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Economy
Jolt to eurozone as German court warns against central bank stimulus

Germany’s constitutional court jolted eurozone stock markets and hit the value of the euro after judges warned that the European Central Bank’s plans to flood the financial system with cheap credit could breach German law.The bombshell ruling by the court in Karlsruhe came after judges agreed that Germany’s central bank must stop cooperating with the ECB’s long-running stimulus scheme within the next three months unless the ECB could prove it was not excessive.Analysts said the decision highlighted the constraints on the ECB as a lender of last resort compared with the more independent US Federal Reserve, the Bank of Japan and the Bank of England, as it wrestled with the biggest economic crisis in peacetime after the Covid-19 outbreak.The ECB has already injected billions of euros into the reserves of high street banks across the continent to encourage them to lend to small businesses as part of a programme created by the former president Mario Draghi after the 2012 eurozone debt crisis.Last month Draghi’s successor, Christine Lagarde, said the pandemic meant a fresh round of stimulus was needed under the banner of the public sector purchase programme (PSPP), leading many conservative politicians in Germany to accuse the ECB of over-reaching its mandate.The court considered a claim that PSPP was illegal as it amounted to directly financing eurozone governments. The judges concluded that the ECB needed to prove that the programme was justified, through “a proportionality assessment”.“The Bundesbank may thus no longer participate in the implementation and execution of the ECB decisions at issue, unless the ECB governing council adopts a new decision that demonstrates … the PSPP are not disproportionate to the economic and fiscal policy effects,” they said.Carsten Brzeski, an analyst for ING, warned the ruling could undermine the authority of the ECB and its ability to protect the eurozone’s financial system during a crisis.He said that while the judges had excluded the most recent injection of €750bn (£653bn) linked to the pandemic, they had agreed the Bundesbank could be prevented from participating in the ECB’s long-term quantitative easing (QE) programme.“An optimistic interpretation could be this is lots of barking without biting and that everything is fine as long as the ECB demonstrates that it has thought through the economic consequences of its decisions. But a pessimistic interpretation could be that no amount of additional ECB analysis will convince German judges and could, therefore, spell the end of QE,” he said.The euro dropped 0.7% to $1.0829 and was set for its biggest daily slide in more than a month.Concerns about the ECB’s backing for eurozone governments, all of which have signalled large increases in debts this year to fund coronavirus-linked welfare and business subsidies, sent the interest rate government’s must pay on their debts higher.The benchmark 10-year bond yields in the euro area were between two and nine basis points (bps) higher on the day. Germany’s 10-year Bund yield was up 2.5 bps at -0.54%, while the Italian 10-year debt yield was 7 bps higher on the day at 1.82%.The court ruling initially rattled European stocks markets and briefly erased gains driven earlier in the morning by hopes global lockdowns would ease. However, shares later recovered: the FTSE 100 was up 1.7%, Germany’s Dax rose 1.8% and France’s CAC rose 2%.Some analysts said that the three-month deadline was reassuring and lifted sentiment after the initial panic. Kenneth Broux, a strategist for Société Générale, said: “The PSPP violates German law but I think the three-month deadline is important to clarify proportionality and the ECB can move on after that.“It illustrates the difficulties versus the Fed, for example; the Fed has no such constraints of US states challenging QE there,” he said.

Economy
New York Attorney General Scrutinizes Amazon for Firing Warehouse Worker

SEATTLE — Amazon may have violated federal worker safety laws and New York State’s whistle-blower protections when it fired an employee from its Staten Island warehouse who protested the company’s response to the coronavirus outbreak, according to a letter the office of the New York attorney general, Letitia James, sent the company last week.The letter, which was earlier reported by National Public Radio, was confirmed by Ms. James’s office. Amazon did not respond to a request for comment.Amazon has been under pressure for the safety of its hundreds of thousands of workers who are packing and shipping products to millions of homebound Americans in the pandemic. The company has rolled out various safety measures at its warehouses across the country, such as temperature checks and mandatory masks, but it has faced protests at several facilities from employees who have said they feel unsafe. As of early April, workers at more than 50 of its warehouses in the United States had contracted the coronavirus.The case that Ms. James’s office has been looking into involves Christopher Smalls, an employee in Amazon’s Staten Island warehouse. In late March, Mr. Smalls agitated for more worker protections at the facility as co-workers began getting sick. On March 28, Amazon put Mr. Smalls on quarantine for being in contact with a worker who had contracted the coronavirus.On March 30, Mr. Smalls led a protest calling for Amazon to temporarily close the warehouse and provide workers more protections. Amazon fired him, saying Mr. Smalls had violated its policies by leaving his quarantine to attend the protest at the site.That same day, Ms. James criticized the retailer for firing Mr. Smalls, saying state law protected people’s right to organize.The firing attracted even more attention when leaked notes from an April 1 meeting of Amazon’s top executives showed they discussed making Mr. Smalls “the face of the entire union/organizing movement.” One executive added that Mr. Smalls was “not smart, or articulate.” Amazon’s general counsel, who wrote the meeting notes, later apologized for the remarks.Lawmakers have said those meeting notes showed that Amazon had planned to “smear” Mr. Smalls. They questioned why the company had put Mr. Smalls on quarantine more than two weeks after he had been exposed to the sick worker and just days before the protest.Ms. James’s office has been in touch with Amazon since the incident. In the letter, the attorney general said Amazon’s safety measures were inadequate and might have violated provisions of the Occupational Safety and Health Act. The letter, which sought internal communications about worker organizing, also said there could be other cases of potential illegal retaliation.Jesse McKinley contributed reporting from Albany, N.Y.

Economy
Job or Health? Restarting the Economy Threatens to Worsen Economic Inequality

WASHINGTON — Efforts to quickly restart economic activity risk further dividing Americans into two major groups along socioeconomic lines: one that has the power to control its exposure to the coronavirus outbreak and another that is forced to choose between potential sickness or financial devastation.It is a pick-your-poison fact of the crisis: The pandemic recession has knocked millions of the most economically vulnerable Americans out of work. Rushing to reopen their employers could offer them a financial lifeline, but at a potentially steep cost to their health.State and federal officials have nowhere near the testing capacity that experts say is needed to track and limit the spread of the virus, and there is no vaccine yet. But states are already reopening, urged on by President Trump, who is eager to restart the United States economy.That push is likely to exacerbate longstanding inequalities, with workers who are college educated, relatively affluent and primarily white able to continue working from home and minimizing outdoor excursions to reduce the risk of contracting the virus.Those who are lower paid, less educated and employed in jobs where teleworking is not an option would face a bleak choice if states lift restrictive orders and employers order them back to work: expose themselves to the pandemic or lose their jobs.That disempowered group is heavily black and Latino, though it includes lower-income white workers as well.“It’s sad and scary,” said Tina Watson of Holly Hill, S.C., who has seen her hours cut in half at the Wendy’s where she works. Though her income has dropped from that cutback, she is worried about having to interact with customers when the state relaxes limits that have forced the restaurant to operate as drive-through only in recent weeks. “I’m feeling like my life is at risk if they open up our dining,” Ms. Watson said.A growing share of workers is increasingly stuck with that choice.The governors of Georgia and South Carolina have begun allowing some businesses to reopen, even though both states continue to see new infections and what the Centers for Disease Control and Prevention call “widespread” community spread of the virus.On Friday, Gov. Brian Kemp of Georgia allowed gyms, nail and hair salons, and bowling alleys to begin operating, with restaurants and movie theaters allowed to open on Monday. Colorado, Minnesota, Mississippi and Ohio are also allowing some businesses to start operating again.Not all businesses will decide to reopen even if they are allowed to; many will choose to stay closed, fearing too few customers to make it worth the cost. That was the situation in parts of Georgia on Friday, as many establishments kept their doors shut. But furloughed workers whose employers recall them to their jobs would in most circumstances lose their unemployment benefits, even if their pay might not return to the levels they were earning before the crisis.

Economy
Gov. Murphy Expects NJ Reopening to Begin Within Weeks

Gov. Philip D. Murphy sketched out benchmarks on Monday for relaxing his coronavirus lockdown order and reopening businesses in New Jersey even as he warned that the state faces a financial “Armageddon” — and could be unable to pay its teachers, firefighters and police officers.He gave no indication of when the stay-at-home order might be lifted, saying it would remain fully in place until further notice.Sounding a more hopeful note, Mr. Murphy did say that schools might reopen before the end of June. “There is a chance that we could get back in school,” he said in an interview Monday morning on CNBC.Mr. Murphy, at a noon briefing, laid out four metrics that will be used to determine how quickly the state can begin to reopen: a sustained decline in hospitalization and infection rates; expanded testing capacity; more tracing of people who have had contact with those infected with the virus; and increased availability of places, such as hotels, for people who are sick with the virus to remain in isolation.“A plan that is needlessly rushed,” he said, “will needlessly fail.”When pressed on the timing of a reopening, he was noncommittal, but said he expected it would be measured in weeks, not months.

Economy
Houston’s ‘Horrifying’ Double Crisis: Oil Crash and Virus Shutdown

HOUSTON — On the same day that the price for U.S. crude oil fell to about $30 below zero — a mind-bending concept that marked the first time oil prices had ever turned negative — Mayor Sylvester Turner of Houston, the self-proclaimed energy capital of the world, stood before reporters. His words were grim and muffled by the black mask covering his face.The mayor announced that city employees would soon be furloughed, but he declined to say how many. The Houston Zoo, he said, could expect to see funding deferred under what he called “the worst budget that the city will deal with in its history.”Cities across the country are struggling under the economic shadow of the coronavirus. But few have to deal with a collapse in their fundamental industry at the same time.“We’ve probably seen within weeks the same amount of economic shock that used to occur in years,” said State Senator Paul Bettencourt, a Houston Republican whose district includes the Energy Corridor, a stretch of Interstate 10 on Houston’s west side that is home to Shell, ConocoPhillips and other oil and gas giants. “We’ve gone through this before. The problem is we didn’t do it in the middle of a pandemic.”Energy conferences that drew oil executives from around the world to Houston have been called off. Budget analysts expect a loss of more than $100 million in revenue for city government, with sales tax revenue alone expected to drop by 30 percent for the month of April. Thousands of energy workers, some of whom only lately moved to the region to take advantage of the recent prosperity, have been laid off. Many of them were told the bad news during painful Zoom sessions from home.Warning letters from energy companies have been flooding the Texas Workforce Commission about layoffs and furloughs: 3,500 at Halliburton, 223 at Tenaris, 184 at Baker Hughes, 102 at Diamond Offshore Drilling, 95 at Energy Transfer.“This feels like the early ’80s when we were in the oil price crash, but it’s the one-two that’s horrifying — the one-two punch with Covid and the oil prices,” said Annise Parker, who served as mayor of Houston from 2010 to 2016, referring to Covid-19, the disease caused by the coronavirus. “It’s going to be devastating.”The Houston area by some estimates may lose 200,000 to 300,000 jobs — a blow worse than the Great Recession of 2008 and 2009.Bob Dunston, 60, who was an engineer supervisor, had worked for 18 years at Weatherford International, one of the world’s largest oil field services companies. On April 9, he found himself on a Skype call with his boss’s boss and a representative from human resources.

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