Liberal ideology & virtue signaling put before people’s HEALTH, as Macron, Merkel defend open borders amid Covid-19 spread

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By Neil Clark

Dealing with Covid-19, Emmanuel Macron seems to be singing from the same hymn sheet as Angela Merkel, who is also against closing borders, but is this not a case of Western liberal ideology overriding necessity and common sense?

Compare and contrast. In his speech to the nation last night, Macron declared: “This virus has no passport.” He added: “We will undoubtedly take measures to close borders, but only when it is relevant… It is at the European level that we have built our freedoms.”

‘Coronavirus has no passport!’ Macron insists no need to close French borders unless EU agrees, as he orders school & uni shutdown

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Macron is closing all schools, nurseries, universities and day care centres from next week and has called on the vulnerable to isolate themselves. But if anyone can still come into France unchecked from countries where coronavirus is even more of a problem, won’t those measures be undermined?

Ditto Germany. Angela Merkel said this week that “we in Germany, in any case, are of the opinion that border closures are not an appropriate response to the challenge.”

Contrast this ‘open borders,’ ‘we must protect Schengen’ approach with that of the Czech Republic, Slovakia, Austria and Hungary who are all EU member states. Declaring a 30-day ‘state of emergency,’ the Czech government has closed its borders to people from 15 countries hit by coronavirus and banned its citizens from visiting these countries too. From Monday next week, all international travel to and from Czechia will be essentially prohibited.

Slovakia is closing its borders today to all foreigners except those who have a residency permit, while announcing that all Slovaks who have been abroad will have to face two weeks of quarantine. Austria has barred all people entering the country from Italy, unless they have a medical certificate. Hungary has banned arrivals from Italy, China and Iran.

But in Western Europe, it seems a commitment to maintaining ‘open borders,’ even at a time of a potentially very extreme health crisis, trumps other concerns.

An example of this fundamentalist and very dogmatic approach can be seen in the tweet from Belgian MEP Guy Verhofstadt who declared: “Nationalism isn’t the answer to COV19, because viruses don’t care about borders or nationalities.”

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International travel may broaden the mind, but unfortunately, it also helps Covid-19 to spread.

You really don’t have to be Albert Einstein to understand that the more open the borders, the greater chance of a country seeing its coronavirus cases rise. Yet the most powerful countries in the EU – unlike the more pragmatic ones in central and eastern Europe – seem to be putting virtue signaling and liberal ideology first. Of course, there’s a moral case that can be made for ‘free movement,’ but in a time of crisis, governments have to forget all that and put protecting their own citizens first. Nationalism? No, it’s just doing what governments are elected to do.

If we can criticize Macron and Merkel on these grounds, we can criticize Boris Johnson too. Plane loads of people arriving from the worst affected areas of Italy have been arriving in Britain without any proper checks. On last night’s BBC Question Time, Professor John Ashton, a former director of public health, noted how around 3,000 supporters of the Spanish football team Atletico Madrid were in Liverpool this week for a Champions League tie. Spain’s Corona cases, as of Wednesday, had surpassed 1,600 with about half of them in the Madrid region.

Two-thirds of Spain’s deaths from the virus have occurred in the Madrid region. Yet, as Professor Ashton pointed out, the Madrilenos would have been out and about in Liverpool on Tuesday and Wednesday, drinking in bars, staying in hotels, traveling on public transport. How can governments say they are doing everything they can to stop the spread of coronavirus when unrestricted travel from Covid-19 ‘hotspots’ is still taking place?

It may be true, as Macron says, that “It is at the European level that we have built our freedoms,” but what price ‘freedom’ if it means the ‘freedom’ to die from coronavirus because the most logical, common sense step of all is not taken?

Rabobank: Our Coronavirus Base Case Is Rapidly Shifting From “Bad” To “Ugly”

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Submitted by Michael Every of Rabobank

Regular readers will know that our four projected COVID-19 scenarios were “Bad, Worse, Ugly, and Unthinkable”. Current news today suggests risks that the base case is rapidly shifting from “Bad”, meaning only China is impacted, to “Ugly”, where both emerging Asia and developed economies see soaring infection rates and deaths.

After all, following Vietnam, Iran now has eight deaths and an uncertain number of cases, prompting schools and universities to closed and the borders with Afghanistan and Pakistan to be sealed from the other side. For an economy already being crushed by sanctions, this is all that it needed. More worrying for markets, South Korea (with a GDP of over USD1 trillion) has also been swamped by hundreds of new cases, a 20-fold leap in just five days, and, as in China, is seeing the highest-level emergency declared, cities on lock-down, gatherings and travel bans in place, and the national assembly additionally suspended. Samsung has had to shutter at least one factory, in the city of Gumi. The Asian economy, already reeling, it about to suffer another major kick.

Worse, in Europe there also are over 160 cases in a cluster in northern Italy, with three deaths so far, and the regions of Lombardy and Veneto, the industrial and financial heartlands, in both panic and lockdown. Venice’s Carnival has been cancelled, and so was a recent fashion show. Italy is 11% of Eurozone GDP, and those two regions are 30% of Italy’s GDP. For a Eurozone already close to recession, that shock could well be more than enough to generate a downturn. Once again, we also see what we said we would in our recent virus special report: a “China-style” response: yesterday a train from Venice to Munich was stopped at the Austrian border because of fears that two passengers on board may have had the virus. So much for Schengen? Recall that the origins of the world “quarantine” come from Venice in an earlier phase of globalisation, and refer to the *40* days sailors had to stay on a visiting ship to prove they were not carrying an infectious disease. No just-in-time supply chains in those days though.

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Meanwhile, China is saying the virus may not have started in the seafood market; hot-headed Chinese social media is saying it might have been America who started it; experts are saying COVID-19 can linger on surfaces for nine days, and is airborne, and can be passively carried with no symptoms for up to *27* days, nearly double the 14 days previously thought; and other reports show that false negative tests are a serious issue, with at least one confirmed case of a patient being tested negative twice and then switching to positive. As the WHO, which has urged us all to travel as normal until now, “because markets”, wails, the window to stop this becoming a global pandemic is closing.

By contrast, China is doing its best to say that all is well. Unsurprisingly, since Party Chairman Xi Jinping placed his hand-picked people in charge, new cases have dropped sharply. Optimists see this means the lockdowns have worked – which means more global lockdowns must now be priced in, however; pessimists suggest data goal-seeking is playing a role here. However, deaths have not fallen yet, with another 97 yesterday raising the overall fatality rate worryingly (and one study of 53 Wuhan patients suggests a 61.5% fatality rate for those with any co-morbidity factor such as diabetes and/or heart or lung disease).

Just as unsurprisingly, Xi has publicly promised China will have beaten the virus by the end of March, and that the overall economic goals for 2020 are still in place, even as right now we are still basically flat-lining as shown by traffic congestion, pollution, and property sales. As we have already covered in recent weeks, the only way for BAU to return ASAP is for everyone to start travelling and gathering and working again: which is exactly how the virus will spread, especially after we have been told there is a 27-day latent period, as well as a clear tendency of asymptomatic carriers, and even more so now it has legs outside China too. Even so, people are being urged back to work as eagerly as they were being told to lock themselves in at home just two weeks ago.

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Equally unsurprisingly, the PBOC, who have already lowered rates 10bp, are making clear that COVID-19 “will be short-lived and will not change the country’s sound economic fundamentals”. With several reports suggesting up to 85% of China’s small business are going to run out of cash within three months, and many within weeks, its banks riddled with bad loans and already under-capitalised, and the state clearly about to embark on another massive debt-splurge to build more infrastructure to keep to a set GDP number regardless, even when China does re-emerge from COVID-19 it will be sagging under an even more unsustainable debt load, and the state will be playing an even larger economic role. It’s also unclear if foreign firms will be as willing to be embedded in a long, China-centric supply chain regardless, making USD inflows less likely; and all of those issues above will mean the weaker CNY we have referred to for years. It is no surprise we are through 7 again; the larger surprise is that we are not closer to 7.20.

More broadly, of course, the “Ugly” scenario is seeing US Treasury yields test critical support levels. The 10-year is now at 1.47% and another leg down will see us in whole new territory. Likewise, the USD is on a roll upwards and threatening to push higher: imagine if European virus cases spread, the same happens in Japan, and China cannot reopen as planned. And imagine what a stronger USD on top of this virus backdrop will mean for emerging-market USD borrowers. Ugly indeed.

Such is the news-flow that I hardly have time to relate that Bernie Sanders handily won the Nevada Democratic caucus, leaving Joe “White Walker” Biden in a poor second place and Mike Bloomberg looking as user-friendly as his terminals are. That makes Bernie the clear presidential nominee front-runner at this stage – and makes many Never-Trumpers into Rather-Trumpers, I would imagine. And imagine if Bernie’s plans for free healthcare for all intersect with a virus outbreak in the US….(on which note, please see our recent Through The Looking Glass report imagining a Sanders presidency).

Germany to ramp up security at Swiss border after migrant pushed 8yo boy under train

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Days after a foreigner killed a young boy by pushing him and his mother under a train, the German interior minister has recommended stricter checks at the country’s Swiss border and advanced security measures at all rail stations.

“I will do everything in order to put intelligent controls in place on the border,” Horst Seehofer told Spiegel magazine in a follow-up to the harrowing incident at Frankfurt station, in which a 40-year-old Eritrean man assaulted an eight-year-old boy and his mother.

The immigrant, believed to have lived in Switzerland since 2006, pushed the pair onto the tracks seconds before a high-speed train, the Intercity Express, arrived.

The mother managed to roll out of harm’s way but her child was killed. The attacker then attempted to flee the station but was pursued by a group of passengers and was eventually apprehended by police outside the Frankfurt terminal.

READ MORE: Foreigner pushes 8yo boy in front of train in Germany, reigniting migration debate

Now, Seehofer wants to introduce “occasional, temporary checks at the border with Switzerland” to screen foreigners. Both Germany and Switzerland are in the visa-free Schengen area, but travelers crossing their border aren’t subjected to any controls.

The issue needs to be dealt with immediately, Seehofer warned, mentioning that a total of 43,000 unauthorized arrivals had been registered in Germany last year. The conservative politician was once at odds with Angela Merkel over imposing limits on incoming immigrants, but this time the Chancellor is fully on my side on the issues of security.”

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Border checks aside, Seehofer also urges ramping up security at railway stations. He didn’t expand on that but said it could involve installing safety barriers or locks on the platforms – similar to those already in use in London and Paris. Such countermeasures could potentially cost billions of Euros, the minister acknowledged

The Frankfurt tragedy re-ignited a heated migration debate that reached its climax back in 2015 and 2016, when Germany opened its borders to hundreds of thousands of asylum seekers – mostly from the Middle East and Africa. The heavy influx of migrants saw the crime rate going up and also led to the resurgence of the far-right extremists ready to use violence against foreigners and “pro-refugee” politicians.

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