The Bill

The global cost of the corona pandemic now approaches the $10 trillion mark. This is the price of the handouts, tax deferrals, and loan guarantees extended by governments trying to nurse their societies back to health. Only a fraction of that money may, in the fulness of time, be recouped. Since the depth of the recession that the virus thrust upon the world is still an unknown quantity, nobody knows for sure who and what is able to survive the pandemic. In Europe, most governments guesstimate that only about 65 percent of the deferred taxes will get paid. Up to 20 percent of the loan guarantees extended may be invoked at some point.

Budget deficits are quickly rising to levels not seen outside times of war. Debt burdens keep pace, limiting the financial wiggle room of states as preparations are made to slowly resuscitate economies. Though most economists agree that states had no choice but to act decisively, some begin to wonder who is going to pay for the enforced largesse.

Absent a global debt jubilee, the piper must be paid – eventually and presumably. This crisis has no winners, apart from a few billionaires who somehow managed to add to their fortune whilst sipping drinks aboard mega yachts anchored within swimming distance of a welcoming tax haven. Earlier recessions were local or regional in nature and could count on strong growth elsewhere to find a way up.

Not so this time around. China sputters and nears its own day of post-corona reckoning with a regime increasingly lashing out at any and all forms of dissent in a rather sorry display of gutted self-confidence. To paraphrase Karl Marx, China’s current posturing at home and abroad masks the inherent weakness of its system. Despite the unbelievable antics of its president, the United States will be fine. The country still holds the master key to the global financial system. As always, the US dollar rules supreme in a troubled world. Not even President Trump can scare investors away from the mighty dollar – and that’s saying something.

Europe is not nearly so lucky and will be hard-pressed to come up with novel solutions to remain an economic power of note. Were it not for the almost pig-headed refusal of the Frugal Four to engage in acts of creative bookkeeping, solutions could be found such as the Spanish suggestion to issue consols – perpetual bonds that pay interest but are redeemed at the issuer’s convenience. Consols are an interesting tool to kick the proverbial can not just down the road, but into interstellar space.

The idea that the debts incurred by the pandemic must be paid, and the vast volumes of credit injected into the Eurozone economy since 2015 must be taken out (i.e. the money destroyed) seems ludicrous. Such a rigorous approach to financial management will most likely result in a very long period of lacklustre growth, high unemployment, and political turmoil. Deflation also remains a distinct possibility. Business as usual is probably not on offer for the foreseeable future. To navigate the post-corona era without creating another politically volatile lost generation, out-of-the-box thinking is needed. That’s not something to expect from Europe’s Frugal Four.


In the good old days, the likes of Fidel Castro and Hugo Chávez entertained their people with seemingly unending ramblings about nearly every topic under the sun. Both rulers are dead now, but a few presidents still cling to notions of omniscience and feel the need to shine their light on issues they know virtually nothing about.

Sometimes it just cannot be helped, and one must take US President Donald Trump to task over his increasingly bizarre behaviour during the daily Coronavirus Task Force briefings staged at the White House. On Thursday, the event descended to a new and painful low as the mightiest man on earth, sporting his signature fake tan, took leave of whatever senses he had left to suggest sunlight and Lysol as possible cures for covid-19.

Whilst President Trump kept blabbering, oblivious to the ridicule he sparked, renowned scientists such as task force coordinator Dr Deborah Birx barely managed to hide their disbelief and stupefaction at so much nonsense being spouted by a single person. Taking to the lectern, President Trump philosophised at great length about cleansing the insides of the human body with some sort of disinfectant and later suggested covid-19 patients could be bombarded with bright light to kill off the virus.

Immediately after he was done, Washington State emergency authorities rushed out a tweet, warning citizens not to try out any of the president’s suggestions. Reckitt Benckiser, the British maker of Lysol, warned that its disinfectants under no circumstance should be administered into the human body.

The very event that means to reassure the American public that the federal government is doing all it can to contain the virus and battle the disease, has now become a stage for the dissemination of crackpot solutions and dangerously silly ideas. It is a daily show lasting up to two hours that features an emperor without clothes, sycophants too afraid to point out the obvious, and a few scientists trying to make the best of a very bad situation.

We should all be exceedingly grateful to the many thousands of dedicated civil servants and professionals who keep the United States federal government on an even keel by ignoring to the best of their ability any instructions from above. They must try and keep this up for another 271 days until the inauguration of the 46th president when a sense reason may resurface in the White House. Donald Trump may then replace that poor man James Buchanan as the worst president in US history – a full 44 notches down from Honest Abe. The other possibility does not bear thinking about.

Intensive Care

Just like a particle accelerator produces a string of strange phenomena, a pandemic-stressed economy churns out elements that do not comply to long-standing theories. Negative interest rates and oil prices are but two of the curios that breeched the walls of convention. The former already existed in the pre-corona era, whilst the latter represents an event never observed before.

Another economic law that ended on the scrap heap of busted myths is the inverse correlation between inflation and unemployment as evidenced by the Phillips Curve, named after the New Zealand economist who studied centuries’ worth of economic data to prove his point: when inflation creeps up, unemployment numbers ease and vice versa.

To crunch the numbers and illustrate the effects of shifting spending priorities, ‘Bill’ Phillips in 1949 designed and built a hydraulic computer that used coloured water and an intricate web of pipes, sluices, and reservoirs to mimic the path travelled by money as it trickles through society.

The MONIAC (Monetary National Income Analogue Computer), also known as Bill’s Financephalograph, provided its builder and others with the insight that a trade-off exists between a strong economy and low inflation. The consensus is that Mr Phillips would have won a Nobel prize had he not passed away, aged 60, in 1975.

According to prominent economists, the Phillips Curve no longer seems to reflect or predict present-day reality. Actually, its elegant path was first broken in the 1970s when stagflation reigned supreme and economies suffered both high rates of inflation and unemployment. This gave latter-day monetarists such as Milton Friedman the courage to dismiss Mr Phillips’ research as irrelevant to longer-term economic trends.

Although both sides of the debate presented vast volumes of evidence to support their stance, it looks as if facts on the ground have created another reality altogether: just before the pandemic struck, most advanced economies shared a set of similar, yet historically unique, features: low growth, low inflation, and low unemployment. This was not supposed to be possible.

Thus, we unknowingly may have entered the realm of the bizarre years ago. The threshold seems to have been the banking crisis of 2008 and the Great Recession that followed in its wake. This is when strange phenomena first appeared, perhaps reflecting the bewildering patchwork of solutions implemented to keep weakened economies on life support. The patient never fully recovered and has now been returned to intensive care.


Most news cycles only last a few days. Major events may capture the readers’ attention for perhaps a week or two before they are demoted to the inside pages only to drop out altogether a few days later. The intensity of news coverage is also inversely proportional to the distance of the unfolding story. A major crisis in a faraway place usually merits the same amount of column inches as a minor local hiccup.

Those editorial facts of life no longer seem to apply. Nearing its seventh week, the corona pandemic’s news cycle shows no signs of fizzling out. Its global nature and many vectors push out most other topics. Suddenly it seems that all other news is either inexistent or irrelevant. Surveys ordered by major newspapers show that readers have not yet reached their saturation point. In fact, consumers demand more coverage of the issue that will undoubtedly come to define a new era.

Quality papers such as The Times and The Guardian in the UK, and the New York Times in the US, report large spikes in the number of online visitors. Many newspapers have also seen a significant increase in the demand for online subscriptions. However, most industry analysts agree that, rather perversely, the virus may turn out to be the last nail in the coffin of newsprint.

Publishers may derive some solace from the fact that the death of the printed newspaper has been prematurely announced a great many times before. Radio was supposed to have finished them off. When that didn’t happen, television was identified as the undertaker. It was only the arrival of the internet, and the advent of ‘free’ news, that managed to chip away at the throne newspapers had occupied for centuries.

In times of trouble such as these, most consumers instinctively turn to newspaper for the real story. The medium, often ridiculed and dismissed as a throwback to former times, still boasts the largest newsrooms that are invariably inhabited by the most talented journalists, writers, and editors available.

The welcome increase in the volume of paid subscriptions is probably not enough to compensate for the loss of advertising revenue. As the Corona Recession deepens, newspapers, whilst still standing at the pinnacle of the Fourth Estate, need help. Mindful of conflicts of interests, governments should probably not want to directly subsidise the industry. They can, however, put legislation in place to force social media freeloaders to pay properly for content generated by news organisations.

Australia is doing just that. The country’s Competition and Consumer Commission is putting the finishing touches on a code of conduct that will force Facebook, Google, and other tech giants to pay for content they now either nick or acquire for pennies. France is set to follow the Australian example ‘tout suite’. The preservation of industries that are deemed vital to the functioning of society is currently much in vogue. The news business is such an industry.


During the early 1980s, the architect of the Brazil’s ‘economic miracle’ was vilified almost unanimously when he sacrificed monetary stability on the altar of growth. Between 1979 and 1985 Delfim Netto, now 91, was in charge of economic planning under the country’s last military dictator.

However, after democracy returned to the country a monumentally inept civilian administration somehow managed to stoke the fires of inflation whilst derailing economic growth, presiding over a recession that later entered history books as the ‘lost decade’. Puzzled, angry, and disappointed, many Brazilians slapped bumper stickers on their car proclaiming: ‘Delfim, eu era feliz e nao sabia’ – Delfim, I was happy but didn’t know.

It is the same feeling currently felt by many as the pandemic upsets routines, imposes limits, and subverts expectations. We may have complained loudly about the old world’s many iniquities, but now long for the time when we could worry about less immediate threats to our collective well-being such as climate change, social inequality, and the plundering of the public commons.

This also recalls the words of an oil executive who, again in the 1980s, celebrated the intense public debate then raging over abortion, euthanasia, cruise missiles, and a host of other moral issues: “As long as politicians keep their hands off the economy, we’ll be fine and can keep raking in the cash.”

Climate doomsayers have long warned us that our way of life must be changed radically in order to stave off disaster. That change has been forced upon us not by Greta Thunberg, but by an even smaller harbinger of doom – a virus so tiny its very existence is doubted by assorted crackpots and eager believers in conspiracy theories. The air is heavy with the self-congratulatory utterings of the I-told-you-so crowd.

Ignoring these sorry souls, most of us just want our old lives back, including its slightly less agreeable bits. The new world thrust upon us is neither brave nor welcoming. How long before patience runs out and people start demanding the impossible from their rulers?

Some Americans, armed to the teeth, are already taking to the street to demand their former lives back. Their president seems willing to comply but even the mightiest man on earth must accept a reality that refuses to cooperate. In fact, there is nothing anybody can do but hope for science to come up with a vaccine. Until then we must sit tight whilst quietly suffering bouts of nostalgia for a time when we were happy bit didn’t know.