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a shadow budget could allow Merkel to spend more

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Germany’s Chancellor Angela Merkel gestures as she addresses media representatives after a European Union (EU) summit.

JOHN THYS | AFP | Getty Images

There’s a change in attitude in Germany when it comes to its spending plans, analysts have told CNBC.

Germany is actively looking at ways to invest more — a move that could be controversial in a country where a balanced budget has become somewhat a tradition. However, the increasing risk of an economic recession is putting pressure on German officials to explore ways to open the coffers a bit more.

Data out of Germany has been quite disappointing over the last half a year, leading many analysts to consider the chances of a recession. The German statistics office showed last month that the German economy contracted by 0.1% in the second quarter of this year.

“I think the (German) government is still not too concerned about a real recession, but they are finally opening up for the long-discussed need for more investments,” Carsten Brzeski, chief economist at ING Germany told CNBC via email Tuesday.

Media reports out earlier this week suggested that Berlin is considering a “shadow budget,” which would allow it to take on new debt through new independent public agencies, without including the numbers under its federal budget.

I can assure you that we are sticking to the goal of a balanced budget

Angela Merkel

Chancellor of Germany

This, in theory, should give Germany more leeway to spend in infrastructure and climate policies. At the same time, its balanced budget — one where revenues match or outweigh expenditure — should not be impacted. Price stability is seen as a key part of the German psyche following a prolonged period of hyperinflation in the Weimar Republic in the 1930s.

“A shadow budget could be a good way to pass the holy cow of constitutional debt brake,” Brzeski also said.

Germany’s debt brake

The German constitution includes a rule called “debt brake,” which basically forces its leaders to present budgets without structural deficits or a very limited deficit. Since 2014, the largest European economy has managed to raise public spending without adding new debt — registering a record budget surplus of 58 billion euros ($65 billion) in 2018. However, politicians across the various parties in the Bundestag are wary of using that buffer to spend more due to public opinion.

In this context, Chancellor Angela Merkel said Tuesday that the balanced budget was not at risk. “As a federal government, we take seriously the responsibility for a solid budget policy,” she said, according to Reuters. “And I can assure you that we are sticking to the goal of a balanced budget,” Merkel added.

Brzeski explained that changing the debt break would “take too long.” Thus, having a shadow budget, or even some kind sovereign wealth fund, “would be a good way out.”

“It increasingly looks as if the government will link (any new investment) to climate change. This topic will also get broad support,” he added.

Guntram Wolff, an economist and director of the think-tank Bruegel, told CNBC that the German “government is actively looking into creating a shadow vehicle to fund green investments. They do so more to tackle climate change than to fend off a recession.”

He added on Twitter that the German discussion on a shadow budget is a “good example of how political ideology and rigid rules on debt lead to fiscal gimmicks.”

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TikTok transparency report shows it removed 49 million videos

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TikTok removed over 49 million videos for content violations in just six months, according to the company’s latest transparency report, published Thursday. 

Less than 1% of all videos published on the platform are removed for content violations, TikTok said, in what is its second transparency report. 

India, where the app was banned last week, had 16.5 million videos removed, which is roughly four times more than any other country. 

The U.S., which is “looking at” banning the app, had the second most videos removed with 4.6 million. Pakistan ranked third (3.7 million), the U.K. was in fourth (2 million), and Russia was in fifth (1.3 million).  

Globally, the main reason for removal was “adult nudity and sexual activities,” with one in four of the deleted videos removed for this reason in December. 

Other reasons included alcohol and drug taking, violence, self-harm or suicide. Less than 1% of the videos removed violated TikTok’s polices on hate speech, integrity and authenticity, and dangerous individuals and organizations. 

Of the videos removed, TikTok said 89.4% were taken down before they received any views. 

TikTok refused to disclose how many were taken down by human moderators and how many were removed by the company’s software. 

Owned by China’s ByteDance, the short video app said that it had 500 requests from governments and law enforcement agencies in 26 countries during the second half of 2019. That’s up 67% on the first half of the year, when it received 298. 

India, which was TikTok’s largest market in terms of user numbers, made 302 requests, and TikTok shared data in 90% of those cases. The U.S. made 100,  and TikTok shared data in 82% of those cases. Elsewhere, Japan made 16, Germany made 15, Norway made 10, and the U.K. made 10. 

“Any information request we receive is carefully reviewed for legal sufficiency to determine, for example, whether the requesting entity is authorized to gather evidence in connection with a law enforcement investigation or to investigate an emergency involving imminent harm,” TikTok said in the report. 

Governments requested content be removed on 45 separate occasions but TikTok did not comply with all of those. The bulk of the requests (30) came from India. 

“If we believe that a report isn’t legally valid or doesn’t violate our standards, we may not action the content,” TikTok said. 

The report states that TikTok did not receive any user information or content removal requests from China or Hong Kong. In fact, China doesn’t get mentioned in the report at all. That could be because ByteDance operates a clone of TikTok in China called Douyin so any government requests are likely to be filed there instead.

TikTok isn’t available for download in China and a spokesperson for the company wasn’t immediately available to clarify whether requests to Douyin would be in a separate report.

TikTok has launched “trust and safety hubs” in Dublin, Singapore and Mountain View, California, as part of an effort to provide a more local approach to content moderation. 

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German prosecutors probe Wirecard for money laundering

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The lettering of the payment service provider Wirecard can be seen on a laptop screen

Silas Stein | picture alliance | Getty Images

German state prosecutors are investigating Wirecard for suspected money laundering, a spokeswoman for the Munich prosecutor’s office said on Thursday.

“We are investigating suspected money laundering,” the spokeswoman told Reuters, saying the inquiry was directed at individuals from Wirecard. She said it followed a number of criminal complaints this year and last.

Wirecard declined to comment.

The implosion of what was seen as a German success story once worth $28 billion has caused major embarrassment with experts and politicians criticising what they see as a hands-off approach on the part of the authorities.

Wirecard filed for insolvency last month owing creditors almost $4 billion after disclosing a 1.9 billion euro ($2.1 billion) hole in its accounts that its auditor EY said was the result of a sophisticated global fraud.

Wirecard started out handling payments for gambling and adult websites and now processes payments for companies including Visa and Mastercard.

Some of the world’s biggest investors held its shares before a whistleblower said it owed its success to a web of sham transactions.

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Airborne transmission of coronavirus in restaurants, gyms and other closed spaces can’t be ruled out, WHO says

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A member of Driving Force Crossfit Gym lifts a dumbbell during a socially distanced workout class on July 08, 2020 in Pembroke Pines, Florida.

Johnny Louis | Getty Images

The World Health Organization published new guidance Thursday, saying it can’t rule out the possibility that the coronavirus can be transmitted through air particles in closed spaces indoors, including in gyms and restaurants.

The WHO previously acknowledged that the virus may become airborne in certain environments, such as during “medical procedures that generate aerosols.” The new guidance recognizes some research that suggests the virus may be able to spread through particles in the air in “indoor crowded spaces.” It cited “choir practice, in restaurants or in fitness classes” as possible areas of airborne transmission.

“In these events, short-range aerosol transmission, particularly in specific indoor locations, such as crowded and inadequately ventilated spaces over a prolonged period of time with infected persons cannot be ruled out,” the United Nations health agency’s new guidance says. 

The WHO said in its guidance that while early evidence suggests the possibility of airborne transmission in such environments, spread by droplets and surfaces could also explain transmission in those cases.

“However, the detailed investigations of these clusters suggest that droplet and fomite transmission could also explain human-to-human transmission within these clusters,” the guidance says.

The WHO added that more research is needed to further investigate preliminary findings. The agency says the main mode of transmission is still believed to be through respiratory droplets.

The new guidance comes after 239 scientists from 32 different countries published an open letter earlier this week calling for the WHO and other health authorities to update their information on the coronavirus.

In an article entitled “It is Time to Address Airborne Transmission of COVID-19,” the group of scientists contend that the WHO needs to give more weight to the role of the airborne spread of Covid-19. 

On Tuesday, top WHO officials told reporters they were reviewing the latest evidence and collaborating with the broader scientific community to issue new guidance on what is currently known about whether and how easily the virus spreads by air. 

“The body of evidence continues to grow and we adapt,” Dr. Soumya Swaminathan, the WHO’s chief scientist, said Tuesday. “We take this very seriously. We are of course focused on public health guidance.”

Some scientists have criticized the WHO for being slow to issue guidance on the latest research into the coronavirus, which emerged in Wuhan, China, a little over six months ago. The WHO has defended its guidance, saying that it’s transparent about its review process and applies healthy skepticism to research that has not been peer-reviewed.

On some days, the WHO reviews up to 1,000 publications, Swaminathan said Tuesday. A typical day might mean WHO researchers are combing through about 500 new studies on topics ranging from how the virus spreads to drugs to treat Covid-19.

If airborne transmission proves to be a major factor in the spread of the outbreak, it could have wide-ranging policy consequences. Masks may prove to be even more important in reducing infections, especially in indoor environments and even in areas where physical distancing is possible. Specially outfitted ventilation units could become the norm in indoor spaces, public health experts have said.

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