Look up into the glorious, blue skies of Malta. Not a single cloud to be seen. And not even a single plane’s vapour trail. Birds chirp, spring flowers pop up everywhere in multi-coloured abundance. Emptied of all industrial activity, nature in Europe arose as powerful as ever. The biggest polluters went mute. Transport slowed to a trickle, smokestacks turned cold. And while electricity consumption of households everywhere in Europe went up by a third, its demand for energy has halved.
The biggest slump in economic activity since the 1930s – in certain aspects even more devastating than the Great Depression – has upended all our assumptions of continuous prosperity. Our jobs are now divided into essential and non-essential tasks. Those who take care of our physical health – nurses, doctors, carers, hospital workers – trying their utmost to keep us at bay from painful death, are certainly more appreciated than ever.
Having scolded a young woman for putting 30 rolls of toilet paper in her shopping trolley, she looked at me and made me eat my words: “I work day and night with corona patients and have not been out shopping for the last three weeks, sorry for appearing so inconsiderate.”
Those who grow our fruit and veggies, transport food and household goods, replenish the shelves in the supermarket and expose themselves every day to the risk of getting infected for the good of all of us are considered heroes now. The deliverymen and women are our new infantry.
The rest of us, working from home or not working at all, holed up in our houses, are forced to wait for deliverance from our incarceration and lack of income. All over Europe, governments are trying to fight one way or the other the biggest bout of unemployment in living memory.
Workers are offered extended dole money, made to work short-time, or furloughed at reduced pay. Small businesses and the self-employed are supported by emergency loans, tax credits or grants. Corporations are given payroll support, loan guarantees, or equity injections. None of these measures are administered without hiccups or sufficient speed. Governmental departments, unemployment agencies and assisting banks are overwhelmed with applications.
The risk of giving life-support to industries, which are doomed to fail anyhow, the fear of handing out money to the undeserving or the fraudulent, has made politicians hesitate when celerity had been more essential than fairness or precision. Economic activity will re-emerge once this illness is beaten (reshaped for sure as our lives will have assumed new forms of working and consuming – a ‘new normal’). It is therefore paramount to keep the workforce ready and consumers capable to spend.
Many remedies will be harmful in the long run. Companies hoping to rebuild their business in the near future will struggle to do so if they are burdened with tax payments merely postponed and overburdened with emergency loans. To hire and train the unemployed will be more cumbersome than calling back workers from forced vacations.
To bother about inflation when everything else is at risk would be featherbrained
Job vacancies have temporarily opened up in the health industry, in supermarkets, farming, transport and logistics with hundreds of thousands of places to fill. Workers on the dole, or working short time as well as retirees should be given permission to sign up temporarily without risking their pension or payroll benefits. There’s no time for form-filling, box-ticking and slow-grinding bureaucracy.
The best remedy against long-term damage would be a European Central Bank with the legal remit to dole out grants to industry directly and to send cheques to every household, based merely on self-assessments and tax records. Fraud can be weeded out by law-enforcement later, when things have calmed down again.
Neither people nor countries should be suspected of prolificacy now when it is clear that not a single budget was prepared for this.
In absence of such radical a solution there should be at least agreement that all governmental debt will be gobbled up by the ECB, limitless, indiscriminately and without much care for proportionality. To bother about inflation when everything else is at risk would be featherbrained. Such measures should not only focus on the eurozone, but extend to all of Europe.
Our suspended world has in the meantime created unexpected winners and losers. Burglars have a hard time doing their job when everyone’s at home. Terrorists had to postpone their bloody business, as the impact of even the most devastating bombs is limited when squares and churches are empty, public transport hardly in use and aeroplanes grounded. The Taliban have scaled down hostilities out of fear that their own will get infected. Traffic fatalities are reduced to almost pre-industrial times and work accidents are much rarer too.
As infection rates are sky-rocketing in more densely populated areas, big cities like London or New York look less appealing these days. With museums, restaurants, fancy boutiques and cinemas closed and hospitals overwhelmed, the metropolis has little to offer that we would envy now.
Big families living under one roof experience more happiness than single households. Our love life may have improved, but also the odds for divorce.
The right to closely police and digitally monitor a populace, to curtail the freedom of movement and pry on our private lives, if for health-reasons, has reduced civil liberties even in the most benevolent democracies. But autocracies now really thrive.
It is spring time for dictators. Rodrigo Duterte, president of the Philippines, ordered to “shoot and kill” everyone defying his quarantine orders. Trump has threatened to punish state governors who had criticised his wobbly crisis response by withholding financial support for their jurisdictions.
Hungary’s Prime Minister Victor Orban, referring to the corona threat, has sent his parliament on indefinite leave and is henceforth ruling by decree. He has threatened to dismiss unruly, independent mayors and ordered that “to claim, or spread, falsehood... or a distorted truth” is punishable with three years imprisonment. In Hungary, he is the truth now.
In my next piece I will more closely analyse which listed corporations may survive, which will probably do fine in a year’s time and how all businesses will change.
The purpose of this column is to broaden readers’ general financial knowledge and it should not be interpreted as presenting investment advice or advice on the buying and selling of financial products.
andreas.weitzer@timesofmalta.com
Andreas Weitzer, Independent journalist based in Malta