GERMANY AND EUROPE---- NEW DEFICIT SPENDING!

From  The  Economist - June 13 - 2020

The pandemic has converted Germany to the joys of deficit spending

German economics

Hey, big spenders

BERLIN

Every Thursday at 5pm three dozen of Germany's most prominent economists brush their hair, clear their throats and Zoom into the finance ministry for 90 minutes of debate on whatever is on its officials' minds. The sessions, which emerged from an informal discussion about the Covid-19 crisis in March, have inspired several policy measures. (Olaf Scholz, the finance minister and vice-chancellor, is sometimes in the chair.) They also show how far Germany has moved from its caricature as a deficit-obsessed tightwad.

On June 3rd the coalition announced a stimulus package worth at least €130bn ($148bn). This follows a €123bn supplementary budget passed in March. Fresh borrowing could reach 6% of GDP this year. Meanwhile, Germany has agreed with France that the EU should issue €500bn in common debt to fund investments in member states hard hit by Covid-19. Outsiders who have long despaired of German rigidity find themselves in the strange position of being surprised on the upside.

In 2008 German politicians warned of "crass Keynesianism", before grudgingly passing a stimulus. This time the response has been quicker, bigger and better designed. Benefit rises and cuts to value-added tax aim to boost consumption, and 50bn has been set aside for investment, much of it green-tinged. Politicians have ignored (as they did not in 2009) the lobbying of Germany's mighty auto industry for subsidies for people to buy cars, other than the electric sort. In 2010-12 the EURO zone, at Germany's behest, inscribed austerity into bail-outs and even national constitutions, like Germany's (currently suspended) "debt brake", which limits borrowing. 

Now Germany is signing up for big, multi-year transfers. Strikingly, this triumph of discretionary pump-priming over rule-following is fine with voters: 73% back "taking on large amounts of debt". What happened?

The catalyst, of course, is the virus. 

Germany faces a deep recession: manufacturing and exports are in a hole, and 7.3m workers are on Kurzarbeitergeld (furlough pay), compared with 1.5m at the peak in 2009. At the European level it is easier to mobilize support for countries struck by a pandemic than for (perceived) over-spenders. And the revival in support for the government, which six months ago seemed to have run out of steam, creates space to act.

Yet the groundwork had already been laid. Economic thinking in Germany has undergone a dramatic shift in recent years, says Jens Sudekum, a professor at Heinrich Heine University Diisseldorf. Older economists schooled in rule-based "ordoliberalism" have partly yielded to a younger set, often educated abroad, with a grounding in empirical economics and views that sit squarely in the international mainstream. 

Between 2010 and 2015 the share of German economists who told a survey that fiscal policy could help stabilize economies doubled. And as commentators, the new wave have shaped lively debates on matters like Germany's "black zero" (ie, no deficit) rule.

The pragmatism of the new generation earns them a hearing among policymakers, says Christian Odendahl, an economist at the Centre for European Reform. Under Mr Scholz and his chief economist, Jakob von Weizsacker, the finance ministry has become a salon of sorts; the weekly Zoom calls cap constant email back-and-forths, This atmosphere is cultivated by officials like Wolfgang Schmidt, an old ally from Mr Seholz's home town of Hamburg, and Jorg Kukies, a former Goldman Sachs banker. Mr Kukies helped assemble the Franco-German plan, inspired in part by an old think-tank document on American federalism he urged Mr Scholz to read.

However buzzing the scene around Mr Scholz, the last word remains with his boss, Chancellor Angela Merkel. Mr Seholz's lieutenants claim for him great powers of persuasion in his long talks with the chancellor. Yet at home and abroad Mrs Merkel's authority has also waned as her chancellorship, which will expire after next year's election, winds down. This leaves space for others to make a mark.

Will the changes last? Not necessarily. Mr Scholz sits inside the Social Democratic Party, but like Mrs Merkel's Christian Democrats he argues that Germany can afford its largesse because it paid down debt in years of plenty. In this austere telling, disputed by many economists, the current splurge is a vindication of fiscal rectitude, rather than its negation, "It's not a u-turn, it's an extraordinary situation that needs a comparable response," says Lars Feld, an economics professor at the University of Freiburg. Lukas Haffert at the University of Zurich notes that this year's experience makes it harder for critics of the debt brake to argue that it impedes deficit spending in crises. And the patience of the CDU’s conservative wing will have its limits. An early test will be over the pace of debt reduction. "Consolidating too early would be a disaster," says Mr Sudekum.

The European argument is a little different. Mr Scholz has taken to grand talk of Hamiltonian moments, fiscal union and handing tax powers to the EU. The fact that Germany's spending will only widen the gulf with its partners—the Bundesbank forecasts a 6% fall in GDP this year, far gentler than France and Italy—strengthens the case for big intra-EU transfers. German exporters also need European custom. True, when Europe's leaders begin debating the fund on June 19th, it is Mrs Merkel rather than Mr Scholz who will be negotiating.

But the clock is ticking on her chancellorship. Mr Scholz will probably secure the SPD’s nomination to campaign to succeed her next year. If so, he will not offer his CDU rival an open goal by promising to ignore the old budget rules. But he may be emboldened to push the debate beyond traditional fiscal concerns, such as Germany's investment gap, its worryingly large share of low-paid jobs and its role in Europe. If nothing else, that would mark a change. ■

GERMANY  AND  EUROPE  ARE  EVER  ON  THE  MOVE.  BIBLE  PROPHECY  SAYS  BOTH  WILL  PLAY  A  MIGHTY  HUGE  PART  IN  END  TIME  BIBLE  PROPHECY;  LARGER  THAN  ANYONE  RIGHT  NOW  IN  THE  WORLD  KNOWS  OR  REALIZES.

YES  IT  MAY  TAKE  THE  YOUNGER  GENERATION  TO  FORGE  GERMANY  AND  EUROPE  TO  CENTER  STAGE  ONCE  MORE  IN  THE  WORLD.  

SO  MANY  THINGS  CAN  CHANGE  WITH  THE  NEXT  GENERATION  THAT  KNOWS  LITTLE,  OR  KNOWS  ONLY  WHAT  WILL  BE  CALLED “ANCIENT”  HISTORY  OF  HITLER  AND  THE  NAZIS.

WORLD  SITUATIONS  CAN  CHANGE,  AND  SO  NATIONS  OR  GROUPS  OF  NATIONS,  MOVE  IN  WAYS  THAT  NO  ONE  WOULD  EVER  IMAGINE  THEY  WOULD  MOVE.

AS  THE  WORLD  MOVES  INTO  MORE  AND  MORE  PROBLEMS  FROM  GLOBAL  WARMING,  TO  NATURAL  DISASTERS,  TO  NEW  VIRUSES  AND  ETC.  THINGS  WILL  COME  THAT  WILL  ASTOUND  THE  NATIONS  OF  THE  EARTH.

Keith Hunt

EUROPE AND INEQUALITY !

From The Economist - June 6 - 2020

AMSTERDAM

Covid-19 threatens Europe's success at highting inequality -

Inequality and the pandemic

Widening spread

Carnival season in the southern Netherlands is a week-long spectacle of Rabelaisian debauchery. On February 28th Leon Elsjan of Wipper, a freelance sound technician, was running the sound system at the carnival-ending dance party in the town of Uden, watching costumed revellers consume vast amounts of beer. It would be his last gig for some time. This year's carnivals were super-spreader events that introduced Covid-19 to the Netherlands. In Uden, the death toll rivalled those in northern Italy, and the national government cancelled all public festivals until September.

Mr Elsjan of Wipper did not fall ill, but as a freelance, he was vulnerable in another way. To cope with the economic fallout from Covid-19, the Netherlands introduced a wage-support programme similar to Germany's Kurzarbeit system. The state pays 90% of the salaries of workers at hard-hit firms. But self-employed workers (12.5% of the labour force) are not covered. For them, the government created a bare-bones programme. Mr Elsjan of Wipper gets the maximum: €1,050 ($1,170) per month.

For decades, Europe's vaunted welfare states have kept inequality relatively low. The Covid-19 recession threatens that success in three ways. 

First, it hits badly paid workers harder than well-paid ones. 

Second, lockdowns create new forms of inequality. Some sectors stay open while others shut down, and some people can work from home while others cannot. 

Third, the severity of the downturn has revealed holes in Europe's welfare systems. Some countries are patching them, but others are having trouble.

Quantifying inequality is hard, but Europe is clearly relatively egalitarian. One metric is the Gini coefficient, measured from zero (perfect equality) to one (perfect inequality). For income after taxes and transfers in 2017 (the most recent year available for comparison), the Gini coefficient of the EU was about 0.30. In America it was 0.39, while east Asian countries like Japan and South Korea fell in between.

Before taxes and transfers, the picture is different: on this basis Germany's Gini, for example, is roughly the same as America's. Europe's tax systems are not particularly progressive, so economists have long put its success in fighting inequality down to large transfer programmes. But scholars at the World Inequality Lab (WIL), an academic project, argue that this is a mistake. European transfers look so generous partly because European pensions are mostly public, while in other countries they are mostly private. Treat pensions as earned income and the apparent size of European welfare states shrinks—yet the transatlantic inequality gap remains.

Other analysts dispute the WIL’s data, especially on America. But according to the LAB, in 1980 the income shares of the bottom half and the top 1% of earners in America and Europe were similar. By 2017 America's rich and poor had flipped, whereas in Europe the bottom half still earned more. "The European social model is mostly effective through 'predistribution': investments in education, universal health care, and regulations of labour markets that compress the wage scale," argues Lucas Chancel of the WIL. In many countries unions strike wage bargains covering entire sectors of the economy. The Nordics are the most equal. Western European countries like France, and southern ones like Italy, rely more on redistribution. Eastern Europe does little predistribution or redistribution, and its inequality levels are higher.

In some countries inequality was rising before Covid-19, partly because labour regulations have been liberalized. In Germany, the income shares of the top tenth and the bottom half of earners were equal when labour reforms passed in 2004; by 2017 the top decile earned more. Other countries, such as the Netherlands and Italy, had rising numbers of part-time or gig workers,  who enjoy fewer protections and benefits.

Covid-19 has made such gaps painfully visible. Spain's government realized it had  “no mechanism to support the incomes of the large percentage of the population that works informally. That prodded the country's Socialist-led government to introduce $ a guaranteed minimum income law, which was issued as a decree last week. In Italy, workers in the country's   j huge informal sector may have trouble accessing its emergency Covid-19 benefits.  

     

Italy's central bank thinks the country's Gini coefficient rose from 0.35 to 0.37 in the first quarter. This was partly because of lockdowns, a problem that will certainly have become worse in the second quarter as the lockdown continued. Among the top income quintile, only about half of employees were in occupations hard to pursue from home; in the bottom quintile almost 90% were. Other inequalities are geographical.  “Southern Italy has barely any Covid-19 deaths, but because it is reliant on tourism it is being hit much harder," says Carlo Bastasin, an economist at the LUISS university in Rome.

Three-quarters of Europe's income inequality, measured at a continental level, is caused by differences within individual countries. The gap between poor Sicily and wealthy Milan is more important than that between Milan and Paris. But that could change. The Covid-19 recession opens up a split between countries that have the fiscal capacity to rein in inequality and those that do not—notably in central and eastern Europe. Germany's government intervention has amounted to almost 10% of GDP. Italy and Spain, constrained by debt, have done much less. Hungary has barely raised spending; Poland has done so mainly to prop up companies, not to subsidize workers' or the unemployed.

In recent years, some economists have argued that wars and pandemics can lower inequality by destroying the wealth of the rich and creating opportunities for the masses. In a paper last month, economists from the IMF found that for epidemics, this did not hold: the big ones of the past century raised inequality. Mr Elsjan of Wipper does not count on his industry coming hack: "When I talk to younger guys, I tell them to think about another career." ■

SPRING IN THE ARCTIC----LIKE SUMMER TIME!

The Economist June 6th 2020

Climate feedbacks

Fire down below

A smouldering spring in the Arctic

Seen from the sky, the northern stretches of Siberia in early May were a splodgy white, their thinning winter snow cover interrupted by the brown veins of meandering rivers. Nestled within some of these curves, though, satellites picked up patches of soil warmer than the ground around them. The patches grew and multiplied as the month went on. Before it was over, some were visibly ablaze.

Fires are not unheard of in the Arctic, even at this time of year. But the extraordinary fires seen last summer have put researchers on high alert for oddities. In June, July and August 2019 fires within the Arctic Circle pumped 173m tonnes of carbon dioxide into the atmosphere. The 182m tonnes emitted over the year as a whole smashed the previous record of 110m tonnes, set in 2004. Dense clouds of smoke smothered Siberian cities. The fires consumed not just trees and grasses but also peat which would normally have been frozen. Alaska experienced an unusually active fire season, too.

Last year's inferno makes this year's early-season hotspots and blazes particularly interesting. Fires can overwinter underground, particularly if they find their way to pockets of peat which offer the fire just enough oxygen for slow smouldering beneath the snow. After a wildfire singes a network of submerged layers of peat its descendant embers can pop up months later: though purists frown on the term, they have become known as "zombie fires".

A recent Dutch study of overwintering-fire data, presented at a meeting of the European Geosciences Union held the same week that the satellites were seeing hotspots in Siberia, suggests that they are more likely to happen in years after large burns. Though such fires can travel some distance under the surface, and so do not have to reappear where last seen, most stay put. The fact that some of this May's flames were in areas that burned last year and are rich in peat is thus suggestive. On-the-ground observations will be required to settle the matter, though.

If the fires did overwinter, that is not in itself a bad omen; the Dutch study did not find that overwintering fires make a new year particularly fire-prone. Exceptional fire seasons are normally preceded by hot, dry early summers, as last year's was. Happily, the ground around the Arctic Ocean currently appears wetter than average, except in the north-eastern-most reaches of Siberia. That said, in Siberia and Greenland April's temperatures were well above the 1981-2010 average—in places by more than 10°C. A warm, damp spring could yet become a hot, dry summer.

Arctic fires garner less attention than those in Brazil, which the world has been worrying about for decades, or California, Australia and the Mediterranean, which are more densely populated. But regional and global feedbacks make them peculiarly alarming. By leaving dark scars on the land they burn and spreading soot much farther afield they increase the land's capacity to soak up summer sun, thus making the region warmer still. The warmer it gets, the more flammable it is—and the more carbon dioxide and methane get emitted.

On the scale of what humans do, last year's 173m tonnes of carbon dioxide is appreciable—about 30 big coal-fired power stations working flat out for a year—but not overwhelming. 

There are, though, hundreds of billions of tonnes of carbon stored up in the Arctic, a region already warming at twice the global rate. It is a tipping point to watch. ■

AMERICA---BLACK/WHITE---- SLOW PROGRESS

The Economist June 6th 2020

United States    

African-Americans

Slow progress

WASHINGTON, DC

Though segregation and poverty have declined among blacks since 1968, deep disparities persist

“Every time I think about it I feel like it’s somebody's poking a red-hot iron down my throat," says Bigger Thomas, the poor black boy living in a Chicago slum in the novel "Native Son". "We live here and they live there. We black and they white. They got things and we ain't. They do things and we can't. It's just like living in jail." Richard Wright penned those lines about the debilitating psychological effects of the ghetto in 1940, before the civil-rights era; before the assassination of Martin Luther King in 1968 and the ensuing widespread racial unrest and riots; and well before the current seething protests against racial injustice in several hundred American cities. How relevant are those sentiments today?

In recent years the most prominent episodes of unrest over the deaths of black men in police custody have erupted in places with histories of segregation that persist to this day. 

They include Chicago, where Laquan McDonald was killed in 2014; Baltimore, where Freddie Gray was killed in 2015; and now Minneapolis, where George Floyd was killed on May 25th. Ghettos are no longer legally enforced as of 1948, though the proliferation of restrictive single-family zoning rules in cities does not help. Patrick Sharkey, a sociologist at Princeton, evaluated the effects of the civil-rights era on black families and found, depressingly, that "the stark racial inequality in America's neighbourhoods that existed in the 1970s has been passed on, with little change, to the current generation."

America did not segregate accidentally. At the beginning of the 20th century, blacks began moving from the rural South to the urban north in large numbers, both for better work in factories and to escape government-sanctioned oppression and lynching. White residents responded by mandating segregated neighbourhoods; when these were struck down by the Supreme Court, private racial covenants between homeowners in effect barred would-be black homeowners from white neighbourhoods. Breaches of the colour line were met with violence.

Urban sociologists use a measure called a dissimilarity index to quantify segregation: the percentage of blacks that would have to move to ensure equal dispersion across a city. In 1970 this number was 93%, according to calculations from census data by the social scientists Richard Sander, Yana Kucheva and Jonathan Zasloff, meaning nearly complete segregation. By 2010, the dissimilarity index had declined to 70%—an improvement, but far from the integrated society that civil-rights activists may have hoped for 60 years ago. "Brown [Board of Education] made it clear that we couldn't have racially separate and equal schools, but we never got to that point with respect to housing," says Stefanie DeLuca, a professor of sociology at Johns Hopkins University. Segregation by class, both in housing and schooling, has grown in the meantime.

In 1970, according to one more sophisticated measure of poverty calculated by scholars at Columbia University and Mathematica Policy Research, roughly 47% of black Americans were poor. By 2014 that had fallen to 27%—a sizeable drop, but still nearly triple the level experienced by whites. Although this represents some progress, the poor are increasingly clustered together. 

Since 2000, the number of poor Americans who live in areas of concentrated poverty (defined as places where more than a fifth live below the federal poverty line) has increased by 57%. And black children are seven times as likely as white children to experience this more corrosive form of poverty.

Concentrated disadvantage becomes deeper disadvantage. Social scientists have compiled a mountain of evidence linking life in such neighbourhoods to worse outcomes for health, education, income and risk of incarceration. To live in segregated areas plagued with poverty and violence for generations is to experience continuous loss of opportunity. And it can corrode democratic cohesion as well, by creating separate spheres of race and class—one for "us" and one for "them".

Three important social indicators for black men have also worsened over the past half-century, even as out-and-out racial animus has declined. Joblessness has become more common. In 1972 nearly 80% of black men above the age of 20 were in the labour force. That rate dropped slowly but substantially over the ensuing decades to 67% on the eve of Covid-19, and then to 63% now. The share of births to unmarried couples has increased from nearly 40% to 70%. These family arrangements are highly unstable; about 70% will have broken up five years after a child is born. And incarceration has risen to extraordinary levels. Between 1960 and 2010, it more than tripled for black men.

The three phenomena are interrelated in a complex way. But they probably account for much of the observed extraordinary downward mobility of black boys compared with black girls or whites. Black boys born to families in the top 1% of the income distribution are as likely to go to prison as white boys born in the bottom third. Other stagnant outcomes—whether flat rates of home ownership or unchanged gaps in household wealth—are probably due to the same trends. At some point, glacial progress spills over into anger. "I think America must see that riots do not develop out of thin air," King argued in 1967. "In a real sense our nation's summers of riots are caused by our nation's winters of delay. And as long as America postpones justice, we stand in the position of having these recurrences of violence and riots over and over again." In 2020, they are indeed happening again. ■

ALL ABOUT COVID-19---- WELL KNOWN SO FAR!

From  The  Economist - June 5 - 2020

COVID-19

Assault and battery

The ways in which the virus wears the body down

The first set of lungs felt like rubber, says Rainer Claus, so damaged that it was impossible to imagine how any amount of oxygen could get through them. The lungs in the rest of the ten Covid-19 victims that he and his colleagues at the University Medical Centre Augsburg, in Germany, autopsied in early April were in similarly awful condition.

This has been, for the most part, the story around the world. People get infected with SARS-COV-2, the virus which causes Covid-19, by breathing in tiny liquid droplets containing virus particles. Those particles gain entry to the lungs, where they start reproducing themselves. If the immune system does not stop it—which it mostly does—the virus causes so much damage that the lungs can no longer do their job, ending up like those in Augsburg.

But there are other facets to the disease not so easily understood. 

It robs some of the infected of their sense of smell; in others the toes or fingers darken as if bruised. Hearts swell; blood clots; immune systems cripple organs they are meant to be saving. Doctors around the world are trying to find out how much these various symptoms are attributable to direct effects of the virus, to secondary effects of the damage it does to the lungs, or even, in some cases, to the treatments used against it. The more of the story they can disentangle, the better the standard of care is likely to get.

For the virus to attack a cell, the cell's surface needs to be adorned with a protein which plays a role in the regulation of blood pressure and inflammation called angiotensin-converting enzyme 2 (ACE2). This is found on plenty of cells in the upper respiratory tract and lungs, as well as the linings of blood vessels and the heart, kidneys and intestines. In some cases the virus may get into those intestinal cells directly, having been swallowed. In other cases it seems to get to the gut, and other susceptible organs, via the blood.

Mostly, though, the virus seems to get no further than the ACE2-rich cells of the nose and throat, and perhaps the lungs, before the body's defences take care of it so well that its presence is never even noticed. Tests which look for genetic material from SARS-COV-2 in swabs from the nose and throat frequently find it present in people who show no other sign of it at all: in one British survey 70% of those who tested positive were asymptomatic.

Most of those who do fall ill suffer flu-like symptoms, typically with a fever and a cough, sometimes with diarrhoea, that get better after a week or so. But some suffer for longer, failing to shake the infection before getting badly sick. Many of these people will, after a time, start to feel a shortness of breath as the lungs' ability to oxygenate the blood weakens. About 10-15% of those who are diagnosed—which may mean less than 5% of those infected—eventually become ill enough to need a hospital.

Almost all of those hospitalized have symptoms of pneumonia—the general name for the response of the lungs to a variety of viral, bacterial and fungal infections. When they get deep into the lungs, the SARS-COV-2 particles find a target-rich environment in the alveoli, tiny air sacs which hang like bunches of grapes off the lung's branching network of bronchial tubes and are lined with cells festooned with ACE2. It is in these sacs that oxygen from the air breathed into the lungs passes into the blood stream, and carbon dioxide from the blood passes into the lung to be breathed out. The more the virus damages and kills the cells lining the alveoli, the more difficult this exchange of gases becomes. Hence the shortness of breath.

In some Covid-19 cases, though, this shortness of breath—a textbook symptom of pneumonia—does not show up. Doctors have got used to seeing patients with blood-oxygen levels so low that they should be dizzy or unconscious, but who show no sign of respiratory distress.

Daniel Johnson of the University of Nebraska Medical Centre says his theory is that SARS-COV-2 may be affecting the nervous system. That it can do so in some ways, at least, is hinted at by the fact that some patients report a loss of the sense of smell early on in their infection; there are other signs, too. Perhaps the virus has an effect on the part of the brain which tells the lungs to work harder when carbon dioxide builds up in the blood.

Angles of attack

Another possibility is that the lungs are not the only thing at fault. In some of these atypical patients the perilously low blood-oxygen level "seems to be out of proportion to the overall injury to the lung," says Joseph Levitt of the Stanford University Medical Centre. The lungs of Covid-19 patients feel different, too, he says. Typically, the lungs of patients with severe pneumonia become stiffer, which makes moving air in and out of them increasingly hard. The ventilators on to which such patients are put pump in oxygen under pressure, thus doing some of the lungs' work for them. The lungs of Covid-19 patients with blood-oxygen levels low enough to need a ventilator, though, are not so stiff, says Dr Levitt. They have not exhausted their ability to do their job. But the job is not getting done.

Dr Levitt wonders whether the problem may be in the blood vessels. ACE2's role in looking after blood pressure depends on its ability to regulate signals that make blood vessels constrict or dilate. The way SARS-COV-2 binds to ACE2 probably makes it less able to take part in that signalling. Covid-19 may thus reduce the amount of oxygen which gets into tissues not just by damaging the lung, but also by narrowing and damaging blood vessels. If so, drugs to dilate the blood vessels might help, at least in some cases. Finding out what treatment works best along those lines, though, requires clinical trials, says Dr Levitt.

In hospitals the treatment will normally start with extra oxygen supplied through a nasal cannula (a plastic tube with a prong for each nostril) and therapy to combat dehydration: patients have typically had a fever for days and not been drinking enough, leaving their bodies badly short of fluids. Rest, rehydration and extra oxygen, along with drugs for any secondary infections that have taken advantage of the body's stressed-out state, give the immune systern a chance to get the upper hand.

The immune response to a virus starts with infected cells producing a suite of signalling molecules called cytokines. Some of these tell other cells nearby to be on their guard against attack, thus stymying the virus's ability to replicate itself. Others tell the immune system to come and put some stick about. Thus called to arms, the immune system launches both a prompt all-purpose response—inflammation—and a subsequent targeted counter-attack using antibodies and cells specifically programmed to attack both virus particles and the cells they have infected. Unfortunately the virus seems able to interfere with the early steps of the immune response. It can apparently counteract the part that dampens replication in nearby cells. It may also enhance inflammation.

Whether the virus helps it along or not, severe inflammation of the lungs often leads to what is known as acute respiratory distress syndrome (ARDS). It is ards that sees people rushed to intensive-care units (icus) and put on ventilators.

Because it is hard to tolerate having a tube stuck down your throat and into your lungs, patients on ventilators are heavily sedated and unable to do anything for themselves. Nurses must reposition them every few hours to prevent bed sores. Their doctors keep watch for kidney failure, blood clots and heart problems—risks to critically ill patients in icus that anecdote has suggested may be more common in Covid-19 patients than in others. Those anecdotes are now being backed up by a few studies. However, as Dominic Wichmann of the University Medical Centre Hamburg-Eppendorf points out, this correlation does not necessarily mean SARS-COV-2 is itself damaging the organs involved.

A quarter of Covid-19 patients in British icus have had kidney problems severe enough to require dialysis. "It's all part of the second phase of the illness when people, eight to ten days in, suddenly get worse," says Claire Sharpe of King's College London. A big part of the problem, she says, is just dehydration, always a risk in icus, all the more so when patients are feverish. On top of this, the stress caused to the body by having air pumped in and out amounts to "a double hit on the kidneys".

Chains of command

Early in the pandemic critical-care doctors in various countries added to the problem by flushing fluids from the body in order to keep the patients' damaged lungs from filling with liquid. They appreciated the risk of crashing the kidneys that this involved. Their thinking in doing it anyway, Dr Johnson says, was "I have to do everything I can to try to help their oxygen levels, because if I don't win that then the whole game is lost." Once doctors began to see high rates of kidney failure in Covid-19 patients, though, they stopped "running them dry". Dr Johnson, whose unit had the benefit of the experience from New York and other early hotspots, says kidney failure is now no more common in his Covid-19 patients than in those with other viral pneumonias.

Blood clots are another worry for patients in icus—so much so that mild blood thinners are routinely used as a prophylactic. Again, the problem may be worse in Covid patients. Autopsies of the first 12 people to die of Covid-19 in Hamburg found that four had died from a blood clot in the lungs. Autopsies by other teams have turned up lots of small clots in the blood vessels traversing the lungs.

There are lots of reasons why Covid-19 patients might be at higher risk of clots in the lung and elsewhere. Immobility is one: patients on ventilators are essentially paralysed, and those with Covid-19 tend to stay on ventilators about twice as long as other icu patients. Dehydration thickens the blood. The severe inflammation seen in Covid-19 patients has a big role, too, says Jean Marie Connors of the Harvard Medical School, because clotting substances in the blood tend to increase in lockstep with the chemicals that bring on inflammation. There is also some evidence that the cells which line blood vessels are infected by the virus, she adds. These cells regulate substances that prevent clots—if the virus kills them off clotting can run wild.

Aftermath

At this stage of the disease, cardiologists are also on high alert. Some Covid-19 patients whose lungs start to improve then see an extreme deterioration in their heart function. This is not likely to be simply the effect of being in an icu. But no one knows whether the damage comes from the virus itself infecting the heart, or from the inflammation it triggers.

Harlan Krumholz of the Yale School of Medicine thinks both the virus and the immune response can be involved. In some people the antibody-making process can go awry, and their newly developed antibodies may confuse a healthy cell for an infected one, marking it for destruction by the immune system. That seems to be what happens in a rare sort of inflammation of the heart seen in some children with antibodies to SARS-COV-2.

In most cases, though, it is the generalized immune response, inflammation, that goes into overdrive. Why some patients are prone to this problem remains unclear. But as data piles up from hospitals around the world clues about the biological pathways of the disease are starting to emerge.

Some of the clues come from the conditions which predispose people to the disease. "You'd think underlying lung problems or immune system problems will be the greatest risk," says Dr Levitt. "But it seems the biggest risk factors have been hypertension, diabetes and obesity." That, has led many scientists to suspect that the profound inflammation seen in severe cases of Covid-19 may be yet another problem linked to SARS-COV-2’s fondness for ACE2. 

People with diabetes, hypertension and heart disease have more ACE2 on their cells as a response to the higher levels of inflammation that come with their condition; ACE2 has an anti-inflammatory effect. When SARS-COV-2 sticks to ACE2 and reduces its ability to do its job, the underlying inflammation gets worse.

When inflammation gets completely out of control the body enters what is called a cytokine storm. Such storms drive the most severe outcomes for Covid-19, including multi-organ failure. There is thus an obvious role for anti-inflammatory drugs.

But knowing when to administer them is hard. Go too late, and the storm will be unstoppable; go too early, and you may dampen down an immune response that is turning the tide. A recent article in the lancet suggests that it would help if Covid-19 patients were routinely screened for hyper-inflammation to help identify those who might benefit from anti-inflammatory drugs. But not everyone is convinced today's drugs have much to offer. "We tried a range of anti-inflammatory treatment and it actually didn't work," says Rajnish Jaiswal, who has been working on the front line of Covid-19 treatment at New York's Metropolitan Hospital.

All told, just 58% of those who have gone into British icus and are not still there have been discharged alive. The rest have died. This mortality rate is double that seen for other viral pneumonias in the past three years.

Many of those who survive a severe bout of Covid-19 are likely to have long-term health problems. America's Society of Critical Care Medicine has identified a collection of health problems including poor muscle strength and sub-par heart and lung function as "post-intensive care syndrome"; people who have had ards get it worse than most. Damaged lungs and kidneys can be expected to make good a lot of the harm done to them once a crisis is over, but for some it will take time, and long-term loss of function is possible.

A big worry is what happens to the brain. Sherry Chou of the University of Pittsburgh says that there is no evidence so far that SARS-COV-2 directly harms the brain or the central nervous system, but in parts of the brain, the spinal cord and the nerves the inflammation associated with the disease can lead to muscle weakness and other problems.

The mere fact of being in an icu can also lead to cognitive impairment. The effect of more than a week in intensive care is comparable to that of a major head injury. The problems are linked to the delirium people often fall into when severely ill and heavily sedated in an unfamiliar environment. Delirium is a particular problem with Covid-19, says Dale Needham of Johns Hopkins University. Patients spend a long time in the icu during which they see no one they know—and the strangers caring for them in heavy-duty protective wear "look like aliens".

Patients who have come through ards may also suffer from anxiety and post-traumatic stress disorder. It all adds up to a bleak prospect. In 2017 a study in the Baltimore-Washington area found that a third of previously employed patients who survived ards were not back at work five years on. 

Covid-19 will cast as long a shadow over some survivors' lives as it will over those who mourn the dead. ■

EUROPE MOVES AND MOVES !

From The Economist - May 30 - 2020

State aid

The visible hand

How temporary is the EU’s go-ahead for governments to prop up companies?

It normally takes the European Commission about six months to review an EU member state's request to derogate from the rules against subsidizing domestic industry. Not these days. Since the outbreak of Covid-19 roiled economies everywhere, requests to circumvent "state-aid" rules are often approved in under 24 hours, even on weekends. A trickle of demands from all over the bloc has turned into a flood. Nearly 200 subsidy schemes and bail-outs worth over €2trn ($2.2trn), equivalent to Italy's GDP, have been cleared by Eurocrats.

The single market at the heart of the European economy is built partly on the premise that national governments do not unduly aid "their" firms. Policies preventing them from doing so date back to the very first flushes of European integration. Now Europe finds itself in uncharted policy territory. Never have the rules been loosened to the extent they have been today. Politicians are brokering aid packages to industry in a way no one in living memory has been allowed to do.

Trouble is: they might get used to it. Even before the crisis, Europe was moving in a dirigiste direction. Now a breach has opened in a set of rules that had curtailed politicians' penchants for picking winners. When rules were loosened in past crises, notably in 2008, the state-aid regime quickly snapped back to its old self afterwards. But fewer countries support the principles behind state-aid rules nowadays. So the new relaxed norms may endure beyond the crisis, perhaps permanently. That would mark a new economic era for Europe.

European state-aid rules are a policymaking oddity. American states, for example, can and do try to poach companies from each other with promises of tax breaks, soft loans and the like. Europe went for the subsidy equivalent of a disarmament pact. All aid that isn't expressly allowed to companies is banned, even to state-owned firms. Governments are regularly taken to task for everything from granting football clubs subsidized land to giving multinationals sweetheart tax deals. Policing this is one of the real powers wielded by Brussels, where the rules are enforced by the same commission officials who regulate antitrust.

Tensions have long brewed between that bit of the commission, overseen since 2014 by Margrethe Vestager, the competition commissioner, and some member states. France and Germany have repeatedly demanded competition rules be bent to allow the creation of "European champions". They were furious last year when Ms Vestager blocked the planned merger of the rail bits of Siemens and Alstom.

Merging companies is one way to create champions, but gorging them with state aid is just as effective. That is now allowed, albeit temporarily. Granted, the goal right now is not to create champions so much as to prevent unnecessary bankruptcies and job losses. But if the rules remain eased for too long, the money sloshing to companies will aim less to rescue them in crisis than to boost their prospects afterwards.

Already some countries, notably Spain, have complained that the free-spending regime threatens the single market. That is because a few rich countries are doing most of the spending. Almost half the state aid paid out across Europe is done by Germany, which is big, wealthy and entered the crisis with relatively little debt. Smaller and poorer countries worry that their firms, which have not been so generously aided, will get gobbled up.

Politicians are busy untilting the playing field. On May 27th Ursula von der Leyen, the commission's president, unveiled a €750bn package of loans and grants that will redistribute money from those with the ability to pay (Germany) to those struggling to (Spain). National capitals will now haggle over a final deal.

Ms Vestager says higher German spending has been on the EU’s wish-list for years. As for long-term risks to the state-aid regime, she emphasizes that the easing of the rules is temporary. She has insisted that companies which were in bad shape before Covid-19 struck cannot be rescued; troubled firms that get government bail-outs must pay them back. Those that get the most help cannot pay dividends or bonuses until they repay most of the state aid.

Old Brussels hands say the commission has little choice but to give states leeway in the crisis. "Governments will simply ignore EU rules if they don't flex enough— that's what the commission wants to avoid," says one lawyer. Once everyone has bought into the system's fast-track approval process, the rules can be tightened, for example by demanding that aid to companies is gradually withdrawn.

The aftermath of the crisis of 2008 gives backers of the state-aid regime confidence that such tightening will happen. But this time looks different. A decade ago Europe was in the ascendant, implementing its new fundamental treaty. Aid had gone mainly to unpopular banks seen to have gamed the system, so throttling that aid was politically easy. Fiscal weaknesses had yet to be exposed by the Euro crisis.

In 2020, by contrast, bail-outs are seen as necessary and companies blameless. The crisis has amplified voices demanding that supply chains be repatriated to Europe, which would be easier if states could pay more subsidies. 

Britain, which long backed vigorous curbs on state aid, has left the club. Southern Europe gets nailed by state-aid rules regularly, and would not mind seeing the back of them. Ireland and the Netherlands have fallen foul of Ms Vestager for giving tax breaks to multinationals, a form of forbidden aid. Poland and Italy like the Franco-German plans to create industrial champions.

Ms Vestager says the concept of a "level playing field"—backed by state-aid rules-remains as important as ever. But concerns that China and America are pampering their own firms with subsidies are widespread. 

Even before Covid-19, Europe had made concessions, allowing industrial projects of the sort politicians favour (such as factories to make high-tech batteries for electric cars) to get government largesse.

A Franco-German deal made possible the whopping package Mrs von der Leyen is now touting. While suggesting that the EU receive huge new powers, Emmanuel Macron and Angela Merkel, France's and Germany's leaders, also called for the commission to "adapt" state-aid rules permanently to favour industry. That may prove a difficult recommendation to ignore. ■

………………………..

EUROPE  IS  MOVING;  IT’S  FLEXING  ITS  MUSCLES;  IT  IS  MOVING  MORE  AND  MORE  INTO  INDEPENDENT   POWER  AND  WILL  CONTINUE  TO  DO  SO.

GERMANY  IS  NOW  [WITH BRITAIN  GONE]  THE  CHEIF  AND  SPEAR-HEAD  OF  AN  EMERGING  MIGHTY  ECONOMICAL  AND  POLITICAL  WORLD  POWER.  SHE  HAS  THE  LARGEST  POPULATION  BEHIND  CHINA  AND  INDIA;  HER  TRADING  POWER  WILL  GROW  AND  GROW.

AFTER  THIS  PANDEMIC  OF  COVID19  IS  HISTORY, AMERICA  WILL  SLIDE  DOWN,  ALBEIT  SLOWLY,  BUT  ITS  POWER  OF  BEING  NUMBER  ONE  IN  THE  WORLD  WILL  BEGIN  TO MELT  AWAY.

A  NEW  SCENE  IS  BEGINNING  TO  ARISE  ON  THE  STAGE  OF  THE  WORLD.

BIBLE  PROPHECY  IS  MARCHING  ON!

Keith Hunt  

CYBERSPACE WARS !!!

From  The  Economist - May 30 - 2020

Cyber-defence

Policing the Wild West

WASHINGTON, DC

America rethinks its strategy in cyberspace, the world's most lawless battlefield

CoviD-19 has been a phisherman's friend. Millions of professionals are at home and online, adjusting to new routines and anxious about their jobs. That makes them perfect marks: apt to click on an email that purports to be from their boss or a supplier asking for payment. Law-enforcement officials in many countries have reported a rise in cybercrime since the pandemic started.

But according to the FBI and Department of Homeland Security, not all such attacks come from gangs or individuals looking to make a quick buck. On May 13th those agencies warned that cyber-actors affiliated with China were trying to steal Covid-related data and intellectual property. China is not the only worry. Russian hackers may probe for weaknesses in American electoral systems; Iranians have targeted an American drugmaker; North Koreans have gone after cryptocurrency stores.

Just as the attacks of September nth 2001 spurred   America to change its counterterrorism strategy, repeated intrusions are doing the same for its cyber-security. Yet it first has to define the problem. Terrorist attacks tend to involve carnage, a political motive and an attribution. Cyber-assaults have a range of motives, including theft (North Korea's raids on banks), digital disruption (Russia's NotPetya strikes on Ukrainian and other infrastructure), sabotage (the Stuxnet attacks on Iran's nuclear programme, probably by America and Israel) and political warfare (Russia's interference in America's election in 2016). Sometimes states use non-state actors to carry out cyber-attacks, much as some use terrorist proxies. Attackers may target private-sector networks in banks, hospitals or payment systems, which often appeal to the government for protection.

Defence is difficult. Potential targets are many and diffuse. Attackers' identities are often obscure. They make use of vulnerabilities often unknown until exploited.

The National Defence Authorization Act of 2019, which sets the Pentagon's budget, set up a commission to rethink cyber-defence. The Cyberspace Solarium Commission, named after Project Solarium, Dwight Eisenhower's effort in 1953 to create a durable cold-war strategy, and headed by Angus King, an independent senator from Maine, and Mike Gallagher, a Republican congressman from Wisconsin, had the misfortune to release its recommendations on March 11th, just before America went into lockdowm The commission made its first public presentation to lawmakers via video conference on May 13th.

America's cyber-defence, it argues, is hobbled by jurisdictional boundaries. Intruders are nimble; America's defence is ponderous. Responsibilities are scattered among the FBI, the National Security Agency (NSA, America's signals-intelligence agency), the Pentagon's Cyber Command, the Department for Homeland Security, the Cyber-security and Infrastructure Security Agency (CISA), and others.

The commission recommends creating a national cyber-director within the White House, a co-ordinating role much like that of director of national intelligence, which emerged from the 9/11 Commission's report. It also recommends permanent congressional cyber-security committees and a beefed-up CISA. Yet the White House is cool on a new Senate-confirmed cyber-security post, and creating new congressional committees would mean convincing current ones to surrender jurisdiction.

More important than government structure, however, is working closely with the private sector. The commission recommends declaring some private servers, such as those for the energy, financial and telecoms industries, critical infrastructure. They would receive enhanced government monitoring in exchange for meeting more stringent security standards.

It also recommends building a platform, managed by CISA with help from other agencies including the NSA, where government bodies and private firms can share information about threats. The NSA’s British counterpart, GCHQ, has a similar system. Some companies maybe reluctant to let an agency that has engaged in widespread, warrantless surveillance monitor their security, but Mr King believes the proposal "will have support from industry".

If one way to halt cyber-attacks is to parry the blows, another is to punch back. After Russian electoral intervention in 2016, American officials grew convinced that their country was seen as a soft touch because it had not done so hard enough. "They don't fear us," lamented General Paul Nakasone, head of both the NSA and Cyber Command, in early 2018. The commission accordingly urges American hackers to "strike back with speed and agility".

In practice, though, America's approach has already shifted from punishment to pre-emption—not so much striking back as striking first. In April 2018 Cyber Command and the NSA announced a strategy built around "persistent engagement" and "defend forward". The first of these reflects the belief that competition in cyberspace is not a series of set-piece battles, but a constant digital melee. The second embodies the principle that to prevent an attack, you should go to its source. Just as "our naval forces do not defend by staying in port," says General Nakasone, "our forces must operate against our enemies on their virtual territory as well." In August 2018 President Donald Trump rescinded Obama-era guidance and made it easier for Cyber Command to operate beyond Pentagon networks without presidential authorization.

The more aggressive posture was road-tested during America's mid-term elections. Cyber Command attacked servers belonging to Russia's Internet Research Agency, the company that sowed social-media discord in 2016, and sent text and email messages to Russian operatives warning them that America was tracking them—the digital equivalent of a horse's head in the bed. "We're now opening the aperture, broadening the areas we're prepared to act in," noted John Bolton, then national security adviser, last summer.

Yet taking the fight to rivals presents challenges. The internet has no clean front lines. Attacks from enemy-held cyberspace can be routed through the networks of allies, says Max Smeets of the Centre for Security Studies in Zurich. In 2016 Cyber Command irritated Germany by wiping Islamic State propaganda on German servers without asking for permission. Mr Smeets says adversaries might route attacks via particular countries in the hope of driving wedges between America and its friends.

Taking offence

Another problem is that if one defends far enough forward, it can look an awful lot like attacking. America is said to have secreted malicious code deep into Russian and Iranian infrastructure networks. The practice is akin to burying arms caches behind enemy lines for use in wartime: it makes it easier to strike back if Russia, which has probed America's own power grids, crosses a line. But the same access can be used for unprovoked attack.

An alternative is to punch back by other means. America and several like-minded allies have grown bolder in publicly attributing major cyber-attacks to China, Russia, Iran and North Korea. In 2014 the Obama administration indicted five members of China's armed forces for hacking into American companies. The Trump administration has brought similar charges against Iranian, Russian and North Korean hackers, including a dozen officers of the GRU, Russia's military-intelligence agency, who intervened in the 2016 election. Though few American officials expect that foreign hackers will turn up in the dock, legal tools are still seen as useful for several reasons.

One is shame. Most countries do not like getting caught in the act. Second, Russian intelligence officers would rather avoid a sanctions listing that would cut off shopping trips to Paris and boarding schools in Britain. Third, the forensic evidence laid out within these indictments—-even down to Google searches conducted by individual GRU officers—is a powerful way for America to hint at its reach.

Exposure also helps establish norms, defining what is considered beyond the pale in cyberspace. America and its allies argue that the existing laws of war, including ideas such as proportionality and distinctions between combatants and civilians, apply in the digital world (how this squares with suspected American attacks like Stuxnet is less clear). Russia, China, Cuba and others fear that this line of thinking might legitimize American retaliation.

Double standards abound. America indicted Russian officers for hacking the Organization for the Prohibition of Chemical Weapons, but the NSA has itself run riot in international institutions. And practical deals have not survived contact with reality. An agreement in 2015 between Barack Obama and Xi Jinping, China's president, to ban commercial espionage is widely deemed to have fallen apart.

These divisions play out at the United Nations, where one group of experts, favoured by America and its allies, works parallel to a larger, Russian-dominated group. "What we've really seen is a kind of a fracturing of the process," says Adam Segal of the Council on Foreign Relations. "There are some interesting - ideas percolating through, but they will never be formalized or centralized in any important way." So cyberspace remains a Wild West. ■