Page 22 - Newcom

APRIL 2020
PAGE 22
EDITORIAL
Urgent need for planning & co-operation
There really is no upside to the Covid-19 outbreak. The best the invest- ment industry can hope to do is help clients ride out the storm and learn critical lessons for the future.
Economic activity is virtually at a standstill. And there seem to be no good alternatives. An end to social distancing efforts in order to restart the econ- omy — even if the cost is countless human lives and a functional health-care system — would impose its own economic penalty, as widespread illness undermines growth, much like the voluntary action wreaking havoc now.
Much of the current economic and financial turmoil was accurately predicted in an unusual research report published in August 2005 by BMO Nesbitt Burns Inc.
In that report, two of the firm’s star analysts — then-chief economist Sherry Cooper and then-global portfolio strategist Don Coxe — imagined the effects of a global pandemic akin to the Spanish flu pandemic of 1918-20.
The report suggested the economic fallout from a global public health emergency could rival the Great Depression of the 1930s. If that seems grim, the report concluded that the only potential “winners” from an
LETTER FROM EDINBURGH
economic perspective will be “funeral homes and other ‘death-related’ businesses” — along with drug companies and private medical facilities. From an investor viewpoint, the Nesbitt report stated, the only bene- ficiaries are likely to be those who hoarded cash before the crisis and used it to buy real estate, businesses and other assets on the cheap from
distressed owners.
While that report was pitched as a guide for investors at the time, its
real objective was to call attention to an outsized risk, and to alert govern- ments to the urgent need to plan for, and finance, public health efforts.
The report also argued for acknowledging the universal human con- dition: “Forget the ‘each man for himself’ psychology of protectionist and anti-globalization rhetoric. Like it or not, we are all in this together, and we are all dragged downward by the weakest links.”
Hopefully, when the Covid-19 crisis is finally in the rear-view mirror, its lessons about risk, planning and immense collective consequences will not soon be forgotten.
For now, though, the priority is survival. Stay safe.
INVESTMENT EXECUTIVE
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ART DIRECTOR,
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CONTRIBUTORS
ANDREW ALLENTUCK, CHARISE ARSCOTT, DANNY BRADBURY, PATRICIA CHISHOLM, KEVIN DOUGHERTY, MICHAEL GANLEY, LEAH GOLOB, CATHERINE HARRIS, JADE HEMEON, MADDIE JOHNSON, DWARKA LAKHAN, RUDY LUUKKO, DONALEE MOULTON, WOODROW PELLEY, GORDON POWERS
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KATHY LIOTTA, VIVIAN TSE
DIRECTOR, CONTENT SOLUTIONS ANNA-CHRISTINA DI LIBERTO
SALES CO-ORDINATOR IRENE PICANCO
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Scotland follows London’s lead
First Minister Nicola Sturgeon adopted Westminster’s foot- dragging approach to dealing with Covid-19
BY PATRICIA CHISHOLM
locals, normally cranky over
the cacophony of wheelie bags on the cob- bled Royal Mile, are aghast at the silence. Rush hour has disappeared. And, like in many cities, grocery shelves are eerily bare, especially when it comes to staples such as pasta, rice and beans.
This is Edinburgh — city of travellers, of education, of cultural events and parlia- mentary government, of glowing sandstone, of neighbourhood pubs and fine restaurants — suddenly stilled. By mid-March, the city’s airport had seen an estimated 70% decline in traffic since the turn of the year, resulting in hundreds of job losses at this normally busy European hub. Tens of thousands of sports fans watch games only on TV — if the games are played at all. All of this will repre- sent billions in pounds sterling lost, across almost every commercial sector (except, perhaps, pharmacies).
As the coronavirus continues its inexorable spread through the U.K. — and the world — Scotland is finally waking up uneasily to the realization that it has lagged badly with its preparations. Worse, the trouble could be partly Scotland’s own fault: there are many who believe that the pro-independence Scottish gov- ernment, fronted by First Minister Nicola Sturgeon (who seems to lack deep talent in her party), has been too willing to follow Westminster’s foot-dragging approach.
Even as late as mid-March, when Covid- 19 was raging through northern Italy, Switzerland, France and Spain, the U.K. government officials in London took a “don’t panic, we’ll be fine” approach, while non-government medical experts were yelling from the sidelines that the num- ber of infected people was already in the tens of thousands. Many called for urgent action immediately: shut schools, close businesses, acknowledge that the National Health Service (NHS) can’t cope, ramp up testing — and tell people to stay put.
Yet the Tory government of Prime Minister Boris Johnson continued the “politics and money first” approach it has displayed since the general election in December. Even now, with the above measures belatedly in place, the U.K. looks flat-footed (Johnson himself now has the virus). On March 24, less than a week after pubs, tourist spots and non-essential busi- nesses were finally shut down, and with the virus spreading rapidly, the Johnson government sent a curt, five-line notice to British residents. The message? Stay home, or you’re busted. For millions looking for guidance and at least some reassurance, it was a cold slap.
The Tories continue to insist that their approach to what is now a global emer- gency has been justified. As late as mid- March, that approach included advising people to stop calling the NHS and check
its website instead. Don’t buy so much toi- let paper. Stay home for seven days, even with severe symptoms, without notifying the NHS. Allow sports fans from around the country and Europe to swarm into cit- ies for the 48 hours before a match, eating, drinking and spending in pubs and restau- rants before the game gets called off.
To many people, Westminster seemed to want the world to know that the U.K. was still open for business. But any short-term economic gains that resulted from that strategy appear to have been more than swallowed up in the horrendous costs of delay, with the virus spreading much more quickly than might otherwise have been the case. From 460 confirmed cases on March 11, numbers shot to 11,658 by March 27 — probably only a fraction of the true number of cases. Indeed, the U.K. may be on the brink of joining its overwhelmed neighbours — Italy and Spain — which also were slow to face the reality of how quickly this contagion can spread.
Did Sturgeon really have little choice but to follow London’s lead? It’s hard to know. Lacking the deep resources of Westminster, she may have felt compelled to follow the advice of the Tory-sanctioned scientists. On March 25, Sturgeon announced a new, Scotland-only expert group to monitor the progress of Covid-19 and make recommen- dations for the best ways to deal with it.
Sturgeon has been a vigorous and articulate proponent of Scotland’s independence throughout her career; now, with a slight majority of Scots saying they support leaving the U.K., she seems to be closer to success than ever. However, this crisis has shown that Sturgeon, who lacks the crucial expertise that comes with a strong cabinet and an informed bureau- cracy, may suffer setbacks in her quest for Scotland’s independence. IE
Short-term economic gains have been swallowed up in the costs of delay