Gefira 43 is accompanying the reader through the erratic behaviour that has seized hold of governments and peoples of the Northern Hemisphere among that is meticulously and almost reverentially referred to by its name plus assigned number, as if the recipients of the news were expert virologists, physicians or biologists.

The event is already advantageous to governments and organizations: unbridled money printing, pacification of political opposition without any resort to law enforcement, the introduction of restrictions of which – as we know from experience – not all will be lifted and a wonderful, legitimate, plausible excuse for all and any measures taken and many other things. Look, the blame for all failures within the next two or three years will be conveniently put on the pandemic and everybody will understand! Isn’t it a godsend!

Gefira 43 invites its readers to dispel fear and make an effort to see through the props and pay attention to those parts of the stage which are not made visible by the spotlights. What is being arranged in the dark now, that’s a fundamental question. From Beijing through Moscow, Warsaw, Berlin, Paris to Washington we are seeing more or less the same measures imposed by the authorities acting as if in unison. Gone are the old animosities! Does the event spell a thorough reshuffling of world politics? Is globalization going to be strengthened on the pretext of creating a unifying mechanism capable of combating such calamities in the future or are we witnessing the end of the process of rounding all countries and nations up into one shed? The latter can be substantiated by the observation that all national states in Europe have been acting on their own and the European Union was nowhere to be seen.

Gefira Financial Bulletin #43 is available now

• COVID 19 spells the end of the American Empire
• By way of deception thou shalt do war
• Taking advantage of the Corona crisis

Guest author: C. van Rijn

The Corona crisis is one of the biggest problems humanity has had to deal with in a long time. People are dying in great numbers and radical measures are being taken amid this panic and maybe even mass hysteria. It is often said that human life has no price. And yet, human life has a price. This price is determined on a daily basis by health care systems using the incremental cost-effectiveness ratio (ICER). Usually, countries in Europe are willing to pay in between €20.000-€100.000 to extend a person’s life for a year. On the basis of the concept of quality adjusted life years (QALY) it is calculated whether a person with cancer is still entitled to immunotherapy or whether an older person is still entitled to a heart transplant.
To calculate whether the current measures are worth their money, we are going to estimate the gain in life expectancy resulting from the lockdown and compare it with the costs.

To this end we need to know a few things:
a) total costs of the lockdown;
b) how many years of life are likely to be lost without the lockdown;
c) how many years of life are lost even with a well-executed lockdown;
d) how many years of life are likely to be lost as a negative side effect of the lockdown;
The costs per year of life gained by the lockdown are then: a/ (b- c -d).

These calculations seem easy, but they are quite complicated. As an example we take the Netherlands and operate partly on precise numbers, partly on rough estimates. The findings can be extrapolated and applied to any other country.

First the cost. The economic loss according to CPB estimates stands at 1.2-7.7% and that calculated by the IMF at 7.5%. This means in total about €8 billion to €50 billion.
To calculate how many years of life are lost without the lockdown, we need to know the crude mortality rate (CMR) and the infection fatality rate (IFR). Until now, attention has only been focused on the Case Fatality Rate.
Continue reading →

We are witnessing the greatest transformation in the oil market in history.

What was recently political fiction has become reality: Saudi Arabia, the US and Russia are on the same side. After long negotiations, the largest producers of the black gold agreed to drastically reduce extraction. The limitation of the produced quantities by 20 million barrels per day (according to Trump) means a 20% lower supply (every day a total of 100 million barrels are offered in the world). Although many investors still see no reason for a rapid increase in WTI and Brent (two main types of oil), as world demand has fallen by 25 million barrels due to the so-called pandemic, the determination of the global players should be a warning to the bears on the market. The most likely scenario for most members of the new giant cartel (which also includes Canada, Mexico, Brazil, Kazakhstan and Azerbaijan) is price stabilization between 60 and 70 dollars per barrel. If prices are higher, they are more likely to counteract this, as it would encourage an acceleration of the introduction of massive e-mobility, which would not play into their hands. You can find more about commodities, which will soon be an attractive investment, in our next Bulletin No. 43.

The global financial system with its two powerful pillars – the IMF and the World Bank – continues to play a big role. It needs to cope not only with the pecuniary processes but also with other global occurrences because these have a direct impact on markets, stock exchanges, manufacturing and services. The outbreak of the notorious epidemic that is on everyone’s lips is just such an event. It has economically impacted China, the world’s factory, and now it – or rather the precautions are taken against it – is ravaging Europe and the United States. Businesses are ordered to stop operating or to limit their activities while people need to make their living if only to pay the fixed costs such as rent, credit, leasing, employee remuneration and the like. Yes, governments offer solutions and these include tax exemptions or they provide citizens with unearned money just to allow them to survive. Does it not resemble the quantitative easing of a few years ago? Yet, the divergence between the amount of money available and the amount of goods and services is not going to ameliorate the economic problems.

Continue reading →

Yesterday (March 25, 2020), Vladimir Putin held a televised speech addressed to the citizens of the Russian Federation, occasioned by the emergence of the coronavirus worldwide epidemic. He talked about the unfolding events that have hit Europe and the United States and announced a number of measures that the government was engaged in, combating the biological threat. During the whole coming week all professional activities are to be suspended while citizens will be secured with money from the state and a number of tax exemptions. A speech like any other that might be held by any leader of any state under the circumstances. There was, however, something that distinguished this address from similar speeches.

+

Towards the end of his appearance President Putin announced an important fiscal initiative: recipients of dividends earned in Russia will have to pay a 15% tax (rather than the 2% as binding at present) if they intend to transfer the money abroad. Consider that the income tax in Russia amounts to 13%. With this measure President Putin is doing away with yet another yoke that was put on Russia during the Yeltsin era. With this proposal of a legislative bill President Putin will put a stop to capital flight. Surely, the moment for such an announcement was carefully selected: who during the time of the worldwide pandemic, as the current events are referred to, will dare to oppose the move?

President Putin also announced that Russia would renegotiate with other countries agreements on double taxation and in case those other countries did not yield to Moscow’s demands, Russia will unilaterally renege on those agreements.

Consider also that President Putin can kill two birds with one stone. Capital will be kept within the country and the same measure will affect the oligarchs and their Western partners. There will be less money to line the pockets of foreign investors, less credited to foreign bank accounts, less money for subversive political activities in Russia and – what follows naturally – a resultant more intense – let us express it in mild terms – dislike for the Kremlin “regime”, voiced in unison at home and abroad. Also, since almost every action is like a double-edged sword, there might be smaller foreign investment in Russia.

As things accompanying the epidemic are developing, we can note a few interesting phenomena:

[1] borders are useful after all whereas the mass movement of people may be deleterious;

[2] virtue signalling has long gone beyond being ridiculous;

[3] the international solidarity is wishful thinking;

[4] Beijing and Moscow are far closer to Italy – a European Union member-state in need – than Brussels, Paris, Berlin or for that matter Washington.

[1] Borders are useful. Up to now the principle of the free movement of people (to be precise: labour and customers) has been enshrined in all Western states and regarded as unassailable. Whoever had second thoughts about it was ridiculed mercilessly and touted as inhumane, backward and what not. Nowadays all European governments have decided to isolate their countries from the outside world, including their EU member-state neighbours, and they did not need approval from Brussels. Fear of the DNA double helix soaring here and there made conceited politicians and self-assured citizens bow their knees to reality. They have all at the long last recognized that reality is something that refuses to satisfy our wishes.

[2] The other value enshrined in the Western world was its ethics of being race blind. Lo and behold fear of death has shown that people are race conscious, xenophobic and tend to cherish in-group loyalty rather than the global fraternity of all human beings. In Italy and the United States people naturally have begun to behave in a way suggestive of their conscious avoidance of the Chinese co-citizens or visitors. A quite natural behaviour when you consider that the epidemic started in and spread from China. This, however, was like the gauntlet thrown down to the politicians and social activists who have made a point of virtue signalling. Coronavirus prompts ‘hysterical, shameful’ Sinophobia in Italy (Al Jazeera); As the coronavirus spreads across the globe, so too does racism (The Atlantic); Coronavirus: Spike in reports of ‘racist’ abuse of Chinese people in Italy (The Local). These are but a few titles. For them it is not the epidemic that poses a problem, it is racisms that is rearing its ugly head. Only when it comes to acid tests can we see reality – something that refuses to bow to our wishes – of inter-human relations. People are in-group oriented (why shouldn’t they be, after all?) and xenophobic. They are hard-wired for that. Naturally, they are concerned first and foremost about their families and then about their extended families (even though they may not admit it consciously or in an attempt to avoid official ostracism) and not about the whole world, about nations in neighbouring countries, let alone about communities located in the other parts of the globe. This provides fertile ground for the few who want to tout themselves as friends of humanity and feel they are operating on moral high ground, which is a shot of dopamine as good as any other: Italian Mayor Urges Citizens to ‘Hug a Chinese’ to Fight Racism; Italian virologist says political correctness doomed his country’s coronavirus response; and On February 1st Florence, Italy, Celebrated “Hug a Chinese” Day.

You still don’t know why the death toll in Italy has surpassed that in Wuhan?

Continue reading →

Recently we have been witnessing a number of events that have captured our attention. These are: the trade conflict between Saudi Arabia and Russia over the price of oil, the changes to the Russian constitution that are under way, the impact that the coronavirus has on the Western world and the resultant ban that the American president issued on European visitors to the United States. Let us have a closer look at them.

All of a sudden the Saudi authorities came up with the initiative to push down the price of oil worldwide. The OPEC countries were easy to deal with but to make oil cheaper globally, Riyadh needed the consent of one of the biggest oil producers outside OPEC: Russia. Moscow declined the proposal. The question arises: why does Riyadh want to have a smaller income generated by oil exports? After all oil makes up the lion’s share in the country’s finances.

The situation reminds one of the year 1985. In April of that year Mikhail Gorbachev came to power with his revolutionary ideas of reforming the Soviet system. A few months later Saudi Arabia announced its intention to bring down the price of oil and so it did. Now it is known that the move was done in league with Washington. At that time the Soviet Union – just as the Russian Federation today – had a large income from oil. Less money meant trouble for the Kremlin, especially at the time of the reforms that had been announced. The result was the collapse of the Soviet state within a couple of years.

Continue reading →