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Thoughts from Galicia, Spain

Random thoughts from a Brit in the North West. Sometimes serious, sometimes not. Quite often curmudgeonly.

Friday, 29 May 2020
29 May 2020 @ 09:20

Spanish life is not always likeable but it is compellingly loveable.   

- Christopher Howse: 'A Pilgrim in Spain'*

The Bloody Virus

  • A clean exit from Covid-19 is implausible and frothy markets are relying on thinning liquidity, claims Ambrose Evans Pritchard in the 1st article below. 

Life in Spain in the Time of Something Like Cholera 

  • María's Day 18 of her Come-back Chronicle. I should add that that our temperatures of the last few days - around 34 degrees - are very far from normal for May.
  • Talking of our weather . . . This year we really don't want the normal summer influx of Madrileños and Andalucians escaping their respective ovens/hell-holes. Hence the opening report in this video:-

  • BTW . . . The word carallo/carajo in the chorus is Galician(Galego) for 'prick'. It features quite a lot in daily discourse here. Long time readers might recall a schedule of the many phrases it features in. If not, click here.

Real Life in Spain 

  • Back to the tortuous Spanish legal system. News of a case that's finally been decided after 30 years. Where was a Spanish Dickens when he was needed?
  • I've always thought I lived in the North West of Spain. And I know it takes me more than 4 hours to do the 460km drive to city of Valladolid. And yet Valladolid is described in this Guardian article - on the possible grave of an 8-toed rebel Irish lord - as being in the North West of the country. One of us must be wrong. Though it is about 200km north of Madrid, which might have confused a reporter based in the Deep South.

Portugal

  • This lovely country will be open to tourists in a couple of days' time, a month earlier than Spain. And visitors won't be quarantined when they arrive, facing only ‘minimal health controls’. But the border with Spain will stay closed until June 15. 

The UK

  • An 'old man in a chair' claims the populace is being brainwashed. Possibly, but why? To achieve what? One possible answer is to avoid, at any cost, the collapse of the health system and all the negative political fallout from that - against the background of decades of government mismanagement, in one form or another.
  • As we ponder that, the Guardian is suggesting here that The Utter Shambles of the last 3 months is about to enter Chapter 3. For a more vitriolic commentary, see Richard North here.
  • As someone else has put it: As a matter of strict economics, the notion that we must pick between fighting Covid-19 and reviving growth is irritatingly misframed. The British authorities have shown that if you are seriously incompetent, you get both the worst death toll in Europe and one of the worst economic hits as well.  So, well done Mr Johnson et al. Your'e lucky there's no Vox equivalent in the UK, to accuse you of genocide.

The EU

  • It looks like Spain will do very well - if not best - from the latest EU handouts. Doubtless some of our politicians are rubbing their hands in anticipation of the cash flows.

The Way of the world

  • A civil servant who was  mocked for complaining about the cold, wet weather and branded a racist for claiming it always rained in Wales has been awarded more than £240,000 in a race and age-discrimination case.
  • When life’s difficult, cults are an easy answer: Conspiracy theories and new age nonsense like Universal Medicine offer some middle-class escapism from dark reality, says the writer of the 2nd article below.

The USA   

Finally . . .

  • Things are looking up. After ripping out - without notice - several of the vines which form our joint hedge. My new neighbours have advised me the rest will also be pulled out, so they can erect a BBQ. But this will happen 'next year', giving me a chance to plant replacements on my side of the link fence underneath the vines. Which is sort of considerate.
  • My younger daughter has a new web page which might be of interest to some. I certainly found it enlightening, and I thought I knew about it all. Its self explanatory title is Raising a girl with autism. It will surely help anyone facing this very tough challenge.

THE ARTICLES

1. A clean exit from Covid-19 is implausible and frothy markets are relying on thinning liquidity: Ambrose Evans-Pritchard, the Daily Telegraph

The V-shaped recovery in East Asia is sadly no template for the blundering West. The near euphoric rally on global equity markets is based on a fundamental fallacy.

Most of Europe and North America are not pursuing the policies that enabled China and the Pacific Rim states - with big variations - to suppress Covid-19 and to stabilise their economies rapidly. 

The OECD family has adopted the rhetoric of East Asian strategy - ‘test/track/isolate’ - but most countries in fact have hybrid containment regimes that fall far short. With a few exceptions they lack the surveillance and quarantine structures needed to carry out a clean exit. 

Dominic Cummings would not have been allowed to drive across China, Taiwan, or Korea to find a more congenial lockdown venue. He would have been stopped, arrested, and punished. In Wuhan his home would have been boarded up by Communist Party vigilantes before he had escaped.

There is a common theme in the bullish reports crossing my desk from the big global investment funds. They all start from the premise that the rebound in Chinese economic growth will somehow be replicated. 

Leaving aside the question of whether China’s economy is close to normal - given that a fifth of migrant workers have yet to return from their villages, and hidden unemployment is near 15pc - this ‘one-and-done’ hypothesis repeats the error made by these same funds in February before Wall Street crashed 35pc. 

They were not listening to the warnings of global virologists and epidemiologists. Financial analysts were modelling Covid-19 as if it were like SARS. But it was nothing like SARS. Even then we knew that it was as contagious as influenza but ten times more deadly, and with no cross-immunity or vaccines to check the wildfire spread.

The scientists are warning again. They think that Europe and the US are dialing down containment measures before the tracking and isolation apparatus is fully in place and before the stock of infections has been cut to manageable levels. 

A new paper by Imperial College, London, says the R rate is above 1.0 in 24 US states, including Texas, Florida, and Ohio. “Very few have conclusively controlled their epidemics”, it said. Most are opening up anyway.

The early promise of herd immunity from antibody surveys has come to little. The incoming data confirms the worst fears. There is no hidden reservoir of asymptomatic cases. The case fatality rate is as awful as virologists first thought. 

Imperial said the percentage of the US population exposed to the virus as of May 17 was 4.1pc, and just 1pc in California. The best evidence in Britain is that exposure is not much above 15pc in London and 5pc in the rest of the country. Sweden’s Anders Tegnell is having to row back from his swashbuckling forecasts of herd immunity by late Spring.

This creates a terrible dilemma for western governments. My presumption is that once easing has begun, a second lockdown becomes unenforceable. Discipline is visibly breaking down across Europe and America, Cummings or no Cummings. 

Yet my other presumption is that leaders cannot let the virus run its course and hope that a vaccine will come along. Donald Trump is angling to do exactly that and a great number of investors seem to be betting on it too. 

Jeff Currie, Goldman Sachs’ oil guru, says his ultra-bullish call on commodities works whether the post-lockdown strategy succeeds or fails. His premise is that if the virus roars back, the political classes will go for growth the second time around, and damn the consequences. 

I doubt that western democracies would allow their governments to act with such ruthlessness when push comes to shove, or that people would go about normal business in the midst of a full-blown Wave Two. The likely outcome is that the next few months will be a messy series of false dawns and fresh outbreaks, carving out a protracted Nike swoosh rather than the Chinese ‘V’ assumed by equity markets or commodity bulls.

The rush to reopen is understandable. I don’t wish to enter arguments about morality and freedom. But as a matter of strict economics, the notion that we must pick between fighting Covid-19 and reviving growth is irritatingly misframed. The British authorities have shown - without apology - that if you are seriously incompetent, you get both the worst death toll in Europe and one of the worst economic hits aswell. 

The danger ahead is that the economic deep-freeze - akin to an extended holiday in macroeconomic terms for a while - drags on and reaches metastasis. A study by the Bank of Spain says the damage goes non-linear after two months or so. At that point the buffers are used up and insolvencies start in earnest, with a feedback loop working its awful logic through the economy.

Spanish GDP would shrink 6.8pc this year under its benign eight-week scenario. Contraction would almost double to 12.4pc if the disruption lasts an extra four weeks and is then followed by fresh wavelets for months afterwards, with unemployment topping 21pc and the debt ratio spiraling up by 24pc of GDP. By analogy, Italy would be pushed over the brink. The Club Med bloc would be caught in a debt-deflation trap with no way out. 

The EU Recovery Fund unveiled in Brussels today will not make a dent if the malign scenario plays out. The €500bn of direct grants will be stretched into the 2020s and amount to just 1pc of GDP a year. The money will be spread thinly among countless sectors and regions. Italy will hardly notice the difference and may not ultimately be a net recipient in any case.

The European Central Bank is hamstrung. It must satisfy the German Constitutional Court by early August that its first QE programme complies with EU law prohibiting quasi-fiscal bail-outs - otherwise the Bundesbank will have to withdraw.

If the ECB presses ahead and announces another round of pandemic QE (the current batch will run out by October) it risks an even more dangerous showdown. Leaks this week suggest that the ECB seriously aims to go it alone without the Bundesbank if need be. Such a madcap scheme would have no credibility in global markets and would lead to a two-tier euro. That would be playing with fire.

The US Federal Reserve has no such constraints and is doing its best to backstop the international system, providing dollar swap lines to fellow central banks at near zero cost, and buying the debt of ‘fallen angels’ at home to prevent cascade sales of derated US companies.

But be careful. The Fed cannot stop insolvent companies going bust. All it can do is to create liquidity, and today the flow rate of fresh stimulus is diminishing fast. Hedge fund veteran Stanley Druckenmiller, a liquidity specialist, says the risk-reward for equity markets “maybe as bad as I’ve seen it in my career.” 

His reason is that the Fed front-loaded QE in late March. At one point it was buying $120bn of US Treasuries and agency bonds a day. The effect was $1 trillion of extra liquidity above the giant sums being soaked up by the Treasury. This had to go somewhere. It flooded risk assets.

The flows are sputtering out. The Fed’s purchases have been gliding downwards. Last week the total was just $102bn. The US Treasury is now issuing more debt than the Fed is buying. The excess liquidity is gradually evaporating. 

In the end, the Fed will do whatever it takes to rescue the debt markets and Wall Street. It will buy Treasury notes and equities if need be. But it is not injecting net stimulus right now and will not intervene to shore up Wall Street unless the S&P 500 index retests the March lows.

You cannot count on liquidity alone to keep pumping up stock prices in the face of a massive economic shock, tumbling earnings, and a tide of bankruptcies. It will take a perfect exit from Covid-19 as well. 

Mr Druckenmiller’s advice: put on your seat-belts.

2. When life’s difficult, cults are an easy answer: Conspiracy theories and new age nonsense like Universal Medicine offer some middle-class escapism from dark reality: David Aaronovitch, The Times

Just when you thought there was nothing new to say about the Cummings affair, along comes a conspiracy theory. On Monday the Labour MP and failed leadership candidate Clive Lewis tweeted “how interesting” about a quote from another tweeter, the former British ambassador to Uzbekistan, Craig Murray. It read: “On 12 April Dominic Cummings was seen in Barnard Castle. Two days later GlaxoSmithKline of Barnard Castle signed an agreement to develop and manufacture a Covid-19 vaccine with Sanofi of France. Of course that could be coincidence.”

GSK does indeed have a factory in Barnard Castle, although its headquarters is in London. But Mr Murray failed to spell out, in his tweet or his lengthy blogposts, what possible connection there could be between the now-notorious outing and a vaccine deal with France. I can’t think of one but obviously Mr Murray and Mr Lewis can. Within a day this nebulous nonsense was popping up in WhatsApp groups and Facebook posts all over the place.

Mr Murray is a serial “just saying” conspiracy theorist. When the Russians poisoned the Skripals in 2018, for example, Murray pointed a finger at the Israelis and suggested a British government cover-up. At the moment his big issue is the conspiracy he alleges to “fit up” the former Scottish first minister Alex Salmond on sexual assault charges (Mr Salmond was acquitted). In the past he has accused me and other Jewish writers of being “Zionist propagandists” for the sake of “available riches”. Perhaps if Clive Lewis had done his homework on Murray he’d have been more judicious, but the temptation of the extra, hidden explanation, that banishes the possibility of accident and error and replaces it with something far darker and cleverer, is always powerful.

The week before Mr Lewis’s tweet, I recorded a Stories of Our Times podcast with Rosie Kinchen of The Sunday Times. Rosie had been looking into the case of an Australian cult called Universal Medicine (UM), which has been running its British operation from a very swish guesthouse in Somerset. The story contained some of the classic features of cult encounters: divided families, court cases, bizarre rituals and so on.

This one was also slightly different. UM’s founder and guru is a fifty-something former Australian tennis coach called Serge Benhayon. We learn on UM’s website that in 1999 he “found himself under the impress of a series of unfoldments that led to a re-connection, or, ‘union of old’. As a result, he initiated these impresses via the expression of Esoteric Healing using the forum of his sessions to present the teachings that not long after became his vast collection and volume of service to many thousands.”

Not a few of these thousands have been suitably grateful and have made unfoldments of their own, by opening their wallets and bank accounts, by making bequests and donations, or by booking courses and buying various elements of UM’s “vast collections”. Not only does Mr Benhayon draw what seems to be a substantial income from UM’s activities, but so do his wife, his ex-wife and his children.

In 2018, after a long legal process, an Australian court decided that UM was a “socially harmful cult”. And recently in the British Court of Appeal Lord Justice Peter Jackson ordered a woman to make a “definitive break” with the group or else risk losing custody of her daughter.

What’s really fascinating is not the cult, but its adherents. Not least because a friend told me that he knew several of the leading lay members of UM. They were wealthy, privately educated, holding down professional or creative jobs, and often living in nice houses in the countryside. No robes, no strange tattoos. No secret signs. But on the other hand strict dietary restrictions based on the most improbable analysis of the body’s functioning (did you know that you were made up of 45,000 nadis, or energy centres, and that when bad energy runs across the top of your nadis you get ill?). And ways of dealing with this bad (or pranic) energy include turning things counterclockwise, and going to bed at 9pm and getting up at 3am.

Given that Benhayon’s own “philosophical” musings are the most ridiculous jumble of phrases, that he claims to channel Leonardo da Vinci among others, and that he apparently had his first epiphany sitting on the loo, you might have thought that any rational person’s sense of the absurd would have warned them off him, long before they got to other bits. Instead they go on to endorse the Ageless Wisdom, the esoteric chakra-puncture, the idea that all history is a conspiracy, and the ovarian reading.

When you start looking at the online testimony of adherents you begin to understand why. There’s the middle-class woman who had an abortion at 16 and has felt guilty about it ever since. There’s the wife of a successful film director who, having just given birth, has been taught to see that she and the child possessed all the wisdom they required, and that “I need not look outside for the answers but know that they are already within”. Or, “I am a young and attractive woman who has chronic hormone imbalance and hair loss,” but “the EBM session today has given me an opportunity to go even deeper, and with TRUE LOVE.” It’s where religion meets new age health fad, where the anti-vaxxer meets the Livingness. And what does that mean? “It means Taking Care of You. And, more deeply it means You Loving You.”

Like Serge loves them. Like all the Benhayons love them. They are all beautiful. None of them are disappointing. They are all the carriers of inner wisdom. Not only that but this inner wisdom is so easily achieved! The hugely complex, impossible, often arbitrary world doesn’t need your intellect to grapple painfully with it, because it’s a delusion. Leave off wheat, rise at 3am, get the prana massaged away from your nadis and all will be well.

People often believe what they do not because they choose to, but because they need to. A middle-class under-achiever whose focus is very much on themselves needs to be told that they’re actually very special. A failed Labour politician needs to think he may be necessary after all because he has the key to a great scandal. Very few people are so cynical that they espouse preposterous theories that they don’t believe. Though, looking across the Atlantic, it does sometimes happen.

 

 * A terrible book, by the way. Don't be tempted to buy it, unless you're a very religious Protestant.



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