Fiscal Policy

Biden task force lacks sense of dollars

9 Jul 2020

A wish list from the U.S. presidential candidate’s advisers runs the gamut from universal healthcare and zero emissions to racial equity and infrastructure spending, plus tax increases. Missing is much, if any, clarity on the financial equation. Trillions of dollars are at stake.

If you build bailouts, they may not come

7 Jul 2020

Uncle Sam has thrown some $3.5 trln at the economic crisis. Unlike the 2008 slump, a big portion is aimed at helping Main Street. But complex and changing terms put off some mom-and-pop businesses while sophisticated firms got help. It offers lessons for the next aid plan.

Corona Capital: Disney/“Hamilton”, U.S. housing

6 Jul 2020

Concise views on the pandemic’s corporate and financial fallout: “Hamilton” reinvigorates Walt Disney’s digital-download challenge, and America’s stay-at-home rules may mean there’s pent-up demand for real estate and home improvement.

UK stimulus exit talk may do more harm than good

23 Jun 2020

Central bank boss Andrew Bailey is talking about how monetary easing will be unwound, while finance minister Rishi Sunak may later this year unveil deferred tax rises. Payback is inevitable. But when flagged so clearly, it undermines recovery efforts.

Germany’s new $90 bln fiscal bazooka may misfire

2 Jun 2020

Chancellor Angela Merkel’s government is working on new stimulus measures. But the package, which is still being negotiated, is short on infrastructure investment. Consumer handouts and tax cuts may end up boosting savings given concern about the outlook for the economy and jobs.

Review: MMT lives up to some of its promises

29 May 2020

“The Deficit Myth” clearly explains why governments should aim to balance the economy, not the budget. Stephanie Kelton’s book comes at a good time, as huge deficits will help limit the pandemic’s damage. Unfortunately, Modern Monetary Theory suffers from narrowness and naivete.

To win, U.S. Treasury needs to be ready to lose

19 May 2020

The Fed’s $600 bln Main Street bailout is still not up and running. Among the hurdles are terms that banks may not like, partly due to the Treasury’s conservativism. Steven Mnuchin told senators he was willing to take losses. It's a necessary investment to reduce future trouble.

Franco-German motor nudges EU off virus crash lane

19 May 2020

The pair proposed a 500 bln euro fund to help pandemic-hit states. That recognises the need to share the fiscal burden and rely less on ECB boss Christine Lagarde. But market jubilance is premature. Opposition from northern countries means the plan will probably be watered down.

Corona Capital: Cruise ships, China/U.S. friction

13 May 2020

Concise views on the pandemic’s corporate and financial fallout: Royal Caribbean raises and dreams of a time when cruise ships come back into favor, while a U.S. pension fund decides to give Chinese stocks a miss.

Modi’s stimulus surprise is just credible enough

12 May 2020

India’s premier pledged a package equivalent to 10% of GDP. The number is probably too good to be true, but the signal of intent is important. India reforms best in times of crisis. And Modi’s vision, which combines self-reliance with supply-chain clout, is easy to buy into.

China’s soft power will be hardened by the virus

8 May 2020

Even before Covid-19 emerged in Wuhan, partners were rethinking economic and diplomatic ties. Rising foreign criticism is sharpening attitudes in China. And Western disarray is emboldening Beijing. Restraining China’s influence will be the geopolitical struggle of the decade.

Hong Kong’s jobless rate understates harsh reality

6 May 2020

The 4.2% figure is implausibly low given the protests and the pandemic. With U.S. unemployment expected to reach 20%, the Asian financial hub’s distorting omissions of many classes of workers are left exposed. Restaurant receipts and retail sales hint at the true economic damage.

India erects low wall against Chinese money

20 Apr 2020

Direct investment from the People’s Republic will now require special approval, potentially slowing technology development. Capital-hungry India has left the door open to buyers from elsewhere, however. Chinese funds will keep flowing in, but only where they’re welcome.

Guest view: Recovery requires greater cooperation

7 Apr 2020

A rapid, “V-shaped” economic rebound after coronavirus passes seems increasingly unlikely, former Citi Chairman William Rhodes and Stuart Mackintosh argue. Policymakers must gird for a long haul back. A globally joined-up approach, which has been thus far absent, is critical.

Bailout oversight vacancy causes big risks

7 Apr 2020

The U.S. president forced out the inspector general providing supervision for $2.3 trln in emergency relief. Robust supervision over the 2008 bailout fund didn’t allay critics though it made money. Now the potential for exploiting the biggest assistance package ever is high.

Dixon: Helicopter money is a toy best left alone

6 Apr 2020

Some economists say central banks should fund coronavirus containment efforts by just printing money. That would risk fuelling inflation and undermining economic discipline. There are better ways to finance emergency packages to protect people and companies during the lockdowns.

Airlines face overdue dilemma taking Treasury cash

1 Apr 2020

U.S. bailout funds come with strings attached, like handing the feds stock. Taking the money means keeping more employees, but diluting shareholders. For arch-capitalists, that's objectionable. For society at large – and to ensure readiness for a recovery – it's only fair.

New York’s fiscal house has a solid foundation

1 Apr 2020

The U.S. crisis epicenter began a new accounting year on April 1 and could face a $15 bln revenue drop. It will need federal aid. But unlike Illinois and New Jersey, years of sound budgets have given it more cushion to weather the storm. Irresponsible states won’t fare as well.

U.S. has a handicap vs. Europe in this recession

1 Apr 2020

It’s easier to fire workers in America and welfare is less generous than across the Atlantic. That’s unhelpful for bouncing back from a virus-induced crash. Consumers will be less scarred in countries where businesses retain workers and social safety nets are strongest.

Australia fuels global race to flatten jobs curve

1 Apr 2020

Prime Minister Scott Morrison proposes spending some $80 bln subsidising wages for six months. That would cover about 70% of median pay for most and equal 6.5% of GDP. Increasingly generous pandemic stimulus measures in one country ultimately could help workers in another.