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Good morning. David Meyer here in Berlin, filling in for Alan.
We continue to get a fuller picture of how the coronavirus pandemic is feeding on and exacerbating inequality.
The Resolution Foundation, an independent British think tank, said in a new report today that many of the country’s richest people saw lockdown increase their savings, because they had to cancel overseas trips and were less likely to go out for meals.
However, those in lower-income households—with smaller buffers to cope with the crisis—were twice as likely to have sunk further into debt by relying on credit cards and overdrafts to keep going.
“The early evidence from the impact of the coronavirus crisis on family wealth suggests that it has had a starkly different impact for those on lower and higher incomes,” the report’s authors wrote. “Evidence on families’ financial preparedness before the crisis indicates that the workers likely to be worst affected by the lockdown also had less wealth to fall back on in hard times.”
Those who were able to continue working from home typically had two and a half times more net financial wealth than those working in shuttered sectors, and were significantly less fearful about making ends meet if their income were to dry up.
The U.K.’s inequality is nowhere near as bad as that in Brazil, but there are echoes there too—many Brazilians don’t have the financial means to maintain proper social distancing, and that’s one reason why case numbers are shooting up.
The exacerbated nature of inequality in the U.S. Is also well documented, with recent survey data showing that while just 4% of white Americans know someone who died from COVID-19, 11% of black Americans could say the same.
All of which is to say that, overall, the coronavirus pandemic is making life significantly worse for poorer people than it is for richer people. This fact is not going unnoticed, and across the world it is reasonable to predict that the pandemic will push inequality up the policy agenda.
If that push produces results, that could make for a positive long-term impact of a situation that isn’t exactly replete with silver linings right now. If not, the political tensions we see today could soon seem mild.
News below.
David Meyer
@superglaze
[email protected]
TOP NEWS
Wirecard cash
After Wirecard's share price crashed on news of a missing $2.1 billion of cash on the fintech's balance sheet, the company has said the money probably doesn't exist. The German payments firm has now withdrawn its latest set of financials and is looking at full-scale restructuring to enable survival. Its share price halved this morning, taking its losses over the last three trading days to 87%. Bloomberg
Tyson imports
China has suspended poultry imports from a Tyson Foods plant where hundreds of workers were found to have COVID-19. A few days ago, Chinese authorities said food was unlikely to be connected to a new Beijing outbreak, but this new move is raising fears of threats to meat plants around the world—and to China upholding the agricultural-purchase parts of its trade deal with the U.S. Coins2Day
Lufthansa bailout
The German billionaire Heinz Hermann Thiele will meet with the country's economics minister today to discuss his objections to the $10 billion bailout of flag carrier Lufthansa, in which he holds a 15.5% stake. Thiele doesn't like the idea of the government taking a 20% stake in Lufthansa, and would prefer it to participate indirectly through the state development bank KfW. Without shareholder approval for the bailout, Lufthansa could be forced to file for bankruptcy protection. Reuters
German infections
Germany's coronavirus reproduction rate has soared above 2 (a rate at which one infected person would likely infect another two people) as localized outbreaks have forced hundreds of people into quarantine. One massive outbreak was at an abattoir in North Rhine Westphalia; another in a Berlin community where an infected priest visited many families. In the central town of Goettingen, the quarantining of 700 people in a tower block led to a riot on Saturday, as 200 people tried to get out. CNBC
AROUND THE WATER COOLER
Mukesh Ambani
Reliance chair Mukesh Ambani has entered the top 10 of the world's richest people—the only Asian tycoon in that exclusive club. Ambani, who own 42% of the conglomerate, has a net worth of $64.5 billion that edges him ahead of Oracle's Larry Ellison and the world's wealthiest woman, Francoise Bettencourt Meyers. Coins2Day
Apple cut
At Apple's big developer conference this week, headlines are likely to be generated by those who are fed up with the tech giant taking a 30% cut of in-app purchases and making it harder for rivals to compete with Apple Pay. The issues are not just concerns for European antitrust regulators, who last week launched a pair of probes, but are also prompting heavy pushback in the U.S. Financial Times
British diversity
Black people make up 3% of the British population, but just 1.5% of top bosses at U.K. Companies are black. The national business response group Business in the Community is calling on companies to do more, with race director Sandra Kerr saying: "Black livelihoods matter and employers need to take urgent action to ensure that their organization is inclusive and a place where people of any ethnic background can thrive and succeed." BBC
Nascar flags
A noose was reportedly found in the garage stall of Nascar driver Bubba Wallace, whose calls for reform led to a ban of Confederate flags at races. Wallace: "Today’s despicable act of racism and hatred leaves me incredibly saddened and serves as a painful reminder of how much further we have to go as a society and how persistent we must be in the fight against racism." Wall Street Journal
This edition of CEO Daily was edited by David Meyer.
