What we can learn from Europe's response to the COVID-19 crisis - Politics Forum.org | PoFo

Wandering the information superhighway, he came upon the last refuge of civilization, PoFo, the only forum on the internet ...

Political issues and parties in Europe's nation states, the E.U. & Russia.

Moderator: PoFo Europe Mods

Forum rules: No one line posts please. This is an international political discussion forum, so please post in English only.
#15112741
While the USD keeps on falling due to an unprecedented economic downturn and the pandemic which has spiraled out of control, the Euro keeps on gaining strength. Investors spooked by the possibility of a US crash due to an exploding federal deficit are moving money into the Euro.

While the Euro area has also been hit hard by the pandemic, the EU's response is actually strengthening the Euro, because every crisis is also an opportunity. Trump's yesterday-men don't understand this as they are stuck in yesterday's thinking just like they are stuck in fossil fuels instead of investing in new technologies and renewable energy.

Despite the economic challenges of the pandemic, the EU has decided to focus on green technology in its efforts to restart the economy.

What we can learn from Europe's response to the COVID-19 crisis

Europe came together to save its citizens, businesses and member countries during the COVID-19 pandemic, making it a role model for the world.

The EU’s bold monetary and fiscal response demonstrated solidarity and strengthened Europe’s position globally.

The European Green Deal will drive recovery in Europe and make European standards the world's standards.


The immediate reaction to COVID-19 in Europe was not exemplary. Critical medical health supplies were held in national warehouses while borders were closed, with a “my nation first” reaction, as European Commission President Ursula von der Leyen described it.

But Europe learned, and learned fast. Within weeks, European countries came together to save lives, jobs and businesses.

The first steps
First, the European Central Bank launched the €750 billion Pandemic Emergency Purchase Programme, a monetary package to counter the risks to liquidity and the outlook for the euro area. It was upgraded to €1.35 trillion just two and a half months later.

A massive pan-European crisis response package followed. The European Commission (EC), European Investment Bank (EIB) and European Stability Mechanism (ESM) agreed to finance up to €540 billion to help people, businesses and countries throughout Europe, including liquidity support to companies, funding for development of treatments and vaccines, and financing for employment as well as direct and indirect healthcare costs related to the pandemic.

Europe did its best to get back on track. Governments intervened with unprecedented support measures targeting households, businesses and self-employed. The EU supported national efforts by providing flexibility in state aid regulations and fiscal rules.

On the road to recovery
The economic shock was far more severe than initially anticipated. The IMF expects euro area GDP to contract by 10.2% in 2020, bouncing back with 6% growth in 2021 depending how the pandemic unfolds. Some sectors (aviation, tourism, culture and art) shut down completely for weeks, while others (energy, oil and gas, automotive) were severely hit. Supply chains were interrupted, which exposed the EU’s vulnerability and dependency on resources outside the trading bloc, especially for medical supplies.

The EU needed bold action to get economies moving again and ensure the bloc would emerge from the crisis stronger, not weaker. German Chancellor Angela Merkel and French President Emmanuel Macron proposed a €500 billion European Fiscal Response, on top of what countries planned to do nationally. This was increased to €750 billion by the European Commission and – after 90 hours of negotiations – agreed to by the European Heads of State and Government on 21 July 2020. It consists of €390 billion in grants and €360 billion in loans.

This is a historic event for the EU for several reasons.

First, the European Commission will issue more common debt on the capital markets (to be repaid until 2058), which could bring the European safe asset – together with EIB and ESM – towards €2 trillion.

Second, it is a step towards a stronger European common fiscal response in time of crisis, strengthening the position of Europe globally.

Finally, it shows real European solidarity. Money would flow from the wealthier countries to the hardest-hit and lower-income ones. This unprecedented stimulus package comes on top of an ambitious seven-year budget of the EU, or Multiannual Financial Framework (MFF).

Towards a green, smart and sustainable future
With the launch of the European Green Deal, the EU made a bold statement to become the global leader in green technologies and economic sustainability. The European Green Deal is now the growth strategy of Europe. The investments supported by the EU recovery package and budget will be fully in line with its objectives to have a climate-neutral economy. The EU Sustainable Finance Strategy and taxonomy will channel private capital to environmentally sustainable investments and unlock the full potential of capital markets to achieve the climate goals. This important policy initiative will trigger a substantial change in the investment mindset of the private sector. Furthermore, Europe is well-positioned in this role, as the euro is already the leading currency globally in green finance.
Image

To stay competitive in the era of a rapid technological transformation, Europe needs to step up its investment in research and development and adoption of digital technologies and relevant skills. The COVID-19 pandemic revealed the importance of digitalization for businesses and the public sector. During the lockdown, firms and countries with integrated digital technologies have performed better than those that have not. The crisis triggered substantial and probably permanent changes in the way we live, work, shop and learn. This plan will ensure Europe reaches the forefront in the digital age.

Meanwhile, in the middle of the crisis, the EU agreed to move to the next stage of accession negotiations with North Macedonia and Albania. Rather than closing itself off, the EU continues building bridges. The cherry on the top is the July 2020 agreement on the entrance of Bulgaria and Croatia to Exchange Rate Mechanism (ERM II), which means that after two years, the two countries might join the euro; similarly, during the Eurocrisis, Latvia, Lithuania and Estonia joined the euro. This shows that crisis does not undermine the attractiveness of the union and the single currency.

Image

Europe as a global role model
Despite the crisis, Europe has firmly stood by the concept of multilateralism – collaborating to seek solutions and showing solidarity with hard-hit nations within and – equally important – outside the European Union. Therefore, Europe has also looked beyond its borders, collecting €7.4 billion to support measures fighting COVID-19 and ensure poor countries have access to potential vaccines and treatments.

Europe has tried – with best intentions – to serve both its own and global citizens through a soft power well described by fellow Young Global Leader Anu Bradford in her latest book, The Brussels Effect. To put it another way, leading European standards often become global standards.

And in the COVID-19 crisis, Europe might be a role model, in the way it has protected its citizens, business and member countries – while at the same time, showing global leadership in the best interest of humanity.



Euro Renaissance Emerges From an EU Deal That Changed Everything

Money managers are the most optimistic they’ve ever been on prospects for the common currency after its best month in almost a decade. And demand for European assets is so high that the currency is within a whisker of being more expensive than the dollar for the first time since funding pressures jumped earlier this year.

That’s because the European Union’s landmark rescue fund has gone a long way in soothing concerns over the bloc’s structural risks, and efforts to control the coronavirus and reignite the economy look particularly promising compared to the U.S. Those factors are setting the stage for a long-lasting change for the euro.

This is not a matter of growth this year or next year or predictions about the cycle -- it’s really something more structural,” said Nicolas Veron, a senior fellow at the Peterson Institute for International Economics. “The budget deal changes the way financial markets look at the euro zone in a significant way,” he said, adding that “it’s a big reinforcement of the EU and of the euro.

Such is the euphoria over the turn in the euro’s paradigm that stocks, which typically see demand fall as their underlying currency strengthens, are rising as traders capitalize on growth differentials between Europe and the U.S. And the rates on some of the highest-yielding sovereign bonds in the 27-member bloc have plummeted to pre-lockdown levels.

The Big Shift

Underpinning the euro’s transformed fortunes is the EU’s landmark 750-billion-euro ($882 billion) package. The deal, thrashed out in July to support the economic recovery, succeeded where years of political wrangling had failed. The rescue fund, which will be financed by the sale of joint bonds, has helped calm fears of a breakup.

Coupled with European Central Bank’s quantitative easing programs, the difference in yield between benchmark Italian and German bonds, a measure of risk in Europe that soared in March, is now near the lowest since February.

“It’s a powerful story for the euro,” said Tony Small, head of European interest rate strategy at Morgan Stanley. “A big portion of the tail associated with a euro break-up will likely be perceived to have gone away, and will be replaced by an attractive high quality issuer, which will pull up the entire credit quality of the euro.”

The euro’s 4.8% jump in July sent the currency flying through a bearish trend line that capped gains since 2008, unlocking its potential for more rallies. It also spurred a rush among analysts to revise their forecasts higher.

And while the currency has taken a breather in the spot market in August, falling 0.2% to $1.1756 as of 4:59 p.m. on Monday, net-long positions in the security rose to an all-time high, according to CFTC data.

It’s Relative

The currency’s fundamentals look especially strong when compared with the dollar, which has seen net-short positions versus major peers rise to the highest since 2012, according to Bloomberg calculations of CFTC data.

A gauge for the greenback suffered its worst July since 2010, ending the month near the lowest level in almost two years. It’s being weighed down by the rising number of infections in the U.S., which exceeded 5 million, the nation’s fragmented response to the virus, a Washington standoff over a new economic relief bill, and what may be a contentious presidential election in November.

These risks play in the euro’s favor.

There are signs the euro area has succeeded in breaking the link between economies re-opening and the virus escalating, helping to boost forecasts for growth. Even though Europe’s lockdown and initial downturn were larger, gross domestic product is poised to expand 5.5% in 2021, about 1.5 percentage points faster than the U.S., according to estimates compiled by Bloomberg.

That’s only happened eight times since 1992, according to International Monetary Fund data.

Real Yields

Nonetheless, there are mounting concerns about new flare-ups in infections in Europe. The number of confirmed cases in Germany, the continent’s biggest economy, rose more than 6,000 in the seven days through Sunday, the most since May, according to data collected by Johns Hopkins University and Bloomberg News.

“The risks remain that new outbreaks will occur, particularly as we get into winter,” said Iain Begg, a research fellow at the European Institute of the London School of Economics. “But the range of policies -- both the economic and containment policies in Europe -- seems to me to be better-attuned to dealing with both the health crisis and the economic crisis than the U.S.
#15112742
Atlantis wrote:While the USD keeps on falling due to an unprecedented economic downturn and the pandemic which has spiraled out of control, the Euro keeps on gaining strength. Investors spooked by the possibility of a US crash due to an exploding federal deficit are moving money into the Euro.

While the Euro area has also been hit hard by the pandemic, the EU's response is actually strengthening the Euro, because every crisis is also an opportunity. Trump's yesterday-men don't understand this as they are stuck in yesterday's thinking just like they are stuck in fossil fuels instead of investing in new technologies and renewable energy.

Despite the economic challenges of the pandemic, the EU has decided to focus on green technology in its efforts to restart the economy.

What we can learn from Europe's response to the COVID-19 crisis




Euro Renaissance Emerges From an EU Deal That Changed Everything


If your statistics are true then this is nothing short of a miracle. Previously it was 45 to 30% in favour of the USD. If its now 45 to 25 in favour the Euro then it is quite some change and a very fast change. And for the moment, Euro has become the DE Juro and De facto reserve currency for the world breaking the dollars monopoly for god knows how long. Not to mention that the "other currencies" basket also contains mostly European currencies like the pound and the swiss frank. The only 3 "reserve" currencies that are used in any meaningful manner and not based in Europe are: Yen, Yuan and Dollar.

So basically Europe can exersise some form of controls now for more than half of the global wealth.
#15112743
JohnRawls wrote:If your statistics are true then this is nothing short of a miracle. Previously it was 45 to 30% in favour of the USD. If its now 45 to 25 in favour the Euro then it is quite some change and a very fast change. And for the moment, Euro has become the DE Juro and De facto reserve currency for the world breaking the dollars monopoly for god knows how long. Not to mention that the "other currencies" basket also contains mostly European currencies like the pound and the swiss frank. The only 3 "reserve" currencies that are used in any meaningful manner and not based in Europe are: Yen, Yuan and Dollar.

So basically Europe can exersise some form of controls now for more than half of the global wealth.


Well, the pie chart just shows sustainable bond distribution.
#15112752
This might be slightly off topic, but New Zealand was supposed to have eradicated the disease and yet today records 4 new cases in 102 days. Locking the place down again..

https://www.abc.net.au/news/2020-08-11/ ... e/12547678
#15112767
ness31 wrote:This might be slightly off topic, but New Zealand was supposed to have eradicated the disease and yet today records 4 new cases in 102 days. Locking the place down again..

https://www.abc.net.au/news/2020-08-11/ ... e/12547678


I guess the lockdown isn't very rigorous since it seems a bit excessive for 4 new cases, unless they expect to be a lot more out there.

Anyways, the OP was more about the economic response to the pandemic than about containment measures.
#15112769
Atlantis wrote:I guess the lockdown isn't very rigorous since it seems a bit excessive for 4 new cases, unless they expect to be a lot more out there.

Anyways, the OP was more about the economic response to the pandemic than about containment measures.



The two are clearly related. If you can remove the virus from circulation for significant periods of time then the economy will be less affected. New Zealand will hope to stop further spread and so re-open the economy fully in a few weeks.
#15112787
BeesKnee5 wrote:The two are clearly related. If you can remove the virus from circulation for significant periods of time then the economy will be less affected. New Zealand will hope to stop further spread and so re-open the economy fully in a few weeks.

This is another humiliating blow for the Liberals. Remember their argument was that a short sharp early lockdown would solve the problem and allow the economy to reopen quickly. Sweden on the other hand they told us would suffer tens of thousands if not hundreds of thousands death. In fact they only suffered 571 deaths with the current 7 day death having collapsed to 0.

Across the world we are seeing the failure of the lock down strategy. Remember how the Liberals crowed about places that had avoided it by the use of draconian Liberal authoritarian methods. But nearly everywhere the Liberals told us was a success we are seeing rising cases and in many of them rising deaths. It doesn't matter whether you look at countries regions or States. The States in America that avoided the first wave are now seeing cases rising where as in places like New York, Sweden or North Italy, at least for the moment the Xi virus is pretty much dead.
#15112810
Rich wrote:This is another humiliating blow for the Liberals. Remember their argument was that a short sharp early lockdown would solve the problem and allow the economy to reopen quickly. Sweden on the other hand they told us would suffer tens of thousands if not hundreds of thousands death. In fact they only suffered 571 deaths with the current 7 day death having collapsed to 0.

Across the world we are seeing the failure of the lock down strategy. Remember how the Liberals crowed about places that had avoided it by the use of draconian Liberal authoritarian methods. But nearly everywhere the Liberals told us was a success we are seeing rising cases and in many of them rising deaths. It doesn't matter whether you look at countries regions or States. The States in America that avoided the first wave are now seeing cases rising where as in places like New York, Sweden or North Italy, at least for the moment the Xi virus is pretty much dead.


No idea what you are waffling about. New Zealand have had three months where their economy has been unrestricted.

They are now dealing with a flare up and if they do then they may get another three months. Meanwhile other countries are suffering a major economic drop with no evidence that it's going to recover in the short term.

Comparing 4 cases in New Zealand to the levels seen in other countries is mad.
#15112816
BeesKnee5 wrote:No idea what you are waffling about. New Zealand have had three months where their economy has been unrestricted.

They are now dealing with a flare up and if they do then they may get another three months. Meanwhile other countries are suffering a major economic drop with no evidence that it's going to recover in the short term.

Comparing 4 cases in New Zealand to the levels seen in other countries is mad.


Nations with educated high social status citizens that do not live in close proximity should do quite well. America has a lot of uneducated people living in cramped spaces-----mostly minorities, immigrants, the poor, and nursing home residents.
#15112823
Atlantis wrote:While the Euro area has also been hit hard by the pandemic, the EU's response is actually strengthening the Euro, because every crisis is also an opportunity.

Structurally, these things are relative. The EU's biggest economic constituent is Germany, and 50% of its GDP is exports. A strong Euro could spell disaster for Germany, which the weaker economies of Europe rely upon to bail them out.

The political left's penchant for self-congratulations and a lack of reflection is well noted. Europe as a whole has more deaths per capita than the US, not by too much now but still more deaths per capita.

Atlantis wrote:Trump's yesterday-men don't understand this as they are stuck in yesterday's thinking just like they are stuck in fossil fuels instead of investing in new technologies and renewable energy.

America has the world-leading electric car maker: Tesla. We also have tax credits for "renewable energy." I have 30 solar panels. How many do you have?

JohnRawls wrote:And for the moment, Euro has become the DE Juro and De facto reserve currency for the world breaking the dollars monopoly for god knows how long.

No. It has not become the world's reserve currency. The EU has to have a stronger internal economy and run massive trade deficits, and it will not do that. That's part of why China's currency is not a world reserve currency even with the second largest economy in the world.

JohnRawls wrote:So basically Europe can exersise some form of controls now for more than half of the global wealth.

It means that German exports will be more expensive on the global market, and thereby less competitive while weaker EU countries like Italy are strangled in the process. There is a reason that for decades countries have tried to keep their currency low relative to the US dollar and export goods into the US market. The big problem with the currency union is that is presumed inflation and built in an anti-inflationary bias due to the Weimar Republic imploding after WWI with a hyperinflationary depression. Inflation is low. So a strong currency makes for a more deflationary scenario--not something Europe needs right now.

Rich wrote:This is another humiliating blow for the Liberals.

It's potentially fatal. I predicted violence in the US, and that's precisely what we're seeing in the urban centers.

Rich wrote:Across the world we are seeing the failure of the lock down strategy. Remember how the Liberals crowed about places that had avoided it by the use of draconian Liberal authoritarian methods. But nearly everywhere the Liberals told us was a success we are seeing rising cases and in many of them rising deaths.

All the lockdowns have done is crush the hopes and dreams of the once working poor, and now government-dependent "non-essential" people who are rioting willy nilly at this point.

BeesKnee5 wrote:Meanwhile other countries are suffering a major economic drop with no evidence that it's going to recover in the short term.

The US has a ton of pent up demand, but the urban centers run by Democrats have completely fucked themselves. They are going back to the dark days of the late '60s and early '70s, with absurd rates of crime and violence.
#15112862
@blackjack21, I started working in international trade in the 1970s and I can assure you that each time the German currency got stronger, the German economy got stronger too. German companies always managed to adapt to the higher currency because they sell by quality and not by price.

The cheaper the dollar gets, the poorer you'll become. That doesn't mean that US products will become more competitive because you have hollowed out your industrial base. If you have nothing to export, or if you have nothing the world wants to buy, you won't export no matter how low the dollar falls. As long as German industry can provide quality products, it will export. If the Euro gets stronger, they'll just earn more and pay employees higher wages. Did you know that Volkswagen workers in the US only earn about a third of what Volkswagen workers earn in Germany?

Tesla is just a midget among car makers and even in electric vehicles it's no longer leading. The reason why Tesla builds a giant factory in Germany is because 50% of Tesla components are made in Germany. If you want to sell a good product you need quality components, no matter what they cost. And if you want to make quality cars, you want to be in a cluster of quality car makers as in Germany. Musk only has an idea, to realize the idea he needs experienced engineers and companies. He can't do that in the US because US products are junk.

You obviously don't have a clue about the real economy.
#15112972
XogGyux wrote:LOL Trump is not a republican. He is Trumpist.

Trump isn't a typical Republican. I will give you that. However, if you just end up playing semantic games, you will never really understand how he came to power. Typical Republicans are not able to fight the culture war, and frankly don't really want to. They are basically just interested primarily in fiscal and tax policy. There are not a lot of real conservatives in the party, and there aren't many in the Democratic party either. Yet, conservatives are a big political faction in the US. If Andrew Breitbart is right--politics is downstream from culture--the Republicans lose the culture war, because they simply aren't interested in fighting it.

Looking at the riots, the left plays semantic games--calling them "peaceful protests." The rank-and-file Republican establishment wants essentially to ignore it. This is alienating so many people, both liberals and conservatives.

Atlantis wrote:@blackjack21, I started working in international trade in the 1970s and I can assure you that each time the German currency got stronger, the German economy got stronger too.

That's because buying Deutsche Marks is the precursor to buying German goods. The Euro is a much wider area, and an increase in the Euro doesn't necessarily mean an increase in aggregate demand for German manufactured goods.

Atlantis wrote:German companies always managed to adapt to the higher currency because they sell by quality and not by price.

Everybody sells by price.

Atlantis wrote:That doesn't mean that US products will become more competitive because you have hollowed out your industrial base.

Our economy is primarily post-industrial. I work in high tech.

Atlantis wrote:As long as German industry can provide quality products, it will export.

I'm pretty sure German firms want to get paid in Euros, not in "quality." Right now, the world is basically broke.

Germany’s Economic Slump Shows Scale of Europe’s Challenge

Atlantis wrote:Tesla is just a midget among car makers and even in electric vehicles it's no longer leading.

It's leading in market capitalization. Tesla is the #1 automaker in the world by market capitalization. It's worth even more than Toyota. In fact, it is worth more than Volkswagen, Daimler and BMW combined.

Atlantis wrote:The reason why Tesla builds a giant factory in Germany is because 50% of Tesla components are made in Germany.

It's called de-sourcing. They produce where they sell. It's the same reason Volkswagen, BMW and Mercedes build cars in the US.

Atlantis wrote:You obviously don't have a clue about the real economy.

You don't even have a clue that your preceding paragraph about Volkswagen making cars in the US contradicts the paragraph following it. :roll:

You talking to yourself now? more like farting […]

Trump's Taxes Revealed Finally

I wonder if Trump really is donating his salary. […]

End of maduro - hopefully.

Didn't know Venezuela had this in their constitut[…]

What is Fascism

An authoritarian socialist nationalist governmen[…]