BLUNTING COVID-19’s ECONOMIC IMPACT
We must follow the best bailout measures around the world, Diane Francis writes.
Some believe the government should enact a more targeted defence against the novel coronavirus: Impose up to four weeks of mandatory isolation on everyone, then test the low-risk population under 60 and let the healthy ones return to work or school.
The elderly and vulnerable would remain sequestered until there are no new cases, or a vaccine is developed.
This would reduce the economic carnage until a vaccine or stopgap treatment is rolled out.
Meanwhile, the epicentre of the currently stricken global economy — the United States
— is now an existential threat.
Markets are crumbling in the face of a rambling, clueless president and Senate gridlock, which both impede swift financial and health-care initiatives.
America’s dreadful health-care system has been exposed as a decentralized, profit-oriented, patchwork quilt that has not been, and cannot be, mobilized quickly.
To date, Canada’s federal and provincial governments have done a good job providing assurance to the public that the country will backstop everyone.
But the feds have dawdled on the details and will hopefully borrow from best-case bailout initiatives around the world.
And there are a number to choose from. French Prime Minister Emmanuel Macron, for example, has announced tough measures to bolster France’s social safety net and established a “no business will fail” policy to protect the country’s economy from long-term devastation.
European Union nations are also writing blank cheques to mobilize their health-care systems and backstop their economic structures.
Most are delaying tax, mortgage, bank loan, rent and utility payments for up to six months for individuals and businesses.
In Canada, which has the world’s highest level of consumer debt, I would add that a suspension of credit card debt without interest rate penalties must be part of any bailout.
Most countries are also providing loans or credit lines to businesses.
This is essential if a complete shutdown of the economy drags on for months (as opposed to putting the under 60s back to work and school as soon as possible) because stopping the economy cold will destroy most businesses and jobs, and the effects will last for years.
The French will nationalize essential industries if they are facing bankruptcy and the Germans will provide equity infusions to keep struggling ones alive. Germany, the model of discipline and science, has imposed the strictest social-distancing requirements on its citizens, banning groups of more than two people from congregating in public. This may allow it to nip the virus in the bud faster than other jurisdictions, where social-distancing requirements range from 100 people, to a lackadaisical anything goes, as in some parts of Canada and the U.S.
Germany has also instituted large penalties for those who transgress, and the French, Greeks and others require people to stay indoors unless they have a permit or valid reason to leave.
The Germans are allocating more than 10 per cent of their GDP (the world’s fourth biggest economy) to prop up or bail out individuals and businesses.
Social support payments will be increased along with a monstrous stability fund to keep enterprises and their workers afloat.
Last week, Australia announced staged bailout schemes, also totalling 10 per cent of GDP.
These include: doubling the usual unemployment payouts for those who have lost their jobs; additional funds for pensioners; and permission for self-employed workers to withdraw A$20,000 ($17,000) from their version of the Registered Retirement Savings Plan, without penalty, to tide them over.
For businesses, billions will be available to provide cash flow to those directly affected by the coronavirus, so they can pay their workers’ wages.
Canada should require its privileged banking oligopoly to allocate and administer interest-free government loans to businesses and self-employed workers based on merit, free of charge. In Denmark, large enterprises that have lost 40 per cent of their revenues, and small ones that have lost 30 per cent, both qualify for payouts.
Canada’s next step should be to adopt German social-distancing rules, blanket the country with tests and aim by mid-April to let the healthy under-60s return to work, school or volunteerism, in order to staunch the bleeding. Financial Post
Canada should require its privileged banking oligopoly to allocate and administer interest-free government loans ...