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European Union clinches 'historic' stimulus package to repair shattered economies – The Globe and Mail

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EU leaders reached a deal on Tuesday on a package of measures to boost their economies after the coronavirus pandemic, agreeing to borrow and spend hundreds of billions of euros in the next few years and pay them back from new taxes. Reuters

After an acrimonious four-day summit that nearly collapsed, European Union leaders early Tuesday signed off on an unprecedented stimulus package that will see the bloc issue €750-billion in joint debt to help member countries repair their pandemic-battered economies.

The agreement came at 5:30 a.m. in Brussels and was declared a landmark moment of unity by EU leaders and economists, who feared that failure to deliver the package would send the markets tumbling and delay the recovery of the EU economies, which are in deep recession.

The stimulus measures mark the first instance of massive borrowing in the EU’s history, and a big step toward issuing a common bond, a significant integration move.

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Giuseppe Conte, Prime Minister of Italy, the original epicentre of the European COVID-19 pandemic, called the recovery plan “an historic moment for Europe” at a press conference.

COVID-19 news: Updates and essential resources about the pandemic

The recovery package came alongside the approval of a €1-trillion budget that will cover the bloc between 2021 and 2027. “We are 27 around the table, and we managed to produce a budget,” French President Emmanuel Macron told reporters. “In which other political sphere in the world is that possible, is that done? None.”

The pandemic in the EU has killed 135,000 people so far, with Italy seeing more than 35,000 fatalities, the highest tally in the bloc (Britain, which is no longer a member of the EU, has recorded more than 45,000 fatalities). Unemployment rates have soared, and growth in some EU economies will fall by about 10 per cent this year.

The recovery fund is composed of two elements: €390-billion in grants and €360-billion in low-interest loans. The EU will borrow the funds in the capital markets through 2026, and 70 per cent of the grants will go out the door in 2021 and 2022.

But the first payments to EU states will probably not be delivered until mid-2021, meaning the hardest hit countries – notably Italy, Spain and France – will have to find their own fiscal measures to prevent their economies from deteriorating for another year.

In a note, the European economists at ING said “In terms of size, the fund is still relatively small given the severity of the economic crisis … Still, given that more than a year ago, a meager euro-zone budget was almost impossible, and given how far apart member states had been at the start of the discussion, this morning’s outcome is still remarkable.”

The stimulus package will be welcomed by the European Central Bank, which had been propping up the euro-zone countries pretty much single-handedly since the pandemic shut down almost the entire continent in March. The ECB’s emergency-response program will see the central bank buy €1.35-trillion in financial assets such as government bonds.

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The EU’s package of grants and loans was originally proposed by Mr. Macron and German Chancellor Angela Merkel in May, when it became apparent that the pandemic would not vanish quickly. Its success was far from assured because of resistance from the leaders of the “Frugal Four” countries – Austria, Denmark, Netherlands and Sweden – who opposed the idea of handing out grants to member countries. They were less opposed to the idea of repayable loans, which, they argued, would instill some economic discipline on the governments.

In the end, the Frugal Four managed to whittle down the grant component of the stimulus package from €500-billion to €390-billion, with the balance in the form of loans. As a sweetener to break the deadlock, they were given significant rebates on their annual EU budget contributions.

Dutch Prime Minister Mark Rutte also secured an “emergency brake” that would temporarily halt transfers to a member country if that country was not honouring its commitment to reform its economy in exchange for the funds.

Hungarian Prime Minister Viktor Orban threatened to kill the entire package, whose approval required unanimity, if it came with strict rule-of-law conditions such as guarantees for judicial independence. A compromise was worked out that would allow only a weighted majority of governments to block payments over rule-of-law violations.

Economists said that Italy and Spain, the EU’s third- and fourth-largest economies, will emerge as the biggest beneficiaries of the stimulus package. ING calculated that in the first two years, they will receive grants worth about 2.5 per cent and 3.5 per cent, respectively, of their GDP. France, Germany and the Netherlands will see payments worth less than 1 per cent of their GDP.

Almost a third of the stimulus package is to be devoted to fighting climate change, though details were scant as to what kinds of projects would be eligible for the funding. The EU agreed that all spending must be consistent with the carbon-reduction goals of the 2015 Paris climate agreement.

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European markets rose in reaction to the approval of the stimulus package. In morning trading Tuesday, Germany’s DAX index was up 1.7 per cent. Brent crude oil was up by almost 1 per cent. European equities have outperformed U.S. and global equities since mid-May, when the EU stimulus package negotiations were launched.

Tense recovery talks have revealed deep political fractures in the European Union, questioning its ability to stay unified. Reuters

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How the U.S. could block access to TikTok, WeChat

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President Donald Trump has threatened to ban the short-video app TikTok and messaging service WeChat by late September on grounds that the Chinese-owned apps pose a national security threat. It would mark the first time the United States has attempted to shut down widely used mobile internet apps.

How would the U.S. go about blocking access to TikTok and WeChat?

The administration could order smartphone software giants Apple Inc and Alphabet Inc’s Google to remove WeChat and TikTok from their app stores.

When the Indian government in June banned 59 Chinese apps, including TikTok and WeChat, it asked Google and Apple to remove the apps from their app stores, two sources told Reuters. Both companies complied.

 

It would be a rare and possibly unprecedented step for the United States: Apple has not disclosed any app takedown requests from the U.S. government since it started publishing information on such requests in the second half of 2018.

The government could also order the apps to stop offering access to U.S. users by threatening them with legal repercussions. In India, some banned apps pulled themselves from app stores.

If I already have TikTok and WeChat on my phone, will I still be able to use them?

The apps would probably work, but government orders may bar updates, blocking access to new features and bug fixes.

Jay Kaplan, CEO of cybersecurity firm Synack and a former National Security Agency cybersecurity analyst, said it is “highly probable” Apple and Google can remotely disable installed apps, though experts were not aware of any instance in which they have done that recently. Apple and Google declined to comment.

Could users download the apps somewhere else?

Users with phones running Google’s Android can install apps from alternatives to Google’s official app store. Theoretically, they could download WeChat or TikTok from the companies’ websites.

Using alternatives to Apple’s App Store to install apps is more difficult, though not impossible. Ron Deibert, director of the Citizen Lab at the University of Toronto, which has done extensive technical and censorship analysis of WeChat, said using unofficial stores carries the risk of installing versions of popular apps altered with viruses or scams.

Would U.S. users be able to access Web versions of the app?

U.S.-based hosting services such as Amazon.com Inc’s AWS and content delivery providers such as Akamai Technologies Inc could be banned from doing business with targeted apps, said Angelique Medina, director of product marketing at network intelligence firm ThousandEyes. Hosting sites outside the United States could still service Americans, but likely at slower speeds.

Could internet service providers block users from accessing these services?

The government could order ISPs to block users from accessing WeChat’s and TikTok’s servers, as China does to enforce its Great Firewall. But it would not be an easy task for the U.S. government because the United States has thousands more ISPs than China, said Chester Wisniewski, a researcher at cybersecurity provider Sophos. A U.S. order to ISPs also could be challenged in court, legal experts say.

 

In India, the government did order telecom companies and other internet providers to block the Chinese-origin apps, according to notices seen by Reuters. Experts say there are no known cases of the U.S. ordering ISPs to ban access to sites.

What about VPNs?

Americans could use virtual private networks, or VPNs, to circumvent ISP blocks and browse the internet as if they were overseas. This is how internet users in China are able to reach services, such as Facebook, banned by the Great Firewall. Network experts said the same loophole would exist in the United States.

 

Source:- Global News

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4 more Vancouver flights added to COVID-19 exposure list – CTV News Vancouver

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VANCOUVER —
Another four flights have been added to the BC Centre for Disease Control’s COVID-19 exposures list.

All four either arrived or departed from Vancouver late last month. Three were domestic, while one was international.

The first flight landed in Vancouver from Toronto on July 24. The flight number is Air Canada 119, and rows 12 to 18 are believed to be most at risk of exposure to the virus.

The second flight departed from Vancouver for Edmonton three days later, on July 27. That flight number is WestJet 186. People in rows two to eight may be most at risk of COVID-19 exposure.

The same route – WestJet 186 from Vancouver to Edmonton – also had a COVID-19 exposure on July 30. The highest-risk rows on that day’s flight were rows six to 12.

Finally, a July 29 flight that landed in Vancouver after leaving from Amsterdam was also added to the BCCDC’s list. That flight, KLM 681, had an exposure somewhere in rows 31 to 35.

Since the start of July, 21 domestic flights and 21 international flights have been added to B.C.’s exposures list.  

Anyone on one of the domestic flights should self-monitor for symptoms for 14 days. Anyone arriving internationally is required to isolate and monitor themselves for symptoms for 14 days. 

B.C. health officials no longer directly contact people who were seated near a confirmed case of COVID-19 on a flight. Instead, the BCCDC provides updates on flights with confirmed cases as it becomes aware of them.

A full list of recent exposures can be found on the BCCDC’s website.  

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Inflation Is Back–and the Market Rally Is Back With It – Barron's

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One day after a late-day selloff saw all-three major market indexes end the day in the red, stocks are surging higher.

The
Dow Jones Industrial Average
has risen 264.56 points, or 1%, while the
S&P 500
has gained 1.5%, and the
Nasdaq Composite
has climbed 2.2%. The S&P 500 is just 0.1% from an all-time high.

The big news of the day was the consumer price index, which rose 0.6% in July from June. The core CPI, which also rose 0.6%, experienced its biggest month-over-month game since 1991. This might seem concerning—high inflation is bad right?—but is more likely a reflection of the recovery than anything else. “It is important, up front, to be clear about what I think this is and what it is not,” writes Amherst Pierpont Securities’ Stephen Stanley. “It is NOT the start of a persistent trend of accelerating inflation. It IS a much larger and quicker reversal of the one-off price drops seen during the lockdowns.”

And today, it’s helping the market head higher.

Qualcomm
(QCOM) has gained 5% as it continues to rally following its patent win on Tuesday.

Barrick Gold
(GOLD) has advanced 1.1% after getting upgraded to Buy from Hold at Canaccord.

Deere
(DE) has fallen 0.6% after getting cut to Hold from Buy at Deutsche Bank.

Home Depot
(HD) has risen 2.6% after getting raised to Accumulate from Hold at Gordon Haskett.

AutoNation
(AN) has jumped 5.5% after getting upgraded to Buy from Neutral at Guggenheim.

Write to Ben Levisohn at Ben.Levisohn@barrons.com

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