Bloomberg News: Stimulus?

https://www.yahoo.com/finance/news/japan-plans-record-60-trillion-062544747.html

Article:

(Bloomberg) -- Japan’s ruling party proposed the country’s biggest-ever stimulus package worth 60 trillion yen ($554 billion) as the spreading coronavirus locks the economy in a recession.

The sum includes 20 trillion yen in fiscal measures with private initiatives and other elements likely making up the rest, according to the proposal by the Liberal Democratic Party on Tuesday. More than 10 trillion yen, or the equivalent of a 5 percentage point cut in the sales tax rate, would be handed out to the public in a combination of cash, subsidies and coupons, according to the plan.

Japan’s Economy Has Worst Outlook Since 2009 Amid Lockdown Fears

The proposal puts an initial figure on a stimulus package that Prime Minister Shinzo Abe promised on Saturday would be bigger than the economic support offered in the wake of the global financial crisis. The plan didn’t include details of how the package would be funded, though the scale of fiscal measures suggests a sharp increase in the budget deficit would be likely.

Comments and Ideas:

The stimulus looks like a good start. However, as the virus situation continues, most likely there will be need to be even more stimulus packages or even bigger packages. Every group in society should be given what is needed. Even big companies as big companies have a lot of employees. To avoid massive layoffs among the biggest companies they also should be given some relief.

At this point maybe the budget deficit should not be a concern. Japan has not relatively well the past twenty years or so with the largest debt to GDP ratio among advanced countries. So maybe Japan can handle a few more years of an increase in the budget deficit.

Article:

The main takeaway from the plan is the Abe administration’s signaling of its strong commitment to support the economy, economists said.

“There’s a lot of debate about how big the package needs to be, but right now there’s no point in debating size,” said Atsushi Takeda, chief economist at Itochu Research Institute. “The government is saying, ‘Yes, we’re worried about sorting out the nation’s finances, but right now we’ll do whatever needs to be done.’ And there’s no opposition party in Japan that’s going to disagree with that.”

The plan already leaves the door open to more stimulus down the line, flagging the need to consider more measures if needed. Past experience shows that one package is unlikely to be enough, with as many as five sets of measures unleashed between August 2008 and December 2009 as Japan battled the fallout of the financial crisis.

“Quite a few in the party hold the view that this still isn’t enough,” said Fumio Kishida, the party’s policy chief, who submitted the proposal to Abe. “I asked the premier to take leadership on this matter and put together an even bigger number for our policy response.”

Comments and Ideas:

Its good the government is saying it will do whatever needs to be done, and sort out the budget situation later. Again there might be the need for many more packages as an economy is very complicated and there many different groups that are affected. As such the government needs to make sure no group is left out and or no group is left behind. At the same time there needs to be less red tape and regulations to ensure the aid can get to those as quickly as possible.

Yes there definitely needs to be a lot more packages over the next six months. As the economy is not just going to go immediately back to normal before the virus situation.

Article:

Finance Minister Taro Aso has already called for a two-stage response to the impact of the pandemic. Kishida said on Monday that a series of packages could eventually amount to 100 trillion yen.

The latest package would be equivalent to more than 10% of the nation’s gross domestic product and calls for corporate funding measures worth more than 40 trillion yen, according to the plan. It also says the party tax panel will consider tax payment deferrals and cuts.

The plan said cash handouts would be made periodically for households and individuals whose incomes have been greatly hit by the virus. It also called for increased subsidies to companies that don’t cut jobs.

The proposal comes after a 26 trillion yen stimulus package in December and two rounds of emergency measures this year aimed at assisting businesses and workers affected by the virus.

Comments and Ideas:

Whatever the government can do most likely is very much needed for families, individuals, and small and medium sized businesses as they will most likely feel the economic downturn for a long time. Again maybe as many packages as needed over the next six months to a year to lessen the downturn.

Have a nice day and be safe out there!

© 2020, Tom Metts, all rights reserved