Key Focus

  • That is because it is a country that has a greater ability to coordinate fiscal and monetary policies and cut through political disputes more quickly, and it has very smart economic policy makers.
    Thus far there has been a series of announced fiscal measures that have amounted to roughly 1.2% of GDP, excluding infrastructure investment
  • That.s what we are struggling hard to do and are doing inadequately.
    However, what I.m damned sure about is the following:
    Part 2
    Big Fiscal Stimulation with Monetary Cooperation Is Needed, Low-Risk, and Isn.t Yet Happening
    Our biggest economic risk comes from the possibility that our elected officials (who are the ones who control fiscal policy) will handle it badly
  • While some fiscal stimulation measures are being put into place, they.re not large or targeted enough to neutralize the contagion of the economic and market effects of the virus, and they are being argued about. However, there are some emerging signs that some important policy makers might move to a .whatever it takes


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High Level Topics

  • POLICY
  • CREDIT
  • BANKS
  • INTEREST
  • High Level Abstractions

  • POLICY(6, 0 Order)
  • ( POLICY )(6, 0 Order)  top
  • ( POLICY, ECONOMIC )(3, 1st Order)  top
  • ( POLICY, VARIOUS )(1, 1st Order)  top
  • ( POLICY, INDUSTRIES )(2, 1st Order)  top
  • ( POLICY, DEBT )(2, 1st Order)  top
  • ( POLICY, SBA-SUBSIDIZED )(1, 1st Order)  top
  • ( POLICY, SAFETY )(1, 1st Order)  top
  • ( POLICY, RISK )(1, 1st Order)  top
  • ( POLICY, POLITICS )(1, 1st Order)  top
  • ( POLICY, MONETARY_COOPERATION_IS_NEEDED )(1, 1st Order)  top
  • ( POLICY, INADEQUATELY )(1, 1st Order)  top
  • ( POLICY, FISCAL_STIMULATION )(1, 1st Order)  top
  • ( POLICY, ECONOMY )(1, 1st Order)  top
  • CREDIT(5, 0 Order)
  • ( CREDIT )(5, 0 Order)  top
  • ( CREDIT, BANKS )(3, 1st Order)  top
  • ( CREDIT, VARIOUS )(1, 1st Order)  top
  • ( CREDIT, PRE-EXISTING )(1, 1st Order)  top
  • ( CREDIT, POLICY )(1, 1st Order)  top
  • ( CREDIT, ECONOMY )(2, 1st Order)  top
  • ( CREDIT, ECB )(1, 1st Order)  top
  • ( CREDIT, SUB-ZERO )(1, 1st Order)  top
  • ( CREDIT, POLITICAL )(1, 1st Order)  top
  • ( CREDIT, LIQUIDITY )(1, 1st Order)  top
  • ( CREDIT, INDUSTRIES )(1, 1st Order)  top
  • ( CREDIT, GERMANY )(1, 1st Order)  top
  • ( CREDIT, FRUGALITY )(1, 1st Order)  top
  • BANKS(7, 0 Order)
  • ( BANKS )(7, 0 Order)  top
  • ( BANKS, LIQUIDITY )(3, 1st Order)  top
  • ( BANKS, ECB )(1, 1st Order)  top
  • ( BANKS, POLICY )(2, 1st Order)  top
  • ( BANKS, DEBT )(2, 1st Order)  top
  • ( BANKS, BUYING )(2, 1st Order)  top
  • ( BANKS, BUSINESSES )(1, 1st Order)  top
  • ( BANKS, BONDS )(2, 1st Order)  top
  • ( BANKS, SUB-ZERO )(1, 1st Order)  top
  • ( BANKS, SBA-SUBSIDIZED )(1, 1st Order)  top
  • ( BANKS, SAFETY )(1, 1st Order)  top
  • ( BANKS, RISK )(1, 1st Order)  top
  • INTEREST(4, 0 Order)
  • ( INTEREST )(4, 0 Order)  top
  • References

    • ( POLICY )  top
    • ( POLICY, ECONOMIC )  top
    • (Read more)   top
      Our biggest economic risk comes from the possibility that our elected officials (who are the ones who control fiscal policy) will handle it badly
    • (Read more)   topWhile some fiscal stimulation measures are being put into place, they.re not large or targeted enough to neutralize the contagion of the economic and market effects of the virus, and they are being argued about. However, there are some emerging signs that some important policy makers might move to a .whatever it takes
    • (Read more)   top That is because it is a country that has a greater ability to coordinate fiscal and monetary policies and cut through political disputes more quickly, and it has very smart economic policy makers.
      Thus far there has been a series of announced fiscal measures that have amounted to roughly 1.2% of GDP, excluding infrastructure investment
    • ( POLICY, VARIOUS )  top
    • (Read more)   topI don.t yet know if the president and other fiscal policy makers have done the stress tests of various companies and various sectors of the economy as we have, or whether theirs show what ours show, but I.m seriously concerned by what I see, which is that a number of companies and industries will...
    • ( POLICY, INDUSTRIES )  top
    • (Read more)   topThus far, meaningful debt supports to industries that would go broke due to this shock have been absent (other than SBA-subsidized loans, which look to be small)
    • (Read more)   top... tests of various companies and various sectors of the economy as we have, or whether theirs show what ours show, but I.m seriously concerned by what I see, which is that a number of companies and industries will have debt problems that will likely lead to restructurings.
    • ( POLICY, DEBT )  top
    • (Read more)   topThus far, meaningful debt supports to industries that would go broke due to this shock have been absent (other than SBA-subsidized loans, which look to be small)
    • (Read more)   top... companies and various sectors of the economy as we have, or whether theirs show what ours show, but I.m seriously concerned by what I see, which is that a number of companies and industries will have debt problems that will likely lead to restructurings.
    • ( POLICY, SBA-SUBSIDIZED )  top
    • (Read more)   topThus far, meaningful debt supports to industries that would go broke due to this shock have been absent (other than SBA-subsidized loans, which look to be small). Probably the best way to do this is for the fiscal policy makers to guarantee the safety of the banks for new lending of a sort that is needed with government protections...
    • ( POLICY, SAFETY )  top
    • (Read more)   top... industries that would go broke due to this shock have been absent (other than SBA-subsidized loans, which look to be small). Probably the best way to do this is for the fiscal policy makers to guarantee the safety of the banks for new lending of a sort that is needed with government protections on that new lending (a politically challenging move)
    • ( POLICY, RISK )  top
    • (Read more)   top
      Our biggest economic risk comes from the possibility that our elected officials (who are the ones who control fiscal policy) will handle it badly
    • ( POLICY, POLITICS )  top
    • (Read more)   topThat is because it.s tough enough to know what to do during a big crisis and then do it boldly even when there aren.t divisive politics.
    • ( POLICY, MONETARY_COOPERATION_IS_NEEDED )  top
    • (Read more)   top
      Big Fiscal Stimulation with Monetary Cooperation Is Needed, Low-Risk, and Isn.t Yet Happening
      Our biggest economic risk comes from the possibility that our elected officials (who are the ones who control fiscal policy) will handle it badly
    • ( POLICY, INADEQUATELY )  top
    • (Read more)   top That.s what we are struggling hard to do and are doing inadequately.
      However,
      what I.m damned sure about is the following:
      Part 2
      Big Fiscal Stimulation with Monetary Cooperation Is Needed, Low-Risk, and Isn.t Yet Happening
      Our biggest economic risk comes...
    • ( POLICY, FISCAL_STIMULATION )  top
    • (Read more)   top
      Big Fiscal Stimulation with Monetary Cooperation Is Needed, Low-Risk, and Isn.t Yet Happening
      Our biggest economic risk comes from the possibility that our elected officials (who are the ones who control fiscal policy)...
    • ( POLICY, ECONOMY )  top
    • (Read more)   topI don.t yet know if the president and other fiscal policy makers have done the stress tests of various companies and various sectors of the economy as we have, or whether theirs show what ours show, but I.m seriously concerned by what I see, which is that a number of companies and industries will have debt problems that will likely lead to restructurings
    • ( CREDIT )  top
    • ( CREDIT, BANKS )  top
    • (Read more)   topAccidentally we are seeing a bit of this as troubled companies have tapped pre-existing lines of credit at banks. While this may not be what the banks want (I doubt they want to take on more credit risk when the economy is deteriorating), it is one way that money gets to those businesses that are squeezed
    • (Read more)   topAs far as I can see, the best path is to do all these things I just mentioned plus provide support to the banks in conjunction with the fiscal authorities providing fiscal protections that will help the credit get to those who need it most.
      In Europe:
      The European Commission is expected to grant...
    • (Read more)   top... economic impact of the coronavirus: providing liquidity and a bit more credit by buying .120 billion ($133.9 billion) more bonds by the end of the year and launching a new program to offer cheap loans to banks (at rates as low as -0.75%, below the ECB.s sub-zero deposit rate).
    • ( CREDIT, VARIOUS )  top
    • (Read more)   topSee ( POLICY , VARIOUS )
    • ( CREDIT, PRE-EXISTING )  top
    • (Read more)   top... banks for new lending of a sort that is needed with government protections on that new lending (a politically challenging move). Accidentally we are seeing a bit of this as troubled companies have tapped pre-existing lines of credit at banks. While this may not be what the banks want (I doubt they want to take on more credit risk when the economy is deteriorating), it is one way that money gets to those businesses...
    • ( CREDIT, POLICY )  top
    • (Read more)   top.t yet know if the president and other fiscal policy makers have done the stress tests of various companies and various sectors of the economy as we have, or whether theirs show what ours show, but I.m seriously concerned by what I see, which is that...
    • ( CREDIT, ECONOMY )  top
    • (Read more)   topAccidentally we are seeing a bit of this as troubled companies have tapped pre-existing lines of credit at banks. While this may not be what the banks want (I doubt they want to take on more credit risk when the economy is deteriorating), it is one way that money gets to those businesses that are squeezed.
    • (Read more)   topSee ( POLICY , ECONOMY )
    • ( CREDIT, ECB )  top
    • (Read more)   topMore specifically, she kept ECB rates at -0.5% and launched a package of measures to alleviate the economic impact of the coronavirus: providing liquidity and a bit more credit by buying .120 billion ($133.9 billion) more bonds...
    • ( CREDIT, SUB-ZERO )  top
    • (Read more)   top... more credit by buying .120 billion ($133.9 billion) more bonds by the end of the year and launching a new program to offer cheap loans to banks (at rates as low as -0.75%, below the ECB.s sub-zero deposit rate).
    • ( CREDIT, POLITICAL )  top
    • (Read more)   topWe will have to see how all the political players (most importantly the European Commission and Italian government) work this out.
      In Germany:
      The Germans started approaching this crisis with their usual frugality that put not...
    • ( CREDIT, LIQUIDITY )  top
    • (Read more)   topMore specifically, she kept ECB rates at -0.5% and launched a package of measures to alleviate the economic impact of the coronavirus: providing liquidity and a bit more credit by buying .120 billion ($133.9 billion) more bonds by the end of the year and launching a new program to offer cheap loans to banks (at rates as low as -0.75%, below the...
    • ( CREDIT, INDUSTRIES )  top
    • (Read more)   topSee ( POLICY , INDUSTRIES )
    • ( CREDIT, GERMANY )  top
    • (Read more)   top
      In Germany:
      The Germans
      started approaching this crisis with their usual frugality that put not creating a lot of money and credit during times of financial stress above all else, but now they appear to be flipping to doing...
    • ( CREDIT, FRUGALITY )  top
    • (Read more)   top
      The Germans started approaching this crisis with their usual frugality that put not creating a lot of money and credit during times of financial stress above all else, but now they appear to be flipping to doing .whatever it takes
    • ( BANKS )  top
    • ( BANKS, LIQUIDITY )  top
    • (Read more)   top Getting money to targeted businesses is a task the Fed is ill-suited for, but it can provide liquidity to the banks to fund those loans if needed. My suspicion is that we will see more of what I will call .protected lending programs
    • (Read more)   topSee ( CREDIT , LIQUIDITY )
    • (Read more)   top... effective central bank tools requires much greater fiscal stimulation that is targeted to hit the most important pain points, with the cooperation of central banks holding rates down and providing plenty of liquidity, 2) the response thus far has been inadequate in size, focus, and coordination but that has varied a lot by country, 3) in the last few days there have been signs of fiscal and monetary policy makers...
    • ( BANKS, ECB )  top
    • (Read more)   topSee ( CREDIT , ECB )
    • ( BANKS, POLICY )  top
    • (Read more)   top... meaningful debt supports to industries that would go broke due to this shock have been absent (other than SBA-subsidized loans, which look to be small). Probably the best way to do this is for the fiscal policy makers to guarantee the safety of the banks for new lending of a sort that is needed with government protections on that new lending (a politically challenging move)
    • (Read more)   top... plenty of liquidity, 2) the response thus far has been inadequate in size, focus, and coordination but that has varied a lot by country, 3) in the last few days there have been signs of fiscal and monetary policy makers moving to much stronger .do whatever it takes.
    • ( BANKS, DEBT )  top
    • (Read more)   topThe printing of money and buying of debt assets that central banks are now allowed to buy almost certainly won.t work much (because bonds can.t be pushed much higher and they are also less likely to be sold to buy other assets of entities that...
    • (Read more)   topSee ( POLICY , DEBT )
    • ( BANKS, BUYING )  top
    • (Read more)   topThe printing of money and buying of debt assets that central banks are now allowed to buy almost certainly won.t work much (because bonds can.t be pushed much higher and they are also less likely to be sold to buy other assets of entities...
    • (Read more)   topMore specifically, she kept ECB rates at -0.5% and launched a package of measures to alleviate the economic impact of the coronavirus: providing liquidity and a bit more credit by buying .120 billion ($133.9 billion) more bonds by the end of the year and launching a new program to offer cheap loans to banks (at rates as low as -0.75%, below the ECB.s sub-zero deposit rate)
    • ( BANKS, BUSINESSES )  top
    • (Read more)   topGetting money to targeted businesses is a task the Fed is ill-suited for, but it can provide liquidity to the banks to fund those loans if needed
    • ( BANKS, BONDS )  top
    • (Read more)   topThe printing of money and buying of debt assets that central banks are now allowed to buy almost certainly won.t work much (because bonds can.t be pushed much higher and they are also less likely to be sold to buy other assets of entities that are in financial trouble)
    • (Read more)   top... ECB rates at -0.5% and launched a package of measures to alleviate the economic impact of the coronavirus: providing liquidity and a bit more credit by buying .120 billion ($133.9 billion) more bonds by the end of the year and launching a new program to offer cheap loans to banks (at rates as low as -0.75%, below the ECB.s sub-zero deposit rate)
    • ( BANKS, SUB-ZERO )  top
    • (Read more)   top... more credit by buying .120 billion ($133.9 billion) more bonds by the end of the year and launching a new program to offer cheap loans to banks (at rates as low as -0.75%, below the ECB.s sub-zero deposit rate). But it was made clear that the ECB isn.t going to do anything much other than add liquidity because it can.t
    • ( BANKS, SBA-SUBSIDIZED )  top
    • (Read more)   topSee ( POLICY , SBA-SUBSIDIZED )
    • ( BANKS, SAFETY )  top
    • (Read more)   topSee ( POLICY , SAFETY )
    • ( BANKS, RISK )  top
    • (Read more)   topAccidentally we are seeing a bit of this as troubled companies have tapped pre-existing lines of credit at banks. While this may not be what the banks want (I doubt they want to take on more credit risk when the economy is deteriorating), it is one way that money gets to those businesses that are squeezed
    • ( INTEREST )  top
    • (Read more)   top... tell you what I think for you to take or leave as you like. As you know, for some time now I have been concerned that when the next economic downturn would come it would lead to hitting the 0% interest rate floor with a lot of debt outstanding and big wealth and political gaps in the same way that configuration of events happened in the 1930s
    • (Read more)   topHitting this 0% floor also means that virtually all the reserve country central banks. interest rate stimulation tools (including cutting rates and yield curve guidance) won.t work. The printing of money and buying of debt assets that central banks are now allowed to buy almost certainly won.t...
    • (Read more)   top... stimulative without moving to doing what I call Monetary Policy 3 (which is working with fiscal policy makers to monetize their deficits). The first (and preferred) type of monetary policy (MP1) primarily uses interest rates as the control mechanism. When that stops working, they go to the printing of money and buying financial assets which I call MP2
    • (Read more)   topIt is in my opinion appropriate in light of the full picture. In summary, I believe that 1) the 0% interest rate floor and the absence of other effective central bank tools requires much greater fiscal stimulation that is targeted to hit the most important pain points, with the cooperation of central banks...