Sunday, April 5, 2020

Europe Supports Workers in Crisis While We Fiddle (Dems too) - If Biden "Wins" He gets the boobie prize - a ravaged economy that can't be fixed

In the United States, the coronavirus has already provoked millions of layoffs. While the $2 trillion rescue package signed by President Trump sends extensive relief to American workers and businesses, France and other European Union countries are deploying a more encompassing state-led approach in the event that the epidemic takes months, rather than weeks, to contain.
“There’s a very different strategy in Europe than in the United States about how to manage this recession,” said Patrick Artus, chief economist of Paris-based Natixis Bank. “The idea is to have no layoffs or company closures, so that when the coronavirus is finally under control the economy can start right back up.”
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When Germany shut down public life to halt the spread of the new coronavirus last month, Laurenz Bostedt, a freelance photographer, watched as one contract after another was canceled, until his entire expected income had disappeared.
On Tuesday, 5,000 euros, or about $5,400, landed in his bank account, just three days after he had submitted an application for immediate assistance. The citystate of Berlin had pledged on March 19 that money would be distributed quickly to self-employed people and small- business owners who were unable to cover their basic expenses.
To the shock of many Berliners, hardened by regular stacks of paperwork from the city’s bureaucracy, it was. On Thursday, just five days after the application process opened, Berlin’s government said it had already paid out more than $1.4 billion to more than 150,000 self-employed individuals or businesses with fewer than five employees.
 Here are two interesting articles from the NYT illustrating what is happening in France and in Berlin where the city government put money in peoples' pockets in DAYS. Their economies might have a chance. Ours? Zilch. Do you see big ideas like these coming from the Dems or Joe Biden? I do from Bernie Sanders but that ship has sailed and for all you Bernie bashers at some point - maybe 5 years into the depression even if Biden wins ( and what exactly does he "win"? A ravaged economy that he can't fix.

But a real question that Trump and others on the right are attacked for raising - imagine a total crash of the economy leading to civil unrest. There is a point where risks have to be taken. We can't just live this way for months. Let's get over the crest first. But schools should remain closed for the rest of the year. And a warning to the gripers over the Easter vacation: If budget crashes, imagine massive layoffs in the schools with curtailed school days - why not run online classes with masses of kids and one teacher - pay them a 10% bonus and they will do it on a dime and the UFT leadership will cheer.

Links:
France limits joblessness: https://www.nytimes.com/2020/04/01/business/france-coronavirus-unemployment.html

Berlin rapid aid: https://blendle.com/i/the-new-york-times/in-berlin-rapid-aid-payments-to-self-employed-prop-up-creative-economy/bnl-newyorktimes-

Full articles below the break:



GOVERNMENT STIMULUS

BERLIN — When Germany shut down public life to halt the spread of the new coronavirus last month, Laurenz Bostedt, a freelance photographer, watched as one contract after another was canceled, until his entire expected income had disappeared.
On Tuesday, 5,000 euros, or about $5,400, landed in his bank account, just three days after he had submitted an application for immediate assistance. The citystate of Berlin had pledged on March 19 that money would be distributed quickly to self-employed people and small- business owners who were unable to cover their basic expenses.
To the shock of many Berliners, hardened by regular stacks of paperwork from the city’s bureaucracy, it was. On Thursday, just five days after the application process opened, Berlin’s government said it had already paid out more than $1.4 billion to more than 150,000 self-employed individuals or businesses with fewer than five employees.
“We are all pretty amazed,” Mr. Bostedt said in a telephone interview.
“It went surprisingly fast and was all refreshingly well-organized.”
Small employers and freelancers like artists, fashion designers, computer programmers, hair stylists, web designers, coffee shop owners and club operators account for a quarter of all business in Berlin. They were too small to qualify for the initial aid from the federal government that was aimed primarily at keeping big business afloat, leading the city to set up a rescue package meant specifically for them.
Across Europe, countries from Austria to Italy, France and Spain have quickly drawn up relief packages aimed at not only preventing larger business from laying off employees, but also ensuring that small entrepreneurs are able to make basic payments. A worker who loses a job qualifies for unemployment benefits, but government orders to stay at home put self-employed people in an unusual position — not out of a job, strictly speaking, but unable to work.
Nowhere have the benefits been as generous, or as swift, as in Berlin — a city that has become the butt of endless jokes over its perpetual inability to open an international airport, originally slated to begin passenger service in 2011.
“Three days waiting to be called up, then about 10 minutes to fill out the form and after two days, the money was in my account,” George Kvasnikov, an interface and graphic designer, said over Twitter. “Very stress-free.” Italy introduced payments of nearly $650 for self-employed and seasonal workers on Wednesday.
Within hours of opening applications, the website of the country’s social security agency crashed under the deluge of requests — 300 per second by Thursday morning. The authorities will vet the applications before making payments.
The French government is offering the country’s estimated 600,000 self-employed people up to more than $1,600 if lockdown orders force them to stop work entirely, or cost them 70 percent or more of their business in March.
In Spain, the benefits largely involve delayed tax payments and tax rebates rather than cash handouts.
To qualify, independent workers have to prove that their monthly income fell at least 75 percent, compared to the average over the previous six months.
All Germany’s 16 states are offering aid payments, similar to those in Berlin, to the smallest businesses and the self-employed.
While the states are contributing their own funds, they are also drawing on support made available by the federal government as part of its overall spending package to help the economy weather the shutdown, which Chancellor Angela Merkel ordered on March 22.
Those measures banned restaurants from seating patrons — they can offer deliveries or takeout orders — and forced other nonessential businesses to close, in addition to banning people from meeting in groups larger than two.
Each state has its own guidelines for who qualifies for aid, and not all of them have made the application as simple as Berlin’s.
Small businesses with some savings available face a challenge in weighing whether to dip into that money now, or draw from the aid, only to possibly find it taxed later in the year.
“It was all hastily thrown together,” said Hasso Mansfeld, an independent consultant from the western city of Bingen am Rhine, who pored over the fine print to make sure he was following the law before submitting an application in his state, Rhineland-Palatinate.
“It would have been easier if they had just given us ‘helicopter money’ — all small businesses get a set amount,” Mr. Mansfeld said in a telephone interview.
That suggestion resembles the stimulus plan adopted by Congress and President Trump, which includes checks, typically $1,200, for most American adults, and expanded jobless benefits, including payments available to freelancers and gig workers, who ordinarily would not qualify.
Authorities in Berlin, mindful of the role that entrepreneurs and freelancers in the arts and other creative sectors play in the citystate’s economy, were among the first in Germany to pledge financial assistance to them.
They also streamlined applications and approvals, requesting only that applicants be honest and simply checking their tax identification number and a few other basic facts rather than verifying all the information before making payments. But they warned that anyone later determined to have submitted a false claim would have to repay the money.
“Berlin is lively and great, thank in no small part to the commitments of its artists in all creative areas,” Klaus Lederer, the city’s minister for culture, said.
He pledged that the process would be easy and move quickly, in part to ensure that anyone needing to pay their rent for April would have money to do so. Mr. Bostedt, 29, was in that position.
With the shutdowns, the extra jobs he’d take on to make ends meet, including setting up trade fairs or working in restaurants, also dried up.
“Within two weeks, 100 percent of my income was gone,” he said.
He was one of the thousands of people waiting to get a number needed to submit an online application, hours after the Investment Bank of Berlin opened the process last Friday. He was nearly 25,700th in line and waited 30 hours for the push alert to his phone that it was his turn to apply.
He felt no qualms when he checked the box that amounted to a sworn oath that he needed the money to cover his basic expenses. Two working days later, the money arrived.
“I had no other options,” he said. “My landlord was expecting the rent.”
Liz Alderman contributed reporting from Paris, Elisabetta Povoledo from Rome and Raphael Minder from Madrid.


France Tries Limiting Joblessness to Confront Coronavirus Recession

Can countries recover better from the pandemic-induced downturn by preventing companies and workers from going under to begin with? France is making a big bet.
https://www.nytimes.com/2020/04/01/business/france-coronavirus-unemployment.html




  • PARIS — When France started shutting down a few weeks ago as the coronavirus marched relentlessly into the country, Dominique Paul feared disaster. His family’s white-glove catering company, Groupe Butard, halted operations, putting 190 jobs at risk.
    Edward Arkwright, the director general of Aéroports de Paris, the Paris airport operator, weighed how to preserve over 140,000 jobs when a freeze on most global airline traffic caused activity to nose-dive 90 percent in a few head-spinning days.
    The future of both businesses, and hundreds of thousands more around France, spiraled into uncertainty. Instead of sinking, though, they are being thrown lifelines as the French government deploys a targeted plan aimed at sheltering companies and keeping every worker possible employed.
    “We’re using the government’s whole toolbox to get through this crisis,” Mr. Paul said, eyeing the company’s empty Armenonville Pavillon on the edge of Paris, where just weeks ago chefs and waiters served delicacies like scallop carpaccio for glittering events. “Otherwise, we wouldn’t be able to keep up.”
    As the coronavirus wallops the world’s economies, France is rapidly emerging as a test case of whether a country can hasten the recovery from a recession by protecting businesses from going under in the first place, and avoiding mass joblessness.
    Image
    Credit...Elliott Verdier for The New York Times
    In the United States, the coronavirus has already provoked millions of layoffs. While the $2 trillion rescue package signed by President Trump sends extensive relief to American workers and businesses, France and other European Union countries are deploying a more encompassing state-led approach in the event that the epidemic takes months, rather than weeks, to contain.
    “There’s a very different strategy in Europe than in the United States about how to manage this recession,” said Patrick Artus, chief economist of Paris-based Natixis Bank. “The idea is to have no layoffs or company closures, so that when the coronavirus is finally under control the economy can start right back up.”
    France is hoping to learn a lesson from the 2008 financial crisis, when it didn’t take aggressive steps to support workers and businesses. Unemployment soon jumped to around 10 percent and stayed high for half a decade. By contrast, the rise in joblessness in Germany — which kept companies from collapsing by subsidizing furloughs in a system known as Kurzarbeitergeld, or short-time work — lasted less than a year before falling steadily.
    “France has decided it’s not going to make the same mistake with the coronavirus,” said Simon Tilford, director of the Forum New Economy, a research institution in Berlin. “That approach is going to be much less devastating.”
    Image
    Credit...Elliott Verdier for The New York Times
    Austria, Denmark and other northern countries have similar policies, and Britain announced last week that it would do the same. And on Wednesday, the European Commission’s president, Ursula von der Leyen, said governments would join to support short-time work so that “more people will keep their job” during the current crisis.
    In France, the government is spending 45 billion euros ($50 billion) to pay businesses not to lay off workers. Deadlines for taxes and loan payments are delayed. Another €300 billion in state-guaranteed loans are being extended to any struggling company that needs them.
    Over 337,000 businesses have already put 3.6 million employees on paid furlough to be reimbursed by the state, the Labor Ministry said Wednesday. Officials expect the numbers to more than double as it receives “several thousand requests per minute.”
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    The plan isn’t without risks. European leaders are wary of relaunching the economy before the epidemic is proved to be under control. The tsunami of fiscal support by France and its neighbors — over €2 trillion in spending and loan guarantees combined — can be sustained only a few months, economists say.
    The risk extends to the businesses as well, which must continue to pay one-fifth of the salaries of employees who aren’t working. If the economy doesn’t rebound by autumn, companies say, they may yet be forced to revert to layoffs.
    Mr. Paul of Groupe Butard is betting things won’t get that bad, despite fearing the worst when orders were canceled en masse in early March. Events organized by corporate giants like Schneider Electric and the French Federation of Rugby were called off, shrinking his expected monthly revenue of €4 million to €500,000 and leaving Dominique Julo, the company’s events director, with little to plan for.
    Image
    Credit...Elliott Verdier for The New York Times
    Since then, Mr. Paul has used all the financial backstops made available by the French government, even delays of payments for electricity bills and rent on Groupe Butard’s offices and its hulking food preparation facilities outside Paris.
    The state will pay him 80 percent of his employees’ salaries to keep them on payroll. Although Mr. Paul is still waiting for the money, because of a backlog in the 10-day reimbursement period promised by the government, the combined financial relief means the company “will be ready to rebound once the crisis is over,” he said.
    Use of Germany’s paid furlough program is also soaring. Nearly 500,000 firms filed for support in March, the government said Tuesday, up from fewer than 2,000 in February. Among them are Daimler, Volkswagen, Lufthansa and the company that manages Frankfurt Airport, where air traffic has plunged 90 percent.
    A similar collapse in activity forced Mr. Arkwright, the director general of Aéroports de Paris, to put 80 percent of the 6,000 administrative employees and 135,000 baggage handlers, security agents and other workers on paid furlough after Orly Airport and all but two terminals at Charles de Gaulle Airport, the second-busiest in Europe, closed.
    Image
    Credit...Felix Schmitt for The New York Times
    He faced extraordinary circumstances as losses ballooned to an estimated €1.3 billion. Adding to the chaos, the chief executive of Aéroports de Paris, Augustin de Romanet, tested positive for the virus, leaving Mr. Arkwright to manage on an emergency basis as two-thirds of the airport company’s board also self-quarantined. All the executives emerged in good health.
    Aéroports de Paris, which is half owned by the state and is slated for privatization this year, is saving €25 million a month from government subsidies for paid furloughs, Mr. Arkwright said. The state has asked the company not to pay out an annual dividend.
    “The advantage of this approach is that we can start up again literally from one day to the next,” Mr. Arkwright said. “I can call you and say, ‘Come in tomorrow.’ But if you go into unemployment, it’s not sure you’d be called in for a job. And we would lose people with valuable skills.”
    Allowing unemployment to balloon would also cost European governments huge sums, because of the generous benefits offered to fired workers. In Germany, for instance, someone who is let go after 12 months can still receive 60 percent of his or her salary for the next nine; in France, unemployment benefits last up to two years.
    “Laying people off actually costs more,” Mr. Arkwright said.
    And people who can keep their jobs “are less unhappy and shocked than people who have been fired,” said Holger Schmieding, chief economist at Berenberg Bank in London. “They are less likely to dramatically cut their consumption. That limits the overall economic damage.”
    Credit...Philippe Lopez/Agence France-Presse — Getty Images
    In that sense, Mr. Schmieding added, governments paying companies to keep people furloughed “achieve a bigger impact for less money than supporting people who have lost their jobs.” The United States, which will now extend jobless benefits and make one-time cash payments to support workers, is effectively “paying the price for its inadequate welfare net,” he said.
    Mr. Paul of Groupe Butard said the French government’s protectionist playbook could sometimes be stifling for business. But safeguarding the economy and helping companies avoid throwing workers into unemployment would leave French society better off than others once the coronavirus epidemic was contained, he said.
    “The French system can be cumbersome,” he said. “But it is incredibly effective in times like these.”
    Constant Méheut contributed reporting from Paris, and Jack Ewing from Frankfurt.
    Correction: 
    An earlier version of this article misstated the surname of the chief executive of Aéroports de Paris. He is Augustin de Romanet, not de Romane.


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