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North Korea banned tourists and quarantined thousands of people in its efforts to fight coronavirus.
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The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments on Tuesday related to the global economy, the work place and the spread of the virus. INDUSTRY: Less than a week after saying it planned to reopen five North American assembly plants, Ford has decided that those facilities will remain closed indefinitely.
(Bloomberg) -- Two decades since the euro began, one of the principal worries of its founders is materializing as the coronavirus rages through the region’s third-largest economy.The longstanding suspicion that Italy’s profligate borrowing could ultimately become the whole of Europe’s problem was the recurring nightmare of German finance officials throughout the 1990s.Now, as the crisis forces Giuseppe Conte’s government to jettison a decade of tightly capped Italian budget deficits, the country’s strategy for the future is once again built on piling up debt, sending its public borrowings swelling toward or even beyond 150% of gross domestic product.The increasing death toll from the virus and the economic fallout from the lockdown leave the government with no option but to spend more to help its people. But it’s having to deal with the unprecedented situation carrying an already huge debt load.The upshot is that Italy’s finances now depend wholly on the European Central Bank keeping a lid on its borrowing costs. Meantime, the only realistic question for officials in Berlin is how to structure further aid, since the alternative may be a failed state at the heart of the currency union, fatally threatening the euro.“It all hinges on guarantees at the European level to avoid a market reaction,” said Pietro Reichlin, professor of economics at Luiss University in Rome. “Is the European Central Bank ready to undertake the needed purchases?”Italy’s patchy economic record means worries have long lingered on in the minds of policy makers. It represents the ultimate test of resolve they might face one day, even after the euro’s existential debt crisis was stemmed in 2012.Italy’s economy may shrink 6% this year, with household consumption declining 6.8% and gross business investments falling 10.6%, business lobby Confindustria said in a report. The outlook could further worsen if the acute phase of the health emergency is not over by May, the report said.While successive governments in Italy have kept deficits in check, none has succeeded in denting accumulated debt by recreating its economic miracle of the 1960s in a country that, by now, badly needs another one.As Conte and colleagues firefight the health emergency, they’re deploying at least 50 billion euros ($55 billion) in economic aid. That will add to borrowings already totaling 135% of GDP, more than twice the ratio of Germany.Should Italy spend all of the package, its deficit would reach 5%, the highest since 2009, when it was coping with the aftermath of the financial crisis, says Reichlin. Odds are that spending will actually have to be even higher.“Much higher public debt levels will become a permanent feature of our economies and will be accompanied by private debt cancellation,” the Italian former ECB President Mario Draghi said in an opinion piece for the FT. “The alternative, a permanent destruction of productive capacity and fiscal base, would be much more damaging.”Eurogroup President Mario Centeno has said the euro zone will exit the crisis with much higher debt levels, and governments must prevent this threatening the currency bloc with fragmentation.What makes Italy’s situation all the more precarious, as seen from bond markets, is that the political determination to play ball with partners, whose goodwill it needs, is cracking.The populist leader of the opposition League party, Matteo Salvini said in comments released on Saturday that the European Union took too long to respond to its crisis, and that Italians should reconsider their membership of the bloc.“Heavy issuance in Italy and political risk, with Salvini making threats that can unnerve investors, will likely limit how far Italy can rally,” said Mark Dowding, chief investment officer at BlueBay Asset Management.Salvini’s salvo was fired against the backdrop of an economy in dire trouble, with its northern heartland locked down, while tourism is also frozen.Bloomberg Economics forecasts a contraction of more than 6% in the first quarter, while a Morgan Stanley report sees GDP dropping 19% in the quarter on an annualized basis, and by 33% in the next three months.Italy Risks Losing Grip in South With Fears of Looting and RiotsEuropean countries have indicated some willingness to help, possibly granting an enhanced credit line by the European Stability Mechanism with minimal conditions.Meanwhile the ECB has scrapped limits on bond purchases for its 750 billion-euro emergency program, a decision giving it huge firepower to fight the crisis. What those actions underscore is the reality that Italy’s dependence on outside aid will persist for the foreseeable future.Such measures have helped subdue Italy’s borrowing costs, as well as those of other countries. Ten-year yields are currently back below 1.5% after a surge earlier this month saw them near 3%.Poul Thomsen, an official at the International Monetary Fund, told Bloomberg Television that Italy does have fiscal space to act but that over time, it will need to reverse course.“Italy would certainly have, over the medium term, to bring down its debt,” he said. “When it is over, it will have to get back to gradually bringing down deficits.”What Bloomberg’s economists say...“Without help and assurances from European institutions, Italy would probably be in a full-blown sovereign debt crisis by now. Fortunately, the ECB has clearly signaled its willingness to extinguish any fires in the country’s bond market with the Pandemic Purchase Programme. In addition, the ESM provides a backstop to assuage the worries of investors.”\--David Powell. Read his ECB INSIGHTWhat would really help though, according to former Italian Premier Mario Monti, is if the euro’s richest members such as Germany and the Netherlands were to sign up to joint debt issuance to help poorer countries through a trying time. Speaking on Sky TG24 television, he said that the alternative could mean severe consequences.“They need to choose between allowing the birth of euro bonds, or allowing the ECB to die,” he said.Read more: ‘Coronabonds’ Could Bail Europe Out, Tie It Together: QuickTakeItaly’s destiny was perhaps always going to be intertwined with the region, especially when the decision to create a single currency had been taken.David Marsh, who chronicled its establishment in his book “The Euro,” described there how over time, the country’s membership became so inevitable that no rules could impede it. In his words, “excluding Italy was arithmetically valid, but politically impossible.”(Updates with business lobby in eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The CEO Of Texas Roadhouse Has Given Up His Salary To Help His Employees Amid The Coronavirus Outbreak
"Giving up my salary is the least I could do."
- EntertainmentTotal Film Magazine
Community, Mortal Kombat, and more are new on Netflix this April
- BusinessThe Wrap
Fox says it plans to raise $1.2 billion through the sale of senior notes and use the money “for general corporate purposes.”Hey, everyone needs a little extra cash these days.Earlier on Tuesday, Fox became the latest major media corporation to tamp down any optimistic financial expectations. As a general rule, Fox does not provide actual financial guidance, so there were technically no specifics to alter.Also Read: Fox News Insider Denies Judge Jeanine Pirro Was Drunk, Explains 'Technical Difficulties' in 1st Home BroadcastWhile Fox News has been a bright spot as viewers flock to the network for information on the pandemic, a number of canceled or postponed sporting events are threatening to offset those gains. And then there are just regular TV and film productions that are on hiatus as social distancing has become our new normal.“The impact of coronavirus disease 2019 (COVID-19) and measures to prevent its spread are affecting the macroeconomic environment, as well as the business of Fox Corporation, in a number of ways,” the company said in a Tuesday SEC filing. “For example, while the company’s national news ratings remain strong, sports events for which the company has broadcast rights have been cancelled or postponed and the production of certain entertainment content the Company acquires has been suspended. The magnitude of the impacts will depend on the duration and extent of COVID-19 and the effect of governmental actions and consumer behavior in response to the pandemic and such governmental actions.”“The evolving and uncertain nature of this situation makes it challenging for the company to estimate the future performance of its businesses, particularly over the near to medium term, including the supply and demand for its services, its cash flows and its current and future advertising revenues,” it continued. “However, the impact of COVID-19 could have a material adverse effect on the company’s business, financial condition or results of operations over the near to medium term.”Read original story Fox to Raise $1.2 Billion After Saying Coronavirus May Have ‘Material’ Impact on Earnings At TheWrap
I wish my social distancing looked like this...