The Wall Street Journal - USA (2020-11-16)

A2| Monday, November 16, 2020 **** THE WALL STREET JOURNAL.

U.S. NEWS

Thanksgivings past.

For other New York families,

the math is even more daunt-

ing. Take Joe Spallina, on Long

Island. He comes from a large

family, with several siblings

and their respective children,

that typically celebrates the

holiday together for a gather-

ing of 30-plus people.

Mr. Spallina says it is a tall,

if not impossible, order to whit-

tle that figure down to the req-

uisite number of 10 attendees.

“I can tell you our family group

chat has been on fire the last

24 hours,” he said. He wonders

if any exceptions can be made.

“There’s never been a

Thanksgiving I haven’t spent

with my entire family,” said Mr.

Spallina, who has five children.

Mr. Cuomo, a Democrat, said

Wednesday at a press confer-

ence that it would be up to lo-

cal governments to handle en-

forcement of the gathering

limit, but he made it clear that

policing of some kind was

needed.

“The rules are only as good

as the enforcement. Period,” he

said.

A spokeswoman for Mr.

Cuomo said the only exception

was for households of greater

than 10 people where all mem-

bers are already living under

the same roof. A spokesman for

New York City said the city will

enforce the limit and will have

more details on that soon.

Some families are finding

workarounds to the state man-

date. Lenora Lott Paige, a resi-

dent of Greece, N.Y., a suburb of

Rochester, said she normally

hosts about a dozen people for

Thanksgiving. But this year, she

is keeping it well below the 10-

person limit and is looking to

organize a dish exchange with

those not in attendance—mean-

ing everyone can prepare a side

dish to drop off at everyone

else’s homes.

“That way we still have each

other’s cooking,” she said, add-

ing she might offer stuffing or

a dessert as her specialty.

Which isn’t to say all New

York families plan on following

the governor’s mandate. One of

the most prominent rebels is

Joe Borelli, a New York City

councilman who represents

parts of Staten Island. After Mr.

Cuomo’s announcement of the

limit, Mr. Borelli, a Republican,

took to Twitter to declare his

plans for a holiday gathering of

greater than 10: “Kids will see

their grandparents, cousins will

play in the yard, sis in law will

bring strawberry rhubarb pie,

& a turkey will be overcooked,”

he tweeted.

In an interview, the council-

man added that he feels people

should still be mindful of the

pandemic and wear a mask in-

doors. But he said the edict

from the governor goes too far:

“We’re to the point now where

we’re just restricting people’s

lives.”

Some residents of the New

York metropolitan area are

hoping to ease the decision-

making burden on their friends

and families by disinviting

themselves from the Thanks-

giving table.

Lauretta Farrell, a resident

of Westfield, N.J., is one such

example. She bowed out of a

family gathering in New York

when she realized she was

probably the 11th attendee on

the list. “I didn’t want to be the

person” who forced a tough de-

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comedian who made the re-
mark only somewhat in jest.
Cities and states around the
country have capped gatherings
at 10, prompting some difficult
soul-searching and angst
among holiday hosts. Suddenly,
getting into the family Thanks-
giving dinner is becoming a hot
ticket.
North Carolina announced
last week that its indoor gath-
ering limit was being reduced
from 25 people to 10. Massa-
chusetts also put a 10-person
cap on indoor gatherings into
effect earlier in November. Chi-
cago Mayor Lori Lightfoot re-
cently announced a 10-person
limit on meetings and social
events.
This Thanksgiving may turn
into the holiday of the re-
scinded invitation. As families
pay heed to edicts, they are try-
ing to determine who can still
come—and who must get the
boot. Some are abandoning
gatherings all together to avoid
any strife or hard feelings.
Franette Gil, Ms. Reese’s
mother, doesn’t deny that her
daughter’s family might get cut.
“It’s really stressing me out,”
Ms. Gil said of the prospect.
Ms. Reese suspects she is on
the possible chopping block be-
cause her children are in school
and her family is thus more po-
tentially exposed to the virus
compared with other Thanks-
giving invitees. Ms. Gil con-
firmed that is indeed her con-
cern. For now, Ms. Reese is
agreeing to her parents’ de-
mand that she and family mem-
bers take Covid-19 tests shortly
before the holiday, and she
hopes to still get a shot at de-
vouring her mother’s famed
stuffing. “We all pound it,” she
said in fond remembrance of

ContinuedfromPageOne

Hot Ticket:

The Family

Feast

2008 crisis, governments

leaned more on the former.

The key moment in the fo-

cus on austerity to tackle the

postcrisis debt surge came in

June 2010, when a summit of

leaders from the Group of 20

leading economies in Toronto

agreed to halve their budget

deficits by 2013 and stabilize

borrowing as a proportion of

economic output by 2016.

Most of the G-20 econo-

mies had only begun growing

in the third quarter of 2009,

and made the pledge less

than a year later. The equiva-

lent today would be an

agreement in June 2021 to

halve budget deficits by

2024.

That is very unlikely to

happen, and not just because

the G-20 now finds it hard to

agree on very much.

One reason is that Ms. Ja-

vorcik’s understanding of the

lessons from the last crisis is

widely shared. After spend-

ing was cut, growth slowed.

So did debt reduction. Cen-

tral banks stepped in to pro-

mote recovery, keeping

short-term interest rates

much lower than they might

have wished; their critics

said that distorted market

forces and curbed growth

rates.

Today, long-term interest

rates have fallen to historic

lows, with an increased sup-

ply of global savings in large

economies meeting subdued

investment spending.

Back in 2009 and 2010,

economists and policy mak-

ers feared rising debt would

THE OUTLOOK|By Paul Hannon

Austerity Is Likely a Long Way Off

Govern-
ment debts
are piling ever
higher as the
coronavirus
pandemic
heads toward its second year,
with many businesses and
households in parts of the
world still reliant on the pub-
lic purse to stay afloat.
But one lesson that many
governments in rich coun-
tries have learned from the
last financial crisis is that
they risk doing more harm
than good by trying to roll
back that surge in borrowing
before their economies have
healed, however long that
takes.

T

hat view makes it un-
likely governments will
soon resort to the kind
of spending cuts seen in the
years following the 2008 fi-
nancial crisis, and more likely
they will rely instead on eco-
nomic growth and low inter-
est rates to shrink their debts
over a longer stretch of time.
“If we are facing a once-
in-50-years shock, we should
be repaying these debts over
50 years,” said Beata Javor-
cik, chief economist at the
European Bank for Recon-
struction and Development,
summarizing the view. “We
have learned after the finan-
cial crisis that premature
austerity will backfire.”
Austerity is shorthand for
government efforts to reduce
debts through spending cuts
and tax increases. After the

spook investors, driving in-

terest rates higher. The Inter-

national Monetary Fund and

other institutions argued that

governments should commit

to cutting borrowing to pre-

vent a vicious cycle in which

higher interest costs would

lead to higher debts and even

higher interest costs.

That worry hasn’t gone

away, especially for govern-

ments with very high debt

levels or those borrowing in

a foreign currency.

But for rich countries such

as the U.S., Germany and oth-

ers, it seems that what are

known as bond vigilantes

pose a much reduced threat

today. The IMF now says that

in many such places, the

postpandemic rate of eco-

nomic growth is likely to be

higher than the interest rate

paid by governments on their

borrowing. If so, debt will fall

relative to economic output

without governments having

to change either their spend-

ing or tax plans.

G

overnments still might

want to lower their

debt levels. There re-

mains the risk that interest

rates will rise sharply over

the next decade. And the

governments might seek to

create a buffer ahead of the

next crisis.

But they feel less urgency

than in 2010, even in the eu-

rozone, where the postcrisis

push for austerity was more

aggressive than in the U.S.

Government debt has been

the eurozone’s worry since

the currency area was

founded. Voters in the

wealthier north feared that

countries in the poorer south

would borrow excessively

when interest rates fell fol-

lowing the introduction of a

shared currency, and the

northerners would be left

with the bill.

The eurozone therefore

has complex, though ineffec-

tive, rules designed to pre-

vent a rise in government

debt. To allow governments

to respond to the current cri-

sis, the eurozone has sus-

pended those rules for 2021,

and might do so for 2022.

But some European policy

makers want to go further

and change the rules to allow

more flexibility and better

reflect new thinking on how

much debt governments can

handle.

“The discussion about how

and when to normalize fiscal

policy is one that I believe

cannot be held in isolation

from the discussion about

how to improve our eco-

nomic governance frame-

work,” said Paolo Gentiloni,

European commissioner for

economy.

Whatever the political dif-

ficulties of recognizing the

new consensus, much has

changed since 2010. Policy

makers world-wide broadly

agree that austerity doesn’t

work and that low interest

rates make it unnecessary to

pursue that course of action

even if it did.

Governmentdebtisatrecordhighsrelativetoeconomicoutput,

andsettorisefurtherinsomecountries.

Gross debt as share of GDP

Government debt as share of

GDP for advanced economies

Source: International Monetary Fund

180

40

60

80

100

120

140

160

%

2015 ’

U.S.

France

Germany

Italy

U.K.

140

0

20

40

60

80

100

120

%

1900 ’50 2000’

FORECAST

ECONOMIC

CALENDAR

Monday:TheJapanese econ-

omyexpanded at an annualized

18.9% in the July-September pe-

riod, according to economists

surveyed by data provider Quick.

While improvements in private

consumption and exports likely

buoyed the economy in the third

quarter, economists expect any

further recovery to be slow.

China’s economic momen-

tumis expected to have stayed

strong in October with the

growth of domestic consumption

and fixed-asset investment

speeding up, while industrial pro-

duction decelerates, according to

a poll of economists by The Wall

Street Journal.

Tuesday:U.S.retail salesfor

October are expected to have in-

creased for the sixth straight

month, reflecting steady job cre-

ation, a shift in spending toward

tangible goods and early holiday

promotions. Retail sales surpassed

pre-pandemic levels in June.

U.S.industrial productionhas

struggled to return to pre-Covid

19 levels. Economists are estimat-

ing an uptick in activity for Octo-

ber, but not enough to return

combined factory, utility and min-

ing output to pre-pandemic levels.

Thursday:U.S.jobless claims

hit a fresh Covid 19-era low

early this month. Nevertheless,

claims figures for the week

ended Nov. 14 are expected to

remain historically elevated,

showing that the labor market

still has a long way to go.

The U.S.housing markethas

been an economic bright spot.

Some economists think gains

could moderate for October and

heading deeper into the fall as

the supply of for-sale homes

dwindles and asking prices rise.

cision, she said, adding she will

likely make herself a dinner of

turkey cutlets as her stay-at-

home alternative.

Nancy Kopilnick said it is

her skills in the kitchen that

have ensured her a spot at the

annual family Thanksgiving

gathering she will be attending

in Manhattan. Ms. Kopilnick, a

resident of Montclair, N.J., said

the attendee count for the holi-

day is currently at 11, but her

place is guaranteed because she

does most of the cooking. “I

didn’t get the boot because

there goes the turkey,” she said.

—Katie Honan and Jimmy

Vielkind contributed to this

article.

U.S. WATCH

CALIFORNIA

Deputies Shoot Man

Pointing Gun at Them

Los Angeles County deputies

fatally shot a Black man early

Sunday morning after he alleg-

edly pointed a revolver in their

direction, authorities said.

The man, whose name hasn’t

been released, was pronounced

dead at a hospital, the Los An-

geles Sheriff’s Department said.

The shooting occurred around

1:50 a.m. in an unincorporated

area of Los Angeles. Deputies at

the South Los Angeles Station

received a call reporting that a

man was standing in the middle

of the street holding a gun, the

department said. When they ar-

rived, they saw the man pointing

the gun at a vehicle and ordered

him to drop the weapon.

Authorities say the man

turned and pointed the weapon

in the deputies’ direction,

prompting at least one deputy

to fire.

—Associated Press

SOUTH CAROLINA

Five People Killed

In Head-on Crash

A car driving the wrong way

on a South Carolina interstate

highway caused a wreck that

killed five people early Sunday

morning, troopers said.

All five people in the two

cars were trapped in the wreck-

age on Interstate 385 in Laurens

County and had to be cut from

the crumpled metal. Four of

them died at the scene and the

fifth person died at the hospital,

South Carolina Trooper Joe Ho-

vis said.

The wreck happened when a

2014 Kia going the wrong way

in the southbound lanes of I-

near Laurens hit a 2020 Hyundai

head on around 2:15 a.m. Sun-

day, Mr. Hovis said. Three people

in the Hyundai and two people

in the Kia died.

—Associated Press

A Walton Thanksgiving Reunion, left, in 1993; right, Talia Reese, top row, second from right, with her family at Thanksgiving in 2019.

EVERETT COLLECTION CARY REISS

tive” of any deal.
Big without being deemed
too big to grow and with a
strong record on takeovers,
PNC has long been seen as a
likely consolidator of the frag-
mented U.S. regional banking
sector. It stoked that chatter
this year when it sold its stake
in BlackRock Inc. for $15 bil-
lion, bringing in cash that

ContinuedfromPageOne

could be redeployed into an ac-

quisition.

Big bank mergers have been

rare since the 2008 crisis, with

few major players willing to

test the political waters and

wary of new regulations now

applied to larger banks. What is

more, the old logic of adding

adjacent branch networks is

less powerful as digitally savvy

consumers are less tethered to

their corner branch.

But regional lenders are un-

der pressure from national gi-

ants like JPMorgan Chase & Co.

and Bank of America Corp.,

which are raking in deposits

with digital apps, big marketing

budgets and coast-to-coast

branch networks. Low interest

rates have hit especially hard at

regional banks, which rely more

on bread-and-butter loans than

rivals with Wall Street arms.

Deals are an obvious solu-

tion. By closing branches in

overlapping areas and trim-

ming redundant technology

budgets, regional banks hope

to merge their way to higher

profits.

In October, First Citizens

BancShares Inc. agreed to buy

CIT Group Inc. for $2.2 billion,

creating a regional bank with

more than $100 billion in as-

sets. BB&T Corp. and SunTrust

Banks Inc. merged last year

into Truist Financial Corp.,

which is the sixth-largest U.S.

retail lender but would be

kicked down a notch by a com-

bined PNC-BBVA.

The sheer number of mid-

size banks in the U.S. has long

bred expectations of consolida-

tion in the industry. There are

at least 30 lenders with be-

tween $50 billion and $250 bil-

lion of assets.

The deal wouldn’t be PNC’s

first acquisition of a foreign

bank’s stateside operations. It

bought the U.S. retail banking

operations of Royal Bank of

Canada in 2012 for $3.45 bil-

lion. It also scooped up a hand-

ful of struggling institutions

during the financial crisis, in-

cluding National City Corp.,

which was pushed by regula-

tors to accept a deal.

It would signal a retreat

from the U.S. for BBVA, for-

mally called Banco Bilbao Viz-

caya Argentaria, Spain’s sec-

ond-largest lender, with a

major presence in Latin Amer-

ica, too. It paid about $10 bil-

lion in 2007 to acquire Com-

pass, which gave it a long-

desired foothold in the U.S., but

BBVA has at least twice written

down the value of the business

and this year warned of an-

other charge as the coronavirus

pandemic tore through the U.S.

economy. European lenders

that planted flags in the U.S.

starting in the late 1980s have

failed to gain much ground.

Royal Bank of Scotland Group

PLC sold out of Citizens Finan-

cial Group Inc. in 2015. HSBC

Holdings PLC said in February

it would close a third of its U.S.

branches.

PNC Nears

$11 Billion

Bank Deal

By invitation only