Let Venezuela get it’s COVID-19 Emergency Loan!

IMF – Grant Venezuela its COVID-19 Emergency Loan

We urge the IMF to reverse its decision to refuse Venezuela’s request for a $5 billion loan from the emergency fund of the Rapid Financing Instrument to help combat COVID-19 in Venezuela. This fund was set up precisely to respond to the current global pandemic.

We are concerned this decision was influenced by the Trump administration’s pursuit of illegal ‘regime change’ in Venezuela.

We also express our opposition to the US decision to impose an even harsher blockade on Venezuela at this time – this will deny the country vital health supplies, hit ordinary Venezuelans the most, and lead to innocent lives being lost.

  1. Venezuela Solidarity Campaign
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Earth Hour – Take part – Ta del – Participare – Participar

This year, we are facing Earth Hour in exceptional circumstances with countries around the world experiencing a health crisis with the outbreak of the novel Coronavirus (COVID-19). We recognize the exceptional challenge that the world is facing and we thank you for your support as we try to realign our Earth Hour work appropriately. In light of the latest developments, the Earth Hour global organizing team is recommending all individuals to take part in Earth Hour digitally this year.

Read on to explore all the different ways you can take part online or at home this Earth Hour. No matter where you are in the world, you can make an impact and join us for the Hour!

Already planning on joining Earth Hour with us? Let us know!

 

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Switch off for an hour at home

The DNA of the Earth Hour movement. Switch off your lights at home for an hour on Saturday, March 28, 2020 at 8:30 pm your local time.

Plan on staying in? We’ve put together a list of 20+ things you can do for a memorable (and impactful) on-the-night experience all from comfort of your home!

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Tune in online to one of our on-the-night live streams

Browse our directory of online events around the world on the night of Earth Hour!

Can’t find a live stream in your region? More events will be added to our directory in the coming days!

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Make your voice heard – digitally

Sign our «Voice for the Planet» petition to let world leaders know that you care about nature and that you demand urgent political action to protect our planet.

 

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Share your on-the-night Earth Hour experiences

Use the power of your social platforms to spread awareness of Earth Hour among your family, friends, and community!

Use our hashtag #EarthHour and tag us (@EarthHour on Facebook and Twitter, @EarthHourOfficial on Instagram) so we can share your posts and Stories on our own channels!

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Take on our online challenges and contests

Countdown the Hour on TikTok by taking our #DanceForThePlanet challenge and #FlipTheSwitch challenge! Also check our our official Earth Hour filters!

Dancing not your thing? We’ve partnered with One-Minute Brief (OMB) to run a user-generated content competition on the nightof #EarthHour – learn more here.

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Share this video

Earth Hour’s success is driven by the power of the people. Get your friends and family to tune in this Earth Hour and inspire them to take action to protect and restore nature.

 

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Learn more about the issues (and solutions)

Awareness is the first step before action. Hear from Sir David Attenborough, as he explains humanity’s biggest challenge yet  – and how we can overcome it.

 

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Learn how to live more sustainably

Even the smallest individual actions add up – simple changes in the way you live can have a significant positive impact on our planet.

 

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Share your stories

Inspire and empower others by sharing what nature means to you and what you’ve done in your daily life to help protect our planet.

 

 

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Cuba, China, Venezuela Will Help Italy When Others Refuse

Italy and UK rely on help from Cuba, China, Venezuela to fight coronavirus – as US steps up brutal sanctions

Italy requested doctors from China, Cuba, and Venezuela to contain the coronavirus, while Cuba rescued a ship of British citizens. Meanwhile, US sanctions worsen the toll of the Covid-19 crisis in Iran and Venezuela.

By Ben Norton – thegrayzone.com

The sanctions that the United States has imposed on dozens of countries around the world, in an attempt to overthrow their independent governments, have only made the global coronavirus pandemic worse. But at the same time, some of these nations targeted by US economic warfare have taken the lead in the effort to contain the Covid-19 outbreak.

In fact, the local government in the north of Italy, a member of the European Union and NATO, has officially requested medical help from China, Cuba, and Venezuela — all countries demonized by the United States and EU, which in turn have provided Italy with little support.

The Italian government lamented that “not a single EU country” has responded to its request for medical equipment — unlike China, which immediately helped.

And it is not just Italy; Britain has also relied on Cuba to help it battle the contagious virus.

The northern Italian region of Lombardy has been particularly hard hit by coronavirus, with tens of thousands of cases and more than 1,000 deaths. The pandemic has devastated the region, which is the richest and most populous area in the country.

On March 15, Italy recorded 368 new deaths in just one day — more than the deadliest day in Wuhan, China, which successfully contained the virus.

In response to the crisis, Lombardy’s government requested that China, Cuba, and Venezuela send doctors and other medical personnel to help to contain the outbreak.

“We are in touch with Cuba, Venezuela, and China, who have made doctors available,” said Lombardy’s health minister, Giulio Gallera, in a press conference.

Havana’s embassy declared “Cuban solidarity with Italy,” and Cuba’s Foreign Affairs Ministry published a notice confirming Gallera’s request and announcing it will be sending “Cuban personnel specialized in dealing with contagious diseases.”

The local government in the major Italian city Milan has also relied on shipments of medical equipment from China.

A team of Chinese doctors arrived in Italy on March 12.

European Union abandons Italy, after pushing privatization of health systems

The European Union, on the other hand, has left Italy out to dry.

Italy’s ambassador to the EU, Maurizio Massari, published an op-ed noting that his country requested support through the body’s Mechanism of Civil Protection, seeking medical equipment to contain the coronavirus outbreak.

“But, unfortunately, not a single EU country responded to the Commission’s call. Only China responded bilaterally,” Massari wrote.

In fact the European Union has done the opposite of help. The European Commission, which leads the EU, called on member states to cut medical spending and privatize health services at least 63 times between 2011 to 2018.

The EU’s obsession with cutting and privatizing state institutions has greatly weakened the continent’s health infrastructure, making it much more susceptible to deadly pandemics like coronavirus.

Britain relies on Cuban help to dock coronavirus-infected ship

Cuba has been under an illegal US embargo since 1960 — which every country in the world (excluding Israel) votes to denounce each year at the United Nations. But this blockade has not stopped the small country from developing the best health system in all of Latin America.

Even the United Kingdom, one of the richest countries on the planet, has relied on Cuban help to contain the coronavirus.

The British government asked numerous countries in the Caribbean to let the cruise ship MS Braemar dock in their port, after there were several reports of coronavirus among its more than 1,000 passengers.

CNN noted that “British officials launched an intense diplomatic effort to find a country willing to take the” infected ship, but were rejected by Barbados and the Bahamas.

On March 16, Cuba agreed to assist Britain, offering to dock the MS Braemar in a Cuban port and help fly the passengers back to the UK.

Cuba’s Foreign Affairs Ministry declared in a statement, “These are times of solidarity, of understanding health as a human right, of strengthening international cooperation to face our common challenges, values that are key to the humanist practices of the Revolution and of our people.”

US fights for control of potential coronavirus treatment and vaccine

While Cuba, China, and Venezuela — countries targeted by US economic warfare — are helping the world contain the coronavirus outbreak, Washington itself is working overtime to monopolize any potential treatments, so it can profit from them.

A California-based pharmaceutical corporation, Gilead Sciences, has developed an experimental drug that medical experts think could potentially treat coronavirus.

The Chinese government’s Wuhan Institute of Virology applied for a patent so it can produce this drug, which is called remdesivir. But the US company has been fighting tooth and nail to prevent Beijing from being able to manufacture it.

Why? Because Gilead Sciences’ stocks are skyrocketing, and investors are saying the corporation may soon be making a fortune.

The US government has also tried to bribe a German medical company that may be on the verge of developing a coronavirus vaccine.

President Donald Trump reportedly offered “large sums of money” to the German firm, CureVac, so that the United States could have exclusive rights to the treatment — which it could then sell to the rest of the world.

US sanctions prevent Venezuela and Iran from importing medicine and medical equipment

And while the Trump administration and US pharmaceutical companies are seeking to profit from the coronavirus pandemic, Washington is doubling down on its destructive economic warfare.

Venezuela’s attorney general, Tarek William Saab, gave a press conference denouncing Washington for preventing Caracas from buying medicine and medical equipment that would help it fight Covid-19.

“It is ethically unacceptable that such sanctions be maintained against Venezuela,” Saab said. He called on Colombia and Brazil to stop their coup attempts against Caracas and to instead work together to contain the virus.

US sanctions have also greatly hindered Iran’s effort to fight Covid-19. Hundreds of Iranians have died, with thousands more affected, and Washington has prevented the country from buying much-needed medicine and medical equipment.

Iran’s foreign minister, Javad Zarif, denounced the US sanctions as a form of “medical terrorism.”

“Efforts to fight COVID19 pandemic in Iran have been severely hampered by US sanctions,” Zarif added. “It is IMMORAL to let a bully kill innocents.”

In a letter to Secretary-General António Guterres, Zarif called on the United Nations and member states to ignore the “inhuman US sanctions” on Iran and push for them to be lifted.

China has also forcefully spoken out against the US sanctions on Venezuela and Iran.

In a press conference on March 13, a spokesman for China’s Foreign Affairs Ministry, Geng Shuang, condemned Washington’s blockade of Caracas.

“At a crucial moment in which the governments and peoples of all countries are fighting together against the epidemic of a new coronavirus, the American side, however, is determined to continue shaking the stick of sanctions against Venezuela, which is going against the minimum spirit of humanity,” the Geng said.

The Chinese government spokesperson likewise denounced US sanctions on Iran.

Noting that Beijing had sent a team of medical experts to help Iran contain Covid-19, the Foreign Affairs Ministry added, “We urge the US to immediately lift unilateral sanction on Iran. Continued sanction is against humanitarianism and hampers Iran’s epidemic response.”

Ben Norton is a journalist, writer, and filmmaker. He is the assistant editor of The Grayzone, and the producer of the Moderate Rebels podcast, which he co-hosts with editor Max Blumenthal. His website is BenNorton.com and he tweets at @BenjaminNorton.

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Me lever i ny-liberalismen si tid – Og så kom Korona-viruset

Mat for alle – Vaksinar for alle – Alle er like verdige!

I desse tøffe tider håpar eg alle har det nokolunde bra. Ja, me må alle «stålsetje» oss framover. Eg tenkjer spesielt på dei rundt om kring i verda som ikkje tåler dette viruset. Det gjer meg trist, men det er mange andre ting som me også kan tenkje på og støtte med pengar. Eit godt døme på det er ein stor meslingepidemi i Kongo, der over 30 000 ungar har fått meslingar. No er det viktig med omtanke og solidaritet med kvarandre her hjå oss, men ikkje gløym dei me «aldri» høyrer om i vanleg presse.

Fattigdom, sosial ulikskap, trangbuheit, arbeidstilhøve, kan ha meir alvorlege sjukdomar. Forsking visar at dei minst økonomisk sterke er meir utsett for pandemi som den me har no. Gamal kunnskap er sjølvsagt også at fattigdom gjer sjuk. Mange av verdas folk har ikkje helsemessig sikkerheitsnett, har dårleg sanitære tilhøve og ikkje råd til medisinar. Dei rike og høgare inntektsgrupper er mindre utsett, men får sjølvsagt føljer av pandemiane dei og. Og mange fleire vert sjuke under pandemiar fordi dei t.d. har den sesongmessige influensaen eller kroniske sjukdomar. Den såkalla «spanskesjuka» i 1918-19 er eit døme på krig og pandemi. 1. verdskrigen gjekk mot slutten og influensaen kom. Krig skapar sjukdom.

Kan ei verdskrise som denne pandemien er vera ein oppvekkar? Ein oppvekkar om vårt forbruk? Hjå verdas finans- og børselite, der hovudformålet er at pengar skal skape meir pengar basert på stemning og psykologi. Når panikken kjem skal alle selje sine aksjar og obligasjonar på same tid. Då kjem «krakket» og dreg med seg realøkonomien ned i avgrunnen. Dei som då betalar prisen er dei som skapar verdiane, verdas arbeidsfolk. Pengemakt, overforbruk, klimakrise og naturkrise er ein dårleg kombinasjon. Vårt (les; dei rike delar av verda og veldig rike elite i fattige land) ustanselege higen etter overforbruk er noko av det mest problematiske og store dårskap ved den globale kapitalisme. Ny-liberalismen set premiss for forbruk, finansspekulasjon, store multinasjonale gigantar og bankeliten, elles virkar ikkje det kapitalistiske system. Ein kan seie at forbruk, gjeld og profitt, er kapitalismen sine viktigaste pilarar. Utan desse ingen kapitalisme!

Kva er fridom?

Aldri før har den individbaserte «fridom» vore større, meinar liberalistane. Samstundes har dei globale krisene aldri vore større heller: miljøkrise, økonomikrise, flykningkrise og no pandemikrise. Midt oppe i dette er vår forståing av fridomsomgrepet sentral. Fridom vert universelt sett oppfatta som positivt, dei fleste vil ha det, men dei færraste definerar innhaldet i det. Heilt frå antikken, hjå grekarane og romarane (og før) til omlag vår tid har omgrepet «fridom» vore diskutert. To hovudretningar gjer seg gjeldande: Den liberalistiske fridom. Definert som «fråvær av innblanding», frå staten eller andre menneske. Ofte forbunde med den kapitalistiske marknaden sin “fridom” og den individuelle “fridom” til å velje sitt konsum. Denne liberalistiske ideologien har sitt opphav på tidleg 1800-tal, m.a. med filosofen Adam Smith. Det andre fridomsomgrepet har sitt opphav i antikken og vidareført i m.a. den usanske (1776), franske (1789) og norske grunnlov (1814). I nyare tid har ein brukt omgrepet «republikanisme» (har ingenting med dagens republikanarar i USA å gjera). Dette politiske fridomsomgrepet har m.a. i seg “fridom frå vilkårleg makt, tyranni og tvang”. Ein kan her legge til, fridom frå vilkårleg marknadsmakt og «konsumtvang», fattigdom og krig.

Dette krysspunktet mellom ulike innhald i «fridom» lyt me som menneske forhalde oss til, også i krisetider som vår. Me ser gradvis forverring av mange sider av menneskelivet. Eit vodt døme er flykningar, folk som rømmer frå noko alvorleg og uhaldbart som krig, svolt, klimakrise og fattigdom. For ei kontrast det er til «vår fridom»! Innan EU er den kapitalistiske fridomen dei fire friheiter: Fri flyt av varer, kapital, tenester og menneske. MEN, skal nokon inn i dette Schengen-området og med Dublin-forordninga, vert saka straks annleis. Då er krava harde og utvelginga av folk som får kome inn urettvise. Dette regimet har framover åra fått sin største utfordring nokon gong. Og har utvikla seg til eit stengt Europa, eit «Festung Europa». No er denne tenkinga vorte komplett, då heile Schengen-området, eller EU, er heilt stengt grunna Korona-utbrotet. Frå før er Europa stengt for flyktningar. Er me for fullt vorte fanga i ny-liberalismen no? Eller lærer me noko no av ein pandemi som visar kor skjørt vårt økonomiske system er, og tenkjer nytt framover?

Ivar Jørdre

Kronikken er første gong publisert i avisa Hordaland, laurdag 21.03.

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The US Government is More Cruel and Brutal than Ever!

A woman mourns during a funeral held at Beheshte Masoumeh Cemetery for the victims of the new coronavirus in Qom, Iran, on March 17, 2020.

A woman mourns during a funeral held at Beheshte Masoumeh Cemetery for the victims of the new coronavirus in Qom, Iran, on March 17, 2020.

Photo: Fatemah Bahrami/Anadolu Agency via Getty Images

The U.S. government is run by sociopaths.

How else to explain the Trump administration’s callous disregard for the lives of ordinary Iranians in the midst of this global coronavirus crisis? How else to make sense of U.S. officials doubling down in their support for crippling economic sanctions on the Islamic Republic, despite the sheer scale of the suffering?

The spread of Covid-19 has been nothing less than a catastrophe for the people of Iran. On Monday, Iranian officials reported another 129 fatalities, “the largest one-day rise in deaths since it began battling the Middle East’s worst outbreak.” Dozens of Iranian government officials, parliamentarians, and religious leaders have lost their lives to the disease. The death toll now stands at 988, and the total number of cases has crossed 16,000 — roughly, nine out of every 10 cases in the Middle East! Globally, only China and South Korea have had more confirmed cases and yet, as the AP notes, the real number in Iran “may be even higher.”

To be clear: A lot of the responsibility for the death and suffering in Iran has to lie with the Iranian government, which has been grotesquely incompetent and deeply dishonest. “The official response was glaring denial of the magnitude of the crisis,” wrote Iranian doctors (and exiles) Kamiar and Arash Alaei in the New York Times earlier this month. The country’s supreme leader, Ayatollah Ali Khamenei, they noted, even “accused the country’s enemies of exaggerating the threat of the coronavirus.”

Nevertheless, U.S. sanctions on Iran, which have had a devastating impact on the economy, have made things much worse. The government has been forced to request an emergency $5 billion loan from the International Monetary Fund while Iranian President Hassan Rouhani has written to several world leaders to tell them how his country’s fight against the coronavirus has been “severely hampered by US sanctions.” His foreign minister Javad Zarif accused the U.S. government of “medical terrorism.”

The Trump administration — in the form of Treasury Secretary Steve Mnuchin — continues to insist that sanctions do not prevent humanitarian aid. This is, technically, correct. Yet as Human Rights Watch pointed out in October 2019, months before the novel coronavirus outbreak in Iran, “while the US government has built exemptions for humanitarian imports into its sanctions regime … in practice these exemptions have failed to offset the strong reluctance of US and European companies and banks to risk incurring sanctions and legal action by exporting or financing exempted humanitarian goods.” The result, concluded the human rights group, “has been to deny Iranians access to essential medicines and to impair their right to health.”

Imagine being both so cruel and so unreasonable that you make George W. Bush and Dick Cheney look compassionate and reasonable in comparison.

In fact, as the Atlantic Council noted in May 2019, “despite the fact that sanctions exempted humanitarian goods, the US Treasury Department had previously prosecuted medical companies for selling small amounts of medical supplies to Iran, which in turn, has had a deterring effect on other companies doing business with Tehran.”

So it is any surprise, then, that Iranian suppliers of respiratory masks, surgical gowns, and ventilators are now saying they are out of stock? Or that the Iranian government is struggling to import the raw materials that it needs to manufacture antiviral drugs?

In late February, the Trump administration made a minor adjustment to the sanctions regime and allowed some humanitarian aid to arrive in Iran in coordination with the Swiss government. Sanctions relief, however, needs to go much further and much faster. As Rep. Ilhan Omar, one of the few progressive foreign policy voices on Capitol Hill, tweeted last week: “We need to suspend these sanctions before more lives are lost.”

She’s right. And there is precedent here: When a massive earthquake killed 26,000 people in the city of Bam, in southeastern Iran, in December 2003, the Bush administration allowed for a temporary suspension of sanctions. As journalist Negar Mortazavi has recounted, “multiple U.S. military planes landed in Iran for the first time since the 1979 revolution” and “transferred over 150,000 pounds of medical supplies and more than 200 civilian personnel from Boston, Los Angeles, and Fairfax County in Virginia, to assist Iran in search and rescue, emergency surgery, and disaster response coordination.”

Yet the Trump administration has refused to budge. Imagine being both so cruel and so unreasonable that you make George W. Bush and Dick Cheney look compassionate and reasonable in comparison.

On Monday, the Chinese and Russian governments demanded the U.S. suspend sanctions on Iran as a result of the pandemic. The Chinese foreign ministry called on the U.S. to “immediately lift unilateral” sanctions on the Islamic Republic, which it described as undermining the “delivery of humanitarian aid by the UN and other organizations.” Referring to “illegal” and “anti-human” U.S. sanctions, the Russian government accused Washington of “purposefully” cutting off millions of Iranian citizens “from the possibility of purchasing necessary medical supplies.”

Yet, again, the Trump administration has refused to budge. Imagine being both so cruel and so out of step with the international community that the Chinese and Russian governments have the moral high ground over you.

The unilateral reimposition of U.S. sanctions on Iran in 2018 was a clear violation of international law, according to the International Court of Justice. It was not mandated by the U.N. Security Council, and the U.N. Special Rapporteur on the effect of sanctions on human rights has since slammed the Trump administration’s “illegal and immoral forms of coercion,” calling it an “economic attack” on the Iranian people.

Of course, an attack on the Islamic Republic is what the hawks in Washington have always craved. On Sunday, Trump’s former national security adviser John Bolton was once again agitating for a new war with Iran. Meanwhile, Bolton’s former colleagues over at the neoconservative pressure group United Against Nuclear Iran, as Eli Clifton revealed, have been “urging major pharmaceutical companies to ‘end their Iran business,’ focusing on companies with special licenses — most often under a broadly defined ‘humanitarian exemption’ — to conduct trade with Iran.”

There is only one word to describe such behavior: sociopathic. Millions of Iranians, remember, could lose their lives from the virus.

But we have been here before. Brutal U.S. sanctions on Iraq in the 1990s caused the deaths of hundreds of thousands of innocent Iraqi children. Multiple senior U.N. humanitarian officials quit in protest of the policy, with one of them denouncing it as “genocide.”

And the U.S. government’s response? “We think the price is worth it,” declared then Secretary of State Madeleine Albright.

As ordinary Americans line up at grocery stores and pharmacies across the United States to stock up on prescription medications, do they have any clue that their Iranian counterparts are being denied medicines and basic goods because of U.S. government policy? And as the number of deaths in Iran from Covid-19 continues to soar, exacerbated by a horrific U.S. economic embargo, do ordinary Americans think the price is worth it?

The Coronavirus CrisisRead Our Complete CoverageThe Coronavirus Crisis

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The Big Excuse of Capitalism and Stock Markets: The Covid-19

It was the virus that did it

By Michael Roberts – March 15, 2020

I’m sure when this disaster is over, mainstream economics and the authorities will claim that it was an exogenous crisis nothing to do with any inherent flaws in the capitalist mode of production and the social structure of society.  It was the virus that did it.  This was the argument of the mainstream after the Great Recession of 2008-9 and it will be repeated in 2020.

As I write the coronavirus pandemic (as it is now officially defined) has still not reached a peak.  Apparently starting in China (although there is some evidence that it may have started in other places too), it has now spread across the globe.  The number of infections is now larger outside China than inside.  China’s cases have trickled to a halt; elsewhere there is still an exponential increase.

This biological crisis has created panic in financial markets. Stock markets have plunged as much 30% in the space of weeks.  The fantasy world of every rising financial assets funded by ever lower borrowing costs is over.

COVID-19 appears to be an ‘unknown unknown’, like the ‘black swan’-type global financial crash that triggered the Great Recession over ten years ago.  But COVID-19, just like that financial crash, is not really a bolt out of the blue – a so-called ‘shock’ to an otherwise harmoniously growing capitalist economy.  Even before the pandemic struck, in most major capitalist economies, whether in the so-called developed world or in the ‘developing’ economies of the ‘Global South’, economic activity was slowing to a stop, with some economies already contracting in national output and investment, and many others on the brink.

COVID-19 was the tipping point.  One analogy is to imagine a sandpile building up to a peak; then grains of sand start to slip off; and then comes a certain point with one more sand particle added, the whole sandpile falls over. If you are a post-Keynesian you might prefer calling this a ‘Minsky moment’, after Hyman Minsky, who argued that capitalism appears to be stable until it isn’t, because stability breeds instability.  A Marxist would say, yes there is instability but that instability turns into an avalanche periodically because of the underlying contradictions in the capitalist mode of production for profit.

Also, in another way, COVID-19 was not an ‘unknown unknown’.  In early 2018, during a meeting at the World Health Organization in Geneva, a group of experts (the R&D Blueprint) coined the term “Disease X”: They predicted that the next pandemic would be caused by an unknown, novel pathogen that hadn’t yet entered the human population. Disease X would likely result from a virus originating in animals and would emerge somewhere on the planet where economic development drives people and wildlife together.

Disease X would probably be confused with other diseases early in the outbreak and would spread quickly and silently; exploiting networks of human travel and trade, it would reach multiple countries and thwart containment. Disease X would have a mortality rate higher than a seasonal flu but would spread as easily as the flu. It would shake financial markets even before it achieved pandemic status. In a nutshell, Covid-19 is Disease X.

As socialist biologist, Rob Wallace, has argued, plagues are not only part of our culture; they are caused by it. The Black Death spread into Europe in the mid-14th century with the growth of trade along the Silk Road. New strains of influenza have emerged from livestock farming. EbolaSARSMERS and now Covid-19 has been linked to wildlife. Pandemics usually begin as viruses in animals that jump to people when we make contact with them. These spillovers are increasing exponentially as our ecological footprint brings us closer to wildlife in remote areas and the wildlife trade brings these animals into urban centers. Unprecedented road-building, deforestation, land clearing and agricultural development, as well as globalized travel and trade, make us supremely susceptible to pathogens like corona viruses.

There is a silly argument among mainstream economists about whether the economic impact of COVID-19 is a ‘supply shock’ or a ‘demand shock’.  The neoclassical school says it is a shock to supply because it stops production; the Keynesians want to argue it is really a shock to demand because people and businesses won’t spend on travel, services etc.

But first, as argued above, it is not really a ‘shock’ at all, but the inevitable outcome of capital’s drive for profit in agriculture and nature and from the already weak state of capitalist production in 2020.

And second, it starts with supply, not demand as the Keynesians want to claim.  As Marx said: “Every child knows a nation which ceased to work, I will not say for a year, but even for a few weeks, would perish.” (K Marx to Kugelmann, London, July 11, 1868).  It is production, trade and investment that is first stopped when shops, schools, businesses are locked down in order to contain the pandemic.  Of course, then if people cannot work and businesses cannot sell, then incomes drop and spending collapses and that produces a ‘demand shock’.  Indeed, it is the way with all capitalist crises: they start with a contraction of supply and end up with a fall in consumption – not vice versa.

Here is one mainstream (and accurate) view of the anatomy of crises.

Some optimists in the financial world are arguing that the COVID-19 shock to stock markets will end up like 19 October 1987.  On that Black Monday the stock market plunged very quickly, even more than now, but within months it was back up and went on up.  Current US Treasury Secretary Steven Mnuchin is sure that the financial panic will end up like 1987. “You know, I look back at people who bought stocks after the crash in 1987, people who bought stocks after the financial crisis,” he continued. “For long-term investors, this will be a great investment opportunity.”  This is a short-term issue. It may be a couple of months, but we’re going to get through this, and the economy will be stronger than ever,” the Treasury secretary said.

Mnuchin’s remarks were echoed by White House economic adviser Larry Kudlow, who urged investors to capitalize on the faltering stock market amid coronavirus fears. “Long-term investors should think seriously about buying these dips,” describing the state of the U.S. economy as “sound.”  Kudlow really repeated what he said just two weeks before the September 2008 global financial crash: “for those of us who prefer to look ahead, through the windshield, the outlook for stocks is getting better and better.”

The 1987 crash was blamed on heightened hostilities in the Persian Gulf leading to a hike in oil prices, fear of higher interest rates, a five-year bull market without a significant correction, and the introduction of computerized trading.  As the economy was fundamentally ‘healthy’ so it did not last.  Indeed, the profitability of capital in the major economies was rising and did not peak until the late 1990s (although there was a slump in 1991).  So 1987 was what Marx called a pure ‘financial crash’ due to the instability inherent in speculative capital markets.

But that is not the case in 2020.  This time the collapse in the stock market will be followed by an economic recession as in 2008.  That’s because, as I have argued in previous posts, now the profitability of capital is low and global profits are static at best, even before COVID-19 erupted.  Global trade and investment have been falling, not rising.  Oil prices have collapsed, not risen.  And the economic impact of COVID-19 is found first in the supply chain, not in unstable financial markets.

What will be the magnitude of the slump to come?  There is an excellent paper by Pierre-Olivier Gourinchas that models the likely impact.  He shows the usual pandemic health diagram doing the rounds. Without any action, the pandemic takes the form of the red line curve, leading to a huge number of cases and deaths.  With action on lockdowns and social isolation, the peak of the (blue) curve can be delayed and moderated, even if the pandemic gets spun out for longer.  This supposedly reduces the pace of the infection and the number of deaths.

Public health policy should aim to “flatten the curve” by imposing drastic social distancing measures and promoting health practices to reduce the transmission rate. Currently Italy is following the Chinese approach of total lockdown, even if it may be closing the stable doors after the virus has bolted.  The UK is attempting a very risky approach of self-isolation for the vulnerable and allowing the young and healthy to get infected in order to build up so-called ‘herd immunity’ and avoid the health system being overwhelmed.  What this approach means is basically writing off the old and vulnerable because they are going to die anyway if infected and avoiding a total lockdown that would damage the economy (and profits).  The US approach is basically to do nothing at all: no mass testing, no self-isolation, no closure of public events; just wait until people get ill and then deal with the severe cases.

We could call this latter approach the Malthusian answer. The most reactionary of the classical economists in the early 19th century was the Reverend Thomas Malthus, who argued that there were too many ‘unproductive’ poor people in the world, so regular plagues and disease were necessary and inevitable to make economies more productive.

British Conservative journalist Jeremy Warner argued this for the Covid-19 pandemic which ‘primarily kills the elderly’. “Not to put too fine a point on it, from an entirely disinterested economic perspective, the COVID-19 might even prove mildly beneficial in the long term by disproportionately culling elderly dependents.” Responding to criticism ‘Obviously, for those affected it is a human tragedy whatever the age, but this is a piece about economics, not the sum of human misery.’ Indeed, that’s why Marx called economics in the early 19th century – the philosophy of misery.

The reason that the US and British governments won’t impose (yet) draconian measures, as in China eventually and now in Italy (belatedly) and elsewhere, is because it will inevitably steepen the macroeconomic recession curve. Consider China or Italy: increasing social distances has required closing schools, universities, most non-essential businesses, and asking most of the working-age population to stay at home. While some people may be able to work from home, this remains a small fraction of the overall labour force. Even if working from home is an option, the short-term disruption to work and family routines is major and likely to affect productivity. In short, the best public health policy plunges the economy into a sudden stop.  The supply shock.

The economic damage would be considerable. Gourinchas attempts to model the impact. He assumes that relative to a baseline, containment measures reduce economic activity by 50% for one month and 25% for another month, after which the economy returns to the baseline. “That scenario would still deliver a massive blow to headline GDP numbers, with a decline in annual output growth of the order of 6.5% relative to the previous year. Extend the 25% shutdown for just another month and the decline in annual output growth (relative to the previous year) reaches almost 10%!”  As a point of comparison, the decline in output growth in the U.S. during the 2008-09 `Great Recession’ was around 4.5%. Gourinchas concludes that “we are about to witness a downturn that could dwarf the Great Recession.”

At the peak of the Great Recession, the US economy was shedding jobs at the rate of 800,000 workers per month, but the vast majority of people were still employed and working. The unemployment rate peaked at `just’ 10%. By contrast, the coronavirus is creating a situation where – for a brief amount of time – 50% or more of people may not be able to work. The impact on economic activity is comparatively that much larger.

The upshot is that the economy, like the health system, faces a ‘flatten the curve’ problem. The red curve plots output lost during a sharp an intense downturn, amplified by the economic decisions of millions of economic agents trying to protect themselves by cutting spending, shelving investment, cutting down credit and generally hunkering down.

What to do to flatten the curve?  Well, central banks can and are providing emergency liquidity to the financial sector. Governments can deploy discretionary targeted fiscal measures or broader programs to support economic activity. These measures could help `flatten the economic curve’, i.e. limit the economic loss, as in the blue curve, by keeping workers paid and employed so they can meet bills or have bills delayed or written off for a period.  Small businesses could be funded to ride out the storm and banks bailed out, as in the Great Recession.

But a financial crisis is still a high risk.  In the US, corporate debt has risen and is concentrated in bonds issued by the weaker companies (BBB or lower).

And the energy sector is being hit with a double whammy as oil prices have plunged. Bond risk premia (the cost of borrrowing) have rocketed in the energy and transport sectors.

Monetary easing certainly won’t be enough to flatten the curve.  Central bank interest rates are already near, at or below zero.  And the huge injections of credit or money into the banking system will be like ‘pushing on a string’ in its effect on production and investment. Cheap financing won’t speed up the supply chain or make people want to travel again. Nor will it help corporate earnings if customers aren’t spending.

The main economic mitigation will have to come from fiscal policy. The international agencies like the IMF and World Bank have offered $50bn. National governments are now launching various fiscal stimulus programmes.  The UK government announced a big spend in its latest budget and the US Congress has agreed an emergency spend.

But is it enough to flatten the curve if two months of lockdown knock back most economies by a staggering 10%?  None of the current fiscal packages come anywhere near 10% of GDP.  Indeed, in the Great Recession, only China delivered such an amount.  The UK government’s proposals amount to just 1.5% of GDP maximum, while Italy’s is 1.4% and the US at less than 1%.

There is a chance that by the end of April we will have seen the global total number of cases peak and begin to decline.  That is what governments are hoping and planning for.  If that optimistic scenario happens, the coronavirus will not disappear.  It become yet another flu-like pathogen (which we know little about) that will hit us each year like its predecessors.  But even two months lockdown will incur huge economic damage. And the monetary and fiscal stimulus packages planned are not going to avoid a deep slump, even if they reduce the ‘curve’ to some extent.  The worst is yet to come.

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Ei lita vise om Korona-viruset – A Little Song About the Corona Virus

Eg sender alle ei lita helsing i desse tøffe tider og håpar alle har det nokolunde bra. Ja, me må alle «stålsetje» oss. Eg tenkjer spesielt på dei rundt om kring i verda som ikkje tåler dette viruset. Det gjer meg trist, men det er mange andre ting som me kan tenkje på, og også støtte med pengar. Eit godt døme på det er ein stor meslingepidemi i Kongo, der over 30 000 ungar har fått meslingar. No er det viktig med omtanke og solidaritet med kvarandre her hjå oss, men ikkje gløym dei me «aldri» høyrer om i vanleg presse.

Men, det er også viktig med humor i kritiske tider. Ein ven av meg, Kristoffer Foldøy, har laga denne visa (klikk på lenka) om «Korona-tida» me lever i:

trubadurvise om Korona-viruset

Ivar Jørdre

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