Who will pay for the financial fallout of the coronavirus pandemic governments around the world pledged trillions of dollars try and keep their economies afloat will the massive bailout stop another Global Financial crisis this is inside story. Hello welcome to the program im bernard smith. Most economists agree the coronavirus pandemic has pushed the world into recession trade and business abruptly stopped when billions of people were told to stay at home governments are pledging huge stimulus packages to try and reduce the damage the European Union has agreed a 590000000000. 00 rescue package to prop up the worst hit economies such as spain and italy that includes Unemployment Benefits loans for Small Businesses and Health Care Services but leaders couldnt agree on how to share the cost of the crisis the french finance minister is calling this the most important economic plan of the e. U. s history this response contains bald and b. Shoes proposals that will then be unsinkable in just a few weeks ago. We cant pull remember the response to the financial crises of the last decade when nearer the too little too late this time around different. Other countries such as astray Britain China and india have unveiled multibillion dollar rescue packages and the biggest bailout in u. S. History has been unveiled by congress 2 and a quarter trillion dollars but will cover Unemployment Benefits loans and direct payments to every american the International Monetary fund says the world is facing the worst economic crisis since the Great Depression in the 1930 s. The encouraging news is that all governments grants trunking to action any deed there has been significant core of the nation our fiscal money there next week will show that countries around the world have taken fiscal actions amounting to some 8 trillion dollars any in addition there have been massive monetary measures from the g 20 and others. Lets introduce the panel in london vicky pryce the chief Economic Advisor at the center for Economic Business and research in stockholm sweden who suck leme akiyama director of the European Center for International Political economy and also in britains capital greg swenson Founding Partner at Investment Banking firm brick mcadam welcome to you all. First of all of this a big question for all of you combined global Major International economies putting trillions of dollars into fighting into trying to recover from the global effects of the coronavirus or will it be enough to stave off a major global recession or minimize a recession. General expectation is that many countries for have to do more but weve just had for example the fed in the states putting extra to over 2 trillion years done as in liquidity into the market so its obviously been understood that what has been done so far despite quite another fiscal stimulus as weve seen a number of countries probably isnt going to be enough but very much going to depend on how quickly we get out of this and there are of course a number of countries that are already showing some sort of signs that they have an exit strategy so we might see the beginnings so maybe getting out of this lockdown to so many places a facing right this minute but its going to be very tentative so the likelihood is that governments will have to come back and if it takes much longer than they anticipated then with it of course with budgets will be going up and deficits will be. You know increasing very significantly so and also monitor authorities may have to do we just dont know right now but what theyve done so far was an absolute must and as i said many to do more who saw what theyve done so far as an absolute must is is very enough that the Global Economy is a pumped into the system to stave off the worst. Well everyone has been engaged in well trying to cater to their own economies i guess as we heard the us package probably about 10 percent of its g. D. P. And perhaps the most impressive package has been coming so far from japan which is almost spending because originated a and one 3rd of it going to actually Small Business and households and spending almost 110 percent of its annual budgets. A real underachiever here in this context is probably europe where we have so far only seen half a trillion committed and on the european level. Well we have countries like germany has committed about 750000000000 but overall it is quite a underwhelming and we have a still a very bumpy road ahead on the 2nd quarter ok well come back to europe in a 2nd but globally greg do you think overall were going to see stave off a severe global recession well im not sure that thats even possible no matter how much money is thrown at this thing you know from from Central Banks as well as from government so i think the issue is you know how bad and how quickly can we get out of this and thats all going to be driven as i think wed all agree by by the progress in fighting the coronavirus and increasing the testing thats necessary in order to flip the switch on these economies it wont be a v. Shaped its going to be a bumpy road but i think the sooner that we can get back to work then them then the less money thats right that will be required from from governments in the form of stimulus and vicky do you think that your the European Union your ozone countries if you like letting the side down on their side will be pressure on them to come up with much more. But as we heard some countries are doing questionable for example germany others cant really afford to do that and that includes italy greece possibly also spain so what we have is a bit of an unequal reaction to this so all the eyes were on the euro zone my dear were the euro group my do or do you my do more generally so what we have so far is the European Central bank has stepped in quite significantly with an extra promise to notice security is worth about 750000000000. 00 over the next year will begin to do of course also by greek bonds for change so if you see it allows governments in italy greece etc to themselves go out and borrow more and have x. The come to market so thats good news but in terms of sharing the burden a little bit more equally what weve got from the European Union in terms of the the latest package of 50400000000000 euros or thereabouts theres been a certain amount of direct support to countries through the Lending Facility many of you see the yes cent which is basically a facility that was created after the financial crisis this is a loan. Which has no conditions even though some northern countries want to have those conditions but thats good news thats about 250000000000 up about 500 we have some help for the unemployed in the sense of and carriage the firms to keep their work is on their books 100000000000 in fact and we have. Extra money coming to us via guarantees from the European Investment bank all of this is quite good news but it is about a 3rd of what the european so the bank has said we needed in terms of fiscal stimulus across the you thats why i said beginning with my need a little bit more to then and we havent finished i think there we dont have any serious shared risk taking into forward corunna bonds or euro bonds that many countries wanted so yes it is quite limited and presence and quality countries are going to end up having borrowed about more and the worry is whats going to happen and when we come out of it assuming were doing a reasonable way in terms of needing to retrench again so we have this terrible fear there are 70 over the last 10 years and ill begin to see it again who suck that is the next question who how are we going to pay for this who is going to pay for this for the layman these i water amounts of money have to come from somewhere whos coughing up. Well. So if we have a repeat of the discovery during the euro crisis which basically mean that everybody pays for themselves. There are no joint corona but there are no mutualization adept and. In the northern countries i think the population as well as the Political Leadership remember very clearly that when they created the euro that there was not going to be a trance but youre not going to be the massive savings in the known and huge testing and the money would basically move from the sas that was not supposed and so you know were i mean i dont necessarily sympathize with a point of view but there is a very good point which is that spain and italy easily issue bonds that your concentric bank could simply buy in other words the naturalization and the joint bonds more of a political symbol which could be very important for calming down the markets but in other words it doesnt actually add anything in terms of. What we can do in terms of fiscal terms and one thing that is also very clear which is that if you look at the north which is basically netherlands and germany at this stage. Represented by the same people who negotiated the during the euro crisis we are looking at the Prime Minister margaret. And we are looking at an get a merkel and she is probably going to be still be here by the time im dead but. On the Southern Side we have people like mike jones saying and Prime Minister sanchez in spain and also comes in italy theyre all newcomers and another factor think we should forget about is the fact that. President obama is no longer which means that the United States played a pivotal role in forging a compromise amongst the countries and that mechanism well that is no longer. Greg we know about the grumbling from Northern European countries unwilling to what they describe as subsidise southern european members but are we going to head back to austerity and what would that a stereotype be would it be again be cuts to Public Services and funding or are we going to see tax rises instead this time round. Well its probably going to be a combination of both although im not sure how much more you can raise taxes in a place like italy. What theyve been doing for the last 10 years you know hasnt really worked in terms of long term planning or a long Term Solution i mean italys got a debt to g. D. P. 135 percent on the spanish debt to g. D. P. Is 98 percent these countries dont really have the ability to issue very much more debt i mean you know its a good point you could you could just issue bonds from those countries and have that you see be purchased them so thered be you know indirectly funding from basically a transfer of payment from the northern countries so the southern countries but you know theres a long history of this north south divide and you know as your other guest indicated its a lot of its political and psychological not just purely economic you know you look at the pollster renate monomer armor came out last week and said 70 percent of italians think that that germany is trying to strangle the Italian Economy and only 16 percent of those polled disagreed with that statement so you know look i mean you know just set the context can say all he wants about you know the potential of the e. U. Failing if they dont issue these euro bonds but there is real opposition to that in the north not just in germany in the now there owns but in austria and finland as well and so i think theyre in a really tough situation theyre either going to have to issue these bonds and sort of you know break the rules that they that they put in place when they when they put the you together or face you know a real challenge in keeping the e. U. Together i think its its its going to be a really difficult few weeks and addressing this vicki weve had an almost abrupt and to commercial activity almost everywhere in the world Consumer Spending is about 2 thirds of Economic Activity worldwide how long would it take for that to begin to recover. The problem is that in the process of cutting down and shouting in fact the supply and demand with those measures in order to control the buyers we will see reducing real incomes very significantly so g. D. P. Will be falling the ability of consumers to then after having lost a lot of the jobs and having the doctrines in the salaries those remaining in employment quite a while they were and have the purchasing power there to come back and and democritus things that perhaps when they need to get while they were in lockdown but there will be a recovery nevertheless possibly covering the depends hugely and whether the consumers and feels quite a mistake about employment issues whether they think that the Health Situation really has to do so they can go back to work and they feel safe for themselves and family is going to take question time so were not going to have the type of impact that perhaps the lowering of Interest Rates back at the time of the financial crisis and the actually quality that was given to individuals in terms of head then repeat itself now its going to be a much longer process for the recovery that will be getting back to the types of levels we were at before remember countries like italy dumps of the capita g. D. P. Are still below in real terms where they were before the financial crisis and even in the u. K. The only just go back in terms of hourly wages in real terms being where they were before the financial crisis here too so it is going to be a long process unfortunately and thanks for the government will have to be involved in all they say and those deficits will be quite high and those debts will increase to some point but have to do something about then either we can or everything that the central bank has bought terms of bonds in the market the secondary markets and write them off all or Something Else we need to give because those levels of debt are simply not sustainable for the longer term if you want growth again to come who so clearly direct intervention the government have taken in supporting salaries subsidizing salaries or sending people Cash Payments will that encourage people to continue spending you think a minimize the effect of a recession. Well i mean. As we heard before its actually quite refreshing from hearing from my fellow panelist because economists usually say that you know we are in on charter territories its actually quite refreshing for 3 of us that admit that we dont know but the general rule of thumb is that for every week of a shutdown of the scale that were seeing real news about the one percent of g. D. P. Now as we were saying before we are looking at quite a number other than in the 2nd quarter and possibly in the 3rd it will basically make the stimulus package were discussing now. Something of a history we are looking already at the 2nd and perhaps the 3rd way of a correction coming into places like singapore and japan which will spread further we are also looking at the collapse of the International Trade we should a report saying that actually the global trade which has just recovered after the 2010 crisis. Might drop as much as one 3rd which it will be interested and and which is also in scale of a global war and now i mean if you look at economies like for example germany and france actually half of the g. D. P. In germany come actually from exports if that market collapses it basically means that it doesnt really matter what you do to support your salaries because in the end you know the g. D. P. Will be gone because the customers come and then we have also much more long term speculation that we need to take into account because there is no there for example the 1st country to come out of the tunnel will be probably china and on one hand china will be forced to reform into d building up some form of Social Security network but on the other hand extremely export depending economists like europe but also to a certain extent u. S. Financial institutions were really depending on the investment in the united in china. Will see that they will be more dependent on china than the british will be already seeing tendency towards this for example if you look at the business they which seem to suggest that china is currently sucking out quite a lot of Foreign Direct Investment as well as production capacities that actually left china there is now a reversal of the trend that started with the trade wars now with the quite a lot of capital and Production Capacity moving back to china because thats rare probably where you want to be in a Global Pandemic and greg Many Americans will be getting checks of up to 1200. 00 Employment Benefits have been extended and enhanced thats immediate cash why is that you think the best way to keep an economy like the u. S. Taking over at least. Well i mean historically and i would say you know theoretically or philosophically absolutely not those things never work theyre theyre basically short term gimmicks you know they tried that george bush tried that in 2002 with a 600. 00 called a tax refund but its basically a transfer payment they did it again with the democrats in 06 and look at it never works however there has to be an exception in this case because the government has in fact shut down the economy so i think its absolutely critical that they got that they get money into the hands of the people that need it right away immediately so its not designed to be a stimulus its not a stimulus its a relief really its basically relief package and i think thats important to do because of the governments role in this however the sooner we can step back from that and get people back to work let the free markets work you know the sooner we do that the better in terms of the recovery so you know against historically the shirt short term gimmicks dont work it basically is a transfer payment and it doesnt really stimulate the economy i think the best way to stimulate is to directly to regulate and reduce the taxation burden. On the can on workers and so look i think you know as the near term and near term relief that was important and it was the right thing to do but but for sure its not really a stimulus to the economy vickie i just want to ask you about something you touched on in your last. What if governments dont repay all this money that printing what if the Central Banks by their own government bonds why not repay it why not just put it off to the next generation the next generation write it off could that be possible. It is possible and remember of course that everyone aboard a lot to certainly the u. K. Did had a huge debt to g. D. P. Ratio after the 2nd world war and we want to just stop paying basically so you can extend i mean weve got we have boring very cheaply we can extend the repayment periods possibly so a lot of the structuring might take place but otherwise yes some faves you may have to just write it off and the Central Banks may just have to start again because of course their Balance Sheets really increase very significantly because of all the operations that during right now are pushing it into the long term and will be will they decide to do much the terms of like but if you boring right now if you look at whats going on with this year on swearing terms of developed nations their rates that are being paid for in the yields on the say 10 year bonds right now the u. K. Can borrow you know very low they are below 5 percent so so 0. 5 so very very low rates even when you look at 30 year bonds we can borrow at point 75. Percent so why below one percent so we can do it you can probably even pay you know repay the interest over a period of time very low and dont have to pay the extra blank range just you can survive but not many countries across the world will be able to do that and i were a little bit about the southern European Countries also worry about the defense of the worlds well where im suspecting were going to cease and defunds at some point in the international into the fund is already getting good out to deal with that by being prepared to do not pull money into those countries and also looking at their debt situation im suspecting that many countries will fall the wayside from that point of view and they have to start again so yes from have to really look at the whole debts situation afresh but for the moment the thing will have to focus on is of getting to the next phase at least with growth can start again who some to think perhaps more developed economies could get away with not paying not repaying the money theyre printing. Well thats called the folding is now. I think another popular phrase that economists like me saying out there is that we are all japanese now which basically means that we are looking at a significantly larger government that. In conjunction with a. Relatively abysmal growth rate and actually the only country that grown out of that in japan where its basically on the Prime Minister. Mr. Restored some of the faith in the economy and also the growth of the accompt and the Market Growth and the corporate profits but i think europe with a different needs looking at the canary even begin that if that was the baseline i can really see that we are looking at significant increases and greg all the quantity of easing the money printing that there was after the financial crisis didnt lead to skyrocketing inflation the people were scared of that and so why should we worry now about creating all this debt. Thats a great point you know i think a lot of us were concerned about inflation and some of the unintended consequences of these Central Banks levering up and you know you saw the e. C. B. In the fed it you know basically a 25 percent of g. D. P. In terms of their Balance Sheet so i think its something that we have to consider i think we we shouldnt ignore it because if there is some Inflationary Pressure pressures and Interest Rates go up its going to be really difficult for economies to pay back their debts especially in developing Company Countries youve already seen the african finance ministers get together last week and decide to stop stop Interest Payments on many of the debt instruments its something that we have to consider so hopefully we make all of these government measures short term in nature so that the Balance Sheets dont dont blow up too much on fortunately were already out of time and looking forward to the next crisis it seems but for the moment id like to say thanks very much to all our guests vicky pryce who so clean akiyama im greg swenson thank you to watching you can see the program again any time visiting our web site aljazeera dot com and further discussion go to our Facebook Page facebook dot com for slash a. J. Inside story you can also join the conversation on twitter handle is a j inside story for me ernest smith and the whole scene here in doha by phone. There are people in the world who want all forms of verification to just go away so we need people fighting against us we are trying to see if its a fake video may be in syria but in a different time they risk a great deal to find out the truth in very complex situations that include major global play as weve been targeted by Cyber Attacks from russia theyre all dangerous and through this conflict barely kept. Troops in the post truth word are now just 0. Seen as a burden countless babies are aborted in india simply for being girls. But amidst this resistance even from her own patients a fearless midwife has adopted the course of challenging deeply ingrained traditions and terminating this modern day she decides the daughter to a witness on aljazeera. Her. Lawyer. Hello again peter will be here in doha with your top stories from aljazeera spains reporting a rise in deaths linked to the corona virus for the 1st time in 3 days 619 people have died in the past 24 hours pushing the total past 16300. 00 as more than 166000 known cases. As a journalist in madrid she says the rise in deaths is a concern as the government prepares to loosen some social distancing measures well the also experienced