No, federal government spending doesn’t have to be ‘paid for’. The crisis shows providing for our society is not a financial issueOnly a month ago, a stimulus bill of $2tn would have been unthinkable. Indignant deficit scolds would have asked how one planned to pay for it, and complained about burdening our grandchildren with debt and bankrupting our country. Bernie Sanders bent over backwards to explain how he was going to pay for a Green New Deal or Medicare for All. These programs don’t seem as expensive any more. Suddenly the government is planning “helicopter drops” of cash. Larry Kudlow, who relentlessly attacked the Obama stimulus during the global financial crisis, is touting the current stimulus as “the single largest Main Street assistance program in the history of the United States”.Related: Not even Wall Street titans know the true cost of the coronavirus crisisOnce this crisis passes, the deficit scolds will be back at it, trying to put roadblocks in front of progressive policiesRelated: How coronavirus almost brought down the global financial system | Adam ToozeYeva Nersisyan is associate professor of economics at Franklin and Marshall CollegeL Randall Wray, author of Modern Money Theory: A Primer on Macroeconomics for Sovereign Monetary Systems; Why Minsky Matters: An Introduction to the Work of a Maverick Economist; and Understanding Modern Money: The Key to Full Employment and Price Stability, is senior scholar at the Levy Economics Institute and professor of economics at Bard College Continue reading...

Banks offering loans will work through weekend so that scheme is ready for Monday

Activists say inclusion of oil firms’ debts in bond scheme breaks new governor’s promisesThe Bank of England has been accused of failing to live up to its tough talk on the climate crisis after it revealed it would buy debt from oil companies as part of its coronavirus stimulus programme.The oil firms BP, Royal Dutch Shell and Total are among the companies whose subsidiaries’ debts are eligible for the Bank’s bond purchases, according to an indicative list published on its website this week.Income subsidies Continue reading...

More than twenty million unemployment claims have been filed in the last month across America

International community can avoid large-scale humanitarian tragedy in vulnerable regionsDeclining coronavirus infection rates and plans to begin easing lockdown measures in some parts of the developed world have provided a ray of hope after weeks of unrelenting gloom. But, for many developing countries, the crisis may barely have begun, and the human toll of a major Covid-19 outbreak would be orders of magnitude larger than in any advanced economy. With the US having recently recorded more than 2,000 deaths in a single day, this is no trivial number. If the international community doesn’t act now, the results could be catastrophic.Sub-Saharan Africa is a case in point. Several countries there would face significant challenges in enforcing physical-distancing rules and other measures to flatten the contagion curve. The region’s already weak healthcare systems could thus quickly become overwhelmed by an outbreak, especially in a high-density area.Related: Donald Trump is wrong, the economic hit of the coronavirus will last for years Continue reading...

Fund says countries are right to boost spending but should ‘keep receipts’ to ensure transparency

A dig into the data on the business interruption loan scheme unearths several areas of concern

The state has had to pump in money to prop up a system in which too many people were hanging on by their fingertips

America’s manufacturers and retailers are hit hard by coronavirus shutdown, as retail sales also suffer record slump

Jeremy Cushing, Dr Michael Griffiths and Ian Watson sound warnings over a thinktank’s call to ditch the triple lock on pensions, but Mike Pender is in favour of it. Meanwhile, Malcolm Pugh says raising tax on unearned income makes more sense

Hospitality and construction also dealt heavy blow by pandemic, says OBR

The role of the digital revolutionaries is to disrupt everything but the central institution of modern life: the market

Officially 472,000 people in the state filed for unemployment – but the true number is much higher due to the failing system

Work and pensions secretary stirs up interviewer incredulity in show of slim grasp of – mostly everythingImagine you’re a cabinet minister and you get a late-night call from the communications team at No 10 telling you that you’ve drawn the short straw for the following morning’s media round. Most would mutter “oh shit” and reconcile themselves to a night without sleep as they try to come up with some vaguely convincing answers to possible questions about the government’s handling of the coronavirus pandemic. Some might even have switched on the news and realised that deaths in care homes had become a hot topic.Not Thérèse Coffey. She just mumbles a simple “sure thing” and settles down to a good night’s sleep, certain she can wing her way through any interview. Seldom has confidence been so badly misplaced. Last week in her only previous outing, the secretary of state for work and pensions managed to underestimate the number of people claiming universal credit by 200,000. Now she was planning on going full Priti Patel in her desire never to be asked to make another public appearance. Continue reading...

JP Morgan’s $8.3bn bad loan provision is steep but it’s guesswork – no one has a clue about the final billAn $8.3bn provision for bad loans is steep, even for JP Morgan Chase, the biggest bank in the US. Is it even roughly the correct number, though?Jamie Dimon, unrivalled titan of Wall Street, didn’t quite shrug his shoulders nor did he indulge his normal habit of assessing the state of the world for lesser mortals. The provision was taken because of “the likelihood of a fairly severe recession”, which is stating the obvious, but then his finance director said the reserves “could be meaningfully higher in aggregate over the next several quarters relative to what we took in the first quarter”.Related: JP Morgan sets aside $8.3bn to cover Covid-19 lossesRelated: Banks paid millions in bonuses weeks before ban on cash rewards Continue reading...

Unemployment could hit 10% by end of spring with public borrowing rising at fastest rate since WWII

UK hospital deaths rise by 778 to 12,107 amid questions over care home figures; forecast says unemployment could soar by 2 million

UK chancellor says way to bounce back from coronavirus crisis is to reboot growth across regions

Rolling coverage of the latest economic and financial news

Industry body says latest assessment is three times worse than ‘worst-case scenario’ just five weeks ago

Wall Street bank earmarks sum to cover credit cards and oil and gas sector lossesJP Morgan, Wall Street’s biggest bank, has put aside $8.3bn (£6.6bn) to cover potential loan losses as it braces itself for a “fairly severe recession” caused by the Covid-19 outbreak.The provision – much of which is earmarked to cover consumer credit card debts – is the biggest sum put aside for credit losses since the financial crisis in 2009. It resulted in JP Morgan’s earnings for the first three months of the year plunging 69% to $2.9bn compared with $9.2bn a year earlier. Continue reading...

Save the Children says banks, commodity traders and asset management firms should not extract money from poorest countriesCommercial creditors owed money by poor countries should only be eligible for government Covid-19 bailout cash if they agree to sign up to a comprehensive global debt deal, the head of one of the world’s leading charities has said.Despite signs that the G20 group of developed and developing nations are edging towards an agreement on help for the most vulnerable nations, Inger Ashing, chief executive of Save the Children International said the plan would only be fully effective if it included the private sector.Related: IMF has no experience of recession arriving with such ferocityRelated: IMF has no experience of recession arriving with such ferocity Continue reading...

Recovery will take some time as countries will exit Covid-19 lockdown only gradually

Latest World Economic Outlook describes shock of coronavirus pandemic as ‘like no other’

All generations should have to help pay for massive economic cost, says thinktank

The crisis has brought the economy to a near halt, and left millions of people out of work. But thanks to intervention on an unprecedented scale, a full-scale meltdown has been averted – for now. By Adam ToozeIn the third week of March, while most of our minds were fixed on surging coronavirus death rates and the apocalyptic scenes in hospital wards, global financial markets came as close to a collapse as they have since September 2008. The price of shares in the world’s major corporations plunged. The value of the dollar surged against every currency in the world, squeezing debtors everywhere from Indonesia to Mexico. Trillion-dollar markets for government debt, the basic foundation of the financial system, lurched up and down in terror-stricken cycles.On the terminal screens, interest rates danced. Traders hunched over improvised home workstations – known in the new slang of March 2020 as “Rona rigs” – screaming with frustration as sluggish home wifi systems dragged behind the movement of the markets. At the low point on 23 March, $26tn had been wiped off the value of global equity markets, inflicting huge losses both on the fortunate few who own shares, and on the collective pools of savings held by pension and insurance funds.Related: ‘We can’t go back to normal’: how will coronavirus change the world? Continue reading...

Debt relief and massive economic support are needed in Africa, as developing nations cope with health and economic emergencies

So far we haven’t had the evidence to truly judge leaders and their coronavirus policies. With policies easing, we soon will

Consumer and business spending will stay cautious but the state can fill the gap. We must not turn off the taps too early, like in 2010Donald Trump tells us that once Covid-19 is contained and it is safe to go back to work, the economy will be “great again”. Is the US president right?There is at least one reason to think he is. After all, unlike a hurricane or earthquake, the pandemic has caused no damage to the physical capital stock. It follows, Trump and his advisers argue, that we can pick up where we left off. The economy took a time-out but now output will rebound swiftly to pre-crisis levels and growth will proceed as before.Related: The 2008 financial crisis will be seen as a dry run for Covid-19 cataclysm | Kenneth Rogoff Continue reading...

More than 60 poorer countries are spending more paying creditors than on health – study

Ministers face hideously difficult tradeoffs between curbing the menace of the coronavirus and the severe damage being done to the economy

The Bank of England’s extension of the ‘ways and means’ facility adds to a mountain of loans too big to be temporaryRishi Sunak avoided calling the Bank of England last week to beg for an extension of the Treasury’s overdraft facility to meet his Covid-19 spending commitments.The chancellor was saved that job by Andrew Bailey, the central bank’s governor, who saw the red flashing signs on the side of the Treasury’s headquarters from his Threadneedle Street offices almost three miles away. In a joint statement, the Treasury and the Bank said they had agreed to extend the use of the “ways and means” facility as a temporary measure during the disruption caused by Covid-19. Continue reading...

US death toll becomes the highest in the world; Italy and India extend lockdown

With the IMF and World Bank spring conference approaching, research underlines need to bail out world’s poorest countriesFor more than two years the World Bank and the International Monetary Fund have warned that sub-Saharan Africa stands on the verge of a debt crisis. Ever since commodity prices began to fall in 2015, the public finances of nations stretching from Nigeria to Kenya and Chad to South Africa have deteriorated.If China is the manufacturing centre of the world, Africa is its chief supplier of essential materials, from oil and copper to the rare-earth minerals used in mobile phones. As China’s manufacturing waned in the middle of the last decade, so did the crucial foreign earnings that keep African nations afloat. Continue reading...

It may be months before official figures reveal the extent of decline – so analysts are using proxy data to measure it

Anthony Matheson is a doctor who wants to help but can’t, Peter Kaan is convinced the Tories will only do right by the NHS temporarily, and Karen Barratt is fearful that low-paid workers in essential services will end up footing the bill

France and Netherlands at odds on finance ministers’ €500bn compromise

The arguing over a financial rescue package for hard-hit states shows that even member states don’t trust Europe• Coronavirus latest updates• See all our coronavirus coverageThe European Union has scraped through its latest crisis by the skin of its teeth. The past week has been a disgrace. When ministerial talks collapsed on Thursday over the plan for a “coronabond”, the reaction seemed terminal. Germans and Dutch insulted Italians and Spaniards. Italy’s prime minister, Giuseppe Conte, said his country faced an “economic and social emergency”, and the EU appeared not to care. The Danes spoke of “a financial crisis on steroids”. The European commission’s vice-president, Frans Timmermans, predicted “the EU as we know it will not survive this”.Finally a last-minute package was agreed, for €500bn of emergency loan finance. This was little more than an extension of the existing European stability mechanism, designed to help individual countries in short-term emergencies. Even then, it was a mere third of what the European Central Bank had said was needed, €1.5tn euros. What was specifically not agreed was any sharing of the economic burden of the pandemic across European treasuries in general. It was mostly more loans. Continue reading...

Compromise reached after Netherlands relents on ‘economic surveillance’ of beneficiary nations

The Bank of England is right to step in to fund the Treasury’s coronavirus stimulus package, because there are more important things to worry about than government debt

Rolling coverage of the latest economic and financial news as oil prices swing on production cut hopes and EU nears rescue deal

The economy was flatlining before the coronavirus outbreak and now we are nearing the moment of maximum danger

Latest figures show 16 million people have now lost their jobs, with layoffs spreading across the economy

Kristalina Georgieva says Covid-19 pandemic has spawned ‘economic crisis like no other’

A singular event has economists asking the same questions as everyone else: how far is there to fall – and can we ever get back?

Stagnation in services sector and winter drop in construction activity hit GDP growth

With lockdown likely to be extended, Treasury can draw on billions in extra funds to support cashflow

Nearly half of all jobs in Africa could be lost without urgent action, says charity

Resolution Foundation analysts estimate cost of UK’s wage subsidy scheme