A funny thing happened in late April: Sweden — 70% marginal tax rate, safety net replete Sweden — briefly became the darling of the American right wing.
The cause of the fandom was the country’s approach to mitigating the coronavirus pandemic’s effects on its population: Unlike most nations, including its Scandinavian counterparts, Sweden did not shut down its economy or schools. Instead, the country’s leaders asked its people to take responsibility for social distancing themselves and banned only gatherings larger than 50 people, allowing schools and businesses, including bars and restaurants, to stay open. (Officials advised people to work from home when possible and avoid nonessential travel, and on March 31, the country issued a ban on visits to elder care homes.)
Sweden’s Covid-19 daily death rate has consistently been among Western Europe’s highest. And while daily numbers of confirmed Covid-19 cases are trending downward in many parts of Europe, in Sweden, they have plateaued, and are trending upward.
Be careful of assumptions
Sweden’s approach relied on several assumptions, some more overt than others. One was that the country’s entire population would and could, without punishment or incentive, maintain the social distancing needed to protect themselves and each other from disease transmission. Another assumption was that infection with the coronavirus eventually leads to protection — both from repeat infection and onward transmission to others — and that its high transmissibility meant many people would quickly become infected and thus protected. And a third was that the country’s relatively low population density would be protective for everyone.
Despite the country’s ban on care home visits, Covid-19, the disease caused by the SARS-CoV-2 coronavirus, ravaged the largely older populations living in these homes: Nearly half of the country’s deaths from the virus occurred in care home residents. This pattern suggests that even in a country with low population density, “once the virus gets into congregate living facilities, it’s extremely hard to control,” says Eric Schneider, senior vice president for policy and research at the Commonwealth Fund, an independent health care research organization. Sweden’s liberal approach invited this problem “because you’re allowing a certain level of cases in the community — and eventually, through workers, usually, or visitors, or other mechanisms, the virus will make it into those residential facilities,” he says.
Widespread infections means more death
Additionally, the assumption that Sweden’s population would achieve broad protection as a consequence of infection, often called herd immunity by public health specialists, did not play out. Sweden’s leaders did not specifically identify herd immunity as a goal — and they have denied that it’s part of the country’s strategy — but in early May, the epidemiologist who formulated the country’s no-lockdown strategy estimated that 40% of Stockholm’s population would be immune to the virus by the end of the month. Recently published antibody survey results, however, suggest that only 7% of the city’s residents had been exposed to the virus by late April, and the question of how much protection antibodies confer is still a very murky one. In Sweden — as in the rest of the world — population-level protection as a consequence of infection is still a mirage.
Some Swedes did voluntarily stay home when advised by their government to do so, but not nearly as many as in the rest of Scandinavia. According to Google mobility reports, retail and transit activity are down 16% to 17% in Sweden, while similar activity took deeper and more sustained dives in Norway, Finland, and Denmark.
To Schneider, the Swedish model is an intriguing experiment in relying on the voluntary efforts of citizens to change their behaviors without severe mandates — and it is not going well. Things might have turned out differently if the country had taken special steps to protect older residents in facilities, he says, but it’s hard to know. Swedish’s top epidemiologist, Anders Tegnell, said in an interview with Swedish Radio that the country made some mistakes. “If we were to encounter the same illness with the same knowledge that we have today, I think our response would land somewhere in between what Sweden did and what the rest of the world has done,” he said.
In any case, the most instructive phase of Sweden’s approach may lie ahead: “It will be interesting to find out whether they can respond now, or whether they’re going to keep going with a strategy that seems like it’s not working,” says Schneider.
Apple iPhone delay looms
Global smartphone unit sales slumped by 20 per cent in the first quarter, according to a Gartner report this week, but Apple fared much better than Samsung and Huawei, with just an 8 per cent fall. The iPhone maker may not get off so lightly come the end of the year though.
Lockdowns, economic uncertainty and supply chain problems all contributed to the industry’s problems in the first three months, but “Apple’s ability to serve clients via its online stores and its production returning to near normal levels at the end of March helped,” said Gartner.
However, supply chain problems are continuing, according to one of its chip providers. Broadcom reported earnings on Thursday and chief executive Hock Tan talked about a “major product cycle delay in wireless”. Normal expectations of a big revenue uplift from wireless component sales in its current quarter to the end of July were now being shifted to the October quarter for “the ramp of next-generation phone at our large North American mobile phone customer”.
As Bloomberg translates, Hock Tan was referring to Apple, which normally unveils its next-generation iPhone in September, but Covid-19 disruption could push availability to customers back to October. Eric Ross, analyst at Cascend Securities, warned it was possible that general availability may not be till mid-October, and a delay to November would mean Apple needing to be very careful to have adequate supplies to meet holiday season demand.
The news is not good then for Apple’s December quarter and puts into context recent reports that Apple is looking to widen and diversify further its supply chain, moving some production to Vietnam and looking at alternatives to its Foxconn assembly partner.
Wirecard offices searched as prosecutors probe management board
German financial watchdog filed criminal complaint against CEO Markus Braun and three other top executives
Wirecard’s headquarters were searched by police on Friday after Munich prosecutors launched a criminal investigation against chief executive Markus Braun and the payment group’s three other executive board members.
In a statement on Friday, Munich prosecutors said that the search followed a criminal complaint submitted a few days earlier by BaFin, Germany’s financial watchdog. The complaint relates to potentially misleading statements made by Wirecard to investors ahead of the publication of a special audit by KPMG in late April.
Shares in Wirecard tumbled after the KPMG audit said it was unable to verify the genuineness of sales and profits from third parties between 2016 and 2018 that are central to the whistleblower allegations. The group’s stock has fallen 27 per cent since the publication of the special audit into the allegations, which were reported by the Financial Times.
At the core of the investigation are two statements issued by Wirecard on March 12 and April 22 this year that might have been misleading to investors, the Munich prosecutors said. In each of the statements, Wirecard told investors that KPMG’s special audit had so far not found anything untoward.
In its April 22 statement, when Wirecard announced a second delay to the publication of the KPMG audit, it said that “to date no substantial findings have been made” that required a correction of the financial statements for the previous three years, and that “no evidence was found for the publicly raised allegations of balance sheet manipulation”.
Wirecard, which has long been seen as one of Germany’s most successful technology companies and in 2018 replaced Commerzbank as a member of the country’s prestigious Dax index, confirmed that its offices had been searched.
“The investigations are not targeting the company, but the members of its management board,” Wirecard said in a statement released after the German stock market closed on Friday. The group added that it was fully co-operating with the authorities.
The investigation by Munich prosecutors against Wirecard’s management board adds to its list of legal troubles. Germany’s audit watchdog, the Financial Reporting Enforcement Panel, is investigating the group’s accounting. Shareholders and short sellers have in recent weeks also filed civil lawsuits and criminal complaints.
BaFin is also examining whether a recent €2.5m purchase of Wirecard shares by Mr Braun violated prohibitions against trading within 30 days prior to publication of full-year results.
Wirecard missed the April 30 deadline for the publication of its 2019 annual report, and has delayed the release of figures audited by EY to June 18, blaming coronavirus.
BaFin on Friday declined to comment on the criminal complaint filed against Wirecard executives.
The Bonn-based watchdog said a second internal investigation into potential market manipulation by Wirecard is still ongoing. The watchdog for more than a year has been evaluating if the company’s communication in 2019 in response to whistleblower allegations over accounting fraud were potentially misleading.