Shockwave

	In Europe's age of austerity, we have not been able to count on politicians to deliver adequate fiscal stimulus. The EU has until the current moment been deaf to any calls to loosen the purse strings. The Republicans play political football with the American budget. Only Beijing appears to hold all the strings – industrial policy, fiscal and monetary stimulus – in its hands. [Thanks to the FED] After 2008 the US and European stock markets roared ahead of earned incomes, exacerbating inequality. All over the world businesses borrowed much in dollars to take advantage of America’s deep financial markets and low interest rates. But that exposed them to risks. The basic weaknesses of the Eurozone are that it still doesn’t have a backstop for its rickety banking system and that it lacks a shared fiscal capacity; what’s more, Italy’s finances are so weak that they continually threaten to upset European solidarity. In the US, the national institutions of economic policy actually work: they demonstrated this in 2008 and are doing so again now. The FED and the Treasury exert a huge influence not only over the US economy, but the entire global system. The question is how they stand in relation to a profoundly divided American society and how their technocratic style of policymaking is received by the "... know-nothing nationalist right wing of the Republican Party and its champion in the White House." What caused a panic last month was the realization that Covid-19 has exposed all three weaknesses simultaneously. Indeed, in Europe and the US the failure of government has been so severe that we now face a public health catastrophe and an economic disaster at the same time. And to make matters worse, Donald Trump appears tempted to juggle the two. All along, the state was actually involved as a creator of markets or as a distributor and enforcer of property rights. What is new is that the central banks are now permanently on call to add further stimulus whenever growth flags. Deep Doo-Doo for emerging markets as growth slowed and their currencies lost value. Shock One In 2013 Fed chair Ben Bernanke’s suggested he might raise interest rates and causing markets panic. Shock Two In 2014 oil producers were hit by the first big slump in energy prices. Shock Three In 2015 the world economy began weathering China's first real economic setback. Shock Four Slow growth in EU and China caused lower interest rates, raised the dollar's value, and hurt those with dollar denominated debt. A strong US dollar hurt US exporters causing a mini manufacturing recession which set the stage for Trump. Shock Five In 2017 the world began to fear Trump would end US global leadership, end world stabilization, and cause the end America’s hegemonic machine. Shock Six Trump's trade war on Nafta, the EU and China all hurt highly internationalized businesses. Trade rivalries began and meant Huawei or Apple may not be able to pursue their global ambitions? EU was caught in the middle and continued globalization was at risk. Reaction German conservatives and America's anti-government right welcomed the prospect monetary discipline that would slim down businesses that had gorged on cheap funding. Instead, in the summer of 2019, the central banks, harried by Trump, pivoted back to expansion. Source See
	Adam Tooze On The World After Coronavirus and Should we be scared of the Coronavirus debt mountain? Data is the Best Weapon Against COVID-19 10 Years of Change in 10 Weeks

	3. Pandemic Attack Options Options have suboptimal outcomes. Different mindsets in a democratic republic means some will be unhappy. 1. Close Economy, control virus, open economy when can test and find hotspots. Think China, Singapore. South Korea 2. Do little. Protect economy. Some must sacrifice to avoid much future societal pain Think England and Sweden Measuring the gain from avoiding future societal pain is difficult. 3. Procrastinate. Think Many Western democracies. Some did, some didn't. Many have problems restricting liberty. Asian democracies of South Korea and Singapore had few mass surveillance problems. With little testing possible, some shut down, other mindsets led to little action.
	4. What Happened-What May Happen Prelude: 2020 Began with self-confidence European technocrats preoccupied with striking a new Green Deal. The energy transition was a huge, urgent challenge that was unmooring Cold War alignments. China, not the US, looked like a potential partner. Early January China informed the World Health Organization of a novel virus. On the stump at Davos on 22 January, Trump scornfully waved away questions about the virus. He trusted his new friends in Beijing- America had the situation under control. But the markets were worried. On 23 January unprecedented lockdown by Chinese leadership began. Part 1 Mohamed El-Erian Part 2 How America Grows Out of Debt

6. Measuring Reopening Success

5/6/20 Reopened Germany still has many restrictions will remain.
Only people from no more than two separate households will be allowed
to meet outside their homes between now and June 5.
People will have to keep about 5 feet apart when outside and face masks
remain mandatory when shopping or using public transport.

Belgium, which has among the world’s highest Covid-19 deaths per capita
also said it would relax some lockdown measures starting May 10.

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