The Corona Divide

Germans Split Over Lifting of Lockdown

A growing number of people in Germany are resisting lockdown measures imposed to contain the coronavirus. The rift between those who support the measures and those who are critical of them is growing.

By Felix Bohr, Uwe Buse, Anna Clauß, Markus Feldenkirchen, Barbara Hardinghaus, Wolfgang Höbel, Guido Kleinhubbert, Martin Knobbe, Julia Koch, Dialika Neufeld, Christopher Piltz, Max Polonyi, Andreas Wassermann and Alfred Weinzierl

Passengers on a local commuter train in Berlin
Passengers on a local commuter train in Berlin / KARSTEN THIELKER


Last weekend, Christopher Lauer tweeted a photograph from a popular Berlin park. It showed hundreds of people sitting close together under the sunny sky, with little in the way of social distancing.

He captioned it: "There's nothing really to add to this photo from Weinsbergspark in Berlin. From just now.” Lauer was one of the most prominent faces of the Pirate Party several years back and today he’s active as an online influencer, with almost 45,000 followers on Twitter. "My tweet got a ton of shares,” Lauer says. More than a quarter-million people viewed the photo, and almost 1,000 commented on it.

It sparked an aggressive debate between those who have been adhering to the measures imposed by the government to stop the spread of the novel coronavirus and people who have grown tired of the restrictions. "Berlin police, please clean this up at once :),” one user demanded. Another wrote that irresponsible people would ultimately harm everyone. "It’s so terrible.” A number of posters used it as an opportunity to vent, with comments like: "Just drop a bomb and be done with it,” or, "They can just go fuck themselves” or "Shithole Berlin.”

Soon enough, the opposing camp weighed in. "What’s the problem as long as the numbers stay as low as they are?” asked one user. Another wrote that people just aren’t going to allow themselves to be locked up forever. "It’s high time more people went out and got their lives back.” Another accused Lauer of acting like a Nazi neighborhood "Blockwart” with a "Stasi mentality,” a reference to the East German secret police.

Raw Debate

It was a raw debate, but it is one that is being carried out all over Germany and beyond at the moment. The coronavirus measures are not only forcing people to keep a distance - they’re also creating distances between people who used to be close. Lauer says he tweeted the photo out of resignation. Since March 14, he says, he has only left home to go shopping and for walks. He always wears a face mask. And he says he was stunned when he saw all the people in the park. "I limit my movement and take the pandemic seriously and they’re sitting in the park drinking beer?”

Indeed, aggression seem to be spreading faster than the virus itself, and it has the potential to divide society. Frustration over the length of the lockdown and limitations on public life and the economic, social and psychological consequences they are having is growing. At the same time, people who have obediently followed the rules are also getting more aggressive out of despair over the stubbornness of many who aren’t following them.

Compared to many other countries, Germany is doing well in the fight against the coronavirus. The German approach has been praised as exemplary by the international media and the mortality rate is low here compared to other countries. And so far, at least, the health-care system has not become overwhelmed, as some had feared would be the case.

Not only that, but compared to countries like France, Italy or Spain, where permission is necessary to be able to leave one's home, the measures in Germany have been rather moderate. And the restrictions currently in place are being relaxed by the week.

Yet while there was broad acceptance of the new rules during the first weeks of the crisis, people are now asking whether those rules went way too far. And whether it was all worth it – the collapse of the economy, the potential demise of entire industries, the overburdening of families and the psychological consequences of all the restrictions. Recent days have seen rallies, demonstration, petitions and lawsuits.

A growing number of skeptics are voicing their opinions, both experts and those simply looking for attention. "We can already see that the mood in the populace is shifting,” says Friedrich Merz, a candidate for the chair of the conservative Christian Democratic Union (CDU) party.

Among the critics are publicity-hounds like Boris Palmer, the well-known Green Party mayor of the town of Tübingen, who declared: "It could be in Germany that we’re saving people who would have died in six months anyway because of their age and pre-existing conditions.” And then there’s famous German theater director Frank Castorf, who said he didn’t need to have a "teary-eyed" Chancellor Angela Merkel preaching to him about how "I have to wash my hands." He also said he would like to see more resistance to the policies across the country.

But such criticism is also coming from millions of people who aren't quite as full of bombast and who have good reasons for their desperation. This applies especially to those who have been most affected by the restrictions: artists, restaurant owners, parents, but also doctors and psychologists who have warned against neglecting sick people who don’t have the coronavirus.

Silent Resistance

And then there is the silent resistance of many people who say they agree with the measures in surveys, but who have long since abandoned the rules on social distancing and bans on meeting people from outside their households in their everyday lives. The mobility of Germans is rising sharply, as is the number of people who are meeting up with friends and acquaintances.

The political debate, meanwhile, has been divided into two groups: There is the group open to a more risky approach, led by North Rhine-Westphalia Governor Armin Laschet, and those in favor of more discipline” led by Chancellor Merkel and Bavarian Governor Markus Söder. But this rift also runs through all swaths of society, with politicians, journalists, neighborhoods, friends and family all arguing with each other. A divide created by the coronavirus runs through the entire country.

Germany’s most prominent and likely most influential virologist, Christian Drosten, has experienced this shift in the social climate first hand. Even as some are celbrating him as a kind of curly-haired demigod, others see him as being the main culprit for their misery. Britain’s Guardian newspaper even reported that he has even been emailed death threats.

Drosten, though, insists that he won't stop issuing warnings, saying he wants to prevent the country from ruining the progress that has been made by the social distancing rules. His colleague Melanie Brinkmann at the Helmholtz Center for Infection Research is likewise worried about the potential consequences of the more casual approach to the coronavirus that many in Germany are now adopting. "The government has sent the wrong message with the loosening of measures,” Brinkmann says. She fears that people "are no longer taking the virus as seriously.”
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 Sunbathers on a stretch of the Elbe River in Hamburg on a recent sunny day: Dispair is growing over people who are flouting the coronavirus rules.
Sunbathers on a stretch of the Elbe River in Hamburg on a recent sunny day: Dispair is growing over people who are flouting the coronavirus rules. / Bodo Marks / TeleNewsNetwork


The irritation over the incursions into daily life the coronavirus crisis has caused can be observed in many places in Germany. In the town of Wilmersforf in Bavaria, a fight broke out between a cashier at a supermarket and two customers who didn’t want to adhere to the social-distancing rules. A 31-year-old man snatched a cucumber from the saleswoman and threw it in her direction. The police had to be called to the scene.

When Laura Komma, a physician, recently went shopping at a corner grocery store, she found herself standing among several elderly people in the shop, and no one was wearing a mask.

Komma, who has an autoimmune disease, asked them to please wear a mask the next time they went shopping. But they came right back at her: "They don’t work anyway,” said some, or "I have already experienced so much in my life, I’m not going to let you scare me with a virus.”

The doctor lost her cool. "But you protect others when you wear a mask," she spat at one of the seniors, "people like me." She then left the shop and went home, angry at the "selfishness of the elderly," as she puts it.

Growing Protests

Protests against the coronavirus containment measures have been held in many places in Germany in recent days. People have been demonstrating every Saturday afternoon at Berlin’s Rosa-Luxemburg-Platz since March 28 in front of the theater there, calling it a "hygiene protest,” even though it has nothing to do with washing hands. The protesters believe the measures currently in place violate the German constitution.

It began as a protest among left-wing activists, Berlin artists and people who had occupied the Volksbühne theater on the square in an effort to oust its director. But then the far-right, neo-Nazis and others of their ilk began attending.

At one recent protest, a grandfather could be seen playing the national anthem on his harmonica. There was also an elderly woman who said she would like to see her grandchildren in France again. Other protesters carried copies of the German constitution under their arms. Most weren’t wearing masks.

The growing anger could also be observed in Stuttgart, where the initiative Querdenken 711 has been organizing protests against the coronavirus containment measures for three weeks. They are protesting against face mask requirements, travel restrictions and bans on social gatherings. In the beginning, around 30 demonstrators turned up, but this Saturday, organizer Michael Ballweg is expecting more than 3,000 protesters.
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A participant at the "Hygiene Protest" in front of Berlin's Volksbühne theater: Protesters believe the coronavirus containment measures violate the constitution.
A participant at the "Hygiene Protest" in front of Berlin's Volksbühne theater: Protesters believe the coronavirus containment measures violate the constitution. / EMMANUELE CONTINI / Imago Images


On Wednesday night, crowds also gathered on the cathedral square in Magdeburg. The Saxony-Anhalt state chapter of the right-wing populist Alternative for Germany (AfD) had called for a protest against the "knee-jerk measures taken by the federal and state governments.”

Fifty participants were officially admitted and barriers demarcated the area on the square where it could take place and green crosses were taped on the ground to mark the places where protesters were to stand.

But more than 300 people turned up, with most standing outside that area. One man commented that more people will die from cancer that from "the shitty cough, and they’re not doing anything about cancer.” Another man wore a T-shirt warning against the "psycho terror” of Merkel, Drosten and Reiner Haseloff, the state governor.

But it’s not only chronic Merkel-haters or AfD-supporting conspiracy theorists who are expressing their discontent. Many are driven by fear born from concern for their own children, for those who are sick and for their economic livelihoods.

"Kill the Virus, not Our Business"

Hamburg restaurant owner Jörg Meyer, for example, has turned his Facebook page into a kind of battle cry. "Kill the virus. Not our business,” it says against a green background on the page. Speaking by phone, Meyer, 45, explains how he feels politicians have completely lost their minds.

"The fact that they are deliberately destroying everything with this lockdown, practically expropriating the middle class and thus causing social unrest today and in the years to come: I find it totally absurd,” says the owner of the bar and restaurant Le Lion.

Meyer is a major figure in the restaurant scene. He’s had no choice but to look on for weeks as money has dried up because he has been unable to reopen his bar, even though stores have been allowed to open their doors again. "The first 100,000 euros are already gone,” he says.

Government emergency relief money still hasn’t been wired to his accounts nor is the work-furlough allowance for his 16 employees anywhere in sight yet, he says. "If it doesn’t come by next month, I will have to close up shop.”

Meyer is also upset about German Economics Minister Peter Altmaier, who he accuses of running from one talk show to the next and saying: We’re taking care of everyone – no healthy business will go bankrupt. "I think to myself, has he gone soft in the head?” Meyer says. "As a person, as a citizen of this country, I would like to see more honesty from our politicians.”

Together with German celebrity chef Tim Mälzer and other restaurateurs, Meyer staged a protest a few days ago in front of Hamburg’s City Hall to draw attention to his industry’s plight. The restaurant owners set up more than 400 chairs chairs and tables, with Meyer even carrying over the bar stools from his establishment covered with green velvet. The event was staged under the hashtag #emptychairs.
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   Restaurateur Meyer at the "EmptyChairs" protest action in Hamburg: "Has he gone soft in the head?"
Restaurateur Meyer at the "EmptyChairs" protest action in Hamburg: "Has he gone soft in the head?" / Swetlana Holz / Bar Le Lion


"The government should suspend all the measures it has taken and return to normal,” demands Dirk Gratzel of Stolberg, Germany, whose company Green Zero promotes low-emissions business and has seen its projects suffer from the effects of the coronavirus crisis. Gratzel, 52, says he would like to see more stringent protection of the risk groups instead of further restrictions for the masses.

Moreover, he says, the risk of dying from eating too much fat, smoking, consuming too much sugar or alcohol or getting too little exercise is significantly higher. "If we want to drastically reduce the number of deaths in Germany, politicians should start there and do so in the long term, instead of forcing the whole country further into lockdown.”

Disproportionate?

Doubts are also growing among doctors and psychiatrists as to whether the measures that have been adopted by politicians are proportionate. "I don’t believe that the continued lockdown is proportionate to what it yields,” says Bochum-based pneumologist Santiago Ewig, the chief physician at the Ruhr Thoracic Center, a hospital in the city.

He sees "great collateral damage with unforeseeable consequences” in our society, "economic, cultural, psychological and in the care of patients being treated for things other than the coronavirus.” He says that COVID-19, in its aggressive form, is certainly a serious threat, "but we should classify it as one of many threats that we will have to learn to deal with.”

It’s an idea that Cologne-based lung specialist Elmar Storck further elucidates. "Let people live as social beings again and focus on high-risk patients, better protecting residents in senior homes, but at the same time let them receive visitors.” He says it’s inhuman to cut families apart from each other.

Psychiatrists also believe that many people are unable to cope with the conditions that have been imposed, with the threatened or actual loss of a job, with serious economic problems and with loneliness. Furthermore, they say, people are avoiding making the trip to the doctor's office, thus leaving their problems unaddressed.

At the End of Their Ropes

Parents, too, are increasingly suffering as they have to juggle their own work with home schooling and childcare, especially single parents like Anita of Hamburg, who requested that her last name not be used.

Anita works part time in the health-care industry. Before the coronavirus, her 4-year-old son Maximilian’s grandmother helped babysit and he would frequently go to another child’s house to play sometimes. All that is gone now. She was so exhausted last Sunday that she drove to her mother’s house to get a breather in her yard. When the grandmother saw how tired her daughter was, she kept her grandson and told her daughter to go home and get some sleep.

Now Anita has a guilty conscience regarding her mom. She had adhered to the ban on personal contacts for weeks, visiting neither friends nor her child's grandparents. But she just couldn't do it any longer. That’s why she, too, is now pushing for a further loosening of the lockdown. "Otherwise, this is really going to affect people's psyche.”

Judith K. has a different view, and she, too, has good arguments. The 52-year-old is a teacher at a special education school with a focus on intellectual development located near Cologne. The school has 168 young students. Currently, five of those students are being provided with emergency care at school because their parents are key workers. K. says she can already see how poorly they are able to comply with the prescribed preventative measures.

Although many schools in North Rhine-Westphalia are reopening, Judith K’s school remains closed, a fact that is angering an increasing number of parents. "Yesterday, one girl's mother approached me and asked what’s wrong with me, saying I should finally open school again and that I'm just too lazy.” K. says she can understand such desperation. "Parents are at the end of their ropes,” she says. "They’re overwhelmed.” But out of concern for her students, she’s still hoping the school will remain closed for some time to come.
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Protesters in Magdeburg express their opposition to the coronavirus containment measures: "Psycho terror from Merkel and Drosten"
Protesters in Magdeburg express their opposition to the coronavirus containment measures: "Psycho terror from Merkel and Drosten" / HC Plambeck / Der Spiegel


Many in Germany are deeply concerned about the country moving too soon to loosen the lockdown. Michaela Willhardt is one of them. The 46-year-old mother lives with a congenital immune defect, and the coronavirus poses a serious danger. A doctor advised her to wear an FFP2 mask at home as soon as her 8-year-old son starts school again, and to do so indefinitely. The doctor also told her to keep a distance from him.

Willhardt hasn’t left her home since the beginning of the crisis, with two friends taking turns helping her out with her shopping. Her son is no longer allowed to meet up with other friends. Willhardt understands the desire of many people to return to normal life. Indeed, it is a wish she shares. "But I would feel much more comfortable if the restrictions were extended for a few more weeks so that the number of infected could be further reduced."

Such is the new reality in Germany in this age of irreconcilability. Almost all of the people opposing each other over the coronavirus containment measures have solid reasons and arguments on their side for doing so. But there is no solution that will satisfy both camps and their needs equally.

Waning Support

Governments are now trying to find a compromise. They want to continue fighting the pandemic while at the same time mitigating the collateral damage that battle is causing. It’s still entirely unclear what the outcome of this experiment will be.

The only thing that is certain is that the German government itself has played a role in the fact that acceptance of the measures it has imposed is waning and that many Germans are feeling insecure.

The considerations behind the government’s decisions have often remained vague. That is especially conspicuous when the chancellor and her chief of staff, Helge Braun, shift strategies, which has happened often during the crisis. This has resulted in contradictions that have not been resolved and changes in direction that are not explained.

Initially, the majority of politicians at the federal and state level rejected the closure of schools, but then, suddenly, they shifted positions and favored the closures after virologist Drosten read a new study from the U.S. overnight and changed his opinion on the issue. In the beginning, the government also questioned the sense of wearing face masks as a form of protection against infection.

Today, the wearing of masks is mandatory across Germany. The government has also changed its announcements about its targets for controlling the pandemic.

At first, it was a question of how quickly the number of new infections doubled. Later, it was the so-called reproduction factor or "R” number, which refers how many people each infected person passes the disease on to. Now, Merkel’s cabinet has begun looking at a different figure:

The number of new infections. The government has said that the chain of infection can only be traced if that number doesn’t rise too quickly. It’s yet another change that adds to the confusion and feeds distrust among the populace.

These shortcomings play right into the hands of opponents of the measures to contain the coronavirus.The fact that there have only been around 6,000 deaths linked to the coronavirus in Germany has led people like theater director Castorf, for example, to doubt the seriousness of the medical emergency in the country. He laments what he calls an "ideologizing” of politics, which in his opinion is based on scientific advice that is by no means reliable and a worldview he considers questionable.
Such voices could ultimately contribute to the impression held by some that the warnings from the government about the catastrophe have been exaggerated. It is true that an increasing number of Germans are no longer afraid of the disease, even though it is still as aggressive and deadly as it was six weeks ago. Many people think the country has dodged a bullet.

The Prevention Paradox

It’s a phenomenon that is well-known in health research. It’s called the prevention paradox. It states that a preventative measure that has a high health benefit for the overall population often does very little for, or is even harmful to, the individual.

This is particularly true when it comes to controlling pandemics. When fighting an outbreak, it is important that the tough measures are taken at a time when the number of people infected is still low. If this succeeds and the strategy works, then the major health disaster that had been expected doesn't ever materialize. And that would leave many asking whether politicians had gone too far in those prevention efforts.

As such, the very absence of mass deaths can give rise to harsh criticism, particularly if combating the pandemic has serious social and economic consequences.

It’s not just the virus that Germany will likely have to deal with for some time to come, but also this paradox.

Governments face ‘massive’ rise in public debt, IMF warns

Coronavirus response to push budget deficits above financial crisis levels

Chris Giles in London

People wearing protective masks queue to register as unemployed in Sofia, Bulgaria. Government deficits are rising as the economic toll of coronavirus grows.
People wearing protective masks queue to register as unemployed in Sofia, Bulgaria. Government deficits are rising as the economic toll of coronavirus grows © AFP via Getty Images



The increase in borrowing by governments around the world as a result of the coronavirus pandemic will be “massive”, the IMF said on Wednesday, forecasting that population lockdowns and economic contractions would push budget deficits to well above peak levels during the financial crisis.

Globally, net public debt will rise from 69.4 per cent of national income last year to 85.3 per cent in 2020, the IMF said, raising concerns about the willingness of the private sector to finance governments with chequered records in servicing their borrowings. In its first attempt to quantify the scale of the damage caused to public finances by coronavirus, the fund provisionally forecast that global public deficits will climb by 6.2 percentage points this year to reach 9.9 per cent of national income, topping levels seen in 2008-9.

Despite these concerns, the IMF supported the surge in short-term public borrowing, saying it was necessary to fight the spread of the virus. “Government responses should be swift, concerted, and commensurate with the severity of the health crisis, with fiscal tools taking a prime role,” it said in its annual fiscal monitor.

“The human cost of the pandemic has intensified at an alarming rate, and the impact on output and public finances is projected to be massive.”

Bar chart of % of GDP showing Government deficits set to rise


For countries that have good access to lenders, the fund recommended that they should initially borrow to finance their health sectors and protect their companies and households from falling revenues and incomes.

Once lockdowns were lifted, even more borrowing would be needed to “facilitate the recovery”, the IMF warned. “As the virus is contained and people return to work, a broad-based fiscal stimulus becomes more effective,” the IMF said.

But, in the longer term, the fund warned that governments would need to implement higher taxes and curb public spending. “Once economies recover, achieving progress on ensuring debt sustainability will be needed,” the IMF said.

The fund forecast that deficits will rise sharply across the world. In the US, the public sector deficit will surge from 5.8 per cent of national income in 2019 to 15.4 per cent this year with net public debt rising from 84 per cent of national income to 107 per cent, it projected.

Deficits are likely to rise towards 10 per cent of gross domestic product across the eurozone and net debt-to-GDP ratios will balloon in all countries, the fund said — and that could widen the stark differences between eurozone countries’ budget positions that have caused so much political tension in the bloc in the past.

Germany’s net debt is expected to rise by 7.9 percentage points to the relatively low level of 49.2 per cent of GDP but in Italy net debt will rise by 19.6 percentage points to 142.7 per cent of GDP, the fund said, reflecting the country’s deeper downturn and greater loss of tax revenues.

Bar chart of % of GDP showing Rising public sector net debt


The IMF noted that many European countries had not loosened their budgets as much as the US, although they benefited from larger automatic measures to increase spending in a downturn, such as subsidies to furlough workers.

Interest rates on government debt are at historically low levels across major advanced economies, supported by central banks’ purchases of significant quantities of bonds in an attempt to maintain supportive financial conditions.

Emerging economies face a higher cost of servicing their debt, although they generally have much lower levels of borrowing in relation to the size of their economies, and any rise in borrowing costs could fuel capital flight — a “concerning” outlook, the fund warned.

There is a high risk of “an abrupt worsening in financing conditions”, it said.

Countries in this position should do what they can to prioritise health expenditure while seeking to safeguard other services, the IMF recommended.

In low-income developing countries, the average interest bill on government debt stood at 20 per cent of tax revenues in 2019.

The IMF expects this to rise to more than 30 per cent of revenues this year, highlighting the financial squeeze many governments are facing.

Who’s lost their trunks?

The economic crisis will expose a decade’s worth of corporate fraud

Downturns are accounting crooks’ worst enemy




WHEN BERNIE MADOFF owned up to a $65bn Ponzi scheme in December 2008, it was not out of guilt. He knew the game was up. Three months earlier Lehman Brothers had imploded.

The market meltdown sent clients clamouring to withdraw from his funds, leaving them depleted with many investors still unpaid. American regulators had not spotted the fraud, despite a tip-off years earlier. It was not them that did for Mr Madoff, but recession.

Booms help fraudsters paper over cracks in their accounts, from fictitious investment returns to exaggerated sales. Slowdowns rip the covering off. As Baruch Lev, an accounting professor at New York University, puts it, “In good times everyone looks good, and the market punishes you harshly for not keeping up.”

Many big book-cooking scandals of the past 20 years emerged in downturns. A decade before the crisis of 2007-09 the dotcom crash exposed accounting sins at Enron and WorldCom perpetrated in the go-go late 1990s. Both firms went bust soon after. As Warren Buffett, a revered investor, once put it: “You only find out who is swimming naked when the tide goes out.” This time, thanks to a pandemic, the water has whooshed away at record speed.

Hell and low wáter

Much of the swimwear was already threadbare: a borrowing binge has strained many corporate balance-sheets. Some dirty secrets are beginning to come out. Take Luckin Coffee, which had expanded to take on Starbucks in China, attracting big-name investors like Blackrock and Singapore’s sovereign-wealth fund.

On April 2nd the Nasdaq-listed Chinese chain announced an ongoing internal probe amid allegations that its chief operating officer and other employees may have fabricated over 2bn yuan ($280m) in sales. On April 14th Citron Research, a short-seller, accused GSX, a Chinese online-tutoring firm listed in New York, of inflating last year’s sales. In a statement GSX denied the allegations and said Citron’s report was misleading and “full of subjective maliciousness”.

These revelations have revived fears over the flaky corporate governance of Chinese firms listed on foreign exchanges, whose audits, conducted at home, China’s government makes it hard for outsiders to inspect. A gaggle of fraud-hunters like Citron and Muddy Waters, which outed Luckin, claimed numerous scalps after the first wave of such listings a decade ago. This time they are looking beyond China.

Blue Orca Capital, an Asia-focused fund targeting corporate “zeros”, expects opportunities to pop up in other emerging markets, Europe and America. “My entire career has been in a bull market,” says its founder, Soren Aandahl. “This is exciting.”

Mr Aandahl is eyeing any firms with discrepancies between the amount of capital they need to raise and the cash their accounts say they are generating. Others are focusing on industries hit hardest by the pandemic, such as travel, entertainment and property.

Only a small minority of firms resort to outright fraud. Far more prettify profit-and-loss statements with accounting wheezes that fall in a grey area. This accounts for much of what John Kenneth Galbraith, an economist, called “the bezzle” and “psychic wealth”: gains that appear real but prove illusory.

In the bull market startups became masters of conjuring up novel metrics that flatter performance. WeWork’s “community-adjusted” earnings before interest, taxes, depreciation and amortisation (EBITDA) transformed a hefty loss for 2018 under Generally Accepted Accounting Principles (GAAP) into a profit. Illegal? No. A red flag? Absolutely.

Many investors turned a blind eye because they bought into what Mr Aandahl calls “the myth in the shareholder list”: all would be well if other high-profile backers were on board (as with Luckin).




Non-GAAP adjustments have spread like wildfire through corporate accounts, making it harder to discern what numbers reflect a firm’s true financial position. The average number of non-GAAP measures used in filings by companies in the S&P 500 index has increased from 2.5 to 7.5 in the past 20 years, according to PwC, a consultancy.

In credit agreements analysed by Zion Research Group, the definition of EBITDA ranges from 75 words to over 2,200. GAAP is far from perfect, but some of the divergence from it has clearly been designed to pull wool over investors’ eyes. One study found that non-GAAP profits were, on average, 15% higher than GAAP profits.

Playing around with earnings and revenue-recognition metrics is this generation’s equivalent of dotcoms using bots and other tricks to boost “eyeballs” 20 years ago, says Jules Kroll of K2 Intelligence, the doyen of corporate sleuths. “When an area is hot to the point of overheated, there is a growing temptation to juice the numbers.”

In an ominous sign, SoftBank, a Japanese technology conglomerate which bet big on WeWork and dozens of other startups, said this week that it expects an operating loss of ¥1.4trn ($12.5bn) in its last fiscal year.

Besides exposing old schemes, the pandemic is likely to give rise to new ones. When economic survival is threatened, the line separating what is acceptable and unacceptable when booking revenues or making market disclosures can be blurred. Mr Kroll reckons that “amid such massive dislocation, some will inevitably cheat.”

Bruce Dorris, head of the Association of Certified Fraud Examiners, the world’s largest anti-fraud outfit, says the effects of covid-19 look like “a perfect storm for fraud”.

It may engender everything from iffy accounting to stimulus-linked scams as thousands of firms—including bogus applicants—hustle for help. One fraud investigator points to private-equity-owned firms as potential targets.

“There are lots of them, they are highly leveraged and they may not qualify for bail-outs because they have deep-pocketed sponsors,” he says. That increases the temptation to resort to unseemly practices. The ebbing tide is likely to reveal plenty of corporate nudity.

That will not stop some businesses from taking up naturism.

How the Economy Will Look After the Coronavirus Pandemic

The pandemic will change the economic and financial order forever. We asked nine leading global thinkers for their predictions.

By Joseph E. Stiglitz, Robert J. Shiller, Gita Gopinath, Carmen M. Reinhart, Adam Posen, Eswar Prasad, Adam Tooze, Laura D’Andrea Tyson, Kishore Mahbubani

economy-after-coronavirus-brian-stauffer-illustration-3_2l


After many weeks of lockdowns, tragic loss of life, and the shuttering of much of the global economy, radical uncertainty is still the best way to describe this historical moment. Will businesses reopen and jobs come back? Will we travel again? Will the flood of money from central banks and governments be enough to prevent a deep and lasting recession, or worse?

This much is certain: The pandemic will lead to permanent shifts in political and economic power in ways that will become apparent only later.

To help us make sense of the ground shifting beneath our feet, Foreign Policy asked nine leading thinkers, including two Nobel-Prize-winning economists, to weigh in with their predictions for the economic and financial order after the pandemic.


We Need a Better Balance Between Globalization and Self-Reliance

by Joseph E. Stiglitz


Economists used to scoff at calls for countries to pursue food or energy security policies. In a globalized world where borders don’t matter, they argued, we could always turn to other countries if something happened in our own. Now, borders suddenly do matter, as countries hold on tightly to face masks and medical equipment, and struggle to source supplies. The coronavirus crisis has been a powerful reminder that the basic political and economic unit is still the nation-state.

To build our seemingly efficient supply chains, we searched the world over for the lowest-cost producer of every link in the chain. But we were short-sighted, constructing a system that is plainly not resilient, insufficiently diversified, and vulnerable to interruptions. Just-in-time production and distribution, with low or no inventories, may be capable enough of absorbing small problems, but we have now seen the system crushed by an unexpected disturbance.

We should have learned the lesson of resilience from the 2008 financial crisis. We had created an interconnected financial system that seemed efficient and was perhaps good at absorbing small shocks, but it was systemically fragile. If not for massive government bailouts, the system would have collapsed as the real estate bubble popped. Evidently, that lesson went right over our heads.

The economic system we construct after this pandemic will have to be less shortsighted, more resilient, and more sensitive to the fact that economic globalization has far outpaced political globalization. So long as this is the case, countries will have to strive for a better balance between taking advantage of globalization and a necessary degree of self-reliance.


This Wartime Atmosphere Has Opened a Window for Change

by Robert J. Shiller


There are fundamental changes that happen from time to time—often during times of war.

Though the enemy is now a virus and not a foreign power, the COVID-19 pandemic has created a wartime atmosphere in which such changes suddenly seem posible.

Though the enemy is a virus and not a foreign power, the pandemic has created a wartime atmosphere in which fundamental changes suddenly seem possible.

This atmosphere, with narratives of both suffering and heroism, is spreading with the disease.

Wartime brings people together not only within a country, but also between countries, as they share a common enemy like the virus. Those who live in advanced countries can feel more sympathy with those suffering in poor countries because they are sharing a similar experience.

The epidemic is also bringing us together in countless Zoom get-togethers. Suddenly the world seems smaller and more intimate.

There is also reason to hope that the pandemic has opened a window to creating new ways and institutions to deal with the suffering, including more effective measures to stop the trend toward greater inequality. Perhaps the emergency payments to individuals that many governments have made are a path to a universal basic income.

In the United States, better and more universal health insurance might just have been given new impetus. Since we are all on the same side in this war, we may now find the motivation to build new international institutions allowing better risk-sharing among countries. The wartime atmosphere will fade again, but these new institutions would persist.


The Real Risk Is Politicians Exploiting Our Fears

by Gita Gopinath


Over only a few weeks, a dramatic chain of events—tragic loss of life, paralyzed global supply chains, interrupted shipments of medical supplies between allies, and the deepest global economic contraction since the 1930s—has laid bare the vulnerabilities of open borders.
People may self-assess their individual risks and decide to curtail travel indefinitely, reversing 50 years of rising international mobility.

If support for an integrated global economy was already declining before COVID-19 struck, the pandemic will likely hasten the reassessment of globalization’s costs and benefits. Firms that are part of global supply chains have witnessed firsthand the risks inherent in their interdependencies and the large losses caused by disruption. In future, these firms are likely to take greater account of tail risks, resulting in supply chains that are more local and robust—but less global.

In emerging markets, whose embrace of globalization included a steady opening to capital flows, we risk seeing capital controls being reimposed as these countries scramble to shield themselves from the destabilizing forces of the sudden economic stop. And even as containment measures gradually come off worldwide, people may self-assess their individual risks and decide to curtail travel indefinitely, reversing half a century of rising international mobility.

The real risk, however, is that this organic and self-interested shift away from globalization by people and firms will be compounded by some policymakers who exploit fears over open borders. They could impose protectionist restrictions on trade under the guise of self-sufficiency and restrict the movement of people under the pretext of public health. It is now in the hands of global leaders to avert this outcome and to retain the spirit of international unity that has collectively sustained us for more than 50 years.


Another Nail in the Coffin of Globalization

by Carmen M. Reinhart


World War I and the global economic depression in the early 1930s ushered in the demise of a previous era of globalization. Apart from a resurgence of trade barriers and capital controls, an important explanation for this demise is the fact that more than 40 percent of all countries at the time entered default, cutting many of them off from the global capital markets until the 1950s or much later.

By the time World War II ended, the new Bretton Woods system combined domestic financial repression with extensive controls of capital flows, with little resemblance to the preceding era of global trade and finance.

Pandemic-induced recessions may be deep and long—and as in the 1930s, sovereign defaults will likely spike.

The modern globalization cycle has faced a series of blows since the financial crisis of 2008-2009: a European debt crisis, Brexit, and the U.S.-China trade war. The rise of populism in many countries further tilts the balance toward home bias.

The coronavirus pandemic is the first crisis since the 1930s to engulf both advanced and developing economies. Their recessions may be deep and long. As in the 1930s, sovereign defaults will likely spike. Calls to restrict trade and capital flows find fertile soil in bad times.

Doubts about pre-coronavirus global supply chains, the safety of international travel, and, at the national level, concerns about self-sufficiency in necessities and resilience are all likely to persist—even after the pandemic is brought under control (which may itself prove a lengthy process).

The post-coronavirus financial architecture may not take us all the way back to the preglobalization era of Bretton Woods, but the damage to international trade and finance is likely to be extensive and lasting.


The Economy’s Preexisting Conditions Are Made Worse by the Pandemic

by Adam Posen

The pandemic will worsen four preexisting conditions of the world economy. They will remain reversible through major surgery but turn chronic and damaging absent such interventions. The first of these conditions is secular stagnation—the combination of low productivity growth, a lack of private investment returns, and near-deflation. This will deepen as people stay risk-averse and save more following the pandemic, which will persistently weaken demand and innovation.

Second, the gap between rich countries (along with a few emerging markets) and the rest of the world in their resilience to crises will widen further.

Economic nationalism will increasingly lead governments to shut off their own economies from the rest of the world.

Third, partly as a result of flight to safety and the apparent riskiness of developing economies, the world will continue to be over-reliant on the U.S. dollar for financing and trade. Even while the United States becomes less attractive for investment, its attraction will increase relative to most other parts of the world. This will lead to ongoing dissatisfaction.

Finally, economic nationalism will increasingly lead governments to shut off their own economies from the rest of the world. This will never produce complete autarky, or anything close to it, but it will reinforce the first two trends and increase resentment of the third.


More Than Ever, the World Looks to Central Bankers for Deliverance

by Eswar Prasad


The economic and financial carnage wrought by the pandemic could leave deep scars on the world economy. Central banks have stepped up to the challenge by tearing up their own rulebooks. The U.S. Federal Reserve has bolstered financial markets with asset purchases and provided dollar liquidity to other central banks.

The European Central Bank has declared “no limits” to its support of the euro and announced massive purchases of government and corporate bonds, and other assets. The Bank of England is financing government spending directly. Even some emerging-market central banks, such as the Reserve Bank of India, are considering extraordinary measures—all risks be damned.

Central bankers, once considered cautious and conservative, have shown they can act with agility, boldness, and creativity.

Fiscal stimulus by governments, on the other hand, has proved to be politically complicated, cumbersome to implement, and often difficult to target where the need is greatest.

Central bankers, once considered cautious and conservative, have shown they can act with agility, boldness, and creativity in desperate times. Even when political leaders are unwilling to coordinate policies across borders, central bankers can act in concert.

Now and for a long time to come, central banks have become entrenched as the first and main line of defense against economic and financial crises. They may come to rue this immense new role and the unrealistic burdens and expectations it will impose on them.


The Normal Economy Is Never Coming Back

by Adam Tooze


As the lockdowns began, the first impulse was to search for historical analogies—1914, 1929, 1941?

Since then, what has come ever more to the fore is the historical novelty of the shock we are living through. There is something new under the sun. And it is horrifying.

The economic fallout defies calculation. Many countries face a far deeper and more savage economic shock than they have ever previously experienced. In sectors like retail, already under fierce pressure from online competition, the temporary lockdown may prove to be terminal.

Many stores will not reopen, their jobs permanently lost. Millions of workers, small-business owners, and their families are facing catastrophe. The longer we sustain the lockdown, the deeper the economic scars, and the slower the recovery.

What we thought we knew about the economy and finance has been radically disturbed. Since the shock of the 2008 financial crisis, there has been a lot of talk about the need to reckon with radical uncertainty. We now know what truly radical uncertainty looks like.

We are witnessing the largest combined fiscal effort since World War II, but it is already clear that the first round may not be enough. There are few illusions about the unprecedented acrobatics that central banks are performing.

To deal with the accumulated liabilities, history suggests some radical alternatives, including a burst of inflation or an organized public default (which would not be as drastic as it sounds if it affects government debts held by central banks).

If the response by businesses and households is risk-aversion and a flight to safety, it will compound the forces of stagnation. If the public response to the debts accumulated by the crisis is austerity, that will make matters worse.

It makes sense to call instead for a more active, more visionary government to lead the way out of the crisis. But the question, of course, is what form that will take and which political forces will control it.


Many Lost Jobs Will Never Return

by Laura D’Andrea Tyson


The pandemic and subsequent recovery will accelerate the ongoing digitalization and automation of work—trends that have eroded middle-skill jobs while increasing high-skill jobs during the last two decades and contributed to the stagnation of median wages and rising income inequality.

Many low-wage, low-skill, in-person service jobs, especially those provided by small firms, will not return with the recovery.

Changes in demand, many of them accelerated by the economic dislocation wrought by the pandemic, will change the future composition of GDP. The share of services in the economy will continue to rise. But the share of in-person services will decline in retail, hospitality, travel, education, health care, and government as digitalization drives changes in the way these services are organized and delivered.

Many low-wage, low-skill, in-person service jobs, especially those provided by small firms, will not return with the eventual recovery. However, workers providing essential services such as policing, firefighting, health care, logistics, public transportation, and food will be in greater demand, creating new job opportunities and increasing the pressure to raise wages and improve benefits in these traditionally low-wage sectors.

The downturn will accelerate the growth of nonstandard, precarious employment—part-time workers, gig workers, and workers with multiple employers—leading to new portable benefits systems that move with workers and broaden the definition of employer.

New low-cost training programs, digitally delivered, will be required to provide the skills required in new jobs. The sudden dependence of so many on the ability to work remotely reminds us that a significant and inclusive expansion of Wi-Fi, broadband, and other infrastructure will be necessary to enable the accelerating digitalization of economic activity.


A More China-Centric Globalization

by Kishore Mahbubani


The COVID-19 pandemic will accelerate a change that had already begun: a move away from U.S.-centric globalization to a more China-centric globalization.

Why will this trend continue? The American population has lost faith in globalization and international trade. Free trade agreements are toxic, with or without U.S. President Donald Trump. By contrast, China has not lost faith. Why not?

There are deeper historical reasons. Chinese leaders now know well that China’s century of humiliation from 1842 to 1949 was a result of its own complacency and a futile effort by its leaders to cut it off from the world. By contrast, the past few decades of economic resurgence were a result of global engagement. The Chinese people have also experienced an explosion of cultural confidence. They believe they can compete anywhere.

Consequently, as I document in my new book, Has China Won?, the United States has two choices. If its primary goal is to maintain global primacy, it will have to engage in a zero-sum geopolitical contest, politically and economically, with China.

However, if the goal of the United States is to improve the well-being of the American people—whose social condition has deteriorated—it should cooperate with China. Wiser counsel would suggest that cooperation would be the better choice.

However, given the toxic U.S. political environment toward China, wiser counsel may not prevail.


Joseph E. Stiglitz is a professor of economics at Columbia University, winner of the 2001 Nobel Memorial Prize in economics, and the author of People, Power, and Profits: Progressive Capitalism for an Age of Discontent, published in paperback in April 2020. Twitter: @JosephEStiglitz

Robert J. Shiller is a professor of economics at Yale University, winner of the 2013 Nobel Memorial Prize in economics, and the author of Narrative Economics: How Stories Go Viral and Drive Major Economic Events. Twitter: @RobertJShiller

Gita Gopinath is the chief economist of the International Monetary Fund.

Carmen M. Reinhart is a professor of international finance at the Harvard Kennedy School and the author, with Kenneth S. Rogoff, of This Time Is Different: Eight Centuries of Financial Folly.

Adam Posen is the president of the Peterson Institute for International Economics. Twitter: @AdamPosen

Eswar Prasad is a professor of trade policy at Cornell University, a senior fellow at the Brookings Institution, and the author of Gaining Currency: The Rise of the Renminbi.

Adam Tooze is a history professor and director of the European Institute at Columbia University. His latest book is Crashed: How a Decade of Financial Crises Changed the World, and he is currently working on a history of the climate crisis. Twitter: @adam_tooze

Laura D’Andrea Tyson is a professor at the Haas School of Business at the University of California, Berkeley, and a former chair of the U.S. President’s Council of Economic Advisers under the Clinton Administration. Twitter: @LauraDTyson

Kishore Mahbubani, a distinguished fellow at the National University of Singapore's Asia Research Institute, is the author of Has China Won? The Chinese Challenge to American Primacy.

Latin America Confronts the Coronavirus

The challenge posed by the COVID-19 pandemic has no parallel in recent history. The world and the Latin American and Caribbean region cannot afford delayed or inadequate responses. Mutual trust, transparency, and reason – not populism or demagoguery – remain the best guideposts in these uncertain times.

Fernando Henrique Cardoso, Ricardo Lagos, Juan Manuel Santos, Ernesto Zedillo

cardosa4_Hector VivasGetty Images_mexicocitysquarecoronaviruslockdown


SÃO PAULO/SANTIAGO/BOGOTÁ/MEXICO CITY – The COVID-19 pandemic is a shock of unprecedented magnitude and uncertain duration. The consequences have been catastrophic. If not properly addressed, the crisis could cause one of the most tragic episodes in Latin America’s history.

So far, policy responses in our region have been uneven. Several governments reacted promptly, making the protection of public health their primary objective. Sadly, others minimized the risks of the pandemic, misinforming citizens and disregarding both scientific evidence and their own experts’ advice. Such leaders chose to pursue populist and divisive politics in the midst of tragedy.

Minimizing the pandemic’s death toll must be Latin America’s top priority. Policymakers should focus on upgrading health systems, channeling resources to hospitals, temporarily adapting idle infrastructure such as hotels and convention centers, and sharply increasing testing capacity.

Latin American leaders also ought to condemn export controls on medical supplies and other critical resources, and demand increased resources for the World Health Organization, contrary to US President Donald Trump’s reckless decision to freeze some $500 million in WHO funding.

Stronger global coordination among health authorities is needed to improve the capacity to conduct tests, treat and isolate patients, and develop a cure and vaccine – the definitive solution to the pandemic.

The economic shock is massive. In addition to the disruption of domestic production, Latin American economies are suffering from falling export volumes and prices, lost income from tourism and remittances, and large capital outflows. The supply shock to much of the economy, coupled with cratering demand, could trigger a contractionary spiral.

To prevent that, bold policies to protect household incomes are essential. This implies cash transfers to those left vulnerable by the crisis, including informal and independent workers who cannot access employment subsidies or unemployment insurance.

Relief to businesses is also indispensable. Subsidies to help firms pay their wage bill, contingent on the maintenance of employment, protect both companies and workers during the crisis and are crucial for a rapid economic recovery when conditions normalize.

If widespread bankruptcies are not prevented, then the pandemic’s next victim could be the banking system. At that point the payments system – indeed, entire economies – risk collapse.

Many businesses, particularly small and medium-size enterprises, will suffer significant income losses for the duration of the crisis. Without support, lack of liquidity will soon become a solvency problem. Tax deferrals, loan rollovers, and subsidized credit will not be enough.

This emergency demands unprecedented government credit guarantees to ensure that banks keep lending, as well as temporary regulatory changes to encourage credit expansion. Well-capitalized and well-managed state-owned banks can also play a leading role.

More broadly, while policies will differ across countries, extraordinary fiscal resources will likely be needed to boost recovery everywhere. Governments will need to stimulate employment and economic activity without exacerbating health-related risks.

The problem is that the policy space in Latin America today is even narrower now than it was following the 2008 global financial crisis. Fiscal costs should be offset by budgetary adjustments in low-priority areas. A commitment by governments to correct the larger resulting fiscal deficit within a reasonable period would mitigate the risk of a credit downgrade.

External support for both fiscal accounts and the balance of payments is crucial, especially for Latin America’s smaller and less developed countries. If both private firms and governments run bigger deficits, countries’ current-account gaps are likely to widen as well. The recent capital outflows from emerging economies – one of the largest capital-flow reversals in the modern history of financial markets – compound the problem.

The associated depreciation of emerging-market currencies can be a destabilizing force. For many economies in the region, far larger official external support will be the only way to cope with these compound shocks.

The International Monetary Fund has an essential role to play here. The IMF must address countries’ short-run foreign exchange and fiscal needs, and keep supporting economies through a crisis whose duration remains highly uncertain. The Fund needs more resources and the ability to disburse them rapidly. Latin American governments should unite in calling for a new issue of the IMF’s global reserve currency, Special Drawing Rights, totaling SDR1 trillion.

While SDRs are allocated to member countries according to their IMF quotas, a non-proportional allocation could be achieved by creating a common pool overseen by the Fund. In addition, the immediate doubling of the New Arrangements to Borrow would provide the IMF with the needed capacity to attend to the urgent upcoming demand for loans. Finally, because traditional IMF lending programs will not be approved in time, the Fund should increase significantly access to facilities with fast disbursement and low conditionality, such as its Rapid Financing Instrument, or create new pandemic credit facilities.

Major central banks that issue reserve currencies can help by broadening access to swap lines, either directly or indirectly through the IMF or the Bank for International Settlements as intermediaries of central bank liquidity. Domestically, central banks should use all instruments they can, innovating whenever necessary, to provide ample liquidity to financial markets and the economy.

Finally, multilateral development banks (MDBs), such as the World Bank, the Inter-American Development Bank, and the CAF – Development Bank of Latin America, should double the amount of net lending to the region and tap highly liquid global capital markets to provide further budgetary support. In exceptional circumstances and in countries without market access, a debt standstill could complement official lending.

MDBs should also provide countries with guidelines on the various policy areas involved in the crisis response, including their own estimates of COVID-19 morbidity and mortality rates – particularly in countries where governments are downplaying the health threat. Time is of the essence.

The challenge posed by this pandemic has no parallel in recent history. The world and the Latin American and Caribbean region cannot afford delayed or inadequate responses. Mutual trust, transparency, and reason – not populism or demagoguery – remain the best guideposts in these uncertain times.

The crisis cannot be an excuse to weaken our hard-won rights. Instead, it should become an opportunity to strengthen democracy in Latin America, and to show it can deliver for citizens.

As the COVID-19 pandemic escalates, and its effects reverberate around the world, Project Syndicate is delivering the expert scientific, economic, and political insights that people need. For more than 25 years, we have been guided by a simple credo: All people deserve access to a broad range of views by the world's foremost leaders and thinkers on the issues, events, and forces shaping their lives. In this crisis, that mission is more important than ever – and we remain committed to fulfilling it.



Fernando Henrique Cardoso, President of Brazil from 1995 to 2002, is a member of the editorial board of Americas Quarterly and the Global Commission on Drug Policy.

Ricardo Lagos, former President of Chile (2000-2006) and UN Special Envoy for Climate Change (2007-2010), is President of the Fundación Democracia y Desarrollo and a member of The Elders and the Global Commission on Drug Policy.

Juan Manuel Santos, a Nobel Peace Prize laureate, is a former president of Colombia (2010-2018) and a member of the Global Commission on Drug Policy.

Ernesto Zedillo is a former president of Mexico (1994-2000) and a member of the Global Commission on Drug Policy.

China’s GDP Warning to the West

U.S. stock bulls should take a careful look at China, where the post-coronavirus rebound has been patchy amid widespread consumer caution

By Nathaniel Taplin





U.S. stocks are back in a bull market, as investors bet that the coronavirus pandemic in America is near its peak and the economy will make a strong comeback. In China, meanwhile, the health crisis has already peaked—but that strong comeback isn’t really in evidence.

China on Friday posted its first quarterly fall in economic growth on record: The economy was 6.8% smaller last quarter than a year before, according to official figures. Most worrying, consumption and services are struggling to recover due to heavy job losses and continuing worries about a secondary viral outbreak. That bodes ill for the U.S. economy, which is even more dependent on consumer spending and services than is China.

The news wasn’t all bad: Most official indicators declined less in March than in January and February. Most importantly, China’s property market is stabilizing.

Prices rose again modestly last month after flirting with declines in February, and average daily transaction volumes across 30 large cities are back near the level of recent years, according to Goldman Sachs.


China on Friday posted its first quarterly fall in economic growth on record.
Photo: str/Agence France-Presse/Getty Images .


In time, looser monetary policy should also help: China’s central bank on Wednesday cut the rate on its key medium-term lending facility by 0.2 percentage point to its lowest level ever, and credit growth in March accelerated sharply. Containing downside risks in property is key to keeping China’s shaky banking system afloat.

But the news on consumption more broadly isn’t good. March data showed a significant rebound in industry—the year-over-year decline in growth narrowed to just 1%, from 13% in January and February. But the recovery in consumer spending was far less obvious. Retail sales were still down almost 16% on the year, only marginally better than the 20% fall in January and February.
Recent survey data also show that consumers remain cautious. An early-April online survey by Morgan Stanley of 2,041 Chinese consumers in 19 provinces found that only 25% of respondents planned to leave the house for leisure or discretionary spending, as opposed to necessities—double early-March levels but still very low.


That makes sense given both the scale of lost income and continuing worries about a secondary outbreak. Nearly half a million Chinese businesses closed their doors in the first quarter, according to the South China Morning Post. Several million workers have already lost their jobs, and the coming hit to exports as the U.S. and European economies stall could put another four million to six million Chinese out of work, according to consultancy Gavekal Dragonomics.


The Chinese economy is clawing its way back, and eventually the U.S.’s will too. The road will likely be longer and slower, however, than many investors yet seem to appreciate.