6/1 and the End of Trump (and all who sail with him)

There is so much to write, and it is difficult to find a place to start. But I guess I can start with the end:

Trump signs and flags are going to disappear across Amerika today. Arrests will accelerate over the coming weeks. The Republican Party will now splinter and effectively will die as a political party of meaningful standing. Trump truly burned as much of it to the ground as he could. The question remaining is how much damage can he do between now and when he is removed, on the 20^th or before?

Georgia and the impact

It is probably right to start here. Both Senate seats in Georgia have been won by the Democrats, and with that, control of the Senate. Not a blank chequebook, but the ability to ensure that bills actually reach the floor and Senators are required to actually register their vote, so that their positions can actually be recorded, instead of the 2-year act of cowardice that has seen almost no bills reach the floor of the Senate.

Most importantly, Biden will now be able to nominate who he wants in his cabinet and on the bench. He will need to use this power quickly. The first proof is his announcement that Marrick Garland will be his pick for Attorney General, a pick that would have been either impossible or very difficult to get through a Senate with Republican control.

At a guess, news of the loss of Georgia probably contributed to the violence, as the Trumpist Cult could then clearly see that they have lost all; the House, the Senate and the White House. Their rage was stirred up by Trump. The knowledge that they would not even have part of the government to ‘protect them’ may well have added to their sense of betrayal. Of course, Trump (and Giuliani and others) claiming that there was massive voter fraud in the Georgia runoff could not have helped. But the news probably added to the frustration of the Trumpist Cultists.

Trump’s “Stolen Election” rally, and his cowardice

Trump held his rally in front of the White House, and Don Jr and Giuliani spoke before the main act, Trump himself. We watched Trump for the first hour, until the channels switched to the Capitol. Giuliani called for “trail by combat” to a bunch of wannabe revolutionaries. Don Jr incited, and Ivanka called the mob “American Patriots”.

Before the mob actually breached the Capitol, Charlie Savage of the Washington Post posted this in the comments next to the live streaming from the Senate floor:

 

Charlie Savage Washington Correspondent If any of the Capitol Police or staffers get hurt or worse because of the protesters outside the Capitol, Trump is going to face accusations that he incited a riot. At the end of his speech, Trump told his supporters on the Mall that Republicans have been too nice, like a boxer with his hands tied behind his back, and now needed to “fight much harder” against “bad people.” He told them to walk to the Capitol and “demand” that Congress “confront this egregious assault on our democracy” (that is, his loss to Biden), and kept exhorting them that “you have to show strength and you have to be strong” and “you will never take back our country with weakness.” (His defense will be that amid all that militancy, he also used the adverb “peacefully” once.) 2:13 PM ET

 

Yet after saying “We will march to Congress” he got into his motorcade to ride 200 meters back to the White House. Coward.

Storming the Capitol

The Trump “Save America March” broke up and marched to Congress, just as he told them to.

And when they arrived, the barriers were pushed aside, and protesters reached the bottom of the steps of the Capitol. There are questions about who opened the barriers. Regardless, crowds gathered at the bottom of the eastern steps to the Capitol, and crowds gathered at the western side and began to scale the scaffolding that has been put up for the inauguration. There was an inadequate police presence, of Capitol Police and DC Police, and there was no National Guard available. With everyone knowing that there was a high chance of unrest, where were they?

I understand that it might not have been wise to surround the Capitol with a wall of National Guard or police, as the optics of that would be terrible. I can hear it now “they needed the Army to protect them as they stole the election”. So from a public perception perspective, it makes plenty of sense to keep all the security services and military well out of sight. But they should have been on-call, waiting lined up and ready to roll if needed. This will go down as a major failure to prepare, or at worst a calculated attempt to allow rioters to gain entry and overturn the election (or attempt to).

Soon they were at the doors, and windows were broken and protesters climbing in. Soon enough, mobs running through the building. One person was shot trying to break into the Senate chamber. That person since died. I’ll not use her name. While she is an Air Force veteran, she has soiled the flag that she saluted, and has shit upon the Constitution that she swore to protect, from all enemies, foreign and domestic (herself being one of those enemies).

One of the most disturbing pictures, and it is difficult to narrow it down to just one, is the protester/rioter walking through the Statuary Hall carrying the Confederate flag. That is not “Stop the Steal”, that is “Overthrow the Republic”, and that is at Trump’s feet.

Eventually, the Guard and the Police arrived, and order was restored. People were forced to exit the building and leave the grounds. We now read that 50+ people were arrested. That number is a joke. Thousands violated the Capitol, and they are all on camera and video. And the really stupid one videoed themselves and took selfies as they committed riot and attempted to overthrow the government. There will be some short trials and long sentences.

Counting the vote resumed

Even after the Capitol has been stormed by Trumpist rioters, still, some Trumpist Senators continued to object. Remember these names. They are traitors to the nation and the Constitution. They have put a man above the Constitution. They have attempted to install a king. The “Breaking News” Alert from the New York Times summed it up perfectly:

 

Those voting against the results of the American election were: Senators Josh Hawley of Missouri, Ted Cruz of Texas, Tommy Tuberville of Alabama, Cindy Hyde-Smith of Mississippi, Senator Roger Marshall of Kansas and John Kennedy of Louisiana.

 

“Those voting against the results of the American election”.

At about 3:30am Washington time (or thereabouts) Mike Pence read the prepared remarks that included the count of Electors for Biden/Harris and for Trump/Pence. He then declared Biden to be the President-Elect who will be sworn in on the 20^th of January. It was over. Even Trump was forced to issue, through an advisor because his Twitter and Facebook and Instagram accounts have been locked for 12 – 24 hours, that there will be a peaceful transfer of power.

Orderly transfer

Of course, there hasn’t been a peaceful transfer of power. There has been a campaign of rejection of the results culminating in an attempted coup by the mob, stirred up by Trump and his followers. The transfer of power does not happen only on the 20^th, but is a process that starts, or should have started, in November after the election results are clear. A transition team from both the sitting administration and the incoming administration work together to ensure that there is continuity of government. To ensure that new appointees can start the new administration fully briefed on the current situation in the government agencies, the status of programs, and so that staff can get to know each other and who they will be working with. Policies can be discussed so that the incoming administration has an idea of the effort in front of them. National Security continuity is required, and incoming administration officials must know the security threats that the country faces, so that there can be no gap and no period of potential weakness that an enemy can exploit.

Failure to do this is not the peaceful transfer of power.

Trump has not signalled that there will be a orderly transfer of power, he has issued a surrender statement indicating that he recognises (or enough of his direct advisors and supporters recognise) that he will be replaced, that he did lose, and that his insurrection failed. He is now negotiating a peaceful and jail-free departure from the White House on the 20^th.

Make no mistake, Trump is being prised out of the White House with the threat of being physically dragged out. He tried, and failed, and will now depart in such a way as to try one last smear against Biden. But he also has almost no loyalists left.

His insurrection failed. But he will claim that he didn’t actually want that to happen; those well-meaning patriots got out of hand. Good people; the best people, just very enthusiastic people. He will continue to say that the election was stolen, until he is finally sued in civil court by a few states demanding damages. There certainly will be some people in the crowd who will join any suits against Trump for fraud, saying they believed the President when he lied to them, and did what the President wanted and told them to do. It will be an interesting set of lawsuits.

The rest of (Trump’s) Amerika

By now, the morning after, I fully expect that across Amerika Republicans and Trump supporters who are not crazy will be taking down their Trump banners. Trump 2020 bumper stickers will be scraped off. While they will remain conservative, and may still believe in a “deep state”, they also are Amerikans, and they know that inciting you followers to storm the Capitol and walk through the Statuary Hall with the Confederate flag is going beyond the acceptable.

In Wisconsin and Pennsylvania, and quite possibly in Texas, the Trump flags and signs will come down. In the Klan-South it may take a little longer, but in the VFWs (Veterans of Foreign Wars – equivalent to the RSAs in the Commonwealth) the Trump banners will come down. What happened was a direct assault on the Constitution, and that was something they all swore to defend.

Hopefully, the preachers will back-off as fast as they can. They know their constituencies better than anyone. They did not condemn Trump before, because they had good alms paying congregations who wanted to hear how Trump was stopping abortion and making Amerika strong, stopping Communists and keeping the, um, non-Amerikans (read: Blacks, Asians and Hispanics) from displacing good God-fearing Christian Amerikans.

There will be little overt repudiation, because the internal psychological backflips needed will not be possible. But Trump and Trumpism is done, other than for a fringe that will be there no matter what happens. They will no longer, however, be a political force.

 

AI and External Audit: Not until the Business Model Changes

I’ve just read an article on AI and Audit, asking when (or if) Artificial Intelligence will take over the Auditing of companies financial statements. (“Distinguishing Hype from Reality about the Future of Automated Audits” By Gregory P. Shields, CPA, CA  http://thinktwenty20.com/images/Issues/Winter_2020.pdf)

While the article provides a fine survey of the technical issues and impediments, it misses one key element; AI is a threat to the Auditing and consulting firms' business model. Until they can determine how they incorporate this without erosion of fees and profit, there will be limited uptake.

It is an interesting article, if you are into this kind of thing, and considers three scenarios.

 

Arguably, predictions fall into three overall categories:   1. AI will soon displace human auditors. Clairvoyants in this category might be referred to as chicken littles, predicting the auditing sky will soon fall on human auditors. 2. AI will complement the work of human auditors, but never entirely displace them. These clairvoyants might be referred to as eternal optimists, looking at the future of human auditors through rose-coloured glasses. 3. AI will ultimately displace human auditors. These clairvoyants may be the realists. But, what does “ultimately” mean and what are the implications for decisions that have to be made now? (Gregory is a member of the board of directors of the University of Waterloo Centre for Information Integrity and Information Systems Assurance (UWCISA). He is also a member of CPA Canada’s Audit Data Analytics Committee. Before his retirement, he was CPA Canada Director, Auditing and Assurance Standards. His recent projects include developing non-authoritative auditing guidance on data analytics, cryptocurrencies, and accounting estimates.)

The conclusion is not surprising; that AI still has a long way to go, that regulators will take convincing, and that there remain too many cognitive processes that cannot yet be replicated by AI. These are the “value-added” that the human accounting specialist brings to the audit.

But what is missing from the article is the change required in the economics of audit to allow AI to play a meaningful role in disintermediating the human auditor.

The Accounting profession and Auditing firms exist in and rely on an economic model that will delay the introduction of full AI support for the audit. Auditing firms are highly profitable ‘consulting’ companies with a market niche that they will exploit and protect from competitors, and AI is, even if used as an ‘internal’ tool, a competitor.

Almost all major accounting firms are partnerships. While this is mostly a structural and governance mythology, they are bodies of self-feeding units that rely on a “Borg” like assimilation into a greater single entity which looks out for the collective interests. Let’s break that down. Auditing firms are like ant hives, all working together, but ready to cull the non-performing elements, and perfectly happy to jettison worker ants to protect the hive.

Each Partner owns a number of shares in the company, and those shares pay a dividend to the partners. The more shares, the greater the percentage of profits. Junior Partners “buy” a starter set of shares, and as they progress in profitability and seniority, they are allocated more shares. There are no external shareholders, and therefore no wider investor community to answer to. Certainly they talk stakeholders, but what they means are those that can impact their business model for the better or worse.

Each Partner has a team (or shares a team with other partners for efficiency) and ‘sells’ those resources to clients on specific engagements. Basically, people-hours for an agreed person-hour rate, frequently merged into a single overall rate or price for the job. At the core is that simple economics of the cost of inputs and the income generated by those inputs. Technology helps those inputs (people hours) be more productive and increases the potential price of that input on an hourly basis – because fundamentally, hours are the product.

Just as a metal stamping business many (does) use percentage utilisation of metal stamping machines as a measure of productivity, the accounting firms carefully monitor individual human utilisation rates as the core to determining productivity and potential profitability. People-hours utilised (billable) is the core of the Auditing (and associated consulting services) profession's productivity and profitability.

All other functions within the Auditing and consulting firms are paid for by the numbers of hours of human time that are sold and can be seen by the client as being delivered. The cost of delivering those hours if high. Premises, technology, HR services, and ongoing training of staff are significant costs. But there is another cost; the cost of ensuring that the profession continues to exert control over companies and their financial supply chains. After all, without a ‘clean’ audit, most companies cannot access capital at economic rates.

As an aside, brothels work in much the same way; the fundamental product is people-time, and the more time your product can spend ‘billing’ the more profitable the enterprise. Just like the brothels, if the young ones are not producing enough revenue, the young ones and the madams suffer.

A non-profitable partner or business unit within an Audit and consulting firm will be culled, and quickly. This means that a major element of the Senior Manager through Partner ranks, and especially anyone aspiring to Partner rank, is the selling of new business and the protection of and ideally expansion of fees with existing clients.

Unlike the brothels, Auditing and consulting firms have the additional costs of sustaining an industry body whose purpose is to ensure that they retain their dominance in the financial supply chain. (although I guess one could equate this to the cost of bribes to police and local officials?)

Audit firms carry the additional costs of lobbying at the international, national and state level, and through ‘ownership’ (capture is probably a better word) of the process for standards-setting. And standards that will threaten their business model will be managed. The International Accounting Standards Board (as one example) would find itself significantly less effective without the ongoing support from the major Auditing and accounting firms. The accountants and auditors provide much of the technical resources required to draft and review standards, and technical resources are frequently ‘seconded’ at no cost from the firms. And for a good reason; such secondments ensure that their people contribute to the development of the standards, it also ensures that the firms have resources with in-depth knowledge to trot out to their clients.

An AI-heavy audit is a threat to their business model. It is difficult to add a premium to the audit fee for a reduction in the amount of work that will be performed by humans. After all, if the human time is the primary cost factor, when a reduction in the total human inputs should translate into a reduction in the audit fee. Firms have been down this road before. Audit automation and through automated work-papers contributed to a reduction of the audit fee, but was offset by increases in the costs of labour and the total amount of effort required.

Sarbanes-Oxley section 404 was an excellent example. Following the Enron and Worldcom frauds, the additional requirement for a CEO/CFO certification statement resulted in a windfall to the Auditing and consulting firms, boosting total numbers of hours on audits, and the cost-per-hour of now scarce resources. First year accounting graduates were suddenly seeing offer letters at 15% to 20% higher than their friends received the year before. Internal Audit consulting firms found that they were able to raise their rates by more than 50% to 70% in a year, with that particular gravy train lasting almost a decade. It took that long to build a population of internal auditors sufficient to service the new need, in order to once again begin to push rates down.  

This is after ignoring the fact that two Auditing firms facilitated the frauds at Enron and Parmalat. Ironically, such frauds, while costing individual firms dearly, actually raised the overall revenues across the industry. In the case of Anderson’s, it destroyed the firm. In the Parmalat case, the local accounting major’s firm was expelled from the network, and their international clients in Italy were instructed to contact EY on their first day back in January 2004.

Another area where the business model will not be permitted to be undermined by actual practice is the relationship with Internal Audit. Long considered the slightly dim cousin in the auditing world, Internal Audit arguably plays a more critical role in the actual success of companies. Not only does Internal Audit provide real comfort to the Board (along with Risk Management and Management), it can also contribute to process improvement and organisational efficiency.  IA should also be able to contribute to a reduction in the cost of External Audit.

I’ve long argued that improved Internal Audit should enable the External Auditors to place greater reliance on the system of internal controls, and therefore reduce the amount of external effort and cost required to provide an audit opinion. Yet year after year, regardless of the depth or coverage of Internal Audit, the External Auditors provide trite comments about the need to confirm the quality of IA’s work, and that perhaps next year there could be a reduction in External Audit activity. Next year never comes, regardless of how thorough IA has been, or how effective management has been at the implementation of IA recommendations.

After all, effective IA is a threat to the External Auditors’ business model.

And the business model trumps any other consideration.

Artificial Intelligence will encroach on the audit, but it will not successfully do so until the Audit and consulting firms have figured out how they can incorporate it into their business models, or until their business models are changed..

 

Lockdown or Economy, a false choice

Have you heard people say that lockdowns are destroying economies? The argument is that we should open up, let the virus run its course, and build herd immunity (now that it seems only old people die, and that only a tiny percentage of overall cases result in death). Yet the assumptions seem to be that there is an either-or choice. The reality is much different. 

(Twitter: 27/12/2020 – the very voice and face of evil)

Locking down has enormous consequences for economic activity and mental health; this is true. This is balanced by a reduction in the mortality based on a lower or slower spread of the virus. A slower spread of the virus should ensure that the medical system, hopefully, can cater for the load that sick people place on the system. There are only so many hospital beds, and only so many medical professionals. Overload that system, and people will not receive required care, fatalities will rise, and the pool of available healthcare professionals will shrink as they are removed, hopefully temporarily, as they become sick and burned-out. There is also an element of trying to keep the sick-load down until effective interventions are available, and vaccines are available in volume. 

Remove lockdowns (or more accurately, do not impose lockdowns), and the benefits of fewer people becoming ill, dying, and overloading the medical system, will disappear. Now factor in the social impact of a visibly collapsing health system, mounting deaths and infection lurking around every corner and in every shop. There would be no need for a lockdown to stop people from flying. Bars could remain open, generating income for bar owners and employees. Shops and offices could stay open, and the economic activity would reduce unemployment and economic loss. Small investors leveraged to build businesses and futures would have these protected by an economic system that would continue apace, continuing employment and continuing the turnover required to service business (and personal) loans and build assets.

That is the argument. And it is dead wrong.

Mass illness and death have a way of seeping into the soul of a society, and fear is a dampener on economic activity. Trauma begets behaviours (and is caused by behaviours). So, tourism would come to a sudden stop. Likewise, while shops may remain open, economic activity in the shops would have come to a virtual halt. Yet wages would continue to be due, and as revenue collapsed and staff were fired, it would not be long before the markets themselves would begin to ‘price in’ the future impact of collapsing economic activity.

In the US, with a for-profit healthcare system linked to individual employment, the double threat of losing a job while at the same time being forced to work in environments that were clearly advantageous to the spread of the virus could not have anything other than a negative impact on workers' productivity. Worse than worker productivity, worker health will suffer through institutional failure to implement health-saving policies. The only policies that will matter will be wealth-saving policies. We’ve already seen the impact.

Earlier this month in Douglas County, one person who was sick went to work, and later tested positive for the coronavirus.

Within two weeks, that one action led to two subsequent outbreaks. The first killed at least seven people, nearly 20% of the county’s total COVID fatalities since the pandemic began. The second forced more than 300 people into quarantine.

Working from home would become a desirable option for workers (if they can), regardless of the ‘lockdown’ situation.

And the higher death rate among the elderly would drag workers away from the office for funerals and grieving, further impacting the social fabric. The higher death rate would also cause a national grieving significantly greater than the current numbing effect of the virus.

The question of “save lives or save the economy” is a false question. If society did not set out to save as many lives as possible, there would have been no economy. It would have stopped.  

Throughout the pandemic, modelling has included expected cases and mortality based on various levels of a lockdown or other social distancing measures. By early April deaths were climbing quickly, and projections looked pretty scary. The CDC’s site included its historical projections. Below is the 13 April 2020 projections of potential cumulative deaths in the US through July 2020, based on various levels of restrictions.

With the minimum “contact reduction” of 20%, deaths would have reached a range of between 130,000 to a horrifying 350,000. That range itself is horrifying, and reflects the dearth of information available at that time for modelling. It is scary to note that total US deaths passed 125,000 in June, not far off an extrapolation of the 40% contact reduction line above. 300,000 cumulative deaths in the US was reached in December, and current projections are for more than 420,000 deaths by inauguration day on 20 January 2021. 

Imagine 200,000 deaths by May 2020. Who would leave the house? Who would even consider going to work? Would there be an economy?

So while the modelling of total deaths took place, there was not an associated modelling of the potential impact on economic activity based on those deaths.  The comparison should have included not just vague statements about the health system being overloaded, but should have quantified the potential impact of health and economic activity.

The trauma of people being forced to continue to work in offices, factories and shops would be significant. The London Underground provides an example. Even under ‘normal circumstances’ the Tubes are packed, and people are surly and uncommunicative. There are unwritten behavioural rules, such as you don’t talk to others (or if you do, it is either boisterous groups, or quiet individual conversations) and do not make eye contact with strangers. Now imagine that in a pandemic in which everyone is expected to go to work, and the Tube is still crowded, but now there are people with fevers and coughs as well. 

In non-pandemic times, others are tolerated because an unwritten code says ‘we are all in this together’, as long as being together will not kill us. In normal times the unwell person on the train is requested to get off at the next stop and stay on the platform until they feel better or ask for assistance from station staff. 

In a pandemic, station staff are suddenly required to act as front-line medical responders. The infection will spread to them quickly, and the numbers of staff unavailable due to illness will rise. As the London Underground workforce is well unionised and protective, strike action should be expected and would effectively shut down the Underground. So as the pandemic spreads (in a no-lockdown situation) the number of train services will fall, cramming more people into fewer trains, increasing infection rates. 

At some stage, people will simply refuse to take the Tube.

That needs to be figured into the economics of the pandemic, and the ‘stay open’ arguments. Does NYC continue to function if New Yorkers refuse to take the Metro? Does the Metro still function is staff are out on strike or there are too few staff due to sickness?

Then consider the psychological effect of an infection rate climbing quickly, yet with a demonstrably deaf governmental and business community. If we (well, I) have been shocked by the level of conspiracy thinking that has happened with lockdowns, imaging the level of conspiracy thinking that would take place in an “everything should continue as normal” scenario.

I would imagine that business would be even more reviled, and all faith in government to protect people, or even to have the people’s interests in mind would evaporate. Covid-19 would be seen as a tool by which the government was ridding itself of the elderly to avoid pensions and healthcare obligations to the elderly, returning the economy to longer-term demographic stability. Kill off the old, and Social Security costs will fall, and taxes won’t need to rise, allowing more tax cuts for the rich.

And about the ‘rich’. Clearly, THEY are taking this seriously, and are able to distance and protect themselves and their families while the workers who create their wealth must continue to work, be exposed, get sick, and lose everything to the illness. The current anger (yes, there really is anger) at the wealth accumulation by higher earners and the extravagant increases in wealth at the very top through the pandemic will have repercussions. A ‘wealth tax’ cannot be ruled out.

Now imagine a ‘no-lockdown’ scenario, with mounting deaths, raging illness and (in the US in particular) the stripping of families of what meagre assets they have, impoverishment of the newly unemployed (after all, if there is no lockdown there should be little need for a stimulus package). Remember that even those who are benefiting from stimulus are seeing assets diminished and poverty approaching. Renters are falling behind with no associated equity assets to rely upon to provide financial depth. Homeowners are finding mortgage payments difficult or impossible to make. Banks will allow loans to extend only so long.

This is happening with stimulus and with lockdowns. Without lockdowns, the higher infection rates and higher death rates due to crippled health systems will exacerbate the economic problems.

Anti-lockdown advocates also make the spurious claims that ‘more people will die from suicide than will be saved by a lockdown’. This is complete bollocks. The suicide rate will be the same or higher, as large numbers of people are pushed into extreme poverty through economic collapse (which will happen simply because too many sick and dying people will mean too little shopping and too little working). In addition, those that suffer from depression due to the visible increase in illness all around them will have no services available to assist them, as those services will also be impacted by increased employee illness and absenteeism. Volunteers will become fewer as they deal with issues of their own at home and in their families.

Long-Covid

Missing from the discussion has been the economic impact of "Long-Covid" on more general health, and the psychology of returning to work in an "open economy". Long-Covid refers to those patients who continue, sometimes months later, to have Covid-19 related symptoms and in some cases, significant disabilities. 

A core element of a thriving economy is the confidence that the structures are in place to ensure that long-term aspirations will be achievable by "playing the game" of work hard, gain rewards, live a comfortable life. Curtail the probability of a quick recovery and a "back to normal", and expect an even slower recovery. That is the simple psychological impact that will hinder a full return to normality.

Then there is the associated economic impact of a potentially large cadre of individuals who will be unable to fully return to their pre-pandemic jobs and lives. They will "contribute" less to the economy, while likewise increasing the cost of the economy. Societies are expensive to run, and taking care of the weak and the sick to a standard that provides opportunity and enables a quality of life is part of that cost. It is the insurance policy that we all de facto pay for.

Long-Covid will result in untold individual and family suffering, and will be a drain on the economy that is so loved by those with assets. 

While the skyrocketing sickness and death rates in an "open economy" will effectively close that economy regardless of the wishes of politicians and oligarchs. Long-Covid will make create further drains slowing further the recovery of that much-worshipped economy.

Summary

“Open the economy, Now!” Lockdowns cause more harm than benefit. This is true, but only if there is no pandemic. When society is being ravaged by a highly contagious illness, the impact is far beyond the economic. And ignoring the pandemic in the pursuit of continued profit will backfire. More will die, and business will still fail, and prospects for a speedy recovery will wither. 

This is not a Covid-19 travel ban (EU & Europe)

I am prefacing this with the disclaimer: I am NOT a conspiracy theorist, and do not like conspiracy theories. But sometimes you have to wonder. 

So much of Europe is closing its doors to the UK, completely. No air or rail traffic to or from the UK from the Netherlands, Germany, Belgium, France and others. Greece has imposed a 7-day quarantine on any traveller from the UK. The “new strain” of Covid-19 is supposed to be 70% more infectious. This number feels a bit ‘made up’ but I’ll go with it. I’ve seen that it spreads 70% faster, or that it spreads within the body 70% faster. Whatever the situation, Europe has panicked and is shutting down all access to the UK. 

This is, frankly, silly.  The new variant was identified in September, and therefore there is not a country in Europe that has not had travel to and from the UK in the three months since. And in those three months, there can be little doubt that if it is that much more contagious, it will have spread outside the UK already. I almost wonder if there isn’t a little bit of politics going on here also, a gentle reminder to the UK government what Brexit will look like without a deal. Miles of lorries unable to deliver food to the UK because of blockages in the ports. All a good preview of Brexit. 

And they do not need to explicitly say this is what a ‘no-deal’ Brexit will look like; it’s a given.

So while we are told that there is a new strain of Covid-19 out there, and we should worry, the fact is that if it has been around since September, then there is no country that it has not already arrived in (except of course New Zealand).

The Black Death took from 1347 to 1351 to finish its march from the Crimea through Southern Europe, up to France and across to England and north and east to Germany. The plague travelled at the speed of a sail-driven ship, or the speed of a merchant walking their cart from village to village. The dates of arrival of plague in cities across Europe matched the speed of travel by foot (or ship) nicely. Indeed, word of the plague travelled faster, because couriers rode at some speed to deliver regal and ecclesiastic news. But infection travelled in the merchant’s cart.

In such a situation, a new variant of plague identified in September would still be on its way from England to Italy by December, with its arrival at each city along the way being identifiable by increased cases in those cities.

Covid-19 travels at the speed of a jet-liner. So any variant anywhere in the world, if the mutation is hardy enough and supportive of replication without killing the host, will travel around the world in days, maybe a couple of weeks. Shutting the stable door after the horse has bolted is one thing; shutting the stable door a month after the horse meandered out is quite another. That horse is not only long gone, it also wandered through all your neighbours' pastures and paths. 

Locking down all travel from the UK two and a half months after a new variant of Covid-19 has been identified is not only silly but ineffective in the extreme. Add to that the argument that this is a more contagious version. Well in that case, and with the speed of spread of ‘Covid-19 Classic’, a more virulent version should be spreading even faster. And we know that Covid-19 spread in a matter of a few weeks, not months. We also know that the initial spread was faster, but not identified because of the latency period between infection and manifestation of the decease. 

This version has not only had the time to spread, if it is actually more virulent, then it is already spreading rapidly through all of Europe. 

The closing of UK borders is not due to a Covid-19 variant unless this is for show only. And if it is for show, then the EU might as well use that show for alternative and additional messaging. We’re all in this together, or look what happens when you are locked out.

And possibly not a surprise, France has announced that it may open the border to traffic again as soon as 48 hours from now. They certainly will not have the new strain under control or even limited by then. But the main message will have been sent and received.

Good news, bad news, good news, bad news

It has been a day of Good News, Bad News, Good News and Bad News, all depending on the country. 

UK

In the UK this morning, a 90-year old has become the first person to receive the Covid-19 vaccine in the sanctioned roll-out (as opposed to the clinical trials). This marks the beginning of a vaccination programme that should, by late spring, see enough people vaccinated if not declare the pandemic over, at least to declare that the risk is contained. “Normal life” will be able to resume.

The anti-vax community will avoid vaccination, and will find that they are enjoying ‘stay-cations’ for the coming year. I expect no country will allow them entry (and many airlines will refuse to fly them) if they cannot demonstrate vaccination. That is their right, and I fully support it. But decisions come with consequences, and the result of their stand will be that they will not be allowed to put themselves and others in harm’s way – mostly put others in harm’s way. But it is also to keep them out of harm’s way and reduce their potential burden on the rest of society. If they refuse the vaccine, and then go on holiday and catch the virus, they put others at risk, but they also create an additional unnecessary drain on stretched health services.

Still, this has to go down as a great day. Not the first vaccine day. The Chinese and the Russians are already vaccinating their people, but as they are “not us” then they and their vaccines don’t count. So goes the logic; their vaccines have not been through our testing and trial regimes, and we have not had adequate oversight, so we will not certify, or count their vaccines as safe or acceptable. So, ours is first, yeah.

Amerika

Meanwhile, the US daily new cases have reached a seven-day moving average of over 200,000. And the president, Trump, still doesn’t care, and his people still have rallies and gatherings of hundreds or thousands of people with limited or no masks or distancing. Giuliani is sick, and infected how many people as he stood in courtrooms and posed for selfies with people across Amerika? Now that buffoon is ill and receiving the best care that Amerika can provide. In a civilised society, he would be facing charges of endangerment. Even in Amerika is it illegal for someone to knowingly put others at risk of contagion for deadly deceases. Did he know he had it? Possibly not, but his behaviour represents recklessness at the very minimum. He should be in jail. Well, he should be in jail after he recovers.

Even if he did not know he was infected, he certainly knew his behaviours were dangerous. He knew he had been in contact with infected people (at various Trump events) and therefore should have been taking greater care. Instead, there is video of him, in a courtroom, asking someone sitting next to him to remove her mask “so we can hear you”. 

Yesterday was Pearl Harbor day. More than 2400 Americans were killed In the Japanese attack, and the United States declared war on Japan and Germany. Yesterday the US seven-day moving average number of deaths from Covid-19 reached 2300. Yesterday’s and the day before yesterday’s raw numbers were lower than that, but they were the Sunday and Monday numbers, and we expect those to be lower. 

Meanwhile, there is reporting today that Pfizer actually offered to sell the US government 100 million additional doses of their vaccine last summer. The administration turned them down. Now the US will have the 100 million that it pre-ordered from Pfizer, and the 100 million from Moderna, and will not be able to source additional Pfizer vaccine doses until Pfizer’s existing orders from other clients have been filled.

So between the Pfizer and Moderna vaccine doses, there should be enough to vaccinate around 100 million Amerikans (at two doses per person vaccinated). That is just under a third of the population. 

Instead of focusing on sick and dying Amerikans, Trump rang the governor of Pennsylvania to ask him to overturn the election result and select a republican set of electors. The governor said “no”. The governor of Georgia gave him the same answer. Outside the house of the Michigan Secretary of State, the official who certifies the election for Biden, armed groups gathered and shouted threats. And the president said nothing to stop them while continuing to encourage the lie that the vote was stolen and that there was massive fraud. Fraud that they cannot prove in any court. 

Biden is said to be against pursuing Trump; that it would be bad for the country and would stop the healing that needs to happen. He is wrong. Trump and those that enable him, and those that follow his thinly veiled suggestions to “Liberate Michigan” (from lockdowns, but really from a Democratic governor), they must all face the courts. 

Reuters reports “Michigan Secretary of State Jocelyn Benson said dozens of armed protesters gathered in a threatening manner outside her home on Saturday evening chanting “bogus” claims about electoral fraud.”

Thugs with guns outside someone’s house protesting the electoral outcome must see consequences. As above, it may be their right, but with the practice of those rights comes consequences. I hope the faces and names of all those ‘protesting’ outside the Secretary of State’s home are published and spread widely. Let them learn that participation in a free society also requires compliance with the norms of that society.

Those that have committed crimes of intimidation should be prosecuted. Those that have smeared the names of good people should be prosecuted. Democracy is not free, and to forgive and forget the actions of those who seek to undermine it will only embolden them for the next time, until they are shooting in the streets; until they are armed at the polling stations, demanding proof that citizens are authorised to vote, and telling people that if they vote the wrong way, they will be visited afterwards.

We’ve seen this before. And it must not be allowed to happen again.

Greece

Thankfully here in Greece, the numbers continue to fall. 

Yesterday there were under 1000 cases for the first time in over a month, and today there were 1250 new cases (well, actually the day before yesterday, and yesterday, but today with when I can see those numbers). Watching them every day can be depressing and frustrating, so it is good to leave it for a few days, then come and take a look, to be either heartened or concerned. Today, heartened is the word.

The seven-day moving average is now at around 1600, down from 2600 two weeks ago. There is a long way to go, but it does seem that things are moving in the right direction. Does this mean opening for Christmas? I’m not confident. They have opened the “Christmas decoration” shops, to allow people to buy the trappings, light and decorations of Christmas, no doubt to give people some hope and happiness at this time. Without that, it would be a very grim Christmas indeed, and that would add to the depression that will be felt by many as January bites. 

Panama

In a blow to progress in Panama, the "Dry Law" has been brought back in for the Panama Province, covering the city and surrounding suburbs. Arijan apparently is the new epicentre of Covid-19 cases. This not a huge surprise, as workers commute from Arijan into the city, often spending 1 to 2 hours on crowded busses. If they are lucky (and 'wealthy') they travel in air-conditioned buses, trapping the air and the virus inside. If they are not, they travel in crowded buses with the window open enjoying the heat and humidity.

Panama cases have climbed back above 2500 per day. This is as bad as its been, and the hopes that the pandemic had passed are shattered with this. 

I guess the summary for the day is that there is bad news, good news, and bad news, with a weighting toward good news.

The DOW and Pandemic disconnect

The DOW Industrial Average stock index reached 30,000 yesterday, a new record high. Trump claims credit, of course. 

The markets are a good forward-looking indicator of the economy (or they were) and as such, any immediate movement is a reflection of near to mid-range expectations, and trends provide a forward-looking expectation of medium to longer-term economic performance. A rising market used to indicate an expectation of a generally growing economy.

And yet we know that the US economy is in deep trouble. Pandemic trouble coupled with long-term small to medium-sized business trouble. The promised V-shaped recovery is petering out and will return to a more 'normal' recovery. Wall Street and Main Street have rarely been so out of sync.

So why the jump to record-level valuations?

Of course, the stimulus that has been and continues to be pumped into the markets to avoid a crash decoupled Wall Street from Main Street some time ago. So the significant jumps over the past two weeks can and should be seen as market (and therefore the investing class) expectations that there will be greater certainty under a Biden administration, and therefore medium to longer-term plans can be made, and investment programmes confirmed.

It begs the question of why, with the need for ongoing stimulus and 8%-10% federal budget deficits, the markets think the future is so bright. 

The answer is that the US economy has passed the point of being able to fix its systemic debt problem, and any attempt to do so will simply destroy the markets, killing large and medium-sized companies (the small companies are barely holding on already) and that will wipe out any hope of an employment recovery, plunging the US into a multi-year depression. Therefore with an adult in the White House, and an economic team that is willing to tell him hard truths, the markets are betting that the stimulus will keep on rolling.

It begs the question of where the markets would be today without the constant meddling-by-tweet and bogus trade wars of the past four years? 

Still the pandemic continues to build. 

There can be no doubt, and history will declare (and so will any who are looking at this even now and into the coming year) that Trump’s personal response and the craven enablers in the Republican party, and directly contributed to a disaster in the US. 

Meanwhile, US Covid-19 deaths are at a seven-day moving average of 1640 deaths, a number that was last seen on May 12th (as a seven-day moving average). The first time that the rate was that high was as the pandemic was building force (as it is again) on April 7th. There were 34 days between the first time the average was above 1650 and the first time is dropped below 1650. 

If those numbers provided a pattern and an expectation for now, then we will not see the numbers reach this level again for another month. Certainly the numbers could already have peaked, but that is not what the seven-day moving average is telling up. With up/high days and lower/dropping days, the seven-day moving average continues to climb.

The same is happening with new cases. The seven-day average is still rising, at 176,000, even though there are occasional ‘down’ days, usually at the weekends. The three-day average is on another downward wave, but the latest number are not encouraging. Hospitals are becoming overloaded again, and National Guard troops are being called in to deal with the numbers of corpses in Texas.

 

Across the country, the cases are still growing and growing fast. And we are being warned that the coming winter will make matters even worse, with people being cramped inside, and when they go to places where others are or have been, the need to retain the heat will necessitate recycled warm air, increasing the risk of contagion. So for the US, there is little hope that the next weeks will see any actual peak in cases, and certainly little hope that there will be any sustained drop in the number of new cases. Unless, of course, Trump is able to continue to reduce the total number of tests being performed, and thus artificially holding down the number of cases.

Yes, still there is no meaningful response from the Republicans.

All they can do is look on now, still afraid of Trump and his ability, they believe, to destroy their political futures, by calling them out as disloyal. Even now. 

So Amerika has to wait, and hope that Biden and his team will be ready on day-one to implement effective measures. Certainly, the roll-out of vaccines will already be underway before Christmas, but the general population will not be seeing vaccinations until mid to late-January. First will be the front-line workers in healthcare, and then their families, and then the elderly, and then those at most risk. Only after those have been vaccinated will the general population be able to be vaccinated. That will probably not happen until February or later, depending on how fast the Biden team can push, or how much of their programme can start before he is sworn in. (By stealth of course, because Trump will “burn it down” if he sees any tangible support for Biden that is actually is able to interrupt).

Here in Greece things seem to be moving in the other direction, though it will take another week before we can have any confidence. 

The bad news is that the seven-day moving average number of deaths continues to rise, and is over 80. There was a high last week of over 100 deaths in a day. The hospitals are overwhelmed, and in Thessaloniki and the north, 99% of ICU beds are occupied. The military is building a field hospital on the grounds of the Military Hospital here in Thessaloniki, providing an additional 50 (ICU?) beds at least.

Two private clinics have been requisitioned, adding 200 beds to the total available in the public system in Thessaloniki. Hopefully, these will be enough, but I very much doubt it with the steep rise in cases through November. 

Thessaloniki is the epicentre, with over 600 new cases yesterday, reaching more than 14,500 cases in Thessaloniki in total, in November only.

Characteristic of the rapid growth of the virus is the fact that in October - the month in which the spread of the coronavirus had already begun - Thessaloniki had recorded 4,027 cases while in September it had only… 422 cases, a number that is now exceeded daily by the city. In less than two months, Thessaloniki jumped from 422 cases to 14,517, proving the aggression of the new virus. It is noted that in total, since the beginning of the pandemic at the end of February in Thessaloniki, 20,334 cases have been recorded.

https://www.typosthes.gr/ygeia-epistimi/covid-19/234679_koronoios-paramenei-ypo-piesi-me-607-nea-kroysmata-i-thessaloniki

Across Greece, the numbers of new cases are coming down, which if a good thing to see. However, this may be illusory for the same reason as the US, we are entering ‘real’ winter. The article also said that the optimum temperature for the virus is 8 – 10 degrees Celsius (of 48 – 50 Fahrenheit). 

If there is good news it is that the seven-day moving average of new cases is heading downward. Not much yet, but definitely, a peak, if only a week old. We will need much more time to see that it is a real peak and fall, which will be problematic with the winter conditions. But the lockdown here is in its third week, and that is about the time it takes for the asymptomatic contagious cases to spread as far as they can, then begin to die off. After all, if the virus cannot reach someone, then it cannot infect them.

So while cases continue to rise rapidly, the speed of rise has slowed down a little. But the numbers are still increasing, and that continues to drive the need for more beds.

The latest news this morning is that we will be in lockdown at least until December 6th, which is another two weeks. I would not be upset if it were another week after that, to really limit the potential spread. 

The spread cannot be halted by the lockdown; we still need to buy food and go and feed the stray cats. And we are not alone. The entire city must have some limited interactions, even if more limited than ours. And our interactions are limited. We do not move more than about 100 meters from the building, and even then we enter any building with caution, checking that there are not many people inside and that there is plenty of ventilation via open window and doors. The pet-shop is a good example. The front door is open all the time, and upstairs there is a pet grooming station with its window open. Hopefully, this is providing enough airflow to reduce the risk of spread. 

And masks are obligatory, and for the most part, are now being worn property. For the most part. There are still too many people who think that they cannot speak through a mask, so pull the mask down to talk, and then usually to talk too loudly.

But lockdowns work, and this one is already reaping some rewards in peaking infections. I hope.