US shifts to aggressive economic intervention to support business and protect jobs
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Following an initial soft approach to the impact that COVID19 is having on American businesses, the White House has suddenly changed its approach and prepare for a significant economic intervention.
International news outlets understand that in the coming hours, Steven Mnuchin, Treasury Secretary, will announce a stimulus package worth more than 1 trillion dollars, which will include direct payments to Americans. The latter had at first been excluded by aides to Donald Trump, but the President later confirmed that the federal government would be assisting families in financial distress.
This is in line with the approach taken in Europe, with Britain, France, Germany and Spain all launching economic supported measures which go beyond any traditional economic theory. Britain has unveiled a £330 billion package including emergency loan guarantees as well as £20bn in fiscal support. Rishi Sunak, the UK Chancellor was categoric: “This is not a time for ideology or orthodoxy, this is a time to be bold.” France approved a 45-billion euro rescue package, which covers a wide range of measures, including the nationalization of a number of companies. The Financial Times estimates that eurozone members have offered a total of 1 trillion euro in bank guarantees.
Trump’s policy change seems to have been welcomed by the financial market, with the S&P 500 recovering 6% on Tuesday following Monday’s historical collapse. In typical emphatic fashion, the President announced on Twitter that “the United States will be powerfully supporting those industries, like Airlines and others, that are particularly affected by the Chinese Virus. We will be stronger than ever before!”
