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In drastic move, Italy shuts most factories to halt virus
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In drastic move, Italy shuts most factories to halt virus

In drastic move, Italy shuts most factories to halt virus
Photo Credit: AP Photo/Marco Vasini, File
FILE - In this Wednesday, May 8, 2013 file photo, a technician works at the Ferrari department factory in Maranello, Italy. The eurozone's third-largest economy and a major exporter, Italy on Wednesday becomes the first western industrialized nation to idle swaths of industrial production to stop the spread of coronavirus by keeping yet more of the population at home. The new coronavirus causes mild or moderate symptoms for most people, but for some, especially older adults and people with existing health problems, it can cause more severe illness or death. (AP Photo/Marco Vasini, File)

In drastic move, Italy shuts most factories to halt virus

Italy has become the first western developed nation to idle most of its industry to halt the spread of the coronavirus, a potential cautionary tale for other governments, such as the Trump administration, that are resisting such drastic measures.

After more than two weeks of a nationwide lockdown, the Italian government decided to expand the mandatory closure of nonessential commercial activities to heavy industry in the eurozone's third-largest economy, a major exporter of machinery, textiles and other goods.

The move by Italy, which is leading the globe in virus deaths, is more in line with draconian measures taken by China than with declarations coming out of other democratic partners, who are at least a week or two behind Italy’s rate of virus infections.

The industrial closures put in stark contrast concerns over protecting lives in a country with an especially vulnerable aging population against fears of hurting an economy that already was on the brink of recession.

The industrial lobby Confindustria estimates a cost of 70 billion to 100 billion euros ($77 billion-$110 billion) of national wealth a month if 70% of companies are closed, as anticipated. Though some big companies had already suspended activities, thousands of smaller manufacturers had continued after adopting new safety regulations, and will now shut down.

“We are entering a war economy,’’ said Confindustria President Vincenzo Boccia.

Economists grow dizzy speculating on the possible economic drag in a country that never fully recovered from back-to-back recessions the last two decades. UniCredit bank's chief economist, Erik Nielson, expects the economy to shrink by a staggering 5% to 15% this year - and that's assuming a recovery toward the end of 2020 and takes into account a 25 billion-euro aid package and 350 billion euros in liquidity and credit. Another 25 billion-euro package has been promised. The Italian Treasury has put the virus hit at 5% to 7% of GDP in 2020.

‘’The economic consequences of the suspensions risks to be unsurmountable, because the continuity of companies is being interrupted for a substantially undetermined period,’’ Il Sole 24 Ore, the respected business daily of the Confindustria lobby, wrote Thursday.

The government decree mandates the industrial shutdown for one week, but as with the rest of the harsh containment measures they are likely to be extended depending on the pace of contagion.

It's a sobering prospect for other countries in Europe and for the United States, where President Donald Trump has said he aims to have commercial businesses reopen by mid-April, despite warnings from health experts that that is unlikely. There has been no discussion of closing U.S. manufacturing as a nationwide measure.

Unions in Italy have fought especially hard to have more sectors considered nonessential in order to protect workers. They won limits on activity at call centers as well as the production of plastic packaging, some paper and chemical products.

The powerful CGIL union confederation had said the government’s initial list counted 800,000 companies as essential, with workers numbering 7.5 million, or 57% of the workplace.

Italy’s moribund car industry has already been idled voluntarily, with Fiat Chrysler shutting down most of its Italian production and Ferrari converting a part of its factory to help make respirators. The tourism industry has been at a standstill for a month, and struggling Alitalia is virtually shut down. All non-essential commercial and retail activity was shuttered more than two weeks ago.

Premier Giuseppe Conte announced the new industry closures this weekend, citing the biggest emergency the country has faced since World War II. Industrial activities allowed to continue include many related to health care, agriculture and food production.

Under the measures, fashion house Prada said it will start producing 80,000 medical overalls and 110,000 masks for health care workers, and the Armani Group was converting to make single-use medical overalls. Work on a Genoa bridge to replace the one that fatally collapsed in August 2018 - considered of strategic importance - continued, while that on the Italian side of the Brenner Base Tunnel, which will be the longest rail tunnel in the world when completed, was suspended along with work on the Italian side of a high-speed rail tunnel to France.

In all, hundreds of thousands of small, medium-sized and large companies will be closed, with workers receiving partial salaries under short-term unemployment schemes that have been extended to even the smallest businesses.

They include Pirelli tiremaker, with Italy accounting for just 6% of global production, and Luxottica, the largest eyewear manufacturer in the world whose brands include Ray-Ban and Oakley.

The big concern for the small and medium-sized company owners that power Italy's economy is how long the shutdown will last, and how hard that will hurt cash-flow and hinder a smooth return to business.

"If the shut-down is two or three months, it might be as simple as turning a light back on, because supply chains and logistics are very efficient,’’ said Carlo Salvato, an expert in small and medium business at Bocconi University. ‘’But if the shutdown is longer and precipitates a deep slide in wealth, the patterns of consumption could change dramatically."

Olivari is a family-run maker of door handles based in northern province of Novara that survived two world wars, during which it was converted to munitions production due to its expertise with brass and aluminum. But in this shut down - despite the war metaphors - there is no war machine to balance losses from the forced closure.

Antonio Olivari, head of research and development, said the business, which counts 80 workers and annual revenue of around 15 million euros, can bounce back from two weeks or a month of a shut down. “It makes no sense to produce now anyway, with hardware stores and other channels closed,” he said. But if it drags on for months, issues emerge, like salaries.

And people's priorities and habits could be different after this crisis, Olivari said. ‘’Will people still want to invest in finishing or remodeling a home? There may be other priorities. It will be an anomaly that we have never experienced.’’

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Washington Insider

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  • With some public friction over the federal Coronavirus response, President Donald Trump on Friday again singled out the Governor of Michigan and the Governor of Washington State for criticism, telling reporters that he had discouraged Vice President Mike Pence from calling either one to discuss the virus response. 'When they're not appreciative to me, they're not appreciative to the Army Corps (of Engineers), they're not appreciative to FEMA. It's not right,' President Trump said at a Friday White House briefing. 'All I want them to do, very simple, I want them to be appreciative,' the President added. 'We've done a great job,' the President said. 'I think the media and governors should appreciate it.' The President's comments came as he continued to spar long distance with Gov. Jay Inslee (D) of Washington State, and Gov. Gretchen Whitmer (D) of Michigan. Inslee has already been a frequent target of the President - who referred to him in one briefing as a 'snake' - acknowledging that he has urged Vice President Pence not to call the Washington Democrat. 'I say Mike, don't call the Governor of Washington, you're wasting your time with him,' Mr. Trump said. 'Don't call the woman in Michigan.' In an interview Thursday night with Sean Hannity on Fox News, the President took aim at Whitmer, who has complained of troubles in getting medical supplies for hospitals to combat the virus outbreak. 'We’ve had a big problem with the young, a woman governor, you know who I’m talking about from Michigan,' the President said. While Gov. Whitmer went on TV to respond to the President, Inslee used Mr. Trump's favored mode of social media. 'I’m not going to let personal attacks from the president distract me from what matters: beating this virus and keeping Washingtonians healthy,' Inslee tweeted. While Inslee avoided barbs from the White House on Friday night, Whitmer did not. “Governor, Gretchen “Half” Whitmer is way in over her ahead, she doesn’t have a clue,” the President tweeted. Michigan has become a flash point in recent days in the fight to stop the Coronavirus; 32 deaths were announced on Friday, almost as many as the two previous days combined. 28 deaths were announced on Friday in Washington State, raising the death toll there to 175 people, second most of any state.
  • With the backing of the White House and leaders in both parties, the U.S. House on Friday approved an emergency economic rescue plan to help the economy deal with the negative impact of the Coronavirus outbreak, as lawmakers on both sides put aside their differences on the details of the over $2 trillion package.  President Trump signed it into law several hours later. 'We need to support this bill now,' said Rep. Donna Shalala (D-FL). 'The coronavirus has been a nuclear bomb to our economy,' said Rep. Bill Johnson (R-OH). 'We've never faced a public health crisis of this magnitude,' said Rep. Sylvia Garcia (D-TX). The main theater in the House Chamber during debate was not about who was for or against the bill, but whether Rep. Tom Massie (R-KY) would follow through on his threat to force a recorded vote on the measure, amid questions about whether enough lawmakers were present for a quorum. Under the rules, Massie - who did not speak during the debate - needed the support of several dozen lawmakers to force a vote. But Massie did not get that backing, and the bill was approved on a voice vote, to the applause of lawmakers, who sat both on the House floor, and in the galleries above. In debate, lawmakers of both parties expressed concerns about how their local hospitals might not be able to deal with an outbreak of the virus. 'For those from rural districts like mine, our hospitals cannot handle the onslaught of patients,' said Rep. Mike Rogers (R-AL). 'Hospitals in my district face a situation as dire as it has been in my 18 years in Congress.' Lawmakers who flew back to Washington for the debate said the impact on the airline industry was obvious. 'There were two members of Congress on the plane out of a total of four passengers,' said Rep. Rodney Davis (R-IL), who flew from St. Louis.  'You don't think that industry is on the brink of collapse - use it right now, and you will see,' Davis added. The House vote came as a third member of the House announced that he had tested positive, Rep. Joe Cunningham, a freshman Democrat from South Carolina. The package includes direct checks to Americans, billions in emergency aid for businesses big and small, money for state and local governments, and help for hospitals fighting the Coronavirus. “This is the biggest economic and health crisis the country has ever faced,” said Rep. Rosa DeLauro (D-CT).
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It lists the President, Vice President, member of Congress, top Executive Branch officials as people covered by this prohibition. But it goes further - adding, 'spouse, child, son-in-law, or daughter-in-law' as well. One GOP Senator pointed out the 'son-in-law' provision. 'I wonder who that could be targeted towards,' said Sen. James Lankford (R-OK) in a mocking tone, referring to Jared Kushner, as Lankford said Democrats were wrong to pursue such provisions. 'A lot of this fight that we've had over the last three days is because they were demanding that there was no way the President, or any member of his family could get any benefit from this loan program at all,' Lankford said. Democrats won those provisions. + 2. Temporary tax break for makers of hand sanitizer. With various alcohol producers switching over some of their production in recent weeks to make hand sanitizer, this bill also provides a temporary exception to the excise tax on the alcohol used to make hand sanitizer products. To an outsider, it shouldn't be any big deal for a liquor producer to shift into production of hand sanitizer, but in reality - it can have pretty big tax implications in how the federal government deals with the process. For example, after a company makes over 100,000 gallons of alcohol, the tax goes from $2.70 per gallon to over $13 per gallon. This provision on page 212 would allow those hand sanitizer products to be made without being hit by those higher taxes. Here was the social media appeal from one company in Maryland. 3. Special oversight for economic recovery spending. As part of provisions providing public insight into what companies get what kind of aid from the federal government, this bill sets up a special Inspector General inside the Treasury Department dealing with the 'Pandemic Recovery.' The internal watchdog would be charged with 'audits and investigations of the making, purchase, management, and sale of loans, loan guarantees, and other investments made by the Secretary of the Treasury under any program established by the Secretary under this Act.' There is also a new 'Congressional Oversight Commission,' with members appointed by various parts of the government, to oversee the operations of this economic recovery effort - all to guide against favoritism, and any questionable financial awards - much like there was with the Obama stimulus in 2009. 4. Postal Service gets special loan help. Just like after the anthrax attacks following Nine Eleven, the U.S. Postal Service finds itself in a crunch with the Coronavirus. Not only are some employees getting sick, but mail volume is going down - and that's leading to an even bleaker financial outlook. The Coronavirus rescue bill does not give a blank check to the Postal Service, but instead allows it to borrow up to $10 billion from the U.S. Treasury. Page 607 of the bill specifically says the money can only be used to pay for operating expenses - and not any outstanding debt of the Postal Service. The bill also orders the Postal Service to prioritize the delivery of medical products related to the Coronavirus, and also gives the Postal Service the right to establish 'temporary delivery points' during the outbreak, in order to shield employees from the virus. 5. Miscellaneous Provisions. Any reporter who has gone through Congressional spending bills starts to get a little excited when you get to the section labeled 'Miscellaneous Provisions' - and this bill does not disappoint. Starting on page 609, there is a laundry list of extra money sent to various government agencies to deal with the Coronavirus. Some, like money for food safety won't raise any eyebrows. But others were quickly getting the thumbs down from some GOP lawmakers who actually read their way through the details of the bill. 6. There is no Congressional Pay Raise. Let me say it again. There is no pay raise for members of the House and Senate, no matter what you read on Twitter or Facebook. The troublemakers on Twitter didn't take long in spreading fake news about the details of this bill, accusing lawmakers of voting themselves a pay raise. Let me be very clear - that did *not* happen in this bill. There is no reference to the underlying federal code which governs the pay of lawmakers (section 601(a) of the Legislative Reorganization Act of 1946 (2 U.S.C. 4501)).  Is there extra money for Congress in this bill? Yes, there is. The Senate gets $10 million, and the House gets $25 million. Where would that money go? It doesn't take too much imagination to come up with items like extra medical, safety, and security precautions for 435 members of the House. Expanded telework with laptops, servers, and more. Cleaning crews to deal with any outbreaks that might touch Congressional offices or the Capitol complex. And finally, even if lawmakers voted themselves a pay raise, they would not be allowed to get any extra money until the new Congress. That's not a law - that's in the Constitution.
  • The morning after the U.S. Senate unanimously approved an unprecedented $2 trillion economic rescue package to confront the negative impact of the Coronavirus outbreak, House Speaker Nancy Pelosi told reporters that she was already thinking ahead to the next Congressional move to spur economic growth. 'We have to do more,' the Speaker said at a U.S. Capitol news conference, as she told reporters about a phone conversation with Jerome Powell, the Chairman of the Federal Reserve. 'The Chairman of the Fed, Mr. Powell said to me, interest rates are low, think big,'  'There's no question that more money will be needed,' Pelosi added, as she indicated there would be support to funnel more money directly to Americans. 'I don't think we've seen the end of direct payments,' the Speaker said. Pelosi said the House would vote Friday to approve the $2 trillion economic package, most likely by a voice vote. 'We will have a victory tomorrow for America's workers. If somebody has a different point of view they can put that in the record,' the Speaker said.