Thursday, December 31, 2020

China's Three Mistakes in 2020: Ant IPO, K-Shaped Recovery, SOE Defaults - Bloomberg

China's Three Mistakes in 2020: Ant IPO, K-Shaped Recovery, SOE Defaults - Bloomberg

The Three Big Mistakes China Made in 2020

For the many things Beijing did right this year, it still got a few important things wrong.

 

By Shuli Ren

December 29, 2020, 6:00 PM EST

 

Shuli Ren is a Bloomberg Opinion columnist covering Asian markets.

 

Even if you resent China for being the epicenter of Covid-19, you’ve got to admire Beijing’s leadership skills. Less than a year after the pandemic erupted, life is back to normal, while Europe and the U.S. are still struggling. The country is now the world’s shining economic outlier.

 

Many good things can be said about China. Wearing a mask isn’t a political debate. Bureaucrats take virus testing so seriously that some measures go overboard. The central bank resisted the temptation to take the cheap, zero-rate shortcut to boost the economy, and is opening financial markets. No wonder yield-hungry foreigners are buying Chinese assets at a record pace, despite angry objections from U.S. President Donald Trump.

 

But there’s always room to improve. Come January, there will be a more rational occupant of the White House, which will give China the space to focus on structural reforms. And it’s here I’d like to raise some quibbles with Beijing, because for the thousand things it did right this year, it got three big things wrong. 

 

Underestimating the K-Shaped Rebound

 

Just months into the pandemic, the world quickly realized the myriad ways Covid-19 was exacerbating income inequality. Large technology companies and their employees, who could work from home, were flush with cash, while storefront businesses were forced to close.

 

As early as April, when China first emerged from lockdown, small restaurants were starting to voice their complaints about the exclusive arrangements food-delivery super-apps asked them to sign, forcing them to choose one platform over another, and the exorbitant fees they charged. These apps threatened the recovery of the hotel and catering industry, and the livelihood of its workers. The sector, which didn’t fully bounce back until October, employed as many as 33 million people last year.

 

Yet Beijing didn’t start to address this economic imbalance until mid-November, when it published a vaguely worded, 22-page document on antitrust regulations aimed at reining in the country’s tech giants. On Christmas Eve, in a one-sentence statement, the State Administration for Market Regulation said Alibaba Group Holding Ltd. was under investigation for the so-called “pick one out of two” practice. Alibaba’s shares are down 28% from their October high.

 

The K-shaped rebound shouldn’t have come as a surprise: The macro statistics gave plenty of cues. Manufacturing bounced back quickly, while retail sales, a barometer of broader consumer confidence, lagged for months. Luxury items were doing well, with high-end cars selling fast and the likes of Chanel and Louis Vuitton raising prices. 

 

In the U.S. and elsewhere, consumer confidence has been partially shielded from the Covid-19 recession thanks to stimulus checks and augmented unemployment benefits. China, on the other hand, took a page from its 2008 playbook, revving up the economy by building new bullet trains and 5G telecom stations.

 

Over 170 million migrants live and work in China’s cities, mostly in the construction, manufacturing and services sectors. During the pandemic, they not only lost their jobs, but didn’t get to collect unemployment checks. As far as Beijing was concerned, they weren’t jobless; they could always go home to farm. China went for trickle-down economics.

 

The decision to aid business owners over workers may have stemmed from the government’s obsession with control. While Beijing feels it can tell factories to run their machines at full speed, households may just stash away their stimulus checks. Businesses have a higher marginal propensity to spend.

 

Was this fiscal recipe wise? China has been eager to transform into a consumer society, because an economy that relies on industrial production is vulnerable to global business cycles. The lack of a social safety net, however, may have permanently dented household confidence. China’s old-fashioned stimulus is setting back its own economic goals.

 

Muzzling Billionaire Critics

 

Even as Americans flooded the polls to choose their new president, China found a way to steal the show. On Nov. 3, it suspended the $35 billion public listing of billionaire Jack Ma’s Ant Group Co. — just two days before the fintech’s trading debut.

 

The bright side of gridlock in Washington is strong investment case for China: a weaker dollar, which makes its currency more attractive; a sovereign bond yield differential at a record high; and a wave of mainland unicorns going public. But the sudden antics pulled with Ma can unsettle even the savviest investors.

 

In a terse statement announcing its decision, the Shanghai Stock Exchange cited regulatory changes and Ant’s inability to fulfill listing conditions. Beijing has a point. During Covid-19, consumer credit was expanding too fast, and abuses, such as predatory interest charges and misuse of tenants’ prepayments, became a social issue. On Dec. 27, the central bank said in a published Q&A that Ant has “little legal awareness” and asked the fintech giant to return to its core, less-lucrative digital payment business. To China’s credit, bureaucrats have been debating how to regulate Ant’s lucrative lending business for at least two years.

 

Yet the timing was suspect. What captivated a global audience was a suspicion that China pulled the IPO not because of regulatory changes, but because of a blunt speech Ma made in Shanghai two weeks earlier. In it, he criticized China’s broken financial system, saying banks were like “pawn shops,” where only those with collateral and guarantees could get loans. President Xi Jinping, who read government reports about the speech, was reportedly furious.

 

No doubt, Ma loves the limelight, singing and dancing on big stages. Still, what he said wasn’t wrong. In fact, China’s own central bankers have taken the same policy positions – and even used the same words. It just came out of the wrong mouth.

 

The Ant fiasco thus becomes a fine reminder that Beijing bureaucrats tend to forget how to govern when they feel they have lost face. Assumed standards can be tossed at whim.

 

It’s also a lesson to billionaire businessmen: Don’t be blunt and don’t criticize the government, just bury your head and make money quietly. After all, China Evergrande Group’s chairman Hui Ka Yan, who turned his real estate business into the world’s most indebted developer, still manages to survive, even though his company poses a systemic risk to the banking sector. In October, Hui laid low when Xi snubbed him during a visit to Shenzhen. A month later, the Shenzhen government gave him a lifeline. Ma, on the other hand, is still nursing the billions of dollars lost from his loose lips.

 

After four years of incessant berating from Trump, China may no longer care about public relations. But it does want foreign money to help finance its own fiscal deficits. The untimely Ant fiasco puts all that at risk.

 

Mishandling Defaults

 

There’s a persistent perception that rules in China run on a dual track: Private-sector businessmen get summoned and dressed down by government officials whenever they cross the line – as Jack Ma witnessed in November. Meanwhile, state-affiliated entities can sit cozy, with plenty of local resources at their command.

 

An ugly wave of defaults among state-owned enterprises is only further evidence of this trend.

 

Pinched by oversupply and dwindling profit margins, SOEs started to default here and there as early as 2015. Yet the latest wave, which began in September – after China’s economy bounced back from the Covid slowdown – was the first batch to test marketplace rules. The few that missed repayments are the biggest SOEs in their regions.

 

A default on its own is unpleasant, not unacceptable – this is a risk bond investors are prepared to take. But now there is a deepening suspicion that SOEs will move good assets out before creditors drag them to court. In less than one month, three unrelated companies – an  auto giant in the northeast Liaoning province, a coal miner in the affluent central Henan province, and a chip manufacturing powerhouse – shifted their subsidiaries’ stock holdings out before defaulting. That makes a pattern.

 

For years, Beijing has been trying to break the notion of implicit guarantees – that is, the belief that the government will step in to bail out any SOE. This is for good reason: Loss-making ones somehow get AAA ratings, and there’s not enough credit spread in China’s $4 trillion corporate bond market to differentiate between quality and riskier assets.

 

But Beijing must apply the same rules universally. If a private-sector real-estate developer defaults, its creditors could get some land bank back for consolation. Will investors be able to carve off an SOE’s assets when these businesses go bust?

 

The first look isn’t good. China’s regulators have been beating around the bush, punishing bond underwriters and nudging local governments to make empty promises instead.

 

So while SOEs are less likely to default – thanks to their local connections, they tend to be more resourceful with financing – they’re quite capable of shielding core assets from their creditors after missing repayments.

 

This is another mistake, because foreigners would have happily bought SOEs’ yuan-denominated bonds, which pay higher coupons than their offshore dollar issues. This year, portfolio inflows have been so strong that foreigners are promising to take over city commercial banks as the second largest buying bloc of government bonds. They have largely stayed away from the corporate bond market, which is known to be a playground of SOE entities. The latest defaults only give them more reason to sit on the sidelines.

 

President Xi has always been a reformer, keen to upgrade China’s economy and rid the system of excess debt. For the past few years, Trump’s trade war and Covid-19 derailed him. Now that both roadblocks are gone, he can get back on track.

 

Yet China needs to update its approach. Sticking to a 2008 fiscal playbook feels antiquated, particularly compared with the “run-it-hot” strategies in the U.S. To establish a functional marketplace, China needs to dismantle the two-track system the state and the private sector run on. It also needs to give successful billionaire businessmen a forum to make policy recommendations. They know what’s happening on the ground better than anyone sitting in a government building. Sure, a private citizen’s comments can be hard to swallow, but as our ancestors like to say, bitter medicine is good for your health.

 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

 

To contact the author of this story:

Shuli Ren at sren38@bloomberg.net

 

To contact the editor responsible for this story:

Rachel Rosenthal at rrosenthal21@bloomberg.net

 


Astra’s Covid-19 Vaccine Won Approval But How Good Is It? - Bloomberg

Astra’s Covid-19 Vaccine Won Approval But How Good Is It? - Bloomberg

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Astra’s Covid-19 Vaccine Won Approval, But How Good Is It?

A shot developed by the drugmaker and the University of Oxford just gained clearance in the U.K. Here’s what you need to know.

 

By Bloomberg Opinion

December 30, 2020, 4:55 PM GMT

 

Sam Fazeli, a Bloomberg Opinion contributor who covers the pharmaceutical industry for Bloomberg Intelligence, answered questions about the approval in the U.K. Wednesday of a Covid-19 vaccine developed by AstraZeneca Plc and the University of Oxford. It follows the shot developed by Pfizer Inc. and BioNTech SE, which was cleared earlier this month and has already been rolled out in the U.K., U.S. and Europe. Moderna Inc.’s vaccine also gained emergency authorization in the U.S. The conversation has been edited and condensed.

 

The Astra vaccine is the third to be approved by either the U.K., U.S. or EU, but it’s different from the first two. How so?

 

All vaccines aim to deliver pieces of a live virus or a whole inactive (killed) virus to the body so that the immune system has an opportunity to raise a response to it and form a memory. That way, when the actual pathogen arrives, it is ready to rapidly deploy antibodies and immune cells (T-cells) to kill the virus and infected cells, respectively. The Pfizer-BioNTech and Moderna vaccines deliver the genetic material in the form of “messenger RNA,” which instructs cells to create a modified version of a key coronavirus protein. This, in turn, prompts an immune response that can fend off the real virus. AstraZeneca-Oxford’s vaccine, AZD1222, uses a “viral vector” – a tool for delivering the same genetic material – which it derived from an engineered chimp adenovirus, similar to the virus that causes the common cold. (Johnson & Johnson uses a similar approach, but its vaccine uses a human adenovirus to deliver the genetic material.) One of the other key differences between the Astra vaccine and those of Pfizer-BioNTech and Moderna is that it doesn’t require super-cold storage and can be transported and kept at normal refrigerator temperatures. This makes it much easier to use and distribute, especially in more rural areas and countries where cold-chain logistics are problematic.

 

How well does the Astra vaccine work compared with those other two?

 

In preclinical tests and early trials in humans, the vaccine did O.K. It was not as protective against viral infection in the nose and throat of nonhuman primates, though it did prevent severe disease. In the early stages of human trials, the vaccine did not induce as strong an immune response, measured by looking at antibody levels, as that seen with Pfizer-BioNTech and Moderna’s shots. This may explain the lower efficacy seen so far in its later-stage U.K. and Brazil trials and may have to do with the way the vaccine delivers its genetic material. There are also subtle differences in the actual protein structure Astra uses in its vaccine compared with the other two shots. While all of the shots target what’s called the “spike” protein — the rod-like structures that protrude from the virus and help in binding to cells and infecting them — Astra’s is the only one to use an original form of that protein, which has been shown to be less immunogenic in some experimental settings.

 

Wasn’t there a problem with the Astra trials? The dosage was given out incorrectly, and the data was confusing?

 

Yes. The Astra-Oxford team reported late-stage preliminary results from its U.K. and Brazil trials that contained data from about 12,000 subjects vaccinated with AZD1222 and a similar number on placebo. Not only were the trials smaller than the Pfizer-BioNtech and Moderna trials, the efficacy of the vaccine was also lower at 70%, compared with the more than 90% seen with the other two vaccines. And the Astra data was complicated by the fact that 1,367 subjects in the U.K. trial, out of a total of 3,744 who received the vaccine, got only half of the required dose on their first jab because of a manufacturing issue. If you ignore those subjects, the efficacy was about 62% when combining the U.K. and Brazil data. The other issue is that there were only 718 participants 55 or older, who are at higher risk of hospitalization and death, and that’s not enough to judge the potential of the vaccine for that important cohort. There was also a problem with the time interval between the first and the second dose as the trials started looking at the vaccine as a single dose, only later converting to a two-dose regime. All of this raised questions and caused some confusion, which is unfortunate given the generally positive results.

 

Are you comfortable with the data now? Did the U.K. make the right decision?

 

The vaccine clearly works. We just don’t know how well. In a normal world, the Astra data we’ve seen so far would be the kind that would generate hypotheses requiring further trials to prove things like efficacy, the required dose level, the best dosing interval and its effect in the older population. The U.K.’s Medicines & Healthcare products Regulatory Agency, which cleared the shot, has for sure seen more data than has been published; that data, whenever it is revealed, will be crucial in helping us understand what the approval was based on. The MHRA's analysis suggests that the vaccine’s efficacy was 73% up to 12 weeks after one dose of the vaccine. But this is what is called an exploratory analysis and was not based on predefined criteria, again making it hypothesis-generating and needing a future trial. It’s also possible that the trial has some data on the new variant of the virus that has been discovered in the U.K., and how sensitive it is to the vaccine.

 

Speaking of that variant, it appears to be more transmissible than the original forms of the virus . Despite the lockdowns and restrictions it triggered in the U.K., it has since spread elsewhere including the U.S. The good news is that vaccines may work just as well against this variant, but given that viruses are always mutating, there’s a risk of other variations cropping up that could be more resistant to shots. How adaptable is the Astra vaccine?

 

The Astra, J&J, Pfizer-BioNTech and Moderna shots are all amenable to rapid reengineering with any new variant. All four vaccine developers can make new candidates within a few weeks. That is one of their strengths compared with other technologies.

 

The U.K. has approved a dose schedule that seems different from other vaccines. What was this based on?

 

The approval is for a first dose, followed by a second dose up to 12 weeks later. This is much longer than that for Pfizer-BioNTech's vaccine (21 days) and Moderna (28 days). In the published data on Astra’s trials, there was a reference to the fact that the median time interval for subjects who received two standard doses of the vaccine in the U.K. trial was 69 days, with a range of 50 days to 86 days. So the 12-week interval is at the very top end of that range. I don't believe there is likely to be enough data to judge which dose interval is best until the MHRA publishes its approval letter and shows the data that was used to back its decision. What I am worried about is that if the first shot does not provide a strong enough immunity to suppress viral replication in people, it may lead to the virus amassing even more mutations and developing the ability to evade the vaccine. This could affect the efficacy of other shots, too. We just don't know.

 

What about U.S. approval? Is that close to happening?

 

U.S. approval will need data from the much larger and simpler trial that Astra is conducting there. That data should come out in the first quarter. Astra is testing two standard doses of the vaccine four weeks apart in as many as 20,000 individuals. The question is what happens if the efficacy comes out at the same 60% to 64% level seen in the U.K. and Brazil trials. Even though this meets regulatory guidelines for approval, which require efficacy of 50% or more, will the U.S. approve it given the much higher efficacy of the Pfizer-BioNTech and Moderna vaccines? And if it does not, what will that mean for the U.K. approval? Will U.K. subjects, and those of other countries that approve Astra’s vaccine, be deemed as vaccinated when it comes to U.S. travel? This remains to be seen.

 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

 

To contact the author of this story:

Bloomberg Opinion at davidshipley@bloomberg.net

 

To contact the editor responsible for this story:

Beth Williams at bewilliams@bloomberg.net

 


AstraZeneca Oxford Vaccine: When Can I Get It? When Do Vaccinations Start? - Bloomberg

AstraZeneca Oxford Vaccine: When Can I Get It? When Do Vaccinations Start? - Bloomberg

Here’s What Happens Now That Oxford-AstraZeneca Vaccine Won U.K. Clearance

By Suzi Ring

December 30, 2020, 4:37 AM EST Updated on December 30, 2020, 8:46 AM EST

 

The U.K. approved a second Covid-19 vaccine, and it’s a homegrown one this time. The government has ordered 100 million doses of the shot developed by AstraZeneca Plc and the University of Oxford, more than any other candidate.

 

When will the vaccination start?

The first doses are being released Wednesday and vaccination will start next Monday. AstraZeneca says it aims to supply millions of doses in the first quarter.

 

The priority should be to give as many people in at-risk groups their first dose rather than provide the required two doses in as short a time as possible, the government says. But people should get the second shot four to 12 weeks after the first. The first vaccine the U.K. approved, made by Pfizer Inc. and BioNTech SE, requires two injections three weeks apart.

 

How will I know when it’s my turn?

The National Health Service says it will contact people when it’s their turn to be vaccinated, and has emphasized it’s important not to reach out before then.

 

How does the vaccine differ from others?

The product uses a harmless chimpanzee virus to transport genetic material that triggers an immune response to the coronavirus. That’s different from BioNTech and Pfizer’s messenger RNA approach, which transforms the body’s own cells into vaccine-making factories.

 

When patients were given two full doses, the Astra-Oxford vaccine was 62% effective in an advanced trial -- less than the Pfizer-BioNTech one and another from Moderna Inc. A small group that mistakenly received half of the first dose showed better protection, with efficacy reaching 90%. But participants were 55 years old or less, and because older people who are most at risk of severe Covid-19 often show more sluggish immune responses, the results leave some doubt as to whether the higher efficacy will stand up to further testing.

 

How the Oxford-AstraZeneca Vaccine Works

The viral vector vaccine uses a harmless virus to transport genetic material which triggers an immune response to the coronavirus

 

Which dosage will be used?

The U.K. will administer the vaccine in two full doses rather than the half-dose, full-dose regimen. AstraZeneca has said it plans more clinical research to find out whether the results of the half-dose group hold up.

 

Why did the U.K. order more doses of this vaccine?

The homegrown shot is easier to transport and store: It can last six months at refrigerator temperatures, whereas the Pfizer-BioNTech vaccine requires deep freezing. The majority of doses will also be produced locally, which should help avoid any supply delays.

 

Can I choose which vaccine I get?

Probably not. The important thing to remember is that both products protect against severe disease, which is the ultimate goal of the vaccination effort.

 

Can I get both vaccines?

A regulatory panel advised against mixing doses because a combination hasn’t been tested, but it’s possible shots could be pooled in the future if studies show that can produce an enhanced immune response.

 

The U.K.’s Vaccine Taskforce has outlined plans to test combinations of approved shots next year to see if a mix could boost immunity, the panel said this month. The first tests will combine the Pfizer and Astra vaccines.

 

A combination should work for vaccines that target the spike protein of SARS-CoV-2, according to Andrew Pollard, who led the University of Oxford’s vaccine trial with Astra. Both vaccines, as well as the Moderna one on sale in the U.S., use the spike protein as a target.

 


Tuesday, December 29, 2020

A side-by-side comparison of the Pfizer/BioNTech and Moderna vaccines

A side-by-side comparison of the Pfizer/BioNTech and Moderna vaccines
 

...Both vaccines seemed to reduce the risk of severe Covid disease. It’s not yet known if either prevents asymptomatic infection with the SARS-CoV-2 virus. Nor is it known if vaccinated people can transmit the virus if they do become infected but don’t show symptoms.


...Both the Moderna and the Pfizer/BioNTech vaccines require two shots: a priming dose, followed by a booster shot. The interval between Moderna doses is 28 days; for the Pfizer vaccine, it’s 21 days.


Each dose of Pfizer’s contains 30 micrograms of vaccine. Moderna went with a much larger dose of vaccine, 100 micrograms. It means it is using a little more than three times as much vaccine per person as Pfizer is. And yet, they aren’t getting better results. 

...Both these vaccines — in fact, most if not all the Covid-19 vaccines that have reported data so far — fall into the reactogenic category. 

..younger adults, who have more robust immune systems, reported more side effects than older adults.

...Both of these vaccines require an elaborate cold chain, ....But the Moderna vaccine will be far easier to use than Pfizer’s. For starters, Moderna’s must be shipped at -4 Fahrenheit; Pfizer’s must be shipped and stored at -94 Fahrenheit. The former is the temperature of a regular refrigerator freezer; the latter requires special ultra-cold freezers that need to be topped up with dry ice every five days. Doctors’ offices do not have ultracold freezers; neighborhood pharmacies don’t either.

...Pfizer vaccine. The minimum amount of vaccine a location can order is 975 doses.....here are plenty of places across the country that don’t need 975 doses to vaccinate the people currently eligible for vaccination — health workers and nursing home residents. This is the vaccine that needs to be kept at -94 F. The minimum order size will limit the locations in which this vaccine can be used.

The Moderna vaccine’s minimum order is 100 doses, a much more manageable number. 



Sunday, December 27, 2020

Brexit Deal: Now We Know How Boris Johnson's Movie Ends - Bloomberg

Brexit Deal: Now We Know How Boris Johnson's Movie Ends - Bloomberg

Now We Know How Boris Johnson's Movie Ends

The Brexit deal makes Johnson the most consequential prime minister since Thatcher. History will judge him on how he uses his hard-won freedom.

 

By Therese Raphael

December 24, 2020, 12:45 PM EST

 

Therese Raphael is a columnist for Bloomberg Opinion. She was editorial page editor of the Wall Street Journal Europe.

 

Now we know how this movie ends. “Brexit means Brexit,” Theresa May declared in those electric but mystifying opening scenes after the referendum back in 2016. It wasn’t clear then or for a long while after what Brexit meant. Nearly five years and two prime ministerial resignations later, Boris Johnson has finally defined it.

 

Set against the perils of breaking up with no trade deal, having an agreement at all merits celebration. Apart from the economic costs and reputational damage, a no-deal exit would have put terrible strain on the already fraught union with Scotland and poisoned relations with the European Union — still Britain’s largest trading partner and the world’s largest single market.

 

Relief, expressed repeatedly in the EU’s press conference to announce the breakthrough on Thursday, is a low bar for a free trade deal. Put in the context of the last four-plus decades, this is the most regressive trade settlement seen between modern democratic nations. Instead of enhancing cooperation and lowering barriers, it gums up most areas where business and consumers transact.

 

Better Than No Deal

Growth trajectory with a free-trade agreement compared with other options

 

It also makes Johnson the most consequential British prime minister since Margaret Thatcher, acting as a radical rather than a conservative. He campaigned in Britain’s 2019 general election by promising to “get Brexit done” in a way that reclaimed “sovereignty” over British laws, courts, borders and money. He has delivered that control.

 

It was ultimately a bigger break — or a harder Brexit – than the one sought by his predecessor May. The U.K. managed to leverage its weaker negotiating position by threatening to abandon the provisions in last year’s Withdrawal Agreement to maintain a soft border in Ireland and to walk away over EU access to U.K. fishing waters. Unlike May’s similar threat to embrace no deal, the arch-Brexiter Johnson’s warning was credible. And, unlike her, he had a united, Brexit-supporting cabinet and an 80-seat majority to back it up.

 

Though only a summary of the deal has been published, the main contours have been known for months. The EU has offered — as it did from the start — tariff- and quota-free access for British goods. That’s significant. Even the EU’s trade deal with Canada doesn’t get rid of all tariffs on goods trade. But it was not right to claim, as Johnson did initially in Thursday’s triumphal press conference, that “there will be no non-tariff barriers to trade.”

 

On the contrary, while one of the biggest euroskeptic grievances against Brussels was its red tape, Britain had better get used to quite a lot of extra rules and regulations. Businesses exporting across the Channel will need to fill out customs declarations and certify the origin of their products for export; they’ll have to submit animal products for health checks and comply with regulations. Companies will have to pay for certifications in both the U.K. and the EU, increasing the cost of doing business.

 

While large companies have been preparing for a while — moving staff to the continent or hiring customs brokers and third-party consultants to help with new trade complications — most businesses have made only some preparations. Many were simply too focused on surviving lockdowns and they lacked the information to prepare for Brexit anyway. The two sides haven’t agreed on any grace period for companies to adjust.

 

In exchange for tariff- and quota-free access, the U.K. has agreed not to regress from the current standards on environmental, labor-market and other areas of the so-called “level playing field” with the EU, as well as state aid. If Britain opts to diverge in a way that clearly impacts trade, tariffs can be imposed, with a new arbitration mechanism, separate from the European Court of Justice.

 

London has the option to go its own way but there are penalties if it hurts EU businesses by doing so. While the City of London’s finance industry has been insulated from the threat of cross-retaliation (where one sector is penalized for a breach by another), the EU still has the right to withdraw equal treatment (equivalency) for Britain’s financiers. 

 

All of this is a long way from Johnson’s original “friends with benefits” vision of the relationship. “British people will still be able to go and work in the EU; to live; to travel; to study; to buy homes and to settle down,” he wrote in his first column for the Telegraph after the Brexit vote, citing the German business federation, the BDI, in saying “there will continue to be free trade, and access to the single market.”

 

For Brits who do want to travel, work, live or study in the EU, there are new hoops to jump through, all costs that Johnson downplayed in his deal announcement. A Brexit-weary Britain no doubt hopes to stop talking about the topic entirely, but there are many ways in which this agreement foreshadows years of negotiations to come.

 

While the hotly contested area of European access to British fishing waters was resolved for now with an agreement that sees the EU reduce its share by 25% over five and a half years, there will be annual negotiations after that. The deal gives both sides the flexibility to initiate a formal review of its provisions, an open door that Brexit hardliners in Johnson’s party will be tempted to push on.

 

Opposition leader Keir Starmer’s promise to vote for the treaty, but to “build on” the relationship it establishes in the future suggests the battle lines over Europe may not so much disappear as be redrawn.

 

Donald Tusk, the former European Council president, once lamented that Johnson and his cohort led the campaign to leave the EU without even a “sketch of a plan” for how to do it. He wasn’t wrong. “You were only supposed to blow the bloody doors off,” the journalist Sarah Vine told her husband Michael Gove on the morning after the vote, quoting Michael Caine’s character in “The Italian Job.”

 

Instead, the Brexiters took off the roof and the walls too. But eventually they converged on a plan that accepted the limits of the access the EU would allow within Britain’s demands for total control. The new agreement sets a floor on EU-U.K. relations. It will be a long, painstaking process to build a new and properly robust surrounding structure.

 

“It’s one thing to get freedom,” Johnson said on Christmas Eve, “but it’s how we use it, make the most of it; that’s what’s going to matter now.” That’s also how he will be judged.

 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

 

To contact the author of this story:

Therese Raphael at traphael4@bloomberg.net

 

To contact the editor responsible for this story:

James Boxell at jboxell@bloomberg.net

 


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Friday, December 25, 2020

Rick Wilson on Republicans after Trump: I′m worried about ′more competent′ version | Americas| North and South American news impacting on Europe | DW | 23.12.2020

Rick Wilson on Republicans after Trump: I′m worried about ′more competent′ version | Americas| North and South American news impacting on Europe | DW | 23.12.2020

Rick Wilson on Republicans after Trump: I'm worried about 'more competent' version

The Lincoln Project's Rick Wilson offers a very bleak outlook into the future for Republicans after four years of Donald Trump. In an interview with DW's Ines Pohl, he predicts the emergence of a third party in the US.

 

Wilson: 'What follows Trump will be more dangerous'

Rick Wilson, how did Donald Trump happen?

 

This is a country that has become largely addicted to and mediated by reality television. Many saw Donald Trump on "The Apprentice" for 14 years on television. He looked competent and smart, like a great deal-maker and a great businessman. Of course, we all know, in the real world that was never even close to Donald Trump's actual character. When Donald Trump reached the Republican presidential stage, Republican voters had become increasingly isolated from reality of any kind, and then became increasingly addicted to the kind of defiant oppositional nature of Fox News and of their own Facebook groups and their own online communities.

 

How will the millions of Trump supporters influence the future of the Republican Party?

 

They are going to be driving the party further and further into the Trumpist space, which is authoritarian, which is nationalist, which is highly regimented around the obedience to the Dear Leader. As you know, it has frightening historical precedents. I am worried about the more competent, smart, presentable version of Trump, that's going to come down the pike in a few years. That to me is an enormously concerning impact of Trumpism.

 

I'm afraid that Trump has conditioned a generation of Republicans to believe that if they don't get their way they don't need to work within the constitution of the United States. They can go an extrajudicial, extrapolitical route, which may involve violence, which may involve the generation of enormous risks for the future of one of the world's longest running and robust democracies.

 

With Donald Trump leaving office, what happens to the Republican Party and the Trumpism movement?

 

They're going to lose a meaningful number of their own voters, those voters have become members of a Trumpist movement, and that's not going to go away. His son will pick up the mantle when Donald Trump dies, or his daughter, or, people that imitate him very closely will pick up that mantle, and there's nothing that can be done about that, because the Republican Party has sold itself to Trump. There is no institutional Republican Party left to push back against Trumpism.

 

With the potential of the Republican Party fracturing, is it possible we will see a new political party?

 

The emergence of a third party in the US is upon us, and that party is not an American party. That party is dedicated to authoritarianism, that party is dedicated to the worship of a single family, that party is oppositional to anything that gets in their political way. That opposition manifests itself in ways that are not traditionally seen in the American political space.

 

The American political spaces have long had a center left and center right, and the edges of both parties were not terribly influential and there was always a tug of war between those center-left and center-right voices. Now, we have a voice on the extreme right of Trumpism, which is driven by that oppositional defiance of traditional norms.

 

What about the Republicans who have opposed Trump and his policies? What happens with them?

 

There are guys like Mitt Romney and Adam Kinzinger and some of the folks in Georgia, who have said no to the president, but that courage is very rare. When you've only got 27 members of Congress on the Republican side that acknowledged that Joe Biden won the election, you've got a much smaller party than you once had.

 

As the conservative side splits, the Trumpist party will be two-thirds to five-eighths of what was the GOP. It'll be a smaller Romney sort of Republican Party. That's not an effective political party at the national scale.

 

Rick Wilson is a political strategist and co-founder of the Lincoln Project, a political action committee set up by former Republicans to prevent Donald Trump being reelected. Wilson is the author of Everything Trump Touches Dies. He lives in Florida.

 


Thursday, December 24, 2020

Russian Hackers’ Motive Baffles U.S.: Mere Espionage, or Worse? - Bloomberg

Russian Hackers’ Motive Baffles U.S.: Mere Espionage, or Worse? - Bloomberg

Russian Hackers’ Motive Baffles U.S.: Mere Espionage, or Worse?

By William Turton

December 23, 2020, 4:43 PM GMT

 Attackers accessed emails, suggesting espionage was purpose

 Investigation into widespread computer breach in early stages

 

As researchers from Silicon Valley to Washington race to understand the full impact of the massive cyber-attack that breached computer networks in the government and private sector, one of their thorniest unanswered questions centers on motive.

 

Already, investigators and government officials have pointed to an elite group of hackers tied to the Russian government and suggested a fairly obvious rationale: that it was an espionage operation aimed at nabbing classified intelligence and other inside information.

 

But some lawmakers and people involved in the investigations have said that the magnitude and breadth of the hack point to other objectives, including undermining Americans’ faith in the systems themselves. U.S. cybersecurity officials have warned that the attackers pose a “grave risk” to federal, state and local government agencies, in addition to the private sector and critical infrastructure, which could include anything from the electrical grid to transportation networks.

 

Some have even likened the attack to an act of war, raising the stakes in how the U.S. might respond.

 

Chris Inglis, former deputy director of the U.S. National Security Agency, said the attack extended beyond typical cyber-espionage because the attackers dispersed their malicious code so widely, even to potential targets with no obvious intelligence value.

 

“They’ve blown out the possibility that this is a simply an intelligence operation,” he said. “They’re clearly attacking the confidence that we as a society have in those systems.”

 

Melissa Hathaway, former cybersecurity adviser to presidents George W. Bush and Barack Obama, said in a panel discussion on the attacks Tuesday that “key utilities” in the U.S. were also at risk. “We cannot ignore the fact that this is also a protocol that can be used against the industrial control systems.”

 

The hacks are ongoing too, with the hackers still operating within breached networks, according to Microsoft Corp. That access gives them the ability to conduct a more damaging attack, like deleting data or shutting down systems. “When you have this much of persistent access, you have leverage,” Hathaway said.

 

The debate over the motive comes as some members of Congress and former U.S. officials are calling for an aggressive response beyond what has been tried following previous cyber-attacks. Determining the motive for the suspected Russian hackers’ ambitious attack is important as it will help determine in part how President Donald Trump -- or more likely incoming President-elect Joe Biden -- responds.

 

Trump has downplayed the attack, while Biden has vowed to hold the culprits to account. “They can be assured we will respond and respond in kind,” Biden said.

 

A wide range of possibilities are on the table, including both overt measures and others that are unlikely to ever become public. They include targeted sanctions, Justice Department indictments against the hackers, covert operations and the use of the U.S.’s own formidable offense cyber capabilities, according to a person familiar with the discussions.

 

Biden’s incoming chief of staff, Ron Klain, said on “Face the Nation” on Sunday that the options aren’t limited to sanctions. “It’s steps and things we could do to degrade the capacity of foreign actors to engage in this sort of attack.” But he added, “I think there’s still a lot of unanswered questions about the purpose, nature and extent of these specific attacks.”

 

Inquiries into the attack are ongoing, and it may take months before investigators determine what the hackers stole -- or secretly reviewed -- and what their motivations were.

 

The U.S. response may also be muddied by its own cyber-attacks in Russia and elsewhere, much of which haven’t been made public. In 2015, after Chinese hackers breached the Office of Personnel Management, then Director of National Intelligence James Clapper suggested the U.S. would do the same thing if given the chance. “You have to kind of salute the Chinese for what they did,” he said. “If we had the opportunity to do that, I don’t think we’d hesitate for a minute.”

 

In the most recent cyber-attack, the hackers installed malicious code into updates of popular IT software from Texas-based SolarWinds Corp., whose customers include U.S government agencies and Fortune 500 companies, authorities have said. SolarWinds has said as many as 18,000 customers received the malicious update, which served as a sort of secret backdoor that hackers could later use to dive deeper into computer networks.

 

The hackers breached the departments of Treasury, Commerce, State and Homeland Security as well as the National Nuclear Security Administration. They also hacked into the cybersecurity company FireEye Inc., whose investigation of its own breach led to the discovery of the malicious update in SolarWinds’s Orion software.

 

Bloomberg News reported that investigators have identified at least 200 government agencies and companies that were hacked using SolarWinds’s backdoor, but the identities of many of the victims aren’t yet publicly known.

 

U.S. officials including outgoing Attorney General William Barr, as well as cybersecurity experts, have fingered Russia as the most likely culprit; some experts have suggested the attack bears the hallmarks of Russia’s APT 29 hacking group, which is also known as Cozy Bear.

 

In the days after the attack, Senator Mark Warner, Democrat from Virginia, was among those who pointed to spying as motive. The vice chairman of the Senate Intelligence Committee, Warner said the attack was “a very, very sophisticated espionage attempt to take information, key information.”

 

Dmitri Alperovitch, co-founder and former chief technology officer of the cybersecurity firm CrowdStrike, agreed with Warner’s take.

 

“Motive has been obvious since the beginning. This is a data and intelligence collection operation,” said Alperovitch, who is now chairman of the Silverado Policy Accelerator.

 

The fact that the hackers gained access to the email accounts of high-ranking U.S. government officials supports the idea that the suspected Russian hackers were engaged in a massive spying operation. On Monday, Senator Ron Wyden, Democrat from Oregon and the ranking member of the Senate Finance Committee, provided the most compelling evidence to date to support the espionage theory. Following a briefing from Treasury officials, Wyden said hackers had gained access to the email accounts of the department’s highest-ranking officials but that Treasury still doesn’t have a full accounting of what the hackers did.

 

The hackers also broke into about three-dozen email accounts at the Commerce Department’s National Telecommunications and Information Administration, including those of senior leadership, Wall Street Journal reported.

 

Frank Cilluffo, director of the McCrary Institute for Cyber and Critical Infrastructure Security at Auburn University and an adviser to the Department of Homeland Security, said it’s simply too soon to know for sure what the hackers were after, even as it looks initially like a “massive intelligence coup.”

 

“That doesn’t necessarily mean they can’t use those footholds for more disruptive actions in the future,” he said. “It’s hard to know until the damage assessment is complete.”

 


Tuesday, December 22, 2020

&ever CEO says indoor vertical farm will produce 1.5 tons of produce

&ever CEO says indoor vertical farm will produce 1.5 tons of produce

...“We need 95% less fresh water than traditional farms,” said Schwarz.

Can Anyone Put a Stop to Donald Trump's Antics? - Bloomberg

Can Anyone Put a Stop to Donald Trump's Antics? - Bloomberg

I really didn’t want to write about outgoing President Donald Trump again this month, but he’s still the president, and his behavior is increasingly … I don’t know the right word, really. Unsettling? Dangerous? Disturbing? All of the above?

 

Whatever the description, his efforts to undermine democracy and somehow overturn the lawfully conducted election have continued and become more desperate. As the Washington Post puts it: “Trump has turned to a ragtag group of conspiracy theorists, media-hungry lawyers and other political misfits,” including unfortunately several members of the House, to somehow make the impossible happen.

 

There’s no reason to fear that Trump will actually succeed. He can issue all the bogus executive orders he wants to confiscate voting machines in states he didn’t win, but honest election administrators and elected officials in those states (Democrats and Republicans) won’t follow those illegal orders. Nor will the courts take Trump’s side. The even more outlandish talk about declaring martial law and somehow holding new “elections”? Again, presidents simply don’t have the authority to do it. And any attempt to ignore the law and do it anyway won’t work when Republican officials aren’t close to being unified behind it. Even previously loyal Attorney General Bill Barr shot down some of Trump’s other (also unlawful) demands on Monday.

 

As far as attempts to throw out the regularly chosen electors when Congress meets in a joint session on Jan. 6 to record their votes? The House, with its Democratic majority, certainly won’t do that. And Senate Majority Whip John Thune made it clear that even if Republicans retain their majority they have no interest in such a scheme: “I think the thing they got to remember is, it’s not going anywhere. I mean in the Senate, it would go down like a shot dog.” And a congressional challenge to the electors, while utterly without merit and undemocratic, is still less nutty than some of the other things Trump’s team is considering.

 

That Trump will not succeed, however, doesn’t make his talk and actions harmless. Each time he breaks another guardrail, he makes it that much easier for the next would-be autocrat to do the same. Each time he acts as if it’s perfectly normal that election results should turn on raw political power, rather than on what the voters say, he makes it more likely that future elected officials will attempt to do just that. Each time he lies about fictional voter fraud — and he still hasn’t come close to producing evidence for even small irregularities in the election — he not only convinces his strongest supporters that the election was stolen, but he degrades everyone’s faith in all election returns.

 

The question is what can be done about this. The answer, alas, is not much. I’ve previously argued that President-elect Joe Biden is correct to downplay Trump’s nonsense, and I still think that’s true. Nor is there much for House Democrats to do. Sure, they could return to Washington and hold hearings, but what is there really to say? They could impeach Trump a second time, a fate he richly deserves. But unless Republicans in the Senate were on board, there wouldn’t be much of a point to that either.

 

Those Senate Republicans are the ones who could put a stop to it all. They could threaten to remove Trump if he persists. (Yes, there’s not enough time for the House to do a regular impeachment process and for the Senate to hold a full trial, but neither are required by the constitution — if the votes were there, both chambers could get it done in a week.) Such a threat might be enough to ensure they wouldn’t actually have to go through with it. Or they could follow up on what Thune said Monday and make a more public condemnation of the president. Even if that didn’t stop him, it might reduce the damage.

 

But it’s also not likely to happen, since attacking Trump would risk their own popularity and future re-elections. (Trump is already attacking Senator Mitch McConnell for accepting the election results weeks after they were clear.) It also would put their majority at immediate risk, given that Trump could react by urging his supporters to stay home in the upcoming Georgia runoff elections. But we should be clear: Outside of the people actively plotting with the president, it’s Republican senators who bear the most responsibility for constantly enabling him when they could’ve reined him in. It’s a sorry record.


U.S. Relief Package Is Necessary But Insufficient - Bloomberg

U.S. Relief Package Is Necessary But Insufficient - Bloomberg


....inequality trifecta (income, wealth and opportunity)


...the risks associated with a weakening of economic indicators that has led the Fed to follow the European Central Bank deeper into what I have called a policy paradigm of “conscious active inertia”Doing more of the same even though it is unlikely to have a material impact on the economy.

A New Science of Life

A New Science of Life

Monday, December 21, 2020

Czech Startup Founders Turn Billionaires Without VC Help - Bloomberg

Czech Startup Founders Turn Billionaires Without VC Help - Bloomberg

Czech Startup Founders Turn Billionaires Without VC Help

By Ilya Khrennikov

December 17, 2020, 11:00 PM EST

 

 Google picked JetBrains for key coding language for Android

 Founders shunned VCs, bootstrapped to billion-dollar fortunes

 

While investment funds in Silicon Valley have turned the owners of many unprofitable startups into billionaires overnight, the founders of JetBrains s.r.o. have managed the feat without the help of venture capital.

 

The Prague-based startup, whose programming language last year became Google’s preferred development tool for Android, is worth about $7 billion, according to the Bloomberg Billionaires Index. That valuation would make Sergey Dmitriev and Valentin Kipiatkov, two of the three Russian founders who incorporated JetBrains in 2000, billionaires.

 

The firm, which boasts it is among the biggest employers of programmers in St. Petersburg, isn’t interested in raising capital amid high demand for technology companies, according to Chief Executive Officer Maxim Shafirov.

 

“Venture capitalists write every other day, and I feel like a very impolite, unkind person, because I’ve stopped answering,” Shafirov said an interview. “We’ve got enough resources to realize our ambitions.”

 

The lack of investors means JetBrains is under no pressure to sell shares amid the current listing boom, with December set to be the busiest year-end on record for initial public offerings in the U.S. Venture capital investments in the country hit the highest in almost two years in the third quarter, reaching $36.5 billion, according to a CB Insights report.

 

Unlike many companies selling stakes this year, JetBrains already turns a profit. It is on track this year to boost earnings before interest, taxes, depreciation, and amortization by more than 10% to over $200 million, according to Shafirov.

 

Its recent success stems from its open-source Kotlin programming language for Alphabet Inc.’s Android. In 2019, Google announced Android development is “Kotlin-first,” making it the preferred language for the world’s most popular mobile operating system. Google says over 60% of professional Android developers use Kotlin, including Google itself, which tapped it to design its Maps, Home and Play apps.

 

“It’s a profitable private company that, as far as I know, never attracted external financing,” Konstantin Vinogradov, a principal at Runa Capital venture fund who helps manage $420 million in assets, said. “Big VCs would jump at the chance to buy a stake in JetBrains.”

 

Dmitriev and Kipiatkov maintain control over the company, according to Shafirov, who declined to disclose their stakes. The Bloomberg Billionaires Index valuation is based on JetBrains’ 2019 results and the value of publicly-traded peers.

 

JetBrains’s target audience is the IT sector, where its developer tools command a loyal following. 9.5 million programmers use JetBrains software and 20% of them are paying customers, Shafirov said.

 

 

430 of the Fortune 500 are clients, including Citigroup Inc., Google and Volkswagen AG, according to JetBrains. Its main programing hub is in St. Petersburg, where it employs almost half of its 1,500 staff.

 

The company is now seeking to expand into the wider market of workplace collaboration tools and last week introduced a product that will compete with Atlassian Corp. and Slack Technologies Inc., which this month reached a deal to be acquired by Salesforce.com Inc. for $27.7 billion.

 

JetBrains decided to introduce the program, called Space, after finding that existing options didn’t meet the demands of its growing workforce, according to Shafirov.

 

“We don’t have revenue growth targets,” Shafirov said. “Basically, we wrote all this so that making software would be a pleasant and creative process. And now our mission is to expand to other niches.”

 

— With assistance by Alexander Sazonov

 


How voters rank Trump a historically bad president - CNNPolitics

How voters rank Trump a historically bad president - CNNPolitics

Your Covid-19 questions, answered - Can My Son Be Reinfected?

Your Covid-19 questions, answered - btbirkett@gmail.com - Gmail

Covid Q&A: Can My Son Be Reinfected?

Welcome to the inaugural edition of the weekly Covid Q&A from Bloomberg Prognosis! We asked you to write to us with your Covid-19 questions and concerns, and more than 50 of you wrote in over the past week.

In hopes of helping to make this very confusing time just a little less so, each week we will pick one question and to put it to an expert in the field. Our first question comes to us from Kathleen in Chicago, whose son is home from college for the holidays. Just two hours after arriving for Thanksgiving, he received a call letting him know that a coronavirus test he’d taken upon leaving campus had come back positive. He quarantined in his room for two weeks and then tested negative, as did everyone else in the household. Kathleen asked:

Can my son infect other family members who don't have immunity if he visits friends and then returns to our house?

“He can become reinfected, and can infect family members, but the key is the timing,” says Abraar Karan, an internal medicine doctor at the Brigham and Women's Hospital and Harvard Medical School.

The Centers for Disease Control and Prevention says that people appear to become susceptible to reinfection about 90 days after infection. But Karan says that even within that period, if Kathleen's son were to develop Covid-19 symptoms, he would need to be retested. In documented instances of reinfection, some cases have been severe enough to cause symptoms.

But many cases of reinfection, Karan says, appear to be milder, making them hard to detect. Just because Kathleen's son might not show symptoms of reinfection, however, doesn’t mean he’s not spreading the virus to other people.

“Ultimately, there is so much we still don't know about immunity after infection that I would be very careful assuming that this is a license to no longer take any precautions,” Karan says.

Saturday, December 19, 2020

How Slutty Vegan is growing during the pandemic - CNN

How Slutty Vegan is growing during the pandemic - CNN

Covid Pandemic: Microbiomes Could Be Key to Stopping Spread of Future Viruses - Bloomberg

Covid Pandemic: Microbiomes Could Be Key to Stopping Spread of Future Viruses - Bloomberg

To Make a Building Healthier, Stop Sanitizing Everything

Improve the ventilation, even spread some good germs. If you want people to be healthy and productive, tend the microbiome.

 

Four years ago a doctoral student in architecture asked Luke Leung to help him come up with a thesis topic. Leung, an engineer whose projects include the world’s tallest building, the Burj Khalifa in Dubai, proposed the question: What is heaven?

 

“The student did a lot of research and found that no matter the faith—Islam, Judaism, Christianity—heaven is always a place with a garden and running water,” recalls Leung, director of the sustainable engineering studio of Skidmore Owings & Merrill, the architectural behemoth better known as SOM. “So then we started questioning, ‘If that is heaven, what exactly is the place we are living in?’ ”

 

In the Western world, humans spend 90% of their time indoors. The average American spends even more than that—93%—inside buildings or cars. For years scientists have sounded the alarm that our disconnect from the outdoors is linked to a host of chronic health problems, including allergies, asthma, depression, irritable bowel syndrome, and obesity. More recently, experts in various fields have begun studying why buildings, even those designed to be as germ-free as possible, are vectors for disease, not the least Covid-19.

 

“There was a study of more than 7,300 cases in China, and guess how many people caught the disease outdoors?” Leung asks. “Just two.” Early testing following Black Lives Matter protests in Minnesota also suggested that transmission of SARS-CoV-2 outside is rare, even when thousands of people gather, talking, yelling, and chanting—at least when most of those people wear masks. Out of more than 13,000 protesters tested, only 1.8% were positive. Other states showed similar results.

 

Leung says a “misalignment with nature” in building design is partly to blame for our scourge of chronic diseases and the current pandemic. The relative lack of air flow and sunlight is an obvious issue; temperature, humidity, and indoor air pollution also play a role. But there’s another, less discussed factor: the microbiome of the built environment, which encompasses trillions of microbes including bacteria, fungi, and viruses.

 

Until about 15 years ago, very few scientists—and even fewer architects, designers, and engineers—paid attention to indoor microbes, with the exception of problematic outcroppings such as black mold and legionella, the bacteria that causes Legionnaires’ disease. That changed after the 2001 anthrax attacks, when letters laced with deadly bacteria were mailed to politicians and the offices of news outlets, killing 5 people and infecting 17 more. Experts at the nonprofit Alfred P. Sloan Foundation began contemplating what role buildings might play in mitigating bioterrorism threats. Realizing we knew almost nothing about which microbes exist indoors, the foundation poured tens of millions of dollars into research. Soon scientists uncovered rich ecologies of fast-evolving indoor microbe populations. Crucially, most had little overlap with outdoor populations, including salutary species that humans co-evolved with over millions of years.

 

Now, with a global pandemic raging, these researchers are suddenly in demand. “Our calendar is fairly full,” says Kevin van den Wymelenberg, director of the Biology and the Built Environment Center at the University of Oregon. He used to receive two or three inquiries per week, asking for advice on how to improve the health of a building. Now he gets 20 a day. “It’s everyone from hospitals, to large commercial real estate portfolios, to nursing homes and school districts, to personal friends who run a barber shop and are trying to decide whether or not they should blow out the hair of their patrons.”

 

Of course, the most urgent microbe-related question is where to find SARS-CoV-2 and how to kill it. Beyond that, there are also long-term questions. How can we promote indoor microbe populations that don’t make us chronically ill or harbor deadly pathogens? Can we actually cultivate beneficial microbes in our buildings the way a farmer cultivates a field? Experts including Van den Wymelenberg are confident all this is possible. “I really believe our building operators of the future and our designers will be thinking about how to shape the microbiome,” he says.

 

The term “microbiome” is most often used to refer to the population of microbes that inhabit our body, many of which help produce vitamins, hormones, and other chemicals vital to our immune system, metabolism, mood, and much more. In the typical person, microbial cells are as numerous as those containing human DNA and cumulatively weigh about 2 pounds. In recent decades our personal microbiomes have been altered by factors such as poor dietary habits, a rise in cesarean-section births, overprescription of antibiotics, overuse of disinfectants and other germ fighters, and dwindling contact with beneficial microbes on animals and in nature. According a 2015 study, Americans’ microbiomes are about half as diverse as those of the Yanomami, a remote Amazonian tribe.

 

Like our bodies, the buildings we inhabit are also teeming with microbes. “Inhale deeply,” writes Rob Dunn, a professor of applied ecology at North Carolina State University, in his 2018 book Never Home Alone. “With each breath you bring oxygen deep into the alveoli of your lungs, along with hundreds or thousands of species. Sit down. Each place you sit you are surrounded by a floating, leaping, crawling circus of thousands of species.” Dunn says more species of bacteria have been found in homes than there are species of birds and mammals on Earth. In 2015, researchers found that indoor air contains nearly equal concentrations of bacteria and viruses. (Almost all viruses are harmless, and some may be beneficial.) Over time these many microbes have adapted to survive, and even thrive, everywhere from our pillowcases and toothbrushes to the more extreme climates of our dishwashers, showerheads, ovens, and freezers.

 

Many are derived from humans, or likely feed off human debris. Like Pigpen from the comic strip Peanuts, each of us has a plume of microbes spewing off our body at a rate of about 37 million bacteria and 8 billion fungal particles per hour; the difference is that our plumes are invisible to the naked eye. Indoors, the impact is measurable. One study notes that it takes less than 24 hours for a hotel guest to colonize a room with their personal microbes, erasing all traces of previous guests and making the space microbially identical to their home.

 

Considering our perpetual emanations, it’s easy to envision how the coronavirus might spread within a room. A single sneeze discharges roughly 30,000 microbe-filled droplets traveling at up to 200 mph. A cough releases about 3,000 droplets, which reach speeds of 50 mph. A simple exhale produces 50 to 5,000 droplets. We know that a person infected with influenza releases as many as 33 viral particles per minute just breathing and about 200 million per sneeze. Meanwhile, exposure to just a few hundred SARS-CoV-2 particles may be enough to cause infection.

 

Outdoors our invisible plumes almost always disperse quickly, which is a very good thing in the case of Covid carriers. “Any virus that is released into the air is rapidly diluted, moved by wind currents, and spread out across a seemingly infinite space,” says Linsey Marr, an expert in infectious disease transmission and professor of civil and environmental engineering at Virginia Tech. “It’s almost like putting a drop of dye into the ocean vs. putting it into a glass of water.” Sunlight also inactivates viruses in as little as five minutes—eight minutes in the case of SARS-CoV-2. A study from the Department of Homeland Security found that the coronavirus can hang around indoors in the dark for hours.

 

Facing an invisible and potentially deadly virus, the understandable impulse has been to whip out some Clorox and go to battle. But indiscriminate bleach-bombing could backfire. For one thing, misdirected efforts may be a colossal waste of time and money. New York City, for example, announced in the spring that for the first time, it was closing the subway system during early-morning hours to deep-clean every train. “It’s all theater!” says Jack Gilbert, a professor and microbiome researcher at the University of California at San Diego. “You bleach the subway, the bleach dries up and becomes inactive. If just one person who has Covid-19 interacts with that surface, the four hours of cleaning have no effect.” And because we now know SARS-CoV-2 is most often transmitted through the air, cleaning efforts seem even more futile.

 

A more serious risk is that attempts to sterilize our surroundings can kill off bacteria critical for human health—or, even worse, inadvertently promote the survival and evolution of more dangerous bugs, including antibiotic-resistant superbugs. “We should be worried,” says Rob Knight, founding director of the Center for Microbiome Innovation and a professor of pediatrics at UCSD. “If we’re overzealously stripping off all the bacteria that would naturally be there, then we may be creating homes for bacteria and maybe even viruses that are harder to remove.”

 

No amount of chemicals will get rid of everything, and what’s left behind is often undesirable. Microbiologists have swabbed the International Space Station to find out what happens inside an enclosed, supposedly sterile chamber in which every bit of food and equipment has been disinfected within a specially designed NASA facility. As it turned out, microbes were everywhere, almost all of them human derived. Among the most common were bacteria associated with feces, stinky feet, and armpits, which is perhaps why the ISS has been described as smelling like a mix of plastics, garbage, and body odor.

 

Here on Earth, proper hygiene is effective in minimizing exposure to pathogens such as those that cause food poisoning and strep throat, but we tend to go nuclear, using harsh chemicals when soap and water could do the job. For years antimicrobials have been added to everything—wall paint, kitchen sponges, underwear, lip gloss. Now we’ve become more extreme.

 

“It’s just speculation, but we could see a blip where this generation of kids has more immune-related conditions”

 

In hopes of zapping SARS-CoV-2 straight out of the air, some building managers are installing so-called bipolar ionization units, even though they may not work against Covid and sometimes generate harmful gases such as the lung irritant ozone. As for the antimicrobial cleaning agents and surface coatings being liberally applied throughout offices and other public spaces, we may be introducing large quantities of poorly understood, potentially poisonous chemicals into our everyday life—as well as speeding the evolution of disastrous superbugs.

 

“The more we use the same antimicrobials in different contexts, the more opportunity these microbes have to develop resistance,” says Erica Hartmann, an engineering professor at Northwestern University who focuses on indoor microbiology and chemistry. “If they’re developing resistance to the antimicrobial itself, that’s not great, because then we’ve lost an important product in our cleaning arsenal. But if they also develop resistance to clinically relevant antibiotics, of which we have precious few, that’s an even bigger concern—and there’s evidence that both of those things happen.”

 

Wiping out good bacteria along with the bad has also been linked to chronic health problems. One often-cited series of studies, begun in 1998, examined the relationship between cleanliness and disease in the Finnish-Russian border region of Karelia, where people share similar genetics. On the wealthier, cleaner Finnish side, people were as many as 13 times more likely to suffer from inflammatory disorders as on the Russian side, where the majority live in rural homes, keep animals, and cultivate their own gardens.

 

Our pandemic-era anti-germ crusade may not have a big impact on the already formed microbiomes of adults. But infants and young children, who need exposure to a wide variety of microbes to train their developing immune systems, could be more adversely affected. “It’s just speculation, but we could see a blip where this generation of kids has more immune-related conditions,” Knight says, “especially in places where people have had to stay quarantined indoors, where kids didn’t get to go outside as much.”

 

Leung of SOM began thinking about the microbiology of buildings years before the pandemic. It’s not something he tends to mention to prospective clients. “If you tell a client, ‘Let’s talk about microbes,’ they’ll say, ‘Get out of here—next!’ ” he says. “We have to address it carefully.”

 

Beyond using organic materials and maximizing access to natural light and outdoor spaces, Leung says lots can be done to make buildings healthier at the microbial level. For safer air he extols the use of filters designed to eliminate SARS-CoV-2 and other pathogens and contaminants, but he cautions against bipolar ionization technology and says air shouldn’t be sterilized over long durations. Whenever possible, Leung suggests deploying ventilation systems that pump offices full of microbially diverse outdoor air. Among his current projects is the 31-story WeBank tower in Shenzhen, which upon completion in 2022 will draw air through trees planted on balconies before it’s funneled inside. “Sometimes we also open up buildings at night,” Leung says, noting that the outdoor air is first measured for pollutants. “During the day people want air conditioning, but when they’re gone you can recharge the building with microbes from outside.”

 

Proper ventilation is particularly important in energy-efficient buildings, which, like spaceships, are designed to be sealed off from the outside world. In addition to delivering fresh oxygen and eliminating the brain-numbing buildup of carbon dioxide, good airflow and filtration reduce exposure to a long list of mostly unregulated and unmonitored chemicals found indoors. These include known carcinogens and endocrine disrupters, which reside in carpets, computers, free-floating dust, office chairs, paint, and more. Outdoor pollution also seeps inside buildings and gets trapped, especially during hours when ventilation systems are turned off. All this means indoor air is often far worse than outdoor air, with levels of some contaminants rising to 10 times higher or more.

 

For businesses, better air quality alone translates to an estimated $6,500 to $7,500 of added annual productivity per employee, mainly a result of improved wakefulness and acuity, say Joseph Allen and John Macomber, Harvard professors who in April published the book Healthy Buildings. By contrast, they note, a study of more than 3,000 workers in 40 buildings found that 57% of all sick leave was attributable to bad air. Disturbingly, Allen and Macomber also write that up to 90% of American schools don’t meet the minimum ventilation requirements—and that those standards are already far below optimal.

 

In London, Los Angeles, Mumbai, and other polluted cities, outdoor air needs to be heavily filtered before being pumped indoors, and most beneficial outdoor microbes likely don’t survive. But in cleaner and greener areas, simply opening windows has proved effective. “After taking antibiotics, you’re supposed to eat yogurt to replenish with probiotics,” says Mark Fretz, a colleague of Van den Wymelenberg at the University of Oregon, where he’s a research assistant professor at the Institute for Health in the Built Environment. “For your buildings, the yogurt is essentially opening your window.”

 

In 2012 researchers compared the microbiomes of a hospital room in Portland, Ore., with operable windows with one in which windows were permanently sealed. “It was very difficult to find a hospital that even had an operable window,” Fretz says. Opening the window, it turned out, resulted in far more microbial diversity throughout the room, including species found on plants and leaves. Notably, there was also a significantly lower chance of encountering pathogens. (Side note: Potted plants also seed indoor spaces with valuable natural microbes—and they measurably improve human happiness, physical and mental health, and even original thinking—but they barely improve air quality.)

 

Another means of achieving healthier air is humidification, currently an extreme rarity in North America, as any office worker who’s struggled through a dry and overheated winter season knows. “Most of our commercial buildings in the U.S. are not humidified,” Leung says. “And that’s why the pandemic could get even worse this winter.” Not only does sufficient moisture in the air allow the human immune system to function at its best, it also causes viral particles to drop to the floor and die more quickly. According to some calculations, viruses in dry air can survive six times as long as those in buildings with a relative humidity of about 40%.

 

Of course, building interventions alone can’t eliminate the risk of SARS-CoV-2 contagion, so it’s best to keep social distancing and wearing masks. In the meantime, scientists at universities and startups are racing to develop microbial sensors for air filters, building surfaces, wastewater, and even indoor air. “We have tools to help us see the unseen,” Van den Wymelenberg says. For now those detection tools are in their infancy, relying on the arduous process of repeatedly collecting samples and transporting them to labs for testing.

 

“There’s no reason this stuff can’t work. We’re already heavily manipulating the microbiome in our buildings, just not deliberately”

 

Gilbert has ambitious plans for microbial interventions in buildings. Trained as a microbial ecologist, and with experience working on soils, plants, and marine systems, he was initially skeptical when he learned the Sloan Foundation was promoting something called the Microbiology of the Built Environment. “I thought it was a joke,” Gilbert says. “I’ll admit it, I thought there can’t be much microbiology in the built environment, so why would anyone be interested?”

 

Then, in the winter of 2012, he got a visit from Paula Olsiewski, a program director for the Sloan Foundation. At that point he was a professor at the University of Chicago, and when the meeting was over, a blizzard had descended on the city. “I offered to drive her back to her hotel because I had a car that could handle the snow,” Gilbert recalls. “But it was snowing so heavily that the drive took two and a half hours, and in that time she convinced me.”

 

Now at the forefront of microbiome research, human and environmental, Gilbert was even permitted to sample President Obama’s microbiome in 2016. (He’s not allowed to disclose the results.) When the pandemic hit, Gilbert quickly redirected much of his research funding toward studying SARS-CoV-2. He has one project together with Knight’s lab to see how the virus travels through hospitals, where it most often takes up residence, and whether it piggybacks on nefarious bacteria, as the influenza virus often does.

 

He also has a second, more counterintuitive study under way: In an undisclosed California hospital, Gilbert is investigating whether adding harmless bacillus bacteria into medical facilities reduces the prevalence of pathogens, including multidrug-resistant bacteria and viruses. “If you don’t have anything on a freshly disinfected surface, and you cough your virus-laden bacteria onto the table, it will survive there,” Gilbert says. “But if there’s a high enough abundance of bacillus, then the bacillus will outcompete and exclude other pathogens that land on the surface.” Similar studies have been done in the past, with encouraging findings, but Gilbert’s is more rigorous.

 

The idea of putting bacteria to work cleaning isn’t as far-fetched as it might sound. In the 1940s a Danish company called Novozymes started selling environmental microbes for decontaminating wastewater. In the 1980s and ’90s it also contracted with the U.S. government on a large-scale bioremediation project to help clean up the Exxon Valdez oil tanker spill. About the same time, Novozymes sent researchers looking for bugs that might help clean home septic tanks, restaurant grease traps, pet stains, and much more. Among their best finds were grease- and odor-cutting bacteria discovered in the outdoor grill sites of Virginia parks and the kitchen of a Florida restaurant.

 

Today, Novozymes is worth about $16 billion, and its microbes are key ingredients in dozens of home-care brands. These include the likes of Aunt Fannie’s Microcosmic Probiotic-Powered Multi-Surface Cleanser and Counter Culture Probiotic Cleaning Tonic. “We clean the way nature has been cleaning for 4 billion years … with probiotics,” reads Counter Culture’s website. The idea is to deploy an army of microbes that eat away at dirt, debris, and organic matter, also degrading the stuff left in cracks and crevices. Last year even Reckitt Benckiser LLC introduced a probiotic cleaner called Veo, which the company says will “help contribute to the balancing of the home microbiome.”

 

Going a step further, scientists are studying whether salubrious environmental microbes can be introduced into urban homes to reduce the prevalence of inflammatory diseases. In Finland, one group seeded the doormats of city dwellers with about 30 grams (1 ounce) of forest soil so residents could drag outdoor microbes inside. The six-month experiment showed the rugs did shift the indoor air to include more outdoor microbes. Next the researchers want to run a large-scale study to see whether forest-soil-impacted rugs can improve the immune systems of infants and young children. (Another Finnish group is bypassing the rugs and simply smearing infants with a soil preparation to find out if there are health benefits.)

 

So far no one knows exactly which outdoor microbes are beneficial or how much exposure is best. Still, a number of startups are marketing bacteria sprays for homes and businesses. Belgium-based TakeAir advertises an “air enricher” that disperses soil- and ocean-derived microbes through existing ventilation systems to create “a 100% natural and protective biosphere for your building users.” Clients include a Belgian chain of gyms and a housing project in Antwerp. Another front-runner, Betterair in Israel, sells “the world’s first organic air and surface probiotic,” a freestanding microbe mister that retails for $400. (Refill cartridges are $99.)

 

It’s only a matter of time before these technologies become better understood and more widespread. “There’s absolutely fascinating research to be done,” Gilbert says. “I want to maybe engineer bacillus so it has properties that can stimulate the immune systems of people in a room.” Van den Wymelenberg is also hopeful: “There’s no reason this stuff can’t work,” he says. “We’re already heavily manipulating the microbes in our buildings, just not deliberately.”

 

On a Tuesday afternoon in June, Leung takes my call while teaching his 18-year-old son to drive. Asked about the probiotic air enhancers, he laughs. “It actually says a lot about human beings,” he says. “We’ve created buildings so sterile that now we have to buy nature and spray it back in. That’s how silly we are.”

 

Perhaps the pandemic will serve as a wake-up call. “This is our chance to right our wrongs of the past 200 years,” he says, speaking of restoring our relationship with soils, plants, and animals. It won’t be easy. Over the next 40 years, the total amount of indoor square footage will roughly double worldwide, reports science journalist Emily Anthes in her book The Great Indoors. Given the horrors of Covid, many businesses and building managers will also work their hardest to sanitize indoor environments like never before, perhaps causing unintended consequences.

 

In the meantime, the climate crisis is compounding potential health risks as flooding, wildfires, and man-made disasters destroy the natural world, exposing us to dangerous new diseases while annihilating the microbes we likely need to prevent widespread chronic illness (not to mention those we may need as medicines). Already, Leung says, urban air is often depleted of healthful natural bacteria. “In the wintertime, when the leaves are gone from trees, do you know what the main thing is you find in urban air?” he asks. “Microbes from animal feces.”

 

Still, the pandemic may be changing our perspective on indoor life—and even physically altering our microbiomes. Although some people are cleaning too much, eating more junk food, and drinking more alcohol, prescriptions for antibiotics are markedly down from last year, according to the Centers for Disease Control and Prevention. One explanation is a decrease in non-Covid illnesses as a result of social distancing.

 

And though people aren’t mingling as much or sharing microbes—which can be beneficial when pathogens aren’t involved—those lucky enough to live where they aren’t required to hole up indoors are spending more time in nature. “I mean, I see neighbors outside I didn’t even know existed, and they’re working in dirt that they’re pretending is a garden,” one microbiome expert says. As businesses allow employees to work from home, many are also abandoning urban life for greener settings.

 

But winter is upon us, and the pandemic is surging once again as more people move indoors. If we don’t adjust our lifestyle and start making our buildings healthier from a microbial standpoint now, Leung says, we’ll get hit even harder. “If you think this pandemic is bad, wait another 50 years when we have a much older population and much higher health-care costs.”

 

In the not-so-distant future, he warns, three interrelated factors will increasingly affect our well-being: climate change, chronic health problems, and more pandemics. “We’re going to have to design for that,” Leung says. “And it’s going to be important to bring humans and nature together again—like in heaven.”