sovereign wealth funds very cheaply.

Line chart of Changes in net household debt as a share of national income relative to 1982, across the US income distribution (% points) showing The US rich have become much bigger creditors, while the rest have become much bigger net debtors.
Yet none of this would fix the ongoing dependence of macroeconomic stability on ever more debt. There are two apparent solutions. The first is for governments to keep on borrowing. But, in the very long term, this is likely to lead to some sort of default. The well-off, who are the principal creditors of government, are bound to bear much of the costs, in one way or the other. The alternative is to shift the distribution of income, in order to create more sustainable demand and so stronger investment, without soaring household debt.

In 1933, Eccles also told Congress, “It is for the interests of the well to do . . . that we should take from them a sufficient amount of their surplus to enable consumers to consume and business to operate at a profit.” That happened, partly by accident and partly deliberately, after the second world war. Ever-rising household and government debt will not stabilise the world economy ­forever. Nor should asset-price bubbles remain so central to our economy. We will have to adopt more radical alternatives. A crisis is a superb a time to change course. Let us start right now.

G0949_20X Line chart showing Household and government debt against Income share of top 1% in the distribution

martin.wolf@ft.com

Follow Martin Wolf with myFT and on Twitter

Letter in response to this column:

[Marky147]

tbf, this consigns the vulnerable and just scared (for want of a better word) to an undefined period of doing nothing much until vaccines etc but I think that's better than what I view as a ludicrous situation today where most people could pretty safely keep calm and carry on.

Think the problem is that most people are borderline idiots, otherwise I'd agree.

I could do another year of this, so it doesn't bother me one bit, other than not enough takeaways about.

[nirvana]

tbf, this consigns the vulnerable and just scared (for want of a better word) to an undefined period of doing nothing much until vaccines etc but I think that's better than what I view as a ludicrous situation today where most people could pretty safely keep calm and carry on.

Think the problem is that most people are borderline idiots, otherwise I'd agree.

I could do another year of this, so it doesn't bother me one bit, other than not enough takeaways about.

Think there's loads of people like you Marky.and pretty sure for a reasonable number of people it's almost ideal. Aside from seeing my family and the odd visit to a restaurant or pub it's pretty perfectly suited to me too.

But it's killing the jobs of so many otherwise fit and self employed trades people as well as in other decent mid size companies I'm not sure the ends, today, justify the means. Someone has to work to pay for all the public sector jobs and delish pensions.

[Marky147]

tbf, this consigns the vulnerable and just scared (for want of a better word) to an undefined period of doing nothing much until vaccines etc but I think that's better than what I view as a ludicrous situation today where most people could pretty safely keep calm and carry on.

Think the problem is that most people are borderline idiots, otherwise I'd agree.

I could do another year of this, so it doesn't bother me one bit, other than not enough takeaways about.

Think there's loads of people like you Marky.and pretty sure for a reasonable number of people it's almost ideal. Aside from seeing my family and the odd visit to a restaurant or pub it's pretty perfectly suited to me too.

But it's killing the jobs of so many otherwise fit and self employed trades people as well as in other decent mid size companies I'm not sure the ends, today, justify the means. Someone has to work to pay for all the public sector jobs and delish pensions.

It definitely gets to a point where we have to take our medicine, and given that the gov said they're going to be trying to wean people off the furlough dough and get them back to work, I can't see it's long from coming.

My brother had a couple weeks off, but I reckon a fair few self-employed are already back to work. He is only working on jobs he doesn't have to deal with any customers, and using his regular labourer, a Portuguese lad that is sensible and does what he's told.

[Jon MW]

UK to repair stable door, still no sign of horse.

UK 'to bring in 14-day quarantine for air passengers' https://bbc.in/3fvGKq4

It might seem intuitive in one way but if an epidemic is spreading faster in your country than in other countries then there really isn't any point in stopping people as they arrive.

Everyone arriving is either arriving from a higher risk area - in which case they already have to self isolate.
Or they are arriving from an area which is the same or less risk - in which case you could tell them to self isolate for 14 days and that might stop a few people catching the virus. But if they are not coming from higher risk areas then anybody who has not flown in has got just as much (or higher) chance of catching the virus from going to the supermarket of if they have to travel to work.

i.e. why would you want to quarantine new air travellers for 14 days and not want to do the same to anyone who has been out and about domestically? The benefit from quaranting the incoming traveller is no higher than just picking the supermarket shoppers or anyone who has had to go to work.

I don't think the quarantine (more accurately self isolation) measures are really for the current stage of the epidemic. They are for the next stage of the epidemic when we have got a lower rate of transmission than some of those arriving.

All past  research on epidemics has shown that any kind of travel restrictions and airport control have very little effect on being able to stop an epidemic entering the country so it's not worth them going overboard on it whatever they're planning.