Connect with us

Economy

Here’s one plan for reopening the economy — and soon – TVO

Published

on


At some point in the future, someone is going to walk into a Canadian Tire store looking to buy a garden hose or maybe, rather optimistically, a new pair of skates to get ready for hockey season. And as that consumer enters that store, some employee is going to be waiting at the front doors to hand them a pair of safety gloves and a mask, if they don’t already have any. 

It’ll probably be the same at Indigo, where customers pick up (and often put back) book after book on the store shelves — presumably, creating close to ideal circumstances for an opportunistic virus. 

Today is May 4, and that means it’s the first day of what we all hope will be the gradual reopening of the economy. The Ontario government has allowed a goodly number of businesses (garden centres, no-touch car washes, auto dealerships, landscapers) to reopen. Before long, others will join the mix, as we collectively try to take this economy out of the coma we’ve put it into. 

Obviously, if we can do it safely, it’s imperative to get the economy moving again as soon as possible. The astonishing sums of money that governments are borrowing to protect people from economic destitution will have to be paid back some day. That’ll likely mean significant tax increases or austerity measures for today’s younger generations, who, ironically, need less protection from COVID-19 than the baby boomers they pretty much already despise. 

Not only that, we’re starting to hear about the consequences being faced by other non-COVID-19 patients. Health Minister Christine Elliott confirmed last week that her modelling suggests at least three dozen people have now died because their heart surgeries or cancer treatments were cancelled as the health-care system fixates on fighting the coronavirus. 

So what can be done to make these economic and health-care consequences less frightful? 

Steven Salamon is a biotech portfolio manager who spends an inordinate amount of time thinking about health care, the economy, and markets. Not surprising. His job is to increase his clients’ wealth by investing in biotechnology companies, and, at the moment, that’s next to impossible to do. So he wants to be sure that governments are doing everything they can to get the show back on the road.  His first conclusion: 

“Masks have to be mandatory,” he says. “If spitting is the route of transmission, then you need a mandatory mask policy. The masks are not for your protection; they are meant to protect those around you. Masks mean you are taking responsibility, not that you’re unwell.” He thinks that would get people slowly but surely out of their homes and back to work. “You can’t be locked down in perpetuity without complete and utter destruction of the economy.” 

Salamon notes that Germany is starting to reopen in a significant way. Even students are back in the classroom. (They have to be masked when they walk the corridors. Shoppers, for the most part, must also don masks now, too). 

Salamon crunches numbers for a living, and he’s done it here to figure out what works in this crisis, as well. He notes that Hong Kong and New York City have roughly the same population. However, as of a few days ago, Hong Kong was reporting only a little over 1,000 COVID-19 positive cases, whereas New York has an astonishing nearly 175,000. Hong Kong reports only four deaths; New York City, nearly 18,000. And, let’s remember, Hong Kong is right beside China, where the virus originated, and it’s also a major international gateway. However, Hong Kong implemented border restrictions early; its people accepted physical distancing and quarantining in a way many Americans still haven’t; and people there were early adopters of widespread mask-wearing, perhaps thanks to having learned the hard lessons of SARS better than we have. Almost 300 people in Hong Kong lost their lives to that virus 17 years ago. 

“The global success stories like Hong Kong, South Korea, and Taiwan suggest that containment of the virus is possible without a vaccine, if we shift our energy to masks and a strategy of test/trace/isolate,” Salamon says. 

When Salamon’s business gets up and running again, he will insist that everyone in the office wear a mask. And, to reduce the risk of transmission even further, there’ll be no talking allowed on the elevators. 

Next, he suggests, the government should mandate that all people who come into any workplace have their temperatures taken. Yes, it’s an infringement on their rights. But, Salamon says, we simply can’t have people running a fever coming into work. 

Premier Doug Ford has announced a “roadmap, not a calendar” for business reopening, but Salamon says that we need something more specific and should have had it weeks ago. He’d like to see every workplace come up with a plan for reopening.

“The only numbers that matter are staying below the maximum ICU capacity,” he says. “The premier should talk about ICU capacity, rather than case counts or mortality.” The numbers show that Ontario has successfully managed to stay well below ICU capacity, which, Salamon suggests, should give us some more leeway to get the show on the road. 

Clearly, we’re not going to self-isolate until a vaccine is available. Experts estimate that could take 12 to 18 months, and people, as the premier himself has noted, are already getting “squirrelly.” So Salamon thinks the key is to go big on testing, tracing, and isolating those who are at risk — and let everyone else get back to work as safely and quickly as possible. 

“The Ontario government has, understandably, been focused on getting the ICU and long-term care situations under control,” Salamon says.  “But when will we get a strong mask policy and an effective test, trace, and isolate system?” he asks. “All I care about is health, safety, reducing mortality, and getting the province moving again. To me, all these things are interdependent. Give citizens clear principles and trust them to do the right thing.” 

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Coronavirus 'a devastating blow for world economy' – BBC News

Published

on


The coronavirus pandemic is a “devastating blow” for the world economy, according to World Bank President David Malpass.

Mr Malpass warned that billions of people would have their livelihoods affected by the pandemic.

He said that the economic fallout could last for a decade.

In May, Mr Malpass warned that 60 million people could be pushed into “extreme poverty” by the effects of coronavirus.

The World Bank defines “extreme poverty” as living on less than $1.90 (£1.55) per person per day.

However, in an interview on Friday Mr Malpass said that more than 60 million people could find themselves with less than £1 per day to live on.

Mr Malpass told BBC Radio 4’s The World This Weekend: “It [coronavirus] has been a devastating blow for the economy.

“The combination of the pandemic itself, and the shutdowns, has meant billions of people whose livelihoods have been disrupted. That’s concerning.

“Both the direct consequences, meaning lost income, but also then the health consequences, the social consequences, are really harsh.”

Mr Malpass warned it’s been those who can least afford it who’ve suffered the most.

“We can see that with the stock market in the US being relatively high, and yet people in the poor countries being not only unemployed, but unable to get any work even in the informal sector. And that’s going to have consequences for a decade.”

The World Bank, along with its counterparts, has been providing support to the worst affected countries, but says much more is needed.

It is calling on commercial lenders such as banks and pension funds to offer debt relief to poor countries.

He would also like them to make the terms of their loans clearer, so other investors are more confident about putting money into those economies.

Targeted government support and measures to shore up the private sector are also vital to rebuild economies, the World Bank argues.

Investment and support would create jobs in areas like manufacturing, to replace those in the worst affected sectors, such as tourism, which may have been permanently lost.

‘Tensions and inequality’

Mr Malpass admits the damage to global trade, and inclinations to bring supply chains closer to home or erect trade barriers, are a challenge.

“When trade is reduced, that creates its own set of tensions and inequality… I’m sure [the global economy] will be interconnected in the future, maybe less than it was pre-COVID.”

But ultimately, Mr Malpass said the “catastrophe” could be overcome, and that people were “flexible, they’re resilient” .

“I think it’s possible to find paths, it’s hard work for countries and governments to do that.

“But we can encourage that effort… I’m an optimist, over the long run, that human nature is strong, and innovation is real. The world is moving fast and connectivity… has never been higher. And so that gives hope for the future.”

However, he admits the challenge is getting the right plans in place at the right time – and in the meantime, the pain could be considerable.

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Guardians of the World Economy Stagger From Rescue to Recovery – Yahoo Canada Finance

Published

on


Guardians of the World Economy Stagger From Rescue to Recovery

View photos

(Bloomberg) — The world’s governments and central banks are shifting from rescue to recovery mode as the deepest slump since the Great Depression shows signs of bottoming out.

After rolling out trillions of dollars worth of measures to prevent their economies and markets from collapsing, they are now doubling down with even more spending to backstop a recovery as coronavirus lockdowns ease. In what counts for good news these days, Bloomberg Economics’ global GDP growth tracker showed economies contracted at an annualized rate of 2.3% in May, less than the 4.8% slump in April.

“Policy makers are moving from triage to recovery,” said Deutsche Bank Securities Chief Economist Torsten Slok. “They are realizing that more fiscal support will be needed to households and small businesses to prevent this liquidity crisis from turning into a solvency crisis.”

The new wave of stimulus has both governments and central banks moving in sync to continue flooding lenders, markets and companies with cheap credit at an unprecedented pace.

The European Central Bank last week expanded its asset purchases by 600 billion euros ($677 billion) to 1.35 trillion euros, and extended them until at least the end of June 2021. And Germany’s government agreed another 130 billion-euro fiscal stimulus push and said it will back a proposed new 750 billion-euro European Union recovery fund.

“Action had to be taken,” ECB President Christine Lagarde said in a press conference.

It’s a similar story in Asia.

Japan is planning another $1.1 trillion worth of spending in its biggest splurge yet and the central bank in May called an emergency meeting to roll out 30 trillion yen ($274 billion) of loan support for small businesses.

China last week unveiled another 3.6 trillion yuan ($508 billion) in spending and South Korea’s 76 trillion won ($63 billion) ‘New Deal’ fiscal package is its largest to date.

In the U.S., lawmakers continue to debate extra fiscal stimulus and the Federal Reserve, which meets on June 10, has just launched a new Main Street Lending Program, the latest in trillions of support it has already poured into the economy and markets.

While the Fed is unlikely to signal any moves when its officials gather this week, many economists expect it to harden its commitment to easy monetary policy later in the year and perhaps even start pursing a Japan-style campaign to control long-term borrowing rates.

The latest U.S. jobs numbers give some hope that the stimulus unleashed so far is beginning to kick in. A record 2.5 million workers were added by employers during May while unemployment declined to 13.3%, wrong footing economists who had forecast widespread job losses.

Read more: Economists Have Biggest Miss Ever in U.S. Jobs-Report Shocker

To be sure, there’s far from consensus that the latest wave of support will be enough to get growth back to where it was at the start of the year. Some of the steps being taken are merely to replace existing policies as they start to expire.

“It seems clear already approved packages are perceived to be not enough,” said Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis SA.

There are other concerns that monetary policy can only do so much to revive growth before it loses its potency.

“How does the Fed actually get money to millions and millions of households and small businesses, that is difficult to do operationally,” former New York Federal Reserve Bank President William Dudley told Bloomberg Television.

“It’s much easier to intervene in the capital markets where the Fed can rely on counterparties, primary dealers and others,” Dudley said. “It is much more difficult to lend one by one to millions of different entities.”

Another risk is a return to austerity, even if it seems unlikely now. JPMorgan recently predicted a fiscal thrust of 3.3% of GDP this year and 1.5% drag next year.

U.S. senators have put the brakes on a $3 trillion fiscal package that was approved by lower house lawmakers. China’s government has ruled out a return to the kind of large scale stimulus it rolled out after the global financial crisis, preferring to keep a lid on rising debt.

Still, because the crisis meant economies were forced into shutdown, much of the emergency response so far has been less about driving growth and more about avoiding total collapse. It’s that dynamic which is leaving governments with little option but to borrow harder.

“We shouldn’t look at the positive immediate growth impact of the opening up process as being the rate of growth that may last,” said David Mann, chief economist for Standard Chartered Plc.

Creating jobs will be mission critical to cementing any upswing. That will need support for firms to retrain employees, incentives to hire older workers and for governments to continue with wage subsidies. More than one in six people have stopped working since the onset of the crisis, according to the International Labour Organization, which in April estimated more than 1 billion workers were at high risk of a pay cut or losing their job.

“A faster job market recovery will speed up the economic healing and reduce the risk from widening income inequality and social stress,” said Chua Hak Bin, senior economist at Maybank Kim Eng Research Pte.

Ultimately, the rescue of economies will go well beyond quantitative solutions and into the realm of story telling too, as policy makers will need to inject confidence back into wary consumers and executives, said Stephen Jen, who runs hedge fund and advisory firm Eurizon SLJ Capital in London.

“Human psychology is the same and is now as important as the mechanics of delivering the fiscal stimuli themselves,” he said.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For more articles like this, please visit us at bloomberg.com” data-reactid=”58″>For more articles like this, please visit us at bloomberg.com

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Subscribe now to stay ahead with the most trusted business news source.” data-reactid=”59″>Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.

Let’s block ads! (Why?)



Source link

Continue Reading

Economy

Guardians of the world economy stagger from rescue to recovery – BNNBloomberg.ca

Published

on


The world’s governments and central banks are shifting from rescue to recovery mode as the deepest slump since the Great Depression shows signs of bottoming out.

After rolling out trillions of dollars worth of measures to prevent their economies and markets from collapsing, they are now doubling down with even more spending to backstop a recovery as coronavirus lockdowns ease. In what counts for good news these days, Bloomberg Economics’ global GDP growth tracker showed economies contracted at an annualized rate of 2.3 per cent in May, less than the 4.8-per-cent slump in April.

“Policy-makers are moving from triage to recovery,” said Deutsche Bank Securities Chief Economist Torsten Slok. “They are realizing that more fiscal support will be needed to households and small businesses to prevent this liquidity crisis from turning into a solvency crisis.”

The new wave of stimulus has both governments and central banks moving in sync to continue flooding lenders, markets and companies with cheap credit at an unprecedented pace.

The European Central Bank last week expanded its asset purchases by 600 billion euros (US$677 billion) to 1.35 trillion euros, and extended them until at least the end of June 2021. And Germany’s government agreed another 130 billion-euro fiscal stimulus push and said it will back a proposed new 750 billion-euro European Union recovery fund.

“Action had to be taken,” ECB President Christine Lagarde said in a press conference.

It’s a similar story in Asia.

Japan is planning another US$1.1 trillion worth of spending in its biggest splurge yet and the central bank in May called an emergency meeting to roll out 30 trillion yen (US$274 billion) of loan support for small businesses.

China last week unveiled another 3.6 trillion yuan (US$508 billion) in spending and South Korea’s 76 trillion won (US$63 billion) ‘New Deal’ fiscal package is its largest to date.

In the U.S., lawmakers continue to debate extra fiscal stimulus and the Federal Reserve, which meets on June 10, has just launched a new Main Street Lending Program, the latest in trillions of support it has already poured into the economy and markets.

While the Fed is unlikely to signal any moves when its officials gather this week, many economists expect it to harden its commitment to easy monetary policy later in the year and perhaps even start pursing a Japan-style campaign to control long-term borrowing rates.

The latest U.S. jobs numbers give some hope that the stimulus unleashed so far is beginning to kick in. A record 2.5 million workers were added by employers during May while unemployment declined to 13.3 per cent, wrong footing economists who had forecast widespread job losses.

To be sure, there’s far from consensus that the latest wave of support will be enough to get growth back to where it was at the start of the year. Some of the steps being taken are merely to replace existing policies as they start to expire.

“It seems clear already approved packages are perceived to be not enough,” said Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis SA.

There are other concerns that monetary policy can only do so much to revive growth before it loses its potency.

“How does the Fed actually get money to millions and millions of households and small businesses, that is difficult to do operationally,” former New York Federal Reserve Bank President William Dudley told Bloomberg Television.

“It’s much easier to intervene in the capital markets where the Fed can rely on counterparties, primary dealers and others,” Dudley said. “It is much more difficult to lend one by one to millions of different entities.”

Another risk is a return to austerity, even if it seems unlikely now. JPMorgan recently predicted a fiscal thrust of 3.3 per cent of GDP this year and 1.5 per cent drag next year.

U.S. senators have put the brakes on a US$3-trillion fiscal package that was approved by lower house lawmakers. China’s government has ruled out a return to the kind of large scale stimulus it rolled out after the global financial crisis, preferring to keep a lid on rising debt.

Still, because the crisis meant economies were forced into shutdown, much of the emergency response so far has been less about driving growth and more about avoiding total collapse. It’s that dynamic which is leaving governments with little option but to borrow harder.

“We shouldn’t look at the positive immediate growth impact of the opening up process as being the rate of growth that may last,” said David Mann, chief economist for Standard Chartered Plc.

Creating jobs will be mission critical to cementing any upswing. That will need support for firms to retrain employees, incentives to hire older workers and for governments to continue with wage subsidies. More than one in six people have stopped working since the onset of the crisis, according to the International Labour Organization, which in April estimated more than 1 billion workers were at high risk of a pay cut or losing their job.

“A faster job market recovery will speed up the economic healing and reduce the risk from widening income inequality and social stress,” said Chua Hak Bin, senior economist at Maybank Kim Eng Research Pte.

Ultimately, the rescue of economies will go well beyond quantitative solutions and into the realm of story telling too, as policy makers will need to inject confidence back into wary consumers and executives, said Stephen Jen, who runs hedge fund and advisory firm Eurizon SLJ Capital in London.

“Human psychology is the same and is now as important as the mechanics of delivering the fiscal stimuli themselves,” he said.

Let’s block ads! (Why?)



Source link

Continue Reading

Trending