Digital commerce

Fintech comes to America at last

The digital payments boom

America is home to both Silicon Valley and Wall Street, yet it has long seemed in the dark ages on digital payments. 

Until 2018 card purchases required hand signatures, 15 years after Europe switched to chip-and-pin. 

A cosy credit-card duopoly, consisting of Visa and Mastercard, works with the banks to issue cards, with the result that there has been too little competition and sky-high profit margins. 

Asia has leapt ahead, with pervasive, fast and dirt-cheap payments services, and a new generation of dynamic fintech firms that have rapidly reached scale. 

Having outdated and expensive digital financial plumbing is no mere technicality: as online shopping becomes a bigger part of everyday spending, it threatens to become a heavy tax on innovation. 

And it means too few people, especially in poorer households, have access to cheap and simple financial tools.

The good news is that the picture in America is changing for the better. 

Thanks to the pandemic, there has been a surge in payments online and experimentation by consumers with new services provided by digital-payments firms. 

In the past quarter the volume of transactions on PayPal was 36% higher than a year earlier. 

The number of people using Square’s digital Cash App rose by 50% to 36m during 2020. 

Investors are now betting that these two firms, together with Stripe and Adyen (which is Dutch), form a quartet that can take on America’s stodgy financial establishment. 

(The chairman of The Economist’s parent group is a director of Square.) 

PayPal is worth $275bn, nearing Bank of America, the country’s second-biggest lender.

Yet there is a catch. Despite the rise of innovative firms, fees for American consumers have yet to fall by much. 

Square charges 2.6% on the average transaction; Stripe’s fee nears 3%. 

By contrast, China’s big fintech firms charge below 0.5%. 

Fees have been kept low by a fierce price war.

A big part of the problem in America is that, rather than route purchases through competing payment pipes, the fintechs still often have little choice but to rely on America’s credit-card networks to connect merchants, banks and consumers. 

The credit-card firms continue to demand a high rent of roughly 2%. 

Funds can take days to travel. 

That reflects the power and entrenched position of Visa and Mastercard. 

They process 86% of card payments through huge networks linking most shops and firms, which have to sign up to detailed terms and conditions.

You might think that the answer is antitrust action against the credit-card firms. America’s competition watchdogs are growling. 

Last November the Department of Justice sued to block Visa’s $5.3bn purchase of Plaid after Visa’s boss described it as an “insurance policy” to neutralise a “threat to our important us debit business”. 

The two firms abandoned the deal. 

On March 19th the Wall Street Journal reported that the justice department had started a new probe over whether Visa is inhibiting merchants from switching to cheaper services. 

But do not get your hopes up. 

The courts, which decide most antitrust cases in America, take ages to act and tend to be too lenient. 

A big antitrust case against American Express in 2017 flopped.

Instead, the key to making payments more competitive in America is to create a new network of financial plumbing: a “real-time” interbank-payment system allowing for near-instant and cheap transfers. 

Swathes of Europe and Asia have already done this. 

Once this exists, banks and fintechs can build products, standards and services on top of it. 

In Singapore and the Netherlands, for example, those efficient payment pipes are open to digital wallets, which can process payments in a few clicks, taps or by scanning a qr code.

America’s own effort at instant payments, backed by the Federal Reserve and known as FedNow, is to launch in 2023. 

The big banks and credit-card firms are keen to delay a system that could disrupt the status quo. 

The government and the Fed should not just ignore their grumbles but bring forward the timetable. 

The pandemic has shown that online transactions have come of age. 

It has also shown that the public sector can act quickly and effectively when it has to. 

Cheap and swift digital payments are a prize that should be viewed as a priority.

 "We Won’t Get Around a Serious Lockdown"

A Third Wave Washes over Germany as Vaccination Campaign Mounts

Medical professionals and virologists in Germany have been clear in their message: The third wave of the coronavirus must be stemmed through tough measures, otherwise the consequences will be dramatic. So, why are Angela Merkel and her state governors stalling?

By Matthias Bartsch, Markus Becker, Felix Bohr, Rafaela von Bredow, Anna Clauß, Markus Dettmer, Jörg Diehl, Silke Fokken, Veronika Hackenbroch, Kristin Haug, Claus Hecking, Armin Himmelrath, Christiane Hoffmann, Martin Knobbe, Philipp Kollenbroich, Martin U. Müller, Christopher Piltz, Thomas Schulz, Ansgar Siemens, Gerald Traufetter, Alfred Weinzierl, Nicolas Wildschutz und Steffen Winter

Police and pedestrians on Cologne last Tuesday: "I guess everyone is doing what they want." Foto: IC.HARDT / SNAPSHOT-PHOTOGRAPHY

These days, Germany seems to be staggering like a boxer battered by endless blows on the verge of a knockout. 

There’s the weakened chancellor, who is unable to get her way. 

There are everyday Germans, who are tired of the coronavirus and staring in horror at the politicians’ muddled, directionless leadership. 

There is the vaccination campaign, once again shaken by problems with AstraZeneca. 

And there are the rising and seemingly unstoppable infection numbers.

In full view of all, Germany has been steering on a catastrophic course for weeks and the warnings have grown louder from all directions: intensive care doctors, virologists, mathematicians, BioNTech founder Uğur Şahin, influential virologist Christian Drosten and the health expert of the center-left Social Democratic Party (SPD), Karl Lauterbach. 

All are sharing the same message: The pandemic is threatening to go off the rails, the third wave is building up and we are facing the threat of overwhelming infection numbers. 

Some predict up to 100,000 new COVID-19 cases per day in early May despite the current restrictions in place.

"With 100,000 cases per day, the only thing left to do is to carry out disaster medicine,” says Christian Karagiannidis, the president of the German Society for Medical Intensive Care Medicine and Emergency Medicine. 

Virologist Melanie Brinkmann argues that if things keep going as they are, "everyone will know someone in their immediate surroundings who has been hospitalized, died or suffered long-term health problems.”

These warnings could hardly be more dire. 

But they have gone largely unheard in the German political establishment, which has been paralyzed for weeks by an escalating power struggle.

The Chancellor on One Side, the Governors on the Other

On one side, you have the chancellor, worn out by the gradual erosion of her authority. 

She has promised that she won’t allow things to get to the point where the worst predictions come true. 

But she has not revealed when or how she plans to intervene. She’s still mulling it over. Given that the next chancellor will be elected in six months, this could be her final battle.

On the other, you have the state governors. 

Some are almost drunk with power about the idea of being able to run their states autonomously. 

Others are deaf to serious scientific advice and driven by the false assumption that Germans now expect society to reopen immediately, no matter the cost.

Also hovering in the background is the growing question of who has what it takes to become Merkel’s successor as the chancellor candidate for the center-right Christian Democrats: Markus Söder – the Bavarian governor and head of the Christian Social Union (CSU), the Bavarian sister party to Merkel’s CDU – or CDU national party chair and governor of North Rhine-Westphalia Armin Laschet.

Against this backdrop, Germany’s leading politicians are continuing with their disastrous inaction, chained to a federalist system that gives broad powers to the individual states and is proving to be far from crisis proof. 

This power vacuum is making it impossible to implement even obvious solutions, like a two-week lockdown during nationwide Easter holidays, when all schools were closed anyways, that could have gone far in driving down the number of infections and breaking the wave. 

After first agreeing to the lockdown, Merkel and state leaders later backed away from it, with the chancellor apologizing to the country for what she described as a mistake.

And now? 

All scientific models show that permanent re-openings, accompanied by intelligent proposals and testing strategies for doing so, may only be possible in the near future if significantly tougher restrictions on public life are put in place for a few weeks to keep infection numbers down low enough to keep the hospitals from overflowing.

The models also show that it is only a matter of bridging two difficult months. Starting in late May, the accelerating vaccination campaign will be able to significantly curb the virus.

A Free and Easy Summer or Terrible Months Ahead?

But time is running out. 

If the tough measures come too late, it will be hard to break the third wave. 

Intensive care units will then be overloaded for months. 

And if the number of infections is too high, the vaccination campaign won’t work as well as people had hoped either.

So, what should people in Germany be expecting? 

A free and easy summer, with reopened businesses and permanently loosened rules? 

Or months marked by thousands of deaths and long-lasting restrictions? 

Will the people regain their rapidly dwindling trust in the government, or will the damage only intensify? 

Will the Merkel era end in conciliation or with a muffled thud?

The coming two weeks will decide.

If things continue as some would like – a few more loosened regulations here (as in Berlin and the northern state of Schleswig-Holstein) and a few even looser ones there (in the southern German city of Tübingen and in the western state of Saarland) – most scientists agree that the infection curve will climb ever higher, with the cold relentlessness of exponential growth.

By mid-April, only just under 15 percent of the German population will have received at least their first jab of vaccine. 

That’s still too few to effectively fight B.1.1.7, the far more contagious mutation.

"We underestimated B.1.1.7” says Michael Meyer-Hermann, a modeler at the Helmholtz Institute for Infection Research in Braunschweig. 

He says the case numbers rose much earlier than he had calculated in his scenarios. 

"People are obviously tired of the pandemic and are ignoring the contact restrictions,” the physicist says.

At least, he claims, that’s what the mobility data suggests. 

"People are moving around almost twice as much as they did during in the first wave – I guess everyone is doing what they want.”

"We won’t get around a serious lockdown,” says Christian Drosten, a prominent virologist at Berlin’s Charité University Hospital. 

"We have seen in Paris and London that a partial lockdown with a more tiered catalog of measures doesn’t work against this more aggressive variant. 

The infection rate there continued to rise, as did the number of severe and often deadly progressions of the disease.”

He argues that there’s still time to avert that development in major German cities. 

"But this requires political action and the support of as many people as possible,” Drosten says.

Virologist Melanie Brinkmann Foto: Thomas Trutschel/ / imago images/photothek

Brinkmann, a virologist, shares that view: "We can get the numbers down dramatically within four weeks if people have little contact.” 

She argues that the R-value, which measures how many people an infected person transmits the virus to on average, must be massively reduced. 

If the value falls significantly below 1, the number of cases will fall as exponentially and rapidly as they rose. 

With an R-value of 0.7, the numbers halve each week. 

"The harder everyone slams on the brakes, the shorter the lockdown,” Brinkmann says.

She says she’s angry that there hasn’t been an earlier response to scientists’ warnings. 

"We could have an infection rate in the teens,” she says, if politicians at a regular meeting between the chancellor and the state governors in January had taken what scientists had told them seriously. 

The fact that the governors acted to the contrary and even relaxed measures has left the scientist bewildered.

The German Interdisciplinary Association for Intensive Care and Emergency Medicine has produced model calculations. 

The question is how full the intensive care units will get depending on the date the next lockdown begins.

If, as the governors had theoretically agreed, any loosening of lockdown rules were reversed once the infection rate reaches an incidence of 100 cases per 100,000 people per week, there would be enough space left in the hospitals. 

If public life is only shut down again once the incidence reaches 200, the intensive care units in large parts of the country will fill to the brim, like they did at the end of last year. 

If these measures aren’t reversed until an incidence of 300, the hospitals will overflow, requiring triage in which doctors have to decide who to treat with intensive care and who, if necessary, to let die.

"We’re already doing triage almost every day by default,” says intensive care physician Henning Lemm of St. Marien Hospital in the city of Siegen. 

"Not with the COVID-19 patients, but with the regular patients.” 

He says he is often forced to ask himself if a patient is stable enough for the normal ward, or which scheduled operations can be pushed back. 

He says that every new COVID-19 case in the isolation ward reduces Lemm’s treatment capacity for non-infectious patients in the intensive care unit. 

"That hasn’t sunk into the public consciousness yet,” Lemm says.

The situation in France shows that average infection rates of 200 to 300 per 100,000 inhabitants per week do not allow for peaceful coexistence with the virus. 

The French tried living with high infection rates for weeks. 

Intensive care doctor Karagiannidis is in contact with colleagues in Paris, who tell him there are now so many COVID-19 patients in the intensive care units that staff have to be deployed who have not been trained for the situation. 

Normal operating room operations, he has been told, have largely ceased. 

"And doctors are seriously preparing for triage,” Karagiannidis says.

The Wednesday before last, French President Emmanuel Macron announced a nationwide hard lockdown, including curfews. 

"We will lose control if we don't do something,” he said in a televised address.

Merkel Is Not Prevailing

In Berlin, on the other hand, silence and inaction are still prevailing. 

Even Merkel’s confidants are confused about when and how the chancellor intends to act. 

Some believe she is hesitating because she recently had to rescind plans for a lockdown over the Easter break and then apologized, meaning she can’t immediately implement another measure.

Chancellor Angela Merkel's authority has been severely eroded. Foto: Markus Schreiber / AP Photo / Picture alliance

Others suspect she is waiting for the rate of infections to continue rising and for the states to be forced to act. 

This would be a cynical and dangerous gambit, but perhaps the only feasible one, given that Merkel’s authority is badly damaged. 

"Unlike most other governors, I share many of the Chancellery’s assessments of the pandemic response,” says Hamburg Mayor Peter Tschentscher of the SPD. 

"However, the Chancellery is mostly having problems asserting itself over the states led by the CSU and the CDU.”

At the beginning of last week, the chancellor had built up what seemed to be a well-coordinated backdrop of threats. 

That Sunday, Merkel announced on a prime-time political talk show that if the governors don’t agree to pull the brake on loosening restrictions, she would potentially amend the Infection Protection Act to give the federal government more powers.

Shortly thereafter, Söder appeared on another news show to announce that he favored giving the federal authorities more power in the fight against the virus. 

And last Monday, German Interior Minister Horst Seehofer of the CSU said that the federal government should take charge. "You have to act as a federal government.”

The threat from the Chancellery wasn't followed-up with action.

In fact, Seehofer and Söder had spoken on the phone that weekend to coordinate their actions, and the chancellor knew about Seehofer’s move. 

But the trio’s threat wasn’t followed up with any action.

On the talk show, Merkel said she was still deliberating. 

Probably for a few days. 

And she said that she would not, under any condition, allow the number of new daily infections to reach 100,000. 

But nothing happened.

The SPD – the junior partner with Merkel’s CDU and the CSU in the government coalition – is also at a loss about the Chancellery’s plans. 

One person in the party says their approach was akin to someone poking around in the fog looking for something. 

SPD members saw Merkel’s TV appearance as a helpless act of desperation.

The Federal Government Could Regulate Everything

But Merkel’s advisers actually agree that tough measures need to be taken to prevent disaster. 

According to Karl Lauterbach of the SPD, who is a member of parliament and an epidemiologist, two to three weeks of curfew restrictions after 8 p.m. and mandatory testing for daycare centers, schools and businesses could be enough to break the wave. 

But he says we don’t have any more time to wait days for that decision.

Merkel would have two options for reacting immediately. 

"From a constitutional law perspective, it’s quite banal,” says constitutional law expert Sophie Schönberger. 

The federal government could regulate everything the states have regulated to this point. 

"It just needs the political will.” 

One option would be for the federal government to write the relevant provisions into a draft amendment to the Infection Protection Act and submit it to parliament. 

The other would be to transfer the powers to issue ordinances as part of the Infection Protection Act from the states to the federal government.

CDU state governors would view a new law as an affront.

Back in the fall, when Merkel and some of her government ministers were already unhappy with the decisions made by the governors, they discussed whether the federal government should potentially take over more competencies in the fight against the pandemic by law. 

The chancellor balked at the move. According to sources close to her, she appreciates the coordination with the states because it ensures stability and acceptance.

The week before last, the state governors who are members of the CDU party made it clear to the chancellor that they would view a federal law as an affront. 

Rainer Haseloff, the governor of Saxony-Anhalt, countered the chancellor’s moves by holding up a graphic to the cameras at a press conference last Tuesday. 

It showed the average new cases of COVID-19 in Germany and France in recent months, with the French numbers showing a steep upward trend, while the German curve was relatively flat in comparison.

For Haseloff, it was proof that a country with federalist, state-centric structures can get through the crisis better than a centrally structured one like France.

Hesse state Governor Volker Bouffier of the CDU Foto: Andreas Arnold / dpa

Even Merkel’s otherwise loyal supporters are openly expressing their annoyance with her. Deputy CDU leader Volker Bouffier stressed last week that he would like to know just what Merkel intends to include in the federal law. 

He said he could "hardly fathom” how the variety of conceivable measures to combat the coronavirus could be included in it. 

And even if the chancellor were to succeed, he said, she still wouldn’t have much to gain. 

Because "at the end of the day,” the federal government doesn’t even have the administrative capabilities to implement the regulations at the local level. 

"It won’t work without the states,” Bouffier warned.

"You have to come up with something other than always opening, closing, opening and closing."

Bouffier, who is also the governor of Hesse, is a good example of the fact that governors of the 16 German states don’t really know themselves how to get out of this. 

They face demands on one side for strategies to further open public life and calls for a strict lockdown on the other. 

Bouffier says he is warned "every day” by intensive care physicians that the hospitals will soon be overflowing if more restrictive actions aren’t finally taken.

At the same time, he says, mayors, associations and the media are all pressuring him for intelligent solutions. 

"You have to come up with something other than always opening, closing, opening and closing,” he says they tell him.

Head-Scratching over Saarland

But the governors’ most recent ideas have been incompatible with the fundamental idea they had agreed to in a meeting with the chancellor: that the "emergency brake” would be pulled on the opening of public life if the seven-day rate of infection went above 100 people out of 100,000. 

And the plan by Saarland Governor Tobias Hans of Merkel’s CDU to declare his state a model project for reopening public life by relaxing the corona restrictions was met with incomprehension by other state governors.

A drive-through coronavirus testing center in the border between Germany and France Foto: Oliver Dietze / dpa

Thuringia Governor Bodo Ramelow of the Left Party criticized the fact that Saarland was granted a special delivery of 80,000 doses of vaccine because it faced an purportedly acute danger because of its shared border with France. 

"Suddenly, the danger is gone and Saarland is a model region for the entire country,” he says. 

Ramelow says he could only shake his head at the idea.

Hans, on the other hand, argues that his pilot project, based on a model being implemented in Tübingen, is ultimately also a way of slowing the pandemic. 

Because the more you test, the more cases you discover. 

"People want to have prospects,” says Hans. 

This line of argumentation has also been used by Armin Laschet, the governor of North Rhine-Westphalia and national head of the CDU.

He argues that governors are in no way certain what "the people” want. 

Ramelow, who regularly consults the findings of several pollsters, reads from a recent analysis that the population is divided into two roughly equal camps: One considers the current measures to contain the spread of the coronavirus to be too strict and the other believes they are too lax.

"We have never had a majority for loosening” the containment measures, counters Wahlen, a polling institute which has been conducting surveys on the general mood in Germany since the very beginning of the pandemic. 

A digital survey by Civey for DER SPIEGEL provides an even clearer image. 

When asked, "Should Germany immediately return to a tougher lockdown?” just under two-thirds of respondents answered "yes.”

The first states have already reacted to the increasingly perilous situation. 

Hamburg imposed a curfew at night, and the governors of Bavaria and Baden-Württemberg – Söder of the CSU and Winfried Kretschmann of the Green Party – sent a strongly worded letter to their fellow governors. 

The situation, they wrote, is "serious, more serious than many believe.” 

They then followed up with an appeal: "That’s why we have to assume our responsibility now and not just continue discussing it.”

Yet despite all the determination and toughness Söder is seeking to project, he has already meekly scrapped his "Tübingen Plus” model, in which cities with average rates between 100 and 150 weekly infections per 100,000 residents can reopen public life in a controlled manner.

Even Saarland Governor Hans became increasingly unsure during the week whether his state-wide model trial might have to be "postponed” at short notice because of rising infection figures. 

North Rhine-Westphalia Governor Laschet also heralded an orderly retreat. 

"We are in quite a dramatic phase, and we have to do everything we can to get the infections down.”

A Time for Pilot Projects?

However, once Germany succeeds in flattening the third wave, the time will come for a loosening of containment measures. 

That's the hopeful message of recent days. 

Depending on how early and resolutely politicians act, new model projects for a cautious relaxing of restrictions could start as early as the end of April.

In Germany, the university town of Tübingen has been a pioneer in attempts to implement mass testing to restore public life.

 Since March, local residents and visitors who undergo a COVID rapid test and receive a negative result are issued a "day pass,” which allows them to shop in the city center and go to cafés and restaurants. 

Many people have taken advantage of the offer. 

The question now is whether or not the approach will drive up infections in the city.

A sidewalk café in the college town Tübingen: The city's problems began after it started opening up businesses again. Foto: Nico Kurth / DER SPIEGEL

"Tests can be an important contribution to controlling the pandemic, but they are in no way sufficient on their own,” says Gerd Fätkenheuer, a professor for infectious diseases in Cologne. 

He says testing strategies are more effective the lower the number of infections there are. 

"That’s why our primary goal now needs to be reducing the number of cases by means of contact-limitation measures,” says Fätkenheuer. 

"If you can get (average infections per week per 100,000 residents) down to 35 or 50, then it might work to control the number of cases with the help of tests.”

But he adds that this is only promising if testing is systemically and comprehensively carried out at schools and companies. 

The scientist says the hope that you can reduce the number of cases by means of tests is "baloney.”

Still, that hasn’t stopped politicians from flooding the country with model projects amid the third wave. 

In the city of Weimar, for example, shops opened up last week for three days for people who could produce a negative coronavirus test from the same day – a move that wasn’t accompanied by any scientific measurement of its efficacy. 

The municipal administration in the town of Villingen-Schwenningen in the state of Baden-Württemberg says it wants to open all "possible” areas for people who have submitted to tests. 

Volunteers would collect the scientific data. 

North Rhine-Westphalia has already included a provision in its state corona ordinance that would make shopping possible for people with a negative result.

Austria has taken a more systematic approach. 

There, mass tests for the coronavirus have been conducted in recent months in huge field tests. 

School children have been tested on a regular basis in the country since the beginning of February. 

Vienna now offers four high-quality PCR corona tests a week, free of charge, to the city’s 1.9 million inhabitants.

The PCR test project is to be expanded to the rest of Austria in the future. Niki Popper, a mathematician and simulation researcher at the Vienna University of Technology, has been conducting a scientific study of the field tests. 

"Our model works,” he says, "but only up to a point.” 

He says that testing is one factor that has clearly helped slow the increase in cases. 

The country is nevertheless facing new measures for containing the disease.

"The virus can’t just be tested away,” says Michael Wagner of the University of Vienna, the scientific coordinator of an Austria-wide school study. 

This is also because the rapid antigen tests still don’t deliver results that are good enough. 

According to a review by Cochrane -- a network of researchers, which reviewed and evaluated all the important studies available on the subject -- the tests fail to detect an average of 40 percent of people who are infected but asymptomatic.

Sobering Data from Austria

Pooled PCR tests, meanwhile, have proven to be much more accurate. 

They are particularly well-suited to schools and daycare centers. 

Before meeting in the classroom or group rooms, children can gargle and spit into a collection container. 

If the virus is detected in a pooled test, then the pupils in that pool are then given a second test individually. 

These tests have already been used on a trial basis at a few schools in Bavaria.

But the sobering data from Austria shows that even regular testing can only really serve as a complementary measure. 

Despite the mass testing of pupils, the infection rate there increased massively in the age groups between 5 and 14; and in states like Vienna or Burgenland, the average infection rate reached over 400 per 100,000. 

Meanwhile, Wagner, the microbiologist, was able to compare the antigen test data with data from a school study to determine how many infected children can be tracked using this test strategy – "one-fifth of the elementary school children and a quarter of those in the higher grades,” he estimates.

The situation in workplaces is equally murky. 

Coronavirus tests are supposed to be deployed there to interrupt chains of infection as early as possible, but no one has any reliable estimate of how many companies are already offering these tests to their employees.

      A Mercedes plant in Bremen Foto: - / dpa

Small- and medium-sized businesses are having trouble just sourcing enough tests for their workers. Meanwhile, larger companies are facing logistical problems. 

At major industrial corporations like Volkswagen, several thousand employees start work at the same time when they change shifts in a single plant.

German Labor Minister Hubertus Heil of the SPD recently commissioned a survey to determine the current situation with corona tests at companies. 

The first findings are expected this week. 

"If it turns out the week after Easter that there isn’t enough testing happening in the working world, then we will make it legally binding,” Heil has announced.

"It is realistic that all adults who want to get vaccinated will be able to get a shot by the end of July."

Ultimately, all the test strategies and pilot projects are intended to get us through to the point where the vaccination campaign starts to have an effect. 

Uğur Şahin, the CEO of German vaccine maker BioNTech, estimates that enough people will have been vaccinated by early June to noticeably stem the virus. 

This week, around 3 million vaccine doses are to be delivered, and by the end of the month, more than 6 million doses. 

From mid-May onward, over 7 million doses a week are expected.

"It is realistic that all adults who want to get vaccinated will be able to get a shot by the end of July,” says Sebastian Dullien, research director at the Macroeconomic Policy Institute at the Hans Böckler Foundation. 

He has done a comparison of the demand for vaccine and the expected delivery of doses.

"I was surprised myself by how much vaccine there is supposed to be,” says Dullien. 

Deliveries of the Germans’ preferred vaccine, BioNTech, are on track to increase especially dramatically in the second quarter. 

Deliveries are expected to swell from just under 1.1 million doses recently to more than 5 million doses a week.

Mathematically, It's Possible without AstraZeneca

A total of almost 95 million vaccine doses are needed for the presumed 52 million people in Germany who are willing to get vaccinated. 

According to Dullien’s calculations, more than 107 million doses should arrive by the beginning of July, even if the vaccine from Curevac hasn’t been approved by then. 

He expects more than 140 million doses by the end of that month.

"In purely mathematical terms, you could achieve the goal by the end of July without any further use of the AstraZeneca vaccine,” says Dullien, provided that the other manufacturers deliver as announced, particularly BioNTech.

The European Commission sounds similarly optimistic at the moment. 

Following considerable criticism in recent months about its procurement of vaccines, the EU executive body now seems to be building up momentum with the vaccination campaign.

According to Thierry Breton, the EU’s commissioner for the internal market, 100 million doses of vaccine are expected each month between April and June. 

The French national says that, "by mid-July, it will be 420 million.” 

That’s enough to vaccinate 70 percent of the adult EU population, he says.

There are now 53 factories in 12 EU countries involved in vaccine production, says the Frenchman, who has headed a task force to speed up vaccine production since February. 

A company has also been found in Barcelona, Spain, to fill doses of Johnson & Johnson’s vaccine, which was recently approved for use in the EU.

If vaccination centers and doctors can keep up with the deliveries, there are reasonable hopes that people will be able to enjoy their summer. 

A research team led by Viola Priesemann of the Max Planck Institute for Dynamics and Self-Organization in Göttingen has modeled how far the vaccination campaign can go in terms of stemming the virus. 

Their conclusion: If vaccinations are carried according to plan, there may be permanent relaxations of the restrictions in early summer – without the infection rates soaring again.


Remote Work Is Here to Stay. Manhattan May Never Be the Same.

New York City, long buoyed by the flow of commuters into its towering office buildings, faces a cataclysmic challenge, even when the pandemic ends.

By Matthew Haag

Jonah Markowitz for The New York Times

Spotify’s headquarters in the United States fills 16 floors of 4 World Trade Center, a towering office building in Lower Manhattan that was the first to rise on the site of the 2001 terror attacks. 

Its offices will probably never be full again: Spotify has told employees they can work anywhere, even in another state.

A few floors down, MediaMath, an advertising tech company, is planning to abandon its space, a decision fueled by its new remote-work arrangements during the pandemic.

In Midtown Manhattan, Salesforce, whose name adorns a 630-foot building overlooking Bryant Park, expects workers to be in the office just one to three days a week. 

A nearby law firm, Lowenstein Sandler, is weighing whether to renew its lease on its Avenue of the Americas office, where 140 lawyers used to work five days a week.

“I could find few people, including myself, who think we are going to go back to the way it was,” said Joseph J. Palermo, the firm’s chief operating officer.

A year after the coronavirus sparked an extraordinary exodus of workers from office buildings, what had seemed like a short-term inconvenience is now clearly becoming a permanent and tectonic shift in how and where people work. 

Employers and employees have both embraced the advantages of remote work, including lower office costs and greater flexibility for employees, especially those with families.

Beyond New York, some of the country’s largest cities have yet to see a substantial return of employees, even where there have been less stringent government-imposed lockdowns, and some companies have announced that they are not going to have all workers come back all the time.

In recent weeks, major corporations, including Ford in Michigan and Target in Minnesota, have said they are giving up significant office space because of their changing workplace practices, while Salesforce, whose headquarters occupies the tallest building in San Francisco, said only a small fraction of its employees will be in the office full time.

But no city in the United States, and perhaps the world, must reckon with this transformation more than New York, and in particular Manhattan, an island whose economy has been sustained, from the corner hot dog vendor to Broadway theaters, by more than 1.6 million commuters every day.

ImageMidtown is quiet with about 90 percent of Manhattan office workers working remotely. 

Midtown is quiet with about 90 percent of Manhattan office workers working remotely. Credit...Jonah Markowitz for The New York Times

Commercial landlords in Manhattan entered 2020 with optimism, riding a steady demand for office space, record asking prices in some neighborhoods and the largest construction boom since the 1980s. 

But that collapsed overnight. Property owners suddenly found themselves chasing after unpaid rent, negotiating repayment plans with tenants and offering deep discounts to fill empty space.

Mayor Bill de Blasio is requiring the city’s own roughly 80,000 municipal office employees to return in early May, in part as a signal to other employers that filling New York’s buildings is a key to its recovery.

“This is an important step for the city, and it’s another important step on the way to the full recovery of New York City,” Mr. de Blasio said.

Still, about 90 percent of Manhattan office workers are working remotely, a rate that has remained unchanged for months, according to a recent survey of major employers by the Partnership for New York City, an influential business group, which estimated that less than half of office workers would return by September.

Across Midtown and Lower Manhattan, the country’s two largest central business districts, there has never been more office space — 16.4 percent — for lease, much higher than in past crises, including after the Sept. 11 terror attacks in 2001 and the Great Recession in 2008.

As more companies push back dates for returning to offices and make at least some remote work a permanent policy, the consequences for New York could be far-reaching, not just for the city’s restaurants, coffee shops and other small businesses, but for municipal finances, which depend heavily on commercial real estate.

Sarah Patellos, who is on Spotify’s music team, has been working from a dining room table in Truckee, Calif., a mountain town near Lake Tahoe where she has spent most of the past year after flying there for a weekend trip in March 2020 and getting stuck because of government-imposed lockdowns.

“I love being in the city, but you think about your life, the life experiences you want or the different chapters you might want, it’s totally different now,” said Ms. Patellos, who had been living in Brooklyn. “It’s totally life-changing.”

The towering office buildings that line Manhattan’s avenues have long made New York a global powerhouse and the capital of numerous industries, from advertising to finance.

Now even some of the largest and most enduring companies, including JPMorgan Chase & Co., which has more than 20,000 office employees in the city, have told their work forces that the five-day office workweek is a relic. 

The bank, which declined to comment for this article, is considering a rotational work model, meaning employees would rotate between working remotely and in the office.

“Going back to the office with 100 percent of the people 100 percent of the time, I think there is zero chance of that,” Daniel Pinto, JPMorgan’s co-president and chief operating officer, said in an interview in February on CNBC. 

“As for everyone working from home all the time, there is also zero chance of that.’’

Many companies, including large employers like JPMorgan Chase, are moving away from having all employees in the office five days a week. Credit...Jonah Markowitz for The New York Times

Other large businesses, including the accounting firm PricewaterhouseCoopers, the marketing group Omnicom Group and the advertising giant WPP, have searched for subtenants to take over significant chunks of their Manhattan offices.

The loss of workers has caused the market value of commercial properties that include office buildings to plunge nearly 16 percent during the pandemic, triggering a sharp decline in tax revenue that pays for essential city services, from schools to sanitation.

Real estate and commercial buildings contribute almost half of the city’s property tax revenues. For the first time in more than two decades, New York expects property tax receipts to decline, by an estimated $2.5 billion in the next fiscal year.

Still, New York is set to receive significant federal assistance from the $1.9 trillion federal stimulus package: $5.95 billion in direct aid and another $4 billion for schools, a City Hall spokeswoman said.

While that addresses immediate needs, the city still faces an estimated $5 billion budget deficit next year and similar deficits in the following years, and a changing work culture could hobble New York’s recovery.

The amount of office space in Manhattan on the market has risen in recent months to 101 million square feet, roughly 37 percent higher than a year ago and more than all the combined downtown office space in Los Angeles, Atlanta and Dallas. 

“This trend has shown little signs of slowing down,” said Victor Rodriguez, director of analytics at CoStar, a real estate company.

At least one industry, however, is charging in the opposite direction. 

Led by some of the world’s largest companies, the technology sector has expanded its footprint in New York during the pandemic. 

Facebook has added 1 million square feet of Manhattan office space, and Apple added two floors in a Midtown Manhattan building.

And the surge in available commercial real estate has actually been a boon for some new businesses that have been able to find spaces at rents that are lower than they were before the pandemic.

“I’ve seen the obituary for New York City many times,” said Brian S. Waterman, the executive vice chairman of Newmark, a commercial real estate services firm. “The office reboarding will start to occur in May, June and July, and you are going to have a much fuller occupancy once we hit September.”

But for now, few workers are at their desks.

“I could find few people, including myself, who think we are going to go back to the way it was,” said Joseph J. Palermo, the chief operating officer of a Manhattan law firm.Credit...Jonah Markowitz for The New York Times

Only 15 percent of workers have returned to offices in New York City and the surrounding suburbs, up slightly from 10 percent last summer, according to Kastle Systems, a security company that analyzes employee access-card swipes in more than 2,500 office buildings nationwide. Only San Francisco has a lower rate.

The lack of workers has pummeled some of the city’s biggest real estate companies. SL Green Realty and Vornado Realty Trust, two of New York’s largest owners of office space, and Empire State Realty Trust, which owns the Empire State Building, have lost a total of $6.5 billion in market value.

The sharp declines have prompted developers to rally behind an idea that seemed unthinkable before the pandemic: converting distressed office buildings in Manhattan into low-income housing.

The record vacancy rate has been driven by companies across almost all industries, from media to fashion, that have discovered the advantages of remote work.

Beside the cost savings of operating a scaled-down office or no office at all, modern technology and communications have allowed workers to stay connected, collaborate from afar and be more productive without lengthy commutes. 

Parents are also clamoring for more flexibility to care for their children.

“We believe that we’re on top of the next change, which is the Distributed Age, where people can be more valuable in how they work, which doesn’t really matter where you spend your time,” said Alexander Westerdahl, the vice president of human resources at Spotify, the Stockholm-based streaming music giant that has 6,500 employees worldwide.

For now, Spotify does not plan to reduce its New York footprint, but as of February, the company told its United States employees — 2,100 of whom had worked at the Manhattan office — that they could work from pretty much anywhere.

“The change is mainly driven by globalization and digitalization, and our tools are much, much better at allowing for people to work from anywhere,” Mr. Westerdahl said.

“It’s totally life-changing,’’ said Sarah Patellos, who works for Spotify, which has told its New York employees that they can work from anywhere. Credit...Emily Berl for The New York Times

Remote work, of course, is not without significant downsides.

The blurry lines that already existed between work and personal life have been all but obliterated during the pandemic. 

Without the time spent commuting in the morning and at night, people are logging on to work earlier in the day and staying connected later into the night.

And despite modern technology and video conferencing capabilities, companies are struggling to foster workplace cultures and make employees, especially new hires, feel welcome and part of a team.

Those concerns have weighed heavily on executives at Kelley Drye, a law firm founded in 1836 in New York, which is moving from Park Avenue near Grand Central Terminal to 3 World Trade Center in Lower Manhattan.

“Zoom and Teams are great,” said Andrea L. Calvaruso, a lawyer who is the chair of the firm’s trademark and copyright group, but she added that “there’s no substitute for sitting down in a beautiful new collaborative and working together without distractions.”

But Ms. Patellos, despite being unprepared after being stuck in California — she had to buy a keyboard and monitor — soon found herself connecting with colleagues all over the world just as she had in her New York office.

“I fell into a rhythm,” said Ms. Patellos, who is still deciding where to eventually move. 

“I maintained a bit of East Coast hours, starting my days a little earlier and ending a bit earlier. Before I knew it, it became the norm and a routine.” 

Optimistic Forecasts on Economy Might Still Be Too Dismal

Economy could exceed forecasters’ lofty expectations if Covid-19 crisis doesn’t flare up again

By Justin Lahart

There is a question of how quickly U.S. households could step up their spending on restaurant meals and other items if the Covid-19 crisis passes./ PHOTO: RINGO CHIU/ZUMA PRESS

Economists and policy makers have been ratcheting up their forecasts for how the U.S. economy will perform this year. 

But if the vaccination campaign now under way succeeds in stamping out America’s Covid-19 crisis, those forecasts could still be too low.

In the beginning of January, economists surveyed by IHS Markit said on average that they expected that real, or inflation-adjusted, gross domestic product would be 4% higher in the fourth quarter than it was in the same period of last year. 

One $1.9 trillion economic relief package and more than 100 million Covid-19 vaccination dose administrations later, that forecast has risen to 6.3%. 

Similarly, Federal Reserve policy makers now project GDP will grow 6.5% over the same period, which compares with a projection of 4.2% back in December.

If those forecasts come true, 2021 will mark the year of the fastest growth the economy has experienced, on a fourth-quarter-to-fourth-quarter basis, since 1983. 

Considering how much money there is to put to work, it is easy to imagine GDP growing even more quickly.

The $1.9 trillion in additional relief Congress passed earlier this month amounts to 8% of GDP, and although not all of it will make its way into the economy this year, plenty of it will. 

Similarly, the combination of last year’s government relief and people’s reduced spending during the pandemic substantially raised the amount of money Americans have on hand, with Fed figures showing that at the end of last year, U.S. households had $2.8 trillion more in savings, checking and money-market accounts than at the end of 2019. 

That comes to about 13% of GDP. 

Not all of that will be spent as the economy opens, but it seems likely that at least some of it will be pouring into the economy.

One reason forecasts aren’t higher may be that the most optimistic scenario, in which vaccinations continue apace and the Covid-19 crisis lessens, is no sure thing. 

Variants of the novel coronavirus might prove less resistant to current vaccines than is hoped. 

The vaccine rollout might hit an unexpected speed bump, such as a high number of people who opt against vaccination. 

Or people could be slow to lower their guards even when the Covid-19 threat has passed.

Moreover, the Covid-19 crisis is a global phenomenon, and with few exceptions the vaccine rollouts in other countries aren’t nearly as far along as in the U.S., if they have started at all. 

That includes major destinations for U.S. exports, such as the eurozone, Canada and Mexico. 

So layering a bit of caution into a bullish forecast makes some sense.

There also is a question of just how quickly U.S. households could step up their spending even if the Covid-19 all-clear signal sounds. 

The downturn that the pandemic set off hit services spending categories, such as restaurant meals and movie tickets, much harder than goods, such as washing machines. 

But any rebound in services could face some limits—people might well eat out more than they did before the pandemic, for example, but there are only so many seats at the restaurant. 

The effect might be to push some spending into next year, in which case forecasts that 2022 fourth-quarter GDP will be about 3% above the year-earlier level could be too low.

Still, when the economy grows quickly, forecasters have a tendency to set their sights too low. 

In the four years spanning 1996 to 1999, for example, economists surveyed by the Philadelphia Fed in the first quarter of each of those years said that GDP in the fourth quarter would be up by 2% to 2.5% from a year earlier. 

But when those fourth-quarter GDP reports came out they were consistently higher by a significant degree. 

Revised Commerce Department figures now show the economy was then growing in excess of 4% each year.

If things go well in the months ahead, they could go really well.

Australia’s Role in America’s War With China, Part 2

The country would have plenty to do aside from housing U.S. forces. 

By: Jacek Bartosiak

Perhaps America’s greatest operational advantage over China – should a war ever start between them – is the superiority of its submarines. Submarines are great for breaking China’s anti-access/area denial strategy. 

Especially in the early stages of the conflict, nuclear submarines and cruise missile carriers would be Washington’s first option; they would be deep in Chinese-controlled waters, and they could hit inland targets such as ports, communications facilities and air defense systems. 

Even so, submarines have an inherent operational limitation: ammunition, which obviously can’t be replaced underwater.

Geographic Advantage

Enter Australia, whose importance can’t be confined to just one analysis. 

Northern Australia would be the ideal location for US. bases in theory, but inclement weather, great tides, moving floors and reefs make it too treacherous. 

The best option, then, would be Western Australia’s Stirling naval base. 

It’s beyond the range of China’s current conventional missile force, and unlike in Guam, Australia has conventional submarines stationed there. 

Its access to the Indian Ocean also allows U.S. vessels to eliminate peripheral Chinese raids and to cut through Chinese communications or block military ports in the Indian Ocean. (Not for nothing, Stirling would need some upgrades: a new harbor for nuclear ships, a deepened port at the Cockburn Sound canal, and so on. All of which would require things like ammunition stores and massive construction equipment that would make this a huge undertaking.)

Notably, Australia already has massive ship, warship and aircraft traffic reconnaissance capabilities far north of the Australian coast. 

For example, the off-horizon observation system, based on the use of radio wave reflection in the JORN (Jindalee Operational Radar Network) ionosphere, monitors sea routes and straits at a distance of 1,000-3,000 kilometers (620-1,900 miles) from the northern coast. 

The system detects planes, rockets and ships. After a planned upgrade, it will detect ballistic missiles as well as stealth planes and cruise missiles. 

Its data is interchangeable with Wedgetail airborne early warning and control aircraft, HALE-class drones and P-8 Poseidon maritime patrol planes. 

Australia may soon ask other countries in the region to host the system, which would only strengthen it further.

Indeed, Australia has a huge role to play in terms of space reconnaissance. The geographic location of the country on the edge of the Southern Hemisphere enables precise tracking of the launch and, later, the movement of bodies in orbit. 

Western Australia’s sparse population reduces radio interference of satellite signals, and the lack of cloud cover over the country’s western deserts is ideal for tracking Chinese satellites.


In the event of a war with China, Australian forces would have several automatic advantages over Chinese forces in the Indonesian strait area. 

A blockade of the Malacca Strait would divert Chinese vessel traffic to the Indonesian straits closer to Australia. 

This would distance Chinese forces from their own coast, complicating logistics and effectively depriving them of air protection or at least seriously reducing it. 

The current naval and air systems of the Chinese army do not have sufficient range to conduct operations around the straits. 

Only Chinese cruise missiles can threaten surface ships trying to block the Indonesian straits. Chinese long-range reconnaissance will therefore have a very difficult task. 

The natural geography of the area favors Australia by channeling the movement of ships, which helps its armed forces to concentrate strike forces over and between narrow passages. 

Australia’s smaller naval forces have local control of key narrow sea passages closer to their own bases and ports that will be almost entirely beyond Chinese influence.

Australians would presumably be assigned the role of permanent control of the movement of ships and warships, and for this they would need sensors, drones and special forces located near the Lombok and Sunda straits. 

It would not be necessary to maintain a constant air force presence over all Indonesian straits, because Chinese planes have too short a range. 

Only Chinese H-6 bombers with stand-off missiles can operate in this area. 

And the Chinese can fight Australian aircraft only with their Luyang I, II and III-class missile destroyers. 

These ships would naturally be subjected to the first attacks by American (and Australian) forces at the beginning of the war, something best accomplished with a fleet of submarines intercepting Chinese ships on their way south from Hainan Island, or with long-range planes armed with hard-to-detect anti-ship missiles with a range greater than the sensors and radar of Luyang destroyers.

Another role would be to combat Chinese submarines traveling from Hainan Island toward the Indonesian straits to dislodge the blockade. 

In this case, the conventional submarines of the Australian navy – typically difficult to detect in shallow and acoustically noisy waters around the straits – would be even more important than U.S. nuclear ships. 

At the operational level, there would be a division of tasks between American and Australian ships, where American nuclear ships would fight the Chinese navy in the deeper waters of the South China Sea, while quiet, conventional Australian ships lying in the shallow waters of the Indonesian archipelago would be waiting for Chinese vessels trying to get out of the American trap.

An important aspect in all this is Indonesia’s response to the conflict. 

If Indonesia fought with Western powers, it would significantly change the balance of power. In the Sunda and Lombok straits, coastal missiles can be easily used against objects at sea with the help of special units or separate ground troops. 

The Sunda Strait, in particular, is exceptionally narrow – in some places only 15 nautical miles wide. 

Special operations forces equipped with rockets and hidden in the jungle at Cape Tua in Sumatra or Puja in Java, moreover, would help to effectively block traffic in the straits.

One last task Australia may have to carry out, and one that may prove to be its primary task with regard to establishing a blockade, would be to escort its own ships and warships. 

Doing so would require extensive use of warships and combat platforms as the main force. 

Given the daily number of ships passing through the straits, it will not be easy, and even using all Australian forces may not be sufficient in allied operations, given that the Americans also do not have the number of ships to do the job. 

To this end, the Australian armed forces should provide for the possibility of calling and replenishing war stocks in ports geographically close to the straits in Malaysia and Singapore, and in the Philippines.