EsadeGeo Daily Digest, 19/03/2020

Financial Times – Martin Arnold / ECB to launch €750bn bond-buying programme

  • The European Central Bank has announced plans to buy an additional €750bn in bonds after holding an emergency call of its rate-setting committee on Wednesday night in response to the worsening economic and financial turmoil caused by the coronavirus pandemic.
  • The central bank said all the extra asset purchases would be carried out this year and cover both sovereign bonds and corporate debt. Dubbed the Pandemic Emergency Purchase Programme, it would last until the coronavirus crisis is judged to be over. The latest €750bn package comes on top of last week’s €120bn extra purchases and means the ECB will buy more than €1tn of bonds in the next nine months — its highest ever pace of purchases.
  • “Extraordinary times require extraordinary action,” ECB president Christine Lagarde said on Twitter after the measures were announced. “There are no limits to our commitment to the euro. We are determined to use the full potential of our tools, within our mandate.”
  • It is rare for the ECB to change monetary policy outside of its scheduled meetings every six weeks, which is something it has only done a few times before, usually in a co-ordinated move with other central banks, such as after the 2008 financial crisis and 2001 terrorist attacks.
  • The New York Times – Jack Ewing / Some countries are better armored for epidemics than others

Foreign Affairs – Kurt M. Campbell and Rush Doshi / The coronavirus could reshape global order

  • With hundreds of millions of people now isolating themselves around the world, the novel coronavirus pandemic has become a truly global event. And while its geopolitical implications should be considered secondary to matters of health and safety, those implications may, in the long term, prove just as consequential—especially when it comes to the United States’ global position.
  • It is now clear to all but the most blinkered partisans that Washington has botched its initial response. Internationally, the pandemic has amplified Trump’s instincts to go it alone and exposed just how unprepared Washington is to lead a global response. So far, Washington is failing the test.
  • The status of the United States as a global leader over the past seven decades has been built not just on wealth and power but also, and just as important, on the legitimacy that flows from the United States’ domestic governance, provision of global public goods, and ability and willingness to muster and coordinate a global response to crises. The coronavirus pandemic is testing all three elements of U.S. leadership.
  • As Washington falters, Beijing is moving quickly and adeptly to take advantage of the opening created by U.S. mistakes, filling the vacuum to position itself as the global leader in pandemic response. It is working to tout its own system, provide material assistance to other countries, and even organize other governments. 
  • Politico – Jakob Hanke Vela / Trump’s trade war proves immune to the coronavirus crisis

The Economist / Joe Biden builds an insurmountable lead

  • Magnanimity is a winner’s privilege, and the speech that Joe Biden delivered on March 17th was amply magnanimous. He told supporters of Bernie Sanders, whom he defeated in all three states voting that night, that he and his rival “may disagree on tactics, but we share a common vision”.
  • The most striking aspect of Mr Biden’s victory was its breadth. Arizona, Florida and Illinois collectively have 184 counties. Bernie Sanders won three of them, none by more than five points. He hoped that Latinos would buoy him in Florida, but lost the state by nearly 40 points.
  • For some, the decisions to postpone voting, whatever their public-health merits, raised the spectre of Donald Trump doing something similar in November. He cannot cancel an election—that takes an act of Congress—or change the inauguration date, which is in the constitution.
  • But a president could, conceivably, order polling places closed for public-health reasons, or take similar measures to depress turnout or discourage voting. However people ultimately vote, the campaign will be a much quieter affair for the next few months: no big rallies, debates before live audiences or working rope lines. 
  • Project Syndicate – Elizabeth Drew / Why Biden?
  • The New York Times – Michelle Cottle / Well played, Bernie Sanders

Bloomberg – Laura Millan Lombrana / The post-virus economic recovery could be a green one

  • The novel coronavirus has caused unprecedented social disruption and wreaked havoc in the markets. With the world coming apart at the seams, Helen Mountford, vice president for climate and economics at the World Resources Institute, thinks investment in clean technology and infrastructure could help put it back together again.
  • Governments around the world are implementing extreme measures as they struggle to contain the virus outbreak and its devastating consequences for the economy. So far these have included declaring states of emergency, shutting borders, and locking down entire countries. Once the pandemic abates, the recovery will require massive amounts of stimulus.
  • There’s a risk that countries and companies will revert back to what they know works, Mountford says. Shovel-ready coal or fossil fuel projects that were halted in recent years on environmental concerns could easily be reactivated. “That would be a huge risk,” she says. “That’s coming out of one health crisis and trying to boost the economy by leading us into another health crisis in terms of air pollution and climate change.”
  • Unlike in the aftermath of the 2008 financial crisis, when fossil fuel-heavy and otherwise polluting industries received a major share of the bailout money, today green investment options are plentiful. Renewable energy is cheaper than coal almost everywhere in the world, and increasingly competitive with gas. High-speed trains, electric vehicle chargers, and fiber-optic infrastructure should also be on governments’ minds.
  • The Economist / A renewable-energy boom is changing the politics of global warming
  • Bloomberg / China’s rethink on car pollution may signal a retreat on climate

Today’s food for thought:

The selected pieces do not necessarily reflect the views of Javier Solana and EsadeGeo. The summaries above may include word-for-word excerpts from their respective pieces.

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