It should be remembered that on Monday, after the five-day “parking lot”, the new bonds issued in the recent debt swap under local law debuted. Average annual return on assets approached 13%, with the exception of Bonar 2030, whose yield was closer to 12%.
On Wednesday it will be the turn in the local market of the dollar bonds under foreign law, although internationally they are already fully listed.
Through negotiations with private creditors, Argentina managed to restructure more than $ 100 billion. The next challenge for the Government will be to modify the terms of a liability of US $ 44,000 million with the International Monetary Fund (IMF).
In this frame, the country risk index remains practically stable since it barely fell by one unit to 1,119 basis points as measured by JP.Morgan.
For its part, in a day with many changes, the Buenos Aires bag it ended unchanged from Monday and managed to break a streak of two consecutive declines, which had brought the S&P Merval to its lowest level of the month.
The Argentine Stock Exchange and Markets index concluded at 44,628 units, after registering a loss of more than 1% in the morning, and then rising during noon. In the last two days, the Merval had suffered a loss of 4.8%.
As on Monday, the highest earnings were presented Telecom since their actions rose 7%, both in the local market and on Wall Street.
“It could be said that it was a successful wheel since the day began with heavy losses in all the Merval components, which then cut losses as the hours passed. Investors expect positive signals from the Government to risk entering Argentine equity and while positioning themselves in the CEDEARs to avoid local risk“explained Joaquín Candia, from the Rava stock market company.
Despite the improvement, Argentine stocks failed to keep up with the surge in the New York stock market, which exhibited increases of up to 1.2%, driven by technology stocks.
The domestic market remains attentive to the entry of the budget for 2021 to the Chamber of Deputies, in which a fiscal deficit of 4.5% of GDP and a growth of the Argentine economy of 5.5% for next year would be estimated.
International Monetary Fund (IMF) in 2012 to meet the need to create a mechanism by which Turkey’s potential $ 5 billion in additional funding commitments in the agenda once more came to exist. The IMF did not use this commitment.
President Recep Tayyip Erdoğan criticized the leader of the DEVA Party Ali Babacan, anonymously, in a statement he made after yesterday’s cabinet meeting and said, “The IMF asked us for 5 billion dollars. The minister then said, “Should we pay this debt?” said. I said ‘Let’s give it’. The borrower today receives instructions tomorrow. He has now formed a party and he is teaching us economy lessons ”.
“THERE IS A MANAGEMENT THAT GIVES AN IBAN TODAY AND ASKING FOR HELP FROM THE PUBLIC”
Babacan used the following statements in his post on social media:
* Turkey for the first time after a full 19 years, on May 14, 2013, which was resetting the IMF debt by paying the last installment.
* I agree with the determination of Mr. President. When I handed over the management of the economy Turkey, it was strong enough to give the IMF debt.
* But today, unfortunately, there is a management that gives an IBAN and requests help from the public.
* Economy is our problem. We do not teach; We offer solutions for our country to be leveled.
Yilmaz: he WANTS IMF DEBT FROM TURKEY
Former Central Bank (CB) and Good Party Ankara Deputy Governor Durmus Yilmaz, also through social media, “the IMF wanted to borrow from Turkey” has denied the claim. Yilmaz, who served as President for 2006-2011 Central Bank, the IMF does not want to borrow from Turkey, he said that Turkey is in a contingency fund commitments and commitments to happen.
It’s about lending $ 5 billion to the IMF. I tried hard to use the heaviest word, the word I could find is LIE. The subject is very technical. In short, the IMF did not ask for a loan from us. A COMMITMENT was made to a precautionary fund. The commitment was not realized. Proof: There is no such debt record on the MB balance sheet.
Politician Cem Toker which asks whether a loan from the IMF to Turkey in 2017, after the 2008 crisis, in response to the IMF, as requested support for the levy additional resources from the country, but that it was not among the countries that support Turkey.
Toker explained the letter he wrote to the IMF and the content of the letter on TV 100 live.
BABACAN IN 2014: 5 BILLION DOLLAR FROM 456 BILLION DOLLARS …
Period in 2014, CHP Deputy Chairman Sezgin Tanrikulu economy Deputy Prime Minister Ali Babacan, Turkey responded to the request of the IMF gave a parliamentary question on the issue of whether the debt. Tanrikulu, “Turkey has given debt to the IMF sturdy? If so, what is the repayment plan? If not, where is that money, is it planned to be put on the market and to reduce the rising dollar price ”he asked.
In his reply to the parliamentary question, Babacan stated that since the beginning of 2012, studies have been carried out to increase the IMF resources and that a group of countries, especially the G-20 countries, made a total commitment of 456 billion dollars.
Babacan said that Turkey had pledged $ 5 billion. Babacan stated that the said resource will be transferred to the IMF if the IMF resources are insufficient in case of a global crisis. If a potential currency crisis if the IMF should deal would pay the money back right away to Turkey in Turkey.
HOW MUCH COMMITMENT TO WHICH COUNTRY?
Turkey has pledged to fund $ 5 billion pledged by other countries were as follows additives.
Japan 60 billion dollars, Germany 54.7 billion dollars, China 43 billion dollars, France 41.4 billion dollars, Italy 31 billion dollars, Spain 19.6 billion dollars, Netherlands 18 billion dollars, England 15 billion dollars, Saudi Arabia 15 billion dollars, South Korea 15 billion dollars. $, Belgium $ 13.2 billion, Sweden $ 10 billion, Brazil $ 10 billion, India $ 10 billion, Mexico $ 10 billion, Russia $ 10 billion, Switzerland $ 10 billion, Norway $ 9.3 billion, Poland $ 8.3 billion, Austria $ 8.1 billion $, Australia $ 7 billion, Denmark $ 7 billion, Finland $ 5 billion, Singapore $ 4 billion, Luxembourg $ 2.7 billion, Slovakia $ 2.1 billion, Malaysia $ 1 billion, New Zealand $ 1 billion, Philippines $ 1 billion, Southern Cyprus 600 million dollars, Malta 300 million dollars.
The supermarket sector is based on having a precision operation, where every detail counts and allows you to often compete for a penny to win customers. As a result, companies in this field have become accustomed to increases in sales, which are usually around GDP and rarely reach double digits. But the coronavirus has completely altered this reality.
As ARA has learned, Bonpreu, the first supermarket chain in Catalonia, has seen the average customer ticket double since the population was confined. To contextualize the jump, in 2018 the group increased sales by 13%, and a year earlier by 11%. The evolution of 2019 is not yet known, but in 2020, even without knowing how long the current situation will last, it promises to be better for the 35th Catalan company in sales.
Its 187 stores, which also include those of the Esclat brand, have made this leap without resorting to price increases, the company says. The company chaired by Joan Font has carried out a study, based on the 1.2 million purchases made on average during the weeks of the state of alarm, which allows us to observe customer behavior. The conclusion is very clear: commodities are living a golden age.
The frozen fish boom
The closure of fishmongers triggers the purchase of 151%
Of all the products, the jump in the sale of frozen fish stands out, with an increase of 151%. Meat has also experienced a sharp increase in sales, of about 50%. Bonpreu stands out above all for the increase in lamb, processed meats, skewers, steaks and pork chops.
Rising fruits and vegetables
Potato and zucchini, the amazing kings of the shopping basket
The data from the Osona company also make it clear that the consumption of fruit and vegetables has increased in recent weeks. The vegetable, in particular, 54%, and the fruit, 33%. Bonpreu has detected that in the vegetable basket, the most successful in this time are the zucchini and the potato.
Packaging is growing
From pasta and rice to sweets, the snacks and beers
The company has also seen a very significant increase in sales of packaged food products. The increase, in particular, is 80%. This food group serves to check the change in consumption trend from the beginning of confinement until now. The study finds that initially there was more purchase of commodities such as preserves, pasta and rice, and that it later changed to products more associated with celebrations or moments of pleasure, such as beers, snacks and sweets like chocolate.
More cleanliness than ever
Sales of products such as bleach are doubled
The wave of shopping has also reached for household cleaning and personal hygiene products, such as soap, bleach and toilet paper. In this area, sales have almost doubled, with an increase of 99%.
The supermarket group denies they went up
Bonpreu says that almost all the prices of these food families have remained the same as last year. In fact, the company claims that soups and broths, liquid milk, soup pasta and butter have been sold during confinement at lower prices than last year.
Bonpreu even explains that in its establishments, and despite the success of sales that are taking place throughout the sector, the promotions have been maintained, covering half a thousand products. This same week, The Economist echoed a study that explained that the percentage of household spending on food has gone from 18% to 60% due to confinement, in a phenomenon that even compromises the validity of indices such as the CPI in all countries.
Berlin The mood in Germany’s economy is catastrophic. The most important leading indicator, the Ifo business climate index, fell from 85.9 to 74.3 points in April. This is the lowest value ever measured. There has never been a stronger decline. “This is mainly due to the massive deterioration of the current situation,” said Ifo President Clemens Fuest on Friday.
In addition, companies have never been so pessimistic about the coming months. “The corona crisis hits the German economy with full force,” said Fuest. The crisis is now affecting all industries. Even the main construction industry is now worried about the future. So far, together with consumption, it has been the pillar of the economy.
The fact that the effects of the corona-related standstill would hit companies hard in April had become clearer every day since Easter. On Thursday, the Ifo reported that the crisis had hit the labor market: in industry and service providers, one in five companies surveyed by the Ifo want to lay off employees or not to extend temporary jobs.
It is 15 percent in retail, and two percent on construction that has so far been little affected by downtime. In almost all industries, more than 40 percent of companies want to postpone investments – even 31 percent of them are in construction.
How deep the recession will become in 2020 is currently difficult to estimate. “We do not know how much we can start the economy up again without increasing the risk of infection,” Monika Schnitzer told the Handelsblatt. The situation is not comparable to any post-war recession. However, she is confident that Germany will get there in the next few weeks if protective measures are increased and tracing apps are increased.
The purchasing manager index of the IHS Markit institute also fell to a record low on Thursday. In this manager survey, 75 percent of service providers and almost as many industrial managers said that their sales had shrunk significantly. Service providers’ sales fell more than ever in the 20-year history of this survey.
“Both domestic and export demand has collapsed,” writes IHS Markit economist Phil Smith. In the service sector, more jobs were cut than at the height of the financial crisis recession in April 2009, and in industry, too, the reduction in personnel accelerated – despite short-time work.
In any case, leading economists are starting to further lower their forecasts for 2020. The head of economic operations, Lars Feld, now expects that gross domestic product (GDP) will shrink by at least five and a half percentage points in 2020. It could shrink more than in the 2009 financial crisis recession.
Three and a half weeks ago, when the Economic Advisory Council for Economic Affairs Peter Altmaier (CDU) presented a special report on the corona pandemic, a minus of five and a half percent was still the worst-case scenario. However, the IMF expects German GDP to collapse by seven percent in 2020.
Even in the large economic research institutes, which predicted a minus of 4.2 percent for 2020 in their joint diagnosis two weeks ago, many expect that a five will be before the decimal point. The markets are therefore eagerly awaiting which recession forecast the Federal Government will commit to in the coming week.
However, Stefan Kooths, economic expert at the Kiel IfW, also warned that he would now outdo himself in horror scenarios: that April would be the low point of the year and that GDP would decline by ten percent in the second quarter, he said in early March already expected. The question now is how quickly a recovery can begin.
France: lowest since 1980
However, this also depends on how quickly the economy in the EU countries most affected by the pandemic can get going again, Italy, Spain and France. “As intertwined as our economy, for example, with that in Italy, we have to be very interested in the EU not breaking apart,” said Schnitzer. “It is not just about solidarity, it is in our interest if we help other EU countries,” she emphasized.
However, the prospects for the economy are currently catastrophic in all large EU countries. For example, the IHS Markit Purchasing Managers’ Index fell to a record low for the euro zone on Thursday. In Italy, the IMF expects GDP to decline 9.1 percent this year.
The mood in France’s economy also deteriorated massively in April due to the corona crisis. The business climate has dropped to the lowest level since the start of the surveys in 1980, according to data from the national statistical office Insee on Thursday. The index fell by 32 points to 62 points. There has never been such a sharp drop.
Economic activity in France was 35 percent lower in April than it was before the economy shutdown in March. Insee also does not expect the business climate to recover anytime soon. In this unprecedented environment, the behavior of companies and consumers can hardly be predicted. The French government expects gross domestic product to decline by eight percent this year.
More: According to the Ifo Institute, a fifth of German companies are planning to cut jobs due to the corona crisis.
Over 190,000 dead worldwide, nearly two-thirds of them in Europe. Over 2.7 million cases diagnosed. And a question: in the face of the crisis, will countries manage to come together around a common strategy and common means?
This Friday, countries like France, Germany, Italy or Spain, but also private economic players such as the Bill and Melinda Gates foundation were virtually at the side of the World Health Organization during a press conference to mobilize in favor of an acceleration of the production of vaccines, treatments and diagnostic tests against Covid-19.
“It is a historic collaboration to accelerate the development, production and equitable distribution of vaccines, diagnostics and treatments against Covid-19“, said the boss of the World Health Organization, Tedros Adhanom Ghebreyesus.
But neither the China, where the first cases of the new coronavirus were announced in late December, nor United States, the current epicenter of the pandemic with nearly 900,000 cases, of which more than 50,000 have so far been fatal, were not represented.
On the financial plan, the President of the European Commission Ursula von der Leyen will oversee a donor conference on May 4 to raise 7.5 billion euros.
In all, more than 70 pre-clinical trials for a vaccine are underway worldwide according to a WHO document dated April 23, 2020, while at least 6 have already entered the testing phase on humans.
But the key would also be to ensure that all these advances can be accessible to all countries, and not only to the most developed.
“We not only need a vaccine and treatments for a country, a region or half the world, but a vaccine and treatments that are not too expensive, safe, effective, easy to administer and available to everyone everywhere.“, hammered António Guterres, Secretary General of the United Nations.
To put it simply: a gigantic challenge, which will require collaboration between countries which are not always in excellent terms on the diplomatic level.
“I hope that we will manage to reconcile, if I may say, with this joint initiative China and the United States of America because it is basically to say the fight against Covid-19 is a common good of humanity and no division, basically, takes place to win this battle“, said French President Emmanuel Macron.
A cooperation that will also be useful to face the other big challenge: economic, this time. The International Monetary Fund (IMF) and the World Trade Organization (WTO) have called on countries to reduce export restrictions, described “as dangerously counterproductive” in this context of global crisis.
Brent is the most important oil for Europe. The WTI variety comes from the USA.
Singapore Oil prices continued their significant recovery from the previous day on Friday. The decisive factor on Thursday, however, was not an easing of weak demand and excess supply, rather political tensions between the USA and Iran led to rising risk premiums for crude oil.
After an incident on the open sea, US President Donald Trump instructed the Navy on Wednesday to destroy Iranian ships should they stand in the way of American ships. Iran reacted sharply on Thursday with counter threats. Relations between the United States and oil-rich Iran have long been under strain.
In Asian trade, a barrel (159 liters) of the North Sea type Brent last cost $ 22.48. That was $ 1.15 more than the previous day. The US variety WTI was traded at $ 17.70 per barrel. It was $ 1.20 more than on Thursday. By contrast, oil prices on Monday and Tuesday still collapsed. The stock markets were also heavily burdened by this, as concerns about the American energy sector are associated with the price collapse.
After the stock market recovered somewhat as oil prices rose, US Treasury Secretary Steven Mnuchin recently announced that he was considering a loan program for the country’s troubled oil industry. According to those familiar with the matter, the loans would be provided through the Fed. However, the instrument is only one of several options: “We haven’t decided yet,” said Mnuchin.
Despite the current recovery, the enormous supply overhang in the crude oil market remained unbroken. From the perspective of market observers, this will also continue, which is why oil processors recently had a race for freight capacities on ships to store excess petrol and kerosene. Pipeline operators also tried to create more storage space.
With no light visible at the end of the tunnel, the market is preparing for a sustained weakness in demand that will change the oil industry. As the World Bank announced, it expects the weakest recovery in history after the slump in the oil market.
Market observers are initially hoping for a phase of relative stability with the production cuts beginning on May 1, which were agreed by leading oil nations. The start of the cuts was “very constructive,” said Michael McCarthy, strategist at broker CMC Markets Asia Pacific. It appears that the average price for WTI will range between $ 15 and $ 20 a barrel in the near future
The eurozone economy could fall by 15% due to the coronavirus pandemic. The impact is clear when you put it next to the 4.9% drop that was experienced in 2009. It is the warning to sailors with which the President of the European Central Bank (ECB), Christine Lagarde, tried to raise awareness leaders so that they do not do “too little and too late” and approve a “fast, firm and flexible” recovery plan. And the Twenty-seven know that, but they still don’t agree on how to do it. In recent days, positions have come closer, especially after the South renounced any debt pooling. Yesterday they agreed to create an economic recovery fund that will be linked to the new EU budget, but they have not agreed on the size, the form, or how to distribute the money, if it sees more credit (as the north wants) or to through direct transfers (as required by the south).
The brutal work will be up to the Commission, which, after listening to everyone and gathering ideas from all over, has to come up with a proposal in the coming weeks that tries to gather all the concerns. Then the leaders will have to give the final green light, and all this leaves the final decision for June, when they hope to meet physically. And this despite the “emergency” awareness that the President of the European Council, Charles Michel, admitted yesterday after a video conference that closed without a document of conclusions, despite the fact that it was a key appointment to avoid the unequal collapse of the European economy and for the integrity of the single market itself. As the President of the Commission, Ursula von der Leyen, warned, without “decisive and collective action, the recovery will not be symmetrical and divergences will increase”.
But after so many comings and goings, where is the discussion now? Coronabons are definitely ruled out and a half-trillion shield in credits (for companies, ERTOs and healthcare systems) has been approved, which will be launched in June. With this decided, the debate revolves around how to articulate an economic recovery fund linked to the EU budget for the period 2021-2027 and which must be debated again. The discussion is stalled precisely because the north did not want to contribute more money. All of this will now be mixed up, which for some may further delay the discussion while for others it may be the necessary push.
The figures also generate some consensus around 1.5 trillion, but how this sum will be reached is a mystery. That is why, after gathering all the positions of the different European blocs, the leaders have left the final proposal in the hands of the Commission, also because it is Brussels that has the legislative initiative. Von der Leyen presented to the leaders yesterday a proposal for funds linked to the European Community budget that “will find the right balance between loans and direct transfers”. To reach up to 1.6 trillion euros (which is the plan he is working on), it would be necessary to raise the spending ceiling of the EU budget for the coming years and support a debt issue from the European Commission itself ( which has already been done before) and which, in practice, does not involve mutualization of the debt, precisely because the money is then made available to states that request it through transfers or cheap credits. From there, different internal or budget-related mechanisms would mobilize this high amount. In fact, the draft proposal foresees that the fund will only contain about 320 billion euros and that the rest of the money, up to 1.5 trillion, would be activated through various mechanisms of the community budget.
The Commission has presented this first draft after France presented the first fund idea with shared debt, the Netherlands its with gifts from north to south, and Spain its with perpetual debt issued from Brussels, a proposal that finally Italy take on. Perpetuity is already completely ruled out, but Paris, Madrid and Rome are pushing for the debt to be issued in the very long term. Knowing all this, now the battle is between credits and transfers and also in the pace of response. Therefore, the different European leaders appeared with relative satisfaction and full of nuances.
French President Emmanuel Macron was blunt: “Europe’s borrowing is not up to the task. Because? Because loans would already add to the debt of the most fragile countries and worsen financial imbalances. ” Macron is clear that with more credit the problem is not solved: “They must be real transfers, budget transfers.”
In the same vein, Italian Prime Minister Giuseppe Conte called for urgency and even called for a “bridge” mechanism to gain access to these transfers, given that they may not be effective until the end of the year. But for his Dutch counterpart, Mark Rutte, the emergency is resolved with half a trillion credits activated by the Eurogroup and which include the rescue fund that neither Spain nor Italy want to ask for. “There are 520 billion euros available, I would be stunned if we spend them all before the end of the year,” said the Dutchman yesterday, assuming that to finish detailing everything will take time and also that the recovery fund it will be structured mostly in the form of credits. Pedro Sánchez did not appear in Spain, but the Minister of Foreign Affairs, Arantxa González Laya, did so, claiming the role of Spain “at the center of the game” in changing the tone of the talks, although the demands Spanish initials have been diluted and that the south, for now, is the one who has yielded the most.
The country most affected by the pandemic and also one of the weakest economies in the EU with 135% debt. From the beginning he demanded to share risks, mutualizing debt so as not to have to borrow more, but he has already yielded in this line and now accepts a fund of 1.5 trillion euros in perpetual debt to give direct transfers , no credits.
It’s the other end of the story. He has managed to remove the coroners from the debate and now focuses his opposition on how to distribute the money from the recovery fund. He wants it to be just credits and that if there are transfers they are made through the EU budget, a budget that The Hague does not want to see fattened at the expense of its southern neighbors.
It has made hinge. He was on the side of Italy at the beginning of the discussion, but has abandoned debt pooling. Italy made the turn after Spain presented a proposal similar to the French one and it picked up ideas that the socialist commissioners had already dropped: a fund of 1.5 trillion through debt issued by the Commission and backed by an increase in EU budget and that would be perpetual. The latter part is ruled out by the northern opposition. Spain asks for transfers and not credits, but would accept a combination of the two.
He always stands firm against the coronabons and on the side of The Hague, but seeking to focus the debate. That is why Berlin said this week that it was willing to increase its contribution to the EU budget has been key to making the issuance of debt by the European Commission a viable project.
The Chancellor is in top form in times of corona crisis. Angela Merkel explains complicated population doubling rates and reproductive numbers. But she also knows everyday things. “They have to be washed or ironed regularly, put in the oven or in the microwave,” Merkel explains how to care for respiratory masks. “Even if that sounds a bit housewife, so to speak.”
The omniscient state – embodied in the chancellor. The subjects are explained life down to the smallest detail. With this self-image, Merkel takes “measures that have never existed in our country before”. Fundamental rights are restricted, the economy is pushed to the brink and then supported with unprecedented aid.
One of Merkel’s closest confidants, Peter Altmaier, is more than enthusiastic. “An uncle who brings something is better than an aunt who plays the piano”, the Federal Minister of Economics remembers of his childhood.
And what is brought along! If you add up everything the federal government now wants to offer to combat the corona crisis, you get a gigantic sum of at least 1.2 trillion euros. No other country in the world has raised so much money in relation to its economic strength.
Germany has a full 35 percent, far more than the EU average or the USA. Federal finance minister Olaf Scholz did not understate what he promised a few weeks ago: “It is not spilled, but padding.”
The increase in importance and power is unique. Never in the history of the Federal Republic has a government intervened so quickly and deeply in public life and thus in the economy. After the financial crisis, German government debt rose by 315 billion euros in one year. The value of the federal, state and local governments will be far exceeded in this crisis. “I am worried whether we will be able to return to normal economic policy,” says Lars Feld, Germany’s top economy.
The measures to protect health are understandable. But the question increasingly arises: what side effects do the multi-billion dollar rescue programs have? The free market is disturbed, competition is distorted, prices lose their signal strength.
“As much market as possible, as much state as necessary”, the famous words of former Federal Minister of Economics Karl Schiller lose their meaning every day.
There is a risk of higher prices, inefficient companies and loss of wealth. It is significant that more and more companies are turning to the Bundeskartellamt during the corona crisis in order to be exempted from cooperating with competitors. The new spirit of state economy speaks.
Spend as much as you can. The year 2020 will be disastrous. Kristalina Georgiewa (IMF chief)
Certainly, help for companies with no fault of their own must be provided. But with the flood of support funds, the risk of misallocation is high. Capital and labor are tied up in companies with below-average productivity, less investment and innovative strength.
A few weeks ago, after a parliamentary request from the FDP for possible support from zombie companies, the Federal Ministry of Finance had to admit that “necessary market processes of creative destruction are hindered”.
The concern is justified that the state is eating itself too deeply into the economy, throwing privacy and data protection partially overboard and that the influence on the market will not be reversed after the end of the crisis.
A look at history suggests little good. The federal government is still 25 years after the IPO Deutsche Telekom still the largest single shareholder.
Fundamentally, there is a problem that is known in the economy as moral hazard: companies and citizens behave irresponsibly or carelessly due to existing false incentives. The news of fraudsters sneaking up subsidies is increasing.
“The state is a lousy entrepreneur”
The appearances of Altmaier and Scholz are characterized by superlatives. At the federal press conference, they will be presenting the rescue packages worth billions to the public with great regularity. “This is the most comprehensive and effective guarantee that there has ever been in a crisis,” said Altmaier in mid-March. “This is the bazooka, we’ll look for small arms later,” the Federal Minister of Finance said at the appearance.
The small arms that have now been added are quite large-caliber. Scholz announced a debt-financed supplementary budget of 156 billion euros. This includes an emergency fund with a volume of 50 billion euros, which is aimed at the self-employed and small businesses with up to ten employees.
The federal guarantee for the state bank KfW is increased by up to 450 billion euros. And then there is an Economic Stabilization Fund (WSF) with a volume of 600 billion euros. The majority is earmarked for government guarantees to keep companies liquid.
100 billion euros are reserved for possible investments, i.e. partial nationalization of companies. The battered Lufthansa is already holding talks about state participation.
You can still hear Altmaier’s words: “The state is a lousy entrepreneur.” The Federal Minister of Economics at least dedicated the most beautiful hall in the ministry to Ludwig Erhard. But he is currently just as far away from Erhard’s mantra as the Germans are from summer leaves in Mallorca.
Minister of Economics Peter Altmaier (standing) and Minister of Finance Olaf Scholz (front)
The father of the “German economic miracle” throbbed to measure, he remembered sentences, the state should not be a player, but an arbitrator in the economy. Now the state is preparing to take over the entire football club.
No other industrial country is helping its economy with such large sums as the Federal Republic. This shows a new evaluation by the International Monetary Fund (IMF). He does not criticize Germany, on the contrary. “Spend as much as you can,” advises IMF chief Kristalina Georgiewa. The economic situation is too depressing.
The Council of Experts is now assuming that the economy will decline by more than 5.5 percent this year. This is the case that was previously treated as a worst-case scenario. The economic downturn would be worse than in the global financial crisis. 725,000 companies have registered financial difficulties and short-time work.
Including: hospitals. Health Minister Jens Spahn ordered them at the beginning of March to postpone all planned operations. For the hospital operator, this means severe revenue losses. More than a third of the intensive care beds are not occupied. With the Hospital Relief Act, the federal government created a regulation to compensate the clinics for the failures. But that’s far from enough.
This is the bazooka, we’ll look at small arms later. Olaf Scholz (Federal Minister of Finance)
Some private organizations have registered short-time work, including the Schön-Klinik group. The head of the German Hospital Society, Gerald Gaß, sees the time for a “careful, gradual resumption of regular care”.
Spahn also said last week that clinics could “gradually return to normal”. “We do not want to keep 40 percent of the intensive care ventilation beds in Germany permanently”, said the minister.
The pressure on the companies is huge, the need for help is great. This year alone, the federal government is raising 156 billion euros in new debt. The federal states are also preparing an extensive flood of money for pumps.
According to a survey by the Handelsblatt newspaper among the 16 state finance ministries, they are currently planning 65 billion euros in new debt to fight the crisis. In addition to the federal government’s huge € 1.2 trillion rescue package, the federal states are also helping their companies and the self-employed. Bavaria alone has launched a fund with 60 billion euros.
The IMF chief not only welcomes the gigantic aid package in Germany, the monetary fund also calls for thorough control. “Keep the bills,” said Georgiewa. Transparency and accountability should not be put off in the face of the crisis. Whether Germany is world champion in this discipline, doubts are increasing.
Risk zombie company
The financial crisis shaped a saying by the former head of central bank in Europe, Mario Draghi: “What ever it takes”. In this crisis, it becomes a “Whatever, take it!” Aid is mostly spent without checking, the money cannot be distributed quickly enough.
According to an overview by the Ministry of Finance and the Ministry of Economics, over 26 billion euros were applied for by KfW Hilfen. Almost 13,000 of the more than 13,200 applications were approved. In other words, almost anyone who wants help gets it, most likely companies that didn’t have a working business model before the pandemic.
This easily creates zombie companies that are only alive because of generous state aid. After all: With the large sums, the KfW steering committee seems to be examining it more closely. So far, around 8.5 billion euros have been approved. So it takes a little longer for the large-volume applications.
In contrast, the self-employed and small businesses with up to ten employees are suspiciously fast. So far, according to the overview of 1.65 million applications, around 1.1 million have been approved and more than nine billion euros paid out. These are not loans, but aid that does not have to be repaid.
“Speed and thoroughness go hand in hand: it is carefully checked who receives the money,” Finance Minister Scholz promised. But is that true? North Rhine-Westphalia and Berlin were even recently forced to suspend immediate payments because large-scale fraudsters wanted to get to the pots.
There are also problems with honest entrepreneurs. In North Rhine-Westphalia, for example, the self-employed and small businesses are always granted the maximum amounts of EUR 9,000 and EUR 15,000 – regardless of need. This practice is not well understood in the Federal Ministry of Economics. Because a flat-rate payment of maximum amounts was actually not intended.
The aid should amount to up to 9,000 euros for companies with up to five employees and up to 15,000 euros for up to ten employees. The emphasis here is on the “up to”. According to the Ministry of Economic Affairs, the actual amount should be based on sales and operating expenses for the next three months. An entrepreneur with zero euros turnover and 1000 euros costs would be entitled to 3000 euros in emergency aid.
But these details were lost somewhere in the confusion between the federal states and the federal states. The up to 50 billion euros are provided by the federal government. Although federal money is at stake, it is up to the federal states how much they scrutinize companies. In Hamburg, for example, a liquidity check is required. Other countries are significantly less strict so that aid can flow as quickly as possible.
In Berlin, more than a billion euros were paid out to solo and small entrepreneurs within days. And the Berlin Senate also admits behind the scenes that surely there are also deadweight effects. Since no examination was carried out, almost everyone received 14,000 euros in a combination of federal and state funds. These include the self-employed, who normally have annual sales that are significantly lower, they say.
Some recipients are now voluntarily repaying the aid for fear of sanctions. But whether a subsequent thorough examination is possible to convince fraudsters is skeptical in financial management.
Dangerous false incentives
The economic nonsense, which is operated partly in the name of Corona, is great. Governments in the federal and state governments are increasingly creating the illusion that they can regulate everything with state trillions. And more and more, government intervention and expansion is creating false incentives in all areas of the economy, which can be revenged bitterly.
Take the housing market as an example: the Federal Minister of Justice, a woman from the SPD, wanted to protect the tenants. The result is a half-baked law that gets small landlords into trouble. The law was so badly made that solvent companies like Adidas or Deichmann used the gaps and simply suspended the rent payments. Only after a storm of indignation did Adidas row back.
Take the example of KfW loans: After the institutes hesitated to pass on the subsidized loans from the Staatsbank KfW to companies because they still had to bear ten percent of the default risk, the state assumed full liability. With the danger that house banks will now be able to provide loans to companies that have long been bankrupt.
The banks don’t care, they are released from any liability, but of course they still make good money from their business. The fool is the taxpayer who has to answer for the defaults.
Example of short-time work: Short-time work allowance is a tried and tested crisis instrument. The state replaces up to 67 percent of net wages. However, the SPD was not enough. In the coalition committee on Wednesday, she pushed for an increase to 80 percent.
It is the most comprehensive and effective guarantee that there has ever been in a crisis. Peter Altmaier (Federal Minister of Economics)
However, a general increase would have significant deadweight effects: Many companies are already increasing short-time benefits from their own resources. Apart from that, the short-time work allowance is not meant to secure the standard of living, but rather to ensure the survival of companies and thus avoid unemployment.
In other areas, the federal corona strategy is rather arbitrary. The craft complained that the vehicle registration offices were closed. There is also much discussion about opening shops up to the limit of 800 square meters. This border was communicated at least improperly and caused confusion and indignation among the shopkeepers.
Now a Hamburg administrative court has declared the 800 square meter rule to be illegal. The court could not understand why opening larger sales areas alone should attract more people to the city center. Necessary infection protection measures could be followed at least as well in larger stores as in smaller facilities.
Whimsical and impractical was initially the requirement that repair shops were allowed to remain open, but the sales rooms had to be closed. Many craftsmen wondered if they could lead the customers through the sales room into the workshop. Another detail from this series of undesirable side effects of the rescue policy.
The border closures, for example with the Czech Republic, mean that the bricklayers are missing in the construction industry and the harvest workers in agriculture from Romania. The state decides a lot, but the consequences are borne by the entrepreneurs and their employees.
The argument for the state’s rapid generosity in the crisis is: rather spend more now to prevent the economy from crashing and millions of jobs be lost than have to finance mass unemployment for a long time. This approach is absolutely correct. But it also remains true: somehow the state rescue billions have to be financed at least in the medium term if the next generations are not to be overwhelmed.
Currently this is done through the use of reserves and debts. Germany certainly has scope. The Federal Republic had just pushed the debt level to below 60 percent, thereby meeting the Maastricht criteria for the first time in many years in 2019. But that will be the last time for a long time.
As a result of the corona crisis, the federal government expects a general government deficit of 7.25 percent of gross domestic product (GDP) this year. The debt ratio as a share of all debts in GDP is estimated at 75.25 percent, as can be seen from the German Stability Program 2020.
“The projection is currently subject to very high levels of uncertainty,” says the current report. In other words, the debt level could be even higher. This mainly depends on how high the losses are that the federal government will incur from its guarantees and sureties.
Given the huge commitments, some in the grand coalition are trying to put the brakes on. “I don’t like the fact that we almost always get new suggestions every hour, what else can you do,” said Union leader Ralph Brinkhaus. “All of this must also be paid for.”
In a crisis, the state’s money is loose. Some sense their chance to finally implement long-held plans.
Here you will find the latest business news in chronological order, with the latest news coming first.
Thursday, April 23, 7.20 p.m .: The EU summit approved the agreed loan support package of up to 540 billion euros for short-time workers, companies and indebted countries. The Italian Prime Minister Giuseppe Conte, who recently had reservations about aid from the ESM euro rescue fund, is now also supporting the package. The aid should be ready by June 1st. The EU finance ministers agreed on the package two weeks ago. It contains three points – a “safety net” for jobs, for small and medium-sized companies and for troubled countries like Italy or Spain, which are in debt anyway and are now hard hit by the Corona pandemic.
The second point is a guarantee fund at the European Investment Bank (EIB), which the EU countries are also to provide with 25 billion euros. The third element is precautionary credit lines from the European Stability Mechanism ESM. In contrast to ESM aid during the euro crisis, no savings programs are required for this “pandemic crisis aid”, there is only one requirement: The money can only be used for direct or indirect health costs. dpa
Monday, April 6, 7 a.m .: The answer to no to corona bonds remains: the two SPD ministers Olaf Scholz (finance) and Heiko Maas (exterior) confirm their negative attitude in a joint guest contribution for several European newspapers. They repeat that the ESM euro bailout and the European Investment Bank EIB should be used instead. Italy, Spain and France in particular are demanding corona bonds, i.e. joint bonds. The euro finance ministers are discussing possible instruments this Tuesday. This article explains the differences between corona bonds, ESM and EIB.
Sunday, April 5, 8 a.m .: Despite all the aid measures, Europe has to spend more money in the aftermath of the Corona crisis. For this reason, EU Commission President Ursula von der Leyen spoke out in favor of massive investments in the EU budget. “We need a Marshall Plan for Europe,” she wrote in a guest post for the Welt am Sonntag. The EU budget was accepted in all member states as an instrument of solidarity-based compensation and had to be adjusted accordingly to the crisis. The Marshall Plan was a multi-billion dollar aid program from the United States that got Western Europe drawn from World War II back on its feet.
Von der Leyen was confident that Europe would recover soon: “The many billions that have to be invested today to avert a major catastrophe will tie up generations.” In this way, the feeling of community among the nations of Europe could be renewed even in the crisis. The former foreign ministers Joschka Fischer (Greens) and Sigmar Gabriel (SPD) also spoke in favor of a Marshall Plan, albeit in support of Spain and Italy to prevent a possible breakup of Europe. “Europe now needs two things: joint aid in the crisis and a joint recovery program after the crisis,” Fischer and Gabriel write in a guest post for the Handelsblatt and the Daily mirror (Monday).
“Italy and Spain will not forget Europe and especially we Germans for a hundred years if we let them down (…) now. And that is exactly what we are doing,” criticize the two former ministers. In their view, the corona virus has the potential to deepen the cracks that already exist in Europe so massively “that the Union could break apart”. In Italy in particular, there has been repeated criticism of inadequate aid from the EU.
The EU threatens to fail dramatically in this biggest test since its creation, Gabriel and Fischer said. “Instead, we are seeing that powers like Russia and China provide effective public aid to emphasize precisely this deficit in Europe. It is obvious that humanitarian and political goals are being pursued at least at the same time.” The German export ban on medical aids has been lifted and Germany is one of the countries that offer hospital beds to seriously ill patients from Italy, France and Spain. But at best this is a “drop in the bucket”. dpa
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Saturday, April 4, 8:40 a.m .: Greens chairwoman Annalena Baerbock accuses Federal Minister of Economics Peter Altmaier (CDU) of not pushing ahead with the production of important medical devices in the corona crisis. “Germany, in cooperation with our European neighbors, could quickly start a pandemic economy because so many companies have their guns at their feet,” said the dpa party leader. “It would actually be the job of the Federal Minister of Economics to gather the players together, to support their initiative and to ensure investment security for the future with acceptance guarantees.” But Altmaier “apparently doesn’t happen at all,” criticized Baerbock. “The task now is to create the conditions for steps out of the shutdown in a joint effort.” This would require more production capacities for masks, ventilators and protective clothing. “The Ministry of Economy and Health should work together with the federal states to ensure more production capacity and coordinated procurement in a task force.” dpa
Friday, April 3, 6:15 p.m .: The EU Commission has cleared the way for relief in the Loan program the federal government in the corona crisis. The Commission approved programs on Friday where Member States could, for example, grant interest-free loans or assume 100% risk liability. The maximum limit per company is 800,000 euros. The aim was to quickly meet the urgent liquidity needs of small and medium-sized companies, the commission said on Friday. dpa
Friday, April 3, 4:36 p.m .: Because many SMEs despite the federal government’s aid programs, the Ministry of Economic Affairs now wants to add more money. “We are working flat out to improve credit instruments,” the ministry said. The federal government had originally agreed to assume 90 percent of the risks if medium-sized companies with eleven to 249 employees needed additional liquidity. The respective ten banks should assume the remaining ten percent of the credit risk. This should prevent abuse, the EU Commission approved the program under this condition. In some cases, however, banks themselves were still too high in this risk. One is now talking to Brussels about improvements in terms and the release from liability, the Ministry said. Both require an approval under state aid law. Michael Bauchmüller
Friday, April 3, 3:40 p.m .: The EU Commission wants Import duties on medical devices suspend. That said Commission President Ursula von der Leyen on Friday in a video message. This affects the import of certain medical devices and devices from outside the EU. Some such products are not, or only to a very small extent, subject to import duties. Von der Leyen cites breathing masks from China as an example, which would currently be subject to twelve percent import duties. The measure should initially apply for four months. vd
Friday, April 3, 1:28 p.m .: The US President’s family business Donald Trump is in informal talks with Deutsche Bank about postponing some loan payments, a person familiar with the matter said. The global corona virus pandemic has forced borrowers and lenders to discuss debt settlement options in the face of currently enormous pressure on corporate results. The talks were previously held by the New York Times reported. A Deutsche Bank spokesman declined to comment. A Trump Organization spokeswoman did not immediately respond to a request for comment.
Relations between Germany’s largest bank and Trump have been under review since the former real estate tycoon became the leading candidate for the US presidency four years ago. The leadership of Deutsche Bank was so concerned about the potential impact on the image at the end of 2016, should the Trump organization fail to service around $ 340 million in loans, that it would extend the repayment dates until after the end of a possible second term in 2025 discussed, reported Bloomberg. She ultimately decided against the idea and just decided not to do any new business with Trump during his tenure. The Trump Organization has also spoken to Palm Beach County, Florida about leasing payments for a golf course the company operates, the said New York Times in the report, citing unnamed individuals familiar with the matter. Bloomberg
Friday, April 3, 7:03 a.m .: Mexico will not be one for the time being Corona Bier brew more. The government does not consider the continued operation of the brewery to be urgent, reports the parent company Grupo Modelo. Production is currently being shut down and stopped on Sunday until further notice. Should the government beer but still classified as an agro-industrial product could be brewed further. The production of agricultural and food products is in Mexico despite that coronaCrisis allowed.
Friday, April 3, 1.20 a.m .: Federal Minister of Labor Hubertus Heil is ready to talk about an increase in short-time work benefits if companies are otherwise in need of existence in the virus crisis. “My appeal to employers in this situation is clear: don’t throw people out! You have the easier rules for short-time work with which we build bridges over this crisis. If necessary, we build them even longer”, the SPD politician said Rheinische Post. There are already many collective bargaining or company agreements to increase short-time work benefits from 60 or 67 percent (for employees with children) to 80, 90 or 100 percent of wages. “But there are also industries in which this is difficult or controversial.” The state also assumes 100 percent of the social security contributions for short-time workers.
He would talk to employers and unions about how they could pass this advantage on to employees, “but also about whether we could raise the short-time allowance again,” said Heil. The main thing is to protect those who already have low wages from unreasonable wage losses. dpa
Thursday, April 2, 8:52 p.m .: The sporting goods manufacturer Adidas, which was hit hard by the Corona crisis, needs fresh liquidity. Adidas will need credit, but no direct state aid, a spokeswoman said. She did not want to disclose the amount of the loans. The company had announced two days ago that, given the high level of economic uncertainty surrounding the Corona virus outbreak, “it was proactively taking a conservative approach to liquidity management to maintain the company’s financial flexibility in the current environment.” In the process, Adidas also stopped its planned share buyback program.
Adidas had hit the headlines this week for announcing that it would not pay its rent for temporarily closed stores. The sports merchant had justified this with enormous sales losses. After many negative public reactions, Adidas apologized and declared that it should now pay the rents. dpa
Thursday, April 2, 8 p.m .: The electric car manufacturer E. Go Mobile is running out of money. The company of the Aachen professor Günther Schuh has applied for a protective shield procedure. The district court of Aachen granted that, E. Go announced on Thursday evening. Protective shield procedures are intended to protect companies at risk of bankruptcy for three months before their creditors have access.
The corona pandemic interrupted the sale of cars and supply chains, E. Go said, and the capital market had also broken down. So far, investors such as the supplier ZF had supported the company founded in 2015. “Now they understandably have other priorities,” said Schuh. E.Go has no state bailout program: this requires banks to take over their own share; there was no bank ready for this at E.Go.
The company produces small electric cars in Aachen with entry prices of just under 18,000 euros. However, Schuh’s ambitious goals for the year had stalled before the epidemic broke out. E.Go reported component issues in 2017; In 2018, some suppliers terminated supply contracts. Benedikt Müller
Thursday, April 2, 2:30 p.m .: In the Corona Virus Crisis, unemployment claims in the US skyrocket. Last week, 6.65 million Americans made an initial application, the Department of Labor said in Washington on Thursday. With just under 3.3 million applications, the number of first applications in the previous week had already been the highest level since the collection of data, and now there is a new record.
Analysts interviewed by Reuters had only expected 3.5 million applications. Many economists assume that the unemployment rate of 3.5 percent will skyrocket in the wake of the wave of redundancies triggered by the virus pandemic: leading monetary authorities of the Federal Reserve expect an increase to double-digit figures.
The initial applications are an indicator of the short-term development of the labor market in the world’s largest economy. They now point to a dramatic economic downturn as a result of the Corona crisis. Up until a few weeks ago, the number of initial applications had regularly been below 100,000 per week. The full extent of the economic upheaval of the coronavirus pandemic is still not foreseeable. However, many analysts now fear a dramatic slump in the second quarter and a recession all year round.
The rapid spread of the novel coronavirus Sars-CoV-2 has brought public life to a standstill in large parts of the USA. Around three quarters of the approximately 330 million Americans are now subject to exit restrictions imposed by states. Many shops are closed, restaurants and hotels remain empty, countless trips have been canceled. Many employees of closed companies therefore have to apply for unemployment benefits. Layoffs are generally much faster in the United States than in Germany, for example. Until now, there was no regulation in the USA like short-time work benefits to stabilize those in crisis situations.
With an economic stimulus package that the US Congress plans to use to pump around $ 2 trillion into the economy, unemployment benefits, which were previously very limited, were expanded last week. Employers should now also be able to leave employees on leave for up to four months instead of firing them. During this time, the state would pay for the salary. However, the new regulation had hardly any effects on the most recent first applications up to last Friday. Reuters, dpa
Thursday, April 2, 12.45 p.m .: Together with the SPD co-boss Norbert Walter-Borjans reports Federal Minister of Finance Olaf Scholz (SPD) from first experiences with the protective shield for employees and business. Scholz draws a positive interim assessment of the government’s aid packages. So far, around nine billion euros in aid have been applied for. Around 1,500 of 1,800 applications have already been approved. “We hope that everyone will not run out of breath.” The situation is difficult, but Germany has put together one of the largest packages of measures worldwide. This makes a supplementary budget of 156 billion euros necessary.
Thursday, April 2, 12.06 p.m .: EU Commission President Ursula von der Leyen presents its plan to support short-time workers in the European Union. The “Sure” initiative is intended to benefit countries particularly affected by the Corona crisis, such as Italy and Spain. Loans are planned to be financed with the help of guarantees from all Member States. A sum of up to 100 billion euros is to be secured by guarantees of 25 billion euros from the member states.
She had previously admitted mistakes by the European Union in dealing with Italy in the Corona crisis and in a contribution for the Italian newspaper La Repubblica wrote: “The Union will provide up to a hundred billion euros in aid to the hardest hit countries, starting with Italy, to offset the reduction in short-time workers’ wages.”
Italy reported more deaths than any other country in the crisis, followed by Spain. The economic damage caused by the strict curfews is enormous. “It must be recognized that in the early days of the crisis, given the need for a common European response, too many thought only of their own problems,” wrote von der Leyen. “It was harmful behavior that could have been avoided.” Meanwhile, Europe has changed the pace. “We have done everything possible to get European countries to act like a team and ensure a coordinated response to a common problem.” dpa
Thursday, April 2, 10:25 a.m .: The Federal Government’s measures to rescue companies in the Corona crisis already correspond to a quarter of the annual economic output, reports Günther Bräunig, head of the state KfW bank. On behalf of the federal government, the financial institution is responsible, for example, for loan applications from companies that ask for support. “Germany is in full swing,” says Bräunig. For comparison: In China it has been four percent of economic output so far, in the United States ten percent. The corona crisis affects the economy much more than the 2008 financial crisis. “Every company is affected.” KfW has therefore continuously improved the conditions of the program. In many cases, the house banks of the applicant companies are hardly at risk: KfW is liable for up to 90 percent of the loan. Already there are 2500 applications for aid with a volume of almost eleven billion euros – 2000 of which with a volume of 750 million euros have already been committed. The number of people looking for help is likely to increase significantly: “We expect the numbers to rise sharply from Monday onwards because on Monday IT will be ready to make it possible to immediately request and access money digitally,” says Bräunig. Around 4,000 calls were received in the KfW information center every day. However, the institute does not dare to forecast the credit volume that can still be expected: the large numbers would come from the large companies that were looking for help. One thing is already known: Tui. jawi / mesc
Thursday, April 2, 0.59 a.m .: The fast-casual restaurant chain Vapiano SE applies to the competent district court in Cologne to open insolvency proceedings due to insolvency. At the same time, it will be checked whether bankruptcy applications have to be made for subsidiaries of the Vapiano Group, CFO Lutz Scharpe said. Due to the corona crisis, the ailing group’s liquidity requirements had increased significantly. The company states that, due to a lack of agreement on a financing solution with banks and major shareholders, the prospect of funding from the state aid package Covid 19 could not be applied for. All restaurants operated by Vapiano SE remained closed until further notice due to the current corona pandemic. German and international franchisees are not directly affected by the bankruptcy of Vapiano SE, said the system restaurant operator.
Here you will find the latest business news in chronological order, with the latest news coming first.
Lufthansa makes billion loss in the first quarter because of Corona
Thursday, April 23, 5:38 p.m .: Lufthansa flew in an operating loss (adjusted EBIT) of 1.2 billion euros in the first quarter due to the corona crisis. In the previous year, the minus in the traditionally weak quarter at the beginning of the year was 336 million euros. In March alone, almost 1.4 billion euros in sales were lost, the Dax group announced on Thursday in a mandatory announcement to the stock exchange. In the entire quarter, revenues of EUR 6.4 billion were of a similar magnitude below the previous year’s figure of EUR 7.8 billion. dpa
4.4 million initial jobless claims in the United States
Thursday, April 23, 2:53 p.m .: As a result of the corona pandemic, millions of people in the United States have submitted their first jobless claim for the fifth week in a row. 4.4 million new applications were registered in the week ending April 18, the U.S. Department of Labor announced on Thursday. As a result, more than 26 million people lost their jobs within a month. In the previous week alone, 5.2 million people had submitted an initial application for support.
The initial applications are an indicator of the short-term development of the labor market in the world’s largest economy. They now point to a dramatic economic downturn as a result of the Corona crisis. By March, the number of initial applications had regularly been below 100,000 a week.
According to experts, the US unemployment rate should already be well over ten percent, and some analysts even expect it to be around 15 percent. There is still no exact value because the statistics could not keep up with the speed of job losses. The unemployment rate was still 3.5 percent in February, the lowest level in decades.
The rapid spread of the corona virus has largely brought public life to a standstill in the United States. The vast majority of the approximately 330 million Americans are subject to exit restrictions. Many shops and businesses are closed, restaurants and hotels remain empty, flights are canceled en masse, events are canceled. Many employees of closed companies must therefore apply for unemployment benefits. In addition, layoffs in the United States are generally far easier than in Germany, for example.
US President Donald Trump hopes that easing the protective measures imposed due to the epidemic will improve. He wants the states to gradually return to normal and hopes that the economy will start again “like a rocket”. However, most experts assume that the economy will experience a severe recession this year and that a recovery is not in sight until 2021. This is extremely inconvenient for Trump – who is applying for a second term in November.
Corona virus updates – twice a day via email or push message
All reports on the current situation in Germany and worldwide as well as the most important news of the day – twice a day with SZ Espresso. Our Newsletter brings you up to date in the morning and evening. Free registration: sz.de/espresso. In our News app (download here) you can also use the espresso or breaking news Subscribe as a push message.
In view of the crisis at the end of March, the government and Congress had launched a huge stimulus package to pump around $ 2.2 trillion into the suffering economy. This week, Congress wanted to add another $ 500 billion. Then a total of more than $ 650 billion should be available for a program that will largely replace small and medium-sized companies in the coming months with wage costs to limit the rise in unemployment. However, the impact of the program on labor market data was not yet foreseeable. New unemployment data in March and preliminary figures for April will not be released until early May. dpa
Thursday, April 23, 7.53 a.m .: Before the EU summit on the consequences of the corona crisis on Thursday, the Stuttgart-based carmaker Porsche is calling for the introduction of so-called corona bonds. “European community bonds are now urgently needed, which would be a clear sign that Europe is in a crisis,” said CFO Lutz Meschke the Süddeutsche Zeitung. “If we don’t show solidarity now, Europe will be lost,” appeals to the deputy CEO of Porsche AG. He would like the German government to rethink: “Germany in particular, as an export nation, benefits from a sustainably economically strong Europe like no other country.” In view of the corona pandemic and its drastic effects on the economy, “now is no time to insist on dogmatic attitudes”.
Meschke appeals to the heads of government to “systematically and responsibly manage the crisis”. The 54-year-old business economist warns of a “deep and lasting recession in Europe”. To prevent this, “the use of very large public funds is essential”. Meschke explicitly calls for the support of Italy and Spain: “These countries were hit hardest by the pandemic and have comparatively little financial leeway.” The European Union must now “together” avoid “that we are at the beginning of the next major sovereign debt crisis.”
The 27 EU countries have been arguing for weeks about so-called corona bonds, i.e. joint bonds with joint liability of all member countries. France, Italy and Spain, which have been badly hit by the pandemic, appeal for intra-European solidarity and call for joint borrowing. The advantage of such bonds would be that highly indebted countries would receive loans at lower interest rates. But countries like Germany, Luxembourg and the Netherlands refuse joint liability.
Lutz Meschke demands a sign of solidarity from the EU summit: “The positive impact would be gigantic if Europe shows itself as a unit – as a strong partner in the global economy alongside Asia and the USA.” According to Meschke, even if the implementation needed some time, the decision to use corona bonds would be “a strong signal and a real motivation boost”. Not only for the citizens, but also for the capital markets. In view of the concerns from countries like Germany, Meschke emphasizes that the corona bonds are “a unique measure to deal with the crisis”. It is not a matter of rescheduling old debts, but “only of jointly financing the economic start-up”. All EU countries would have to be financially able to stabilize their economy, says Meschke. Not every country can do this on its own because some countries would have to bear an excessive interest burden.
The EU Commission has already developed a model that aims to limit joint liability. Commission boss Ursula von der Leyen wants to present the plan on Thursday. On this basis, the heads of state and government could explore further compromise lines and instruct Leyen to continue working on the plan. Because of the Corona crisis, Porsche has also cut production and requested short-time work for a third of the staff. Lutz Meschke believes, however, that Europe and the auto industry can overcome the corona pandemic: “We will emerge stronger from the crisis if we join forces.” Stefan Mayr
Thursday, April 23, 2:17 p.m.: As a result of the pandemic, the car company Daimler has to make a substantial downward revision of its forecasts for the financial year. The company reported preliminary earnings before interest and taxes for the first quarter, which dropped 78 percent to EUR 617 million. The impact of the Corona crisis on customer demand, supply chains and vehicle production could not be estimated as nearly as detailed and as reliably as was possible in previous crises. . This complicates a new forecast for the 2020 financial year. The full quarterly figures are due to be published on April 29.
Wednesday, April 22, 12.49 p.m .: The minimum wages for Geriatric nurses in Germany are to be increased and expanded. This provides for a regulation that was a topic in the federal cabinet. The Federal Ministry of Labor will now issue this regulation at short notice, it said afterwards in a joint communication from the Ministry of Labor and the Federal Ministry of Health. At the end of January, a commission of employers and employees decided that by April 1, 2022, the minimum wage for nursing assistants in four steps from today’s 10.85 euros (east) and 11.35 euros (west) to 12.55 euros in east and West Germany should rise.
From July 1, 2021, there will also be a minimum wage for specialists of 15 euros for the first time. It is expected to increase to EUR 15.40 by April 1, 2022. The regulation is intended to make this decision binding across the industry.
Minister of Labor Hubertus Heil (SPD) and Minister of Health Jens Spahn (CDU) said that the corona epidemic once again shows how important nursing staff are for society. Your responsible task should be rewarded better than before. The regulations on minimum nursing wages are “a good start”.
In the meantime, the planned Corona special premium of € 1,500 for elderly care workers is likely to fail due to unsettled funding. Massive resistance has been formed in the health insurance companies against the previously expected funding from the contribution-financed long-term care insurance, reports the Frankfurter Allgemeine Zeitung.
Wednesday, April 22, 11:37 a.m .: That particularly hard hit by the consequences of the corona crisis Catering trade According to the SPD, state support should be provided in the Bundestag until restaurants and hotels are reopened. “The main thing now is to develop an opening perspective,” said Carsten Schneider, Parliamentary Managing Director of the SPD parliamentary group in Berlin. “Up to this opening date, we should extend the direct grants for the smallest companies that were previously paid for the months of March to May.” These emergency aids are declared as grants for operating costs, they amount to 9,000 to 15,000 euros for three months. “I am in favor of extending the grants because they help directly and for a limited period,” said Schneider. He rejected the lowering of the VAT on the reduced rate as “completely wrong”. gam
Wednesday, April 22, 7:11 a.m .: The corona pandemic and series hits like “Tiger King” have the online video service Netflix helped to its strongest quarter so far. In the three months to the end of March, the number of payment subscriptions skyrocketed by 15.8 million, according to the streaming market leader after the US exchange closed. Netflix thus posted the quarter with its largest number of customers to date and far exceeded both its own forecast and the expectations of Wall Street analysts. But not that of the investors: after the exchange, the Netflix shares only rose temporarily – and then slipped slightly into the red.
At the end of the quarter, Netflix had almost 183 million paid memberships. The growth had increased rapidly in March when people in more and more countries were instructed to stay at home because of the corona virus, the letter to the shareholders said.
Revenue increased approximately 28 percent year over year to $ 5.8 billion. The profit more than doubled to $ 709 million.
Tuesday, April 21, 3.09 a.m .: The US car rental company Hertz Global fires about 10,000 employees in their North America business. “Like the rest of the global travel sector, the downturn in Hertz’s COVID-19 suddenly came and the reversal in customer demand was significant,” said CEO Kathryn Marinello. To cut costs as a result of the economic crisis in the Covid-19 pandemic, the layoffs would come into effect on April 14th for unionized workers and April 21st for unionized workers, the car rental company said. Official filing shows that there is a total of $ 30 million in severance pay available to employees. The company hopes to recruit as many former employees as possible as global travel demand recovers.
Monday, April 20, 8:20 a.m .: More than 450,000 single parents in Germany work in so-called systemically relevant areas. In the healthcare sector alone there are 179,000, according to figures from the Federal Statistical Office, which the New Osnabrück newspaper templates. The numbers had previously been requested by the left faction. Economic sectors are considered systemically important and must be maintained even in times of crisis and thus during the current coronavirus pandemic. Around 117,000 single parents are reported to work in public administration, 50,000 in food retail, 36,000 in financial services and insurance, and 30,000 in warehouse logistics. Up to now, systemically relevant employment has been decisive for access to emergency care for children from daycare to the sixth grade. Details are regulated differently in the federal states.
“It is good that single parents and other parents who work in critical infrastructures have emergency care available,” said Sabine Zimmermann, a left-wing MP. “But a solution is needed for all 1.8 million working single parents so that they can ensure that their children are looked after without financial losses.” The federal and state governments had already agreed in principle on Wednesday to expand emergency care.
Sunday, April 19, 12.10 p.m .: From Monday onwards, stores with up to 800 square meters of retail space can reopen in many federal states. North Rhine-Westphalia is even more liberal in its easing and also allows furniture stores and baby specialty stores to be reopened. The Swedish furniture store Ikea initially does not want to make use of this. A message on the company’s website states that the first step is to develop a comprehensive hygiene and safety concept. That would not be possible until Monday. The houses in Bielefeld, Dortmund, Dusseldorf, Duisburg, Essen, Kaarst, Kamen, Cologne, Siegen and Wuppertal will remain closed. Many owners of small businesses across Germany write on social media that they will not reopen their stores for the time being. Some are not as far as they want with their own safety concepts, many fathers and mothers with shops cannot work because daycare centers and schools are still closed and childcare facilities are lacking.
Sunday, April 19, 6.55 a.m .: In Germany, 70,000 hotels and restaurants are threatened with bankruptcy due to the corona virus crisis. Around 223,000 companies in the industry lost around ten billion euros in sales by the end of April, said Ingrid Hartges, managing director of the hotel and restaurant association Picture on Sunday. Without additional government support, every third company is facing bankruptcy, said Hartges. The easing for other areas presented this week offers no prospects for the catering trade. “The first thing we had to do was close and we will probably have to suffer the longest,” said Hartges. The association is therefore calling for the responsible opening of restaurants and cafes, the reduction of VAT to seven percent and a state rescue fund with direct aid for businesses.
Federal Finance Minister Olaf Scholz offered financial support to the industry. “Of course, we look closely to see if and where we need additional help,” he said Welt am Sonntag. The government has above all those sectors in view, for which it does not start quickly. “The hotel and restaurant industry is certainly one of them.” The required reduction in VAT deserves careful consideration, said Federal Minister for Economic Affairs Peter Altmaier the Picture on Sunday. But he can also imagine concrete help with modernization and cost savings.