The pandemic could bring a global ceasefire

Several long-running conflicts are edging towards a temporary halt to hostilities

Gideon Rachman

Guterres Dove
© James Ferguson


Could anything good come out of the coronavirus pandemic? Amid mass deaths, lockdowns and the prospect of another Depression, it is hard to find a bright side.

Yet one ray of light may be emerging from an unlikely venue — the UN.

Last month, António Guterres, the secretary-general, issued a call for a “global ceasefire” — to try to prevent the world’s warzones being further ravaged by Covid-19.

Perhaps surprisingly, the call has had some effect on the ground — even in raging conflicts such as Yemen and Syria. Later this week, the push for a global ceasefire may gain momentum, if the UN Security Council approves a resolution backing the idea.

Ceasefires would make it possible to get medical supplies and food into war-torn countries threatened by Covid-19.

The World Food Programme warned recently that millions of people in “about three dozen countries”, many of them conflict-zones, are now at risk of “famines of biblical proportions” because of the economic collapse caused by the pandemic.

Once a temporary ceasefire is in place, UN officials hope more lasting peace could be negotiated. One hopeful precedent — in which a tragedy was turned into something positive — is provided by the 2004 tsunami that hit the Asia-Pacific.

The rescue efforts in the Indonesian province of Aceh helped initiate a peace process that eventually ended a decades-long conflict.Lofty proclamations issued in New York are not, in themselves, going to persuade armies and militias to see the light and lay down their weapons.

But a UN call for a ceasefire — allied to the genuine fear of Covid-19 — may give some warring parties the excuse they need to back away from a conflict.

Richard Gowan at the International Crisis Group says that “Yemen is the big prize”. The war there has already claimed more than 100,000 lives and millions remain threatened by famine.

Saudi Arabia announced a ceasefire two weeks ago in response to the UN appeal and has now extended it.

Yemen watchers think the Saudi government might value a face-saving reason to pull away from a conflict that is going badly for them. The combination of Covid-19 and the UN campaign could provide that.

The Houthi rebels have not yet responded to the ceasefire call and fighting is still continuing, but the UN is hopeful of a breakthrough.
 The Syrian Democratic Forces (a mainly Kurdish force of 100,000 people) has announced a ceasefire, citing the UN appeal. Peace negotiators are now aiming for a long-term cessation in fighting, in the province of Idlib.

They claim to detect some interest from both the Syrian government and jihadist groups defending the area. The Russian government, so far, remains implacable in its desire to conquer Idlib.

But, with that prospect still elusive, it is possible that even the Russians might value a reason to de-escalate. Meanwhile in Iraq, Shia militias have called a halt to skirmishes with American forces, citing the UN’s ceasefire call, and the US has responded, says David Harland of the Centre for Humanitarian Dialogue, a private diplomacy organisation.

The call for a halt to hostilities has also resonated outside the Middle East. The UN points to several other conflicts where at least one warring party has pledged to stop fighting — responding to Mr Guterres’s appeal. They include conflicts in Cameroon, South Sudan, Colombia, the Central African Republic, Myanmar and the Philippines.

Of course, all this progress could prove ephemeral. That is why agreement on a Security Council resolution this week would provide some important extra impetus. Efforts to negotiate a resolution on a global ceasefire have been frustrated for weeks by sniping between the US and China. The US made an early effort to insist on calling Covid-19 the “Wuhan virus”.

Both Russia and the US were worried that signing up to a global ceasefire would stop them fighting their enemies in the Middle East and have insisted on a “terrorism” carve-out in the resolution.Still, energetic diplomacy, from France in particular, looks likely to push the resolution over the line.

That would provide an encouraging sign that the world’s major powers are still capable of working together — despite the increasing acrimony between the US and China, and the continuing bitterness between Russia and the west.

The next step in the revival of the UN as a forum could be a virtual summit of the five permanent members of the Security Council (the US, China, Russia, France and the UK).

Once again this is a French initiative: President Emmanuel Macron sees a revival of “the P5” as a way of both promoting France’s global influence and building bridges with Russia — one of his pet projects. The British and Russians are also enthusiastic.

A P5 summit would polish up their fading claims to be global powers. Now that Boris Johnson, the British prime minister, is back at work, a virtual summit may take place in the coming days.

In normal times, security issues would be the toughest item on the agenda for world leaders to discuss. But these are weird times.

The handling of the pandemic — closely followed by economic revival and international trade — are the most difficult and divisive issues facing the Security Council.

Supporting a drive to end some smouldering wars in Africa and the Middle East might seem an uncontroversial feel-good project by comparison.

Auto Loans Are Running on Fumes

Auto loans are emerging as one the of hardest-hit categories of credit amid the coronavirus pandemic

By Telis Demos


Driving on the 405 Freeway in Los Angeles. Delinquency rates on auto loans at big banks and lenders jumped from a year earlier in the first quarter. / Photo: Justin L. Stewart/Zuma Press .


In consumer lending right now, auto loans are the squeaky wheels.

Auto borrowers have been big beneficiaries of lenders’ forbearance so far. At large banks and lenders, the median amount of lending in forbearance reported after the first quarter stood at 7.5% for auto loans, compared with 3.6% for credit cards, according to figures compiled by Autonomous Research.

These are early figures, representing only the initial phase of this crisis. Still, this indicator is consistent with other early signs. First-quarter delinquency rates on auto loans at big banks and lenders, defined as people at least 30 days late on a payment, jumped an average of 0.26 percentage point from a year earlier, according to figures compiled by Autonomous. By comparison, credit-card delinquencies were up just 0.07 point, Autonomous found.

Auto loans also went into this crisis already somewhat stretched. The percentage of auto-loan balances that were 90 days or more past due was 4.9% at the end of last year, according to the Federal Reserve’s Household Debt and Credit Survey.

That was 38% higher than its quarterly average since 2003. All other major consumer-lending categories, apart from student loans, were below their long-term average.

Auto loans also have grown as a percentage of consumers’ total debt over the past decade.




One notable emerging difference between this crisis and the financial crisis is the speed at which consumers have slashed their card borrowing. After the September 2008 financial bust, card borrowing grew another 15% until its peak in 2009.

But this time around, consumer credit-card balances at U.S. banks are already down 5% from the start of the year, according to Federal Reserve data through April 15.

Capital One Financial, in a call with analysts last week, attributed its higher forbearance rate in auto lending to the size of payments being much larger than credit-card minimum payments—and therefore a bigger strain on a cash-strapped household in the short term.

The bank also said that people are very motivated to seek ways to keep their cars, making them more likely to pursue forbearance for auto loans.

Auto lenders also have another unique thing to worry about in this crisis: recovery values.

Though forbearance for now means there won’t be repossessions, even if a lender were to take back a car, other challenges would follow. Consumer-data collection-and-analytics firm JD Power found that in early April, used-car auctions were happening at a fraction of their normal frequency.

JD Power expects prices to be down 8% to 16% through June, with the most likely scenario that by year-end, prices will be down about 4% to 6%.

The big question looming over all consumer debt is how effective stimulus checks will be in helping borrowers stay current.

This week, OneMain Holdings, which makes personal loans including some to buy cars, said that while 30-to-89-day delinquencies were up 0.32 percentage point year over year in the second half of March, in April the increase slowed to about 0.15 point.

OneMain attributed this to borrower-assistance programs and government stimulus checks.

OneMain shares were up about 12% on Tuesday after the report.

Investors in banks and auto loans will need to see more of the same.

Peacocks and Vultures Are Circling the Deficit

The only fiscal thing to fear is deficit fear itself.

By Paul Krugman


Credit...Bishara Mustafa/EyeEm, via Getty Images


Almost a decade has passed since I published a column, “Myths of Austerity,” warning that deficit alarmism would delay recovery from the Great Recession — which it did. Unfortunately, that kind of alarmism seems to be making a comeback.

You can see that comeback in the gradually increasing number of news analyses emphasizing how much debt we’ll run up dealing with the Covid-19 crisis. You can also see it in the rhetoric of politicians like Mitch McConnell, the Senate majority leader, who is blocking aid to beleaguered state and local governments because, he says, it would cost too much.

So this seems like a good time to emphasize two key facts. One is economic: While we will run very big budget deficits over the next couple of years, they will do little if any harm. The other is that whatever they may say, very few prominent figures in politics or the media are genuine deficit hawks, who are actually worried about the consequences of rising government debt. What we mainly have, instead, are deficit peacocks and deficit vultures.

The term “deficit peacocks” was coined by the Center for American Progress for people who preen and posture about fighting deficits without offering realistic policy proposals. I’d broaden the term to include what I used to call Very Serious People — those who inveigh against the evils of debt not because they’ve done a careful analysis but because they imagine that it makes them sound earnest and tough-minded.

The glory days of deficit peacocks were the early teens, an era in which people like Alan Simpson and Erskine Bowles were lionized by the news media. As Vox’s Ezra Klein noted at the time, for some reason “the usual rules of reportorial neutrality don’t apply when it comes to the deficit”; the wisdom and virtue of deficit warriors were simply taken for granted.

We haven’t heard much from the deficit peacocks in recent years, even though the budget deficit, which declined sharply during the Obama years, soared again under Donald Trump. Funny how that works. But you can be sure they’ll be back in force if Joe Biden wins this November.

What about deficit vultures? That’s the term I’ve been using for politicians who exploit real or imagined fiscal distress to feed a reactionary policy agenda.

After the last crisis, conservatives used deficits as an excuse to cut social programs — for example, a number of states made it much harder to collect unemployment benefits. This time around, McConnell and Trump are trying to exploit deficit fears to force state governments to downsize, undermine (and possibly privatize) the post office and more.

It goes almost without saying that the deficit vultures are hypocrites. After all, Trump and McConnell rammed through a $2 trillion tax cut in 2017, with no apparent concern about the effects on the deficit. Nor have I heard any Republican complaints about Trump’s huge bailouts for farmers, whose distress is largely the result of his own policies.

An aside: Far too much reporting on these issues involves what the economist Dean Baker calls mind-reading. That is, news analyses include statements along the lines of “Republicans are concerned about rising deficits,” when in fact all we know is that Republicans claim to be concerned about rising deficits — and there are very good reasons to be skeptical about that claim. After all, have modern Republicans ever seen deficits as a constraint on their own tax-cutting agenda? Even once?

Still, hypocrisy aside, should we be worried about the effects of Covid-19 on debt? No.

It’s true that we’re headed for some eye-popping numbers. Last week the Congressional Budget Office released preliminary economic and budget projections for the next two years, which were both shocking and unsurprising.

That is, the numbers were grim but more or less in line with what many independent economists have been predicting. In particular, the budget office expects the Covid-19 crisis to drive the unemployment rate to 16 percent in a few months, which might even be on the low side.

Soaring unemployment will cause federal revenues to plunge, and also lead to a surge in spending on safety-net programs like unemployment insurance, Medicaid and food stamps.

Add in the large relief packages Congress has passed, and the budget office projects a deficit that will temporarily rise to levels we haven’t seen since World War II, and it expects federal debt to rise to 108 percent from 79 percent of G.D.P., which sounds scary.

But the government will be able to borrow that money at incredibly low interest rates. In fact, real interest rates — rates on government bonds protected against inflation — are negative. So the burden of the additional debt as measured by the rise in federal interest payments will be negligible. And no, we don’t have to worry about paying off the debt; we never will, and that’s OK.

The bottom line is that right now, the only thing we have to fear from deficits is deficit fear itself. Pay no attention to the peacocks and vultures: In this time of pandemic, we can and should spend whatever it takes to limit the damage.

Medical, Economic, Social, Military: The State of Play

By: George Friedman


A riot broke out in a poor, predominantly Muslim neighborhood north of Paris over the weekend.

The immediate cause was a traffic offense and a violation of the coronavirus lockdown.

The deeper cause was the belief that police were using the lockdown as an excuse to attack Muslims. In Berlin, more than 100 people were arrested after demonstrators protesting lockdown rules confronted police.

In Israel, ultra-Orthodox Jews clashed with police while protesting coronavirus restrictions. In Pakistan, there have been demonstrations sparked by fears that steps to tackle the outbreak will result in hunger.

In the United States, the state of Georgia has abandoned most legal controls imposed over the coronavirus and other states are similarly considering using a staged exit approach. In many parts of the world, small numbers of individuals are reportedly beginning to ignore social distancing and quarantine rules.

The resistance to the lockdown results primarily from feelings that have reemerged after the first two months of relative submersion. The tension between Muslims and the Parisian police is an old story. So too is the refusal of the ultra-Orthodox Jews in Israel to submit to secular law and medical regulations.

The Berlin demonstrations and the shifts in a number of U.S. states are rooted in a deep distrust of the national governments of those countries. The virus is seen by some as an excuse by the elite to seize control of society.

In the United States, the pressure on the medical system has produced a certain response. Remdesivir, a drug that is intended to mitigate the COVID-19 disease in its final and most dangerous phase, has reportedly had some remarkable success in Houston Methodist Hospital.

The Food and Drug Administration launched a new initiative called the Coronavirus Treatment Acceleration Program, which promises to accelerate studies into possible treatments. For example, the program commits to providing an ultra-rapid protocol review of treatment studies within 24 hours of submission in some cases. Clearly the government, facing economic and social pressures, is shifting the tempo of its response.

The significance of this shift has to do with the model I laid out at the beginning of the crisis. It consisted of four modules: medical, economic, social and military, each interacting with each other and being managed by the political sphere, meaning the entire federal and state system and not merely the president.

The first phase was controlled by the medical module, which, having no medical solution, proposed lockdown as the only option. My argument was that the first consequence would be an attempt to control the inevitable damage to the economy that ensued from the lockdown, and that that would cause the government to put intense pressure on the medical.

The next phase was controlled by the social system, also under intense pressure, as it resisted the medical solution of lockdown. Events around the world seem to be indicating that the first phase of the social resistance is underway, while what appears to be the more rapid than expected emergence of a treatment, remdesivir, is an indication of the pressure on the medical system.

I have less insight on the latter process than the former, but regardless of whether pressure was imposed or generated internally, a potential medical solution has emerged more quickly than the medical experts thought possible.

The crisis has therefore entered a new phase. As the lockdown faces mounting economic and social pressures, a hint of a medical solution emerges. This does not mean that a solution will definitely materialize, or that it will eliminate the disease, but it will change the dynamic of the disease.

It is important to understand that the political and particularly social resistance to the lockdown represents simply the beginning of what will be an accelerating movement.

The reemergence of underlying issues is to be expected. Of far greater significance is the random capitulation to the disease, risking death rather than continuing defensive measures. It is difficult to measure how individuals assume risk, but there are enough indicators of resistance, outside the resurrected political movements, to take them seriously.

At this moment, most people would prefer to maintain the strictures placed on them. Even in states that drop the rules, many will continue to practice them.

But the curve of those unwilling to practice them, even where they are mandated, will accelerate.

This will be particularly the case among the poor, who tend to live in small apartments with few amenities, places where remaining locked down with children is not merely an inconvenience but an enormous burden that rises slowly until it becomes untenable. The situation is less intense for those in roomier domiciles, but it has a similar trajectory.

The political movements that have arisen are primarily drawing on prior adherents.

But if no medical mitigation is found and the lockdown continues, those political movements will swell, not so much out of ideological agreement but because they incidentally address a socially unbearable situation.

Children as they grow up are socialized less by their parents than by other children. The interaction on the playground teaches them the realities of life.

The idea that a child can be withdrawn from that socialization for an extended period of time is unrealistic, yet it is the only solution the medical system has provided us until possibly now.

There is the casual belief that death is the worst thing that can befall a human and must never be risked. Empirically that argument is not true.

Roughly 40,000 Americans were killed last year in auto accidents. Every time you turn the key, you begin a very small game with death. Yet people continue to drive.

There are those who choose to climb Mount Everest, knowing that death stalks them at every turn, and those who choose to take drugs that in due course will kill them. In every action that human beings take, they incur the risk of death. Life is always a bet that we inevitably lose (hence my writing on poker).

This is the power of the social module. It does not have a fixed and absolute view on risk, but a calculation of the probability of losing the bet, and the pain to be suffered by not taking the risk. In a small, shabby working-class apartment in Paris, the risk relative to the cost of enduring that lifestyle very rapidly changes. In more spacious and separate spaces, the curve is different. Even for a millennial living alone and maintaining social contacts via text messages, the hunger for a good latte will overwhelm.

The cumulative pressure of the current system will inevitably overwhelm for many the fear of death. In the long run, the gamble is between life and death, and the life that many will be living a few months from now will not be as valuable as it was before.

The tragedy of human life is expressed in the fact that suicide is one of the top 10 causes of death in the United States.

That tragedy tells us that protecting our lives is not an absolute, and that empirically many choose death. The pressure that mounts before that choice needs to be made gives us ample time to solve the problem. And the current solution, from a social point of view, cannot be more than a very temporary one.

We are only at the beginning of the social revolt, organized as it is politically. The actual revolt will be each individual recalculating the value of the hand he was given, compared to the risk he might take.

Inevitably, and with accelerating speed, the restrictions to control the disease will collapse for many and therefore for society. Add to that the economic damage and the question we have is not whether but how we will emerge from this and whether we can emerge without accepting the virus as a permanent threat we will have to live with.

The pressure on the medical system to move beyond sequestration as a solution comes from economic reality and the emerging social unwillingness to accept the restrictions.

The variable is time; medical invention has a stately progression, and one to be praised.

But this is a unique situation, and therefore, the question is what other remdesivirs are lurking in the laboratory. Speed means incurring some risk, and the medical field is risk-averse. But facing the first wave of the social module’s resistance, taking the bet would seem to be prudent.

So the medical system opened the betting with the lockdown. Then the economy raised the bet with near meltdown. Now the social system can be heard to be growing restless. And it is back to the medical, and while all of us want to make a bet that we know we will win, we don’t usually have that luxury.

And so it’s up to the doctors once again; will they call or raise the bet?