Article:
TOKYO (Reuters) - Japan will look into offering cash payouts to households as part of a stimulus package that could be worth more than $276 billion to combat the widening fallout from the coronavirus outbreak, joining efforts across the world to roll out huge fiscal support to fend of recession risks.
Economy Minister Yasutoshi Nishimura said the stimulus package, likely to be compiled by the government in April, will be bold enough to fend off a crisis he described as potentially more serious than when the collapse of Lehman Brothers in 2008 jolted financial markets.
"We'd like to look into various possibilities including on the size of any cash payouts," Nishimura told reporters after a cabinet meeting on Thursday, though he could not say at this stage what the size of the package would be.
Comments and Ideas:
Cash payments need to be large enough and maybe more than once if the virus situation continues on. The government should not worry about deficits or budget at this time, but any and all measure as needed to calm the economy down.
The government and the BOJ need to ensure that there are no blind spots, in that there are no areas in the economy left untouched with the aid and or stimulus measures. Ensure that no one industry or business or family or individual is left out.
Article:
The Sankei newspaper reported on Thursday Japan's ruling coalition was considering an economic package worth more than 30 trillion yen ($276 billion) to deal with the virus fallout.
That would far exceed the 26-trillion-yen stimulus package the government compiled in December last year to ease the impact from the U.S.-China trade war on the export-reliant economy.
"It's a crisis situation now, so the government will likely use as much money as needed," a senior government official told Reuters.
A roll-back of Japan's 10% sales tax, proposed by some ruling party lawmakers, is a less likely option because of the time it will take to notify the public and get retailers ready for the new tax rate, two other government officials said.
The officials spoke on condition of anonymity as they were not authorised to speak publicly.
Comments and Ideas:
Any new stimulus and or aid will is very much needed. Most likely the government is going to have to do multiple stimulus packages over the next year until the economy is at a sustainable level, whatever and whenever that is.
The idea of eliminating or reducing the sales tax might be a good idea but maybe not practical. But for sure it might be needed.
After all the activities surrounding the last tax increase, it might not be easy to roll this one back and then start again. But in this situation, it might be needed.
But most likely cash payments to families etc might be easier if and only if the families can easily get them without a lot of excess paperwork and or enough places that families can go to without too much stress. The government needs to make it as pain free and stress free as possible for families and small and medium sized businesses to get the cash they need. Now is not the time for endless paperwork at banks, government agencies and other places.
Article:
Finance minister Taro Aso said on Thursday tax cuts could be included in the package, but that rolling back the sales tax was unlikely. He also told reporters that Japan must be mindful of its huge public debt when compiling a stimulus package, as big spending could force it to issue more debt.
The virus epidemic has hit Japan's economy, already reeling from last year's sales tax hike and soft global demand, heightening the chance of a recession.
The Bank of Japan's decision to loosen monetary policy at an unscheduled policy meeting on Monday did little to turn around market sentiment, soured by fears over the virus fallout.
A BOJ policymaker had warned of the need to brace for recession risks at a January rate review - held before the epidemic spread widely in the country, though other board members fretted over the cost of ramping up an already huge stimulus.
Comments and Ideas:
Tax cuts might be in need for some but they should be enough where whomever gets them feels they are helping them. Of course the government is always mindful of extra debt, but now is not the time to think too much about that.
All things considered, if this had been a normal situation, the sales tax increase negative affects most likely would have been long gone. The soft demand in the global economy might have still be there, but that is another situation.
Recessions, for the most part come and go. And for the most part, not all in an economy feels the recession. But this is a different situation as most likely everyone has some kind of affect from the virus and the economy situation.
Article:
The BOJ on Thursday offered to buy 1 trillion yen of Japanese government bonds (JGB) in an unscheduled operation, as global bond yields surge on fire-sales by investors seeking to raise cash and reduce risk.
Given the BOJ's depleted ammunition, the onus is now on fiscal policy to mitigate the blow from the epidemic that has cooled consumption through school shutdowns, travel restrictions and event cancellations, analysts say.
As of Wednesday morning, Japan had 29 deaths and 868 coronavirus cases, excluding those from a cruise ship that was quarantined near Tokyo last month and returnees on chartered flights from China, a tally by public broadcaster NHK showed.
Comments and Ideas:
The BOJ has admitted recently its current tools and strategies are limited. But now is the time for sound and innovative strategies that maybe have been overlooked before.
And more fiscal spending along with the BOJ is needed. Both need to work together to find ways to keep the economy going. And find ways to ensure small and medium sized businesses which make up 70 percent of the Japanese economy are sustained through the virus situation and the down economy. No economy can rely on just the large multinational companies.
Have a nice day and be safe out there!
© 2020, Tom Metts, all rights reserved
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