Fiscal Policy

U.S. bailout boasts dollars but not staff

31 Mar 2020

The Treasury has about two dozen senior leaders to funnel $2.2 trln in aid, while key positions are vacant. Goldman Sachs, which provided government recruits in the 2008 financial crisis, has about 410 partners overseeing $1.9 trln in assets. Bankers may fill the gap again.

U.S. aid excludes startups, entrenches Big Tech

30 Mar 2020

Many Silicon Valley firms will miss out on $350 bln in new small business loans. In some cases, entities with the same venture capital investor are lumped together, pushing them above the 500-employee limit. Big players like Google can further entrench themselves.

Dixon: Here’s how to stop humungous fiscal costs

30 Mar 2020

Governments will rack up eye-popping bills to fight coronavirus if they’re not careful. The key will be to avoid debilitating stop-go strategies, where economies come out of lockdowns only to go in again. But that will only happen if exit strategies are well planned, not rushed.

Review: China’s brewing blue-collar rebellion

27 Mar 2020

Foreign investors are entranced by the Chinese middle class; the proletariat less so. In “The Myth of Chinese Capitalism”, Dexter Roberts lays out the increasing plight of the latter, to the benefit of the former. Beijing is struggling to manage this big, hidden political risk.

$2 trln U.S. aid offers postcrisis blueprint

25 Mar 2020

The Senate plan expands jobless support to gig workers while Congress approved sick pay for small businesses. But benefits expire, as do virus-focused policies at firms like Walmart. This is a chance for workers and policymakers to nudge companies to provide long-term help.

U.S. bailout needs fewer diversions, more speed

24 Mar 2020

Lawmakers are wedging non-Covid-19 concerns into the stimulus bill. Some are worthy causes, like getting airlines to cut emissions. But the $2 trln-odd rescue package’s goal should be to get aid where it’s needed fast. As the 2010 Dodd-Frank Act showed, broader issues can wait.

New Zealand airline rescue puts taxpayers in first

24 Mar 2020

The national carrier has received a $514 mln state lifeline that ensures its survival. A high interest rate should ensure any loan is repaid quickly, while shareholders share the pain through suspended dividends. It’s a model for other countries considering bailouts to follow.

America could use a UK-style wage injection

23 Mar 2020

The $1.8 trln stimulus stuck in Congress has flaws, not least no stringent rules on retaining workers. It may also only last for 10 weeks. A British plan to help pay salaries would address such drawbacks in one shot and avoid more rounds of partisan squabbling by lawmakers.

Late German virus budget lacks neighbourly gesture

23 Mar 2020

Finance Minister Olaf Scholz unveiled a 756 bln euro plan to defend Europe’s biggest economy from Covid-19. That’s bigger as a proportion of GDP than those announced by European peers but he waited too long to act. His silence on joint euro zone bonds is also disappointing.

UK adds fiscal steel to economy’s virus defences

20 Mar 2020

Britain will cover employees’ wages at firms hit by Covid-19 and beef up social security payments. That puts it among the more enlightened European states battling to keep their economies afloat. The activist approach is welcome given a slow approach to containing the outbreak.

Corporate bailouts should be quick, big and wide

20 Mar 2020

From large airlines to small restaurants, companies are pleading for state support to cope with plunging revenue. Governments can help by swiftly offering a cheap loan to any business that wants it. It’s the best way to prevent a severe downturn from becoming a prolonged slump.

Trump Org bailout would be ultimate self-deal

19 Mar 2020

The U.S. hotel industry is seeking $150 bln in government aid as it reels from virus fallout. Where does that leave the president’s hotels and golf resorts? Ideally, Trump would set an example by using his own wealth to preserve jobs. To let taxpayers do so would set a new low.

Quarantine hits home for Canada’s Trudeau

18 Mar 2020

The border with the U.S. is closing. The Canadian prime minister – himself in Covid-19 isolation – also unveiled a fiscal aid package worth about 3.6% of GDP, way short of, say, the UK’s response to the pandemic. As everywhere, though, it’s a down payment on an unknown price.

Cash handouts signal surprising ascent of Mnuchin

17 Mar 2020

Donald Trump wants to send cash to Americans after weeks of downplaying the virus. Other countries are likely to follow. The president’s U-turn looks partly down to Treasury Secretary Steven Mnuchin. He has unexpectedly become a steadying hand in a chaotic White House.

Financial mayhem needn’t become pandemic

12 Mar 2020

The Fed opened the taps on $1.5 trln of liquidity to smooth Treasury trading. Stocks tumbled again as companies like Boeing drew on debt. And policy gaffes from Washington and Frankfurt don’t help. But there’s no reason, yet, for the health crisis to create a financial one.

Virus gives UK cover for “jam every day” giveaway

11 Mar 2020

New finance minister Rishi Sunak unveiled 30 bln pounds of stimulus, including emergency steps to help the economy cope with Covid-19. More spending is planned in years ahead. The handouts leave Prime Minister Boris Johnson with little wiggle room after the health crisis passes.

Ailing U.S. consumers need cash, not tax cuts

10 Mar 2020

U.S. President Donald Trump wants to reduce payroll levies to ease virus-related economic pain. But workers often don’t spot such changes and it doesn’t help those who end up not getting paid at all. A direct payment would be more useful and help shore up consumer spending.

Virus stimulus strains bloated U.S. balance sheet

5 Mar 2020

Congress approved an $8 bln plan to mitigate a potential outbreak. It’s a rounding error next to the hundreds of billions that may be needed to stem economic damage. Tax cuts and a spending jump had already pushed the deficit to $1 trln, reducing fiscal room to deal with crises.

Fed easing shocks more than it awes

3 Mar 2020

U.S. central bank boss Jay Powell cut rates by half a percentage point because of economic risks from the coronavirus. Easing from the provider of global financial liquidity sets the scene for others to follow. The impact would have been bigger had G7 peers acted simultaneously.

Virus fight depends on practical economic measures

2 Mar 2020

Italy will spend 4.5 bln euros to fight Europe’s worst coronavirus outbreak. Keeping companies alive through tax breaks and other relief measures while the disease spreads could produce a rebound if the emergency proves short-lived. Monetary policy alone won’t kill the disease.