THREAD: 1/ Sunak's attempt to boost demand and stop business failures relies on £350bn of soft loans to business. It's big - once you realise they will never be repaid... it will take debt above £2 trillion... but...
2/ Sunak's logic, expressed in the presser, is "use channels we already have" - so the commercial bank loan channel underwritten by government is sensible given the urgency... so is business rate abolition etc etc...
3/ But it still feels like they are using arithmetic tools in a logarithmic world: there are two contagions; slumping demand and financial feedback.. so we should attack the demand issue a through universal basic income payment
4/ And shore up airlines, banks, major manufacturers etc with direct state bailouts, taking an ownership stake and drafting the unions into a new partnership model...
5/ My guess is they are thinking simply to raise SSP and ESA and make access easier: fair enough for a panic strike government that's made a huge error, but not good enough given the scale of the crisis...
6/ You can't rely on existing and orthodox channels in this situation: we need emergency fiscal stimulus of the size Roosevelt unleashed in 1941/42 - if the loans thing is 15% of GDP, we need something more like 40-50% of GDP to make a dent in the panic...
7/ And monetary policy has to be equally radical: helicopter money and buying the debt for starters. Because this is a triple decker crisis...
8/ In 2008 the carapace of finance collapsed down onto the real economy; this time around the real economy is deflating faster, will bring finance with it, but the external shock creates feedback loops - and that's before the geopolitics kick in...
9/ At a minimum we need by Friday: SSP raised to the living wage; ESA ditto and access for all. Scrap the Gestapo system surrounding Universal Credit and signal a huge borrowing and money creation project to get UK workers through 18 months of stagnation...
10/ The nationalisations will have to be semi-permanent: who would invest in airlines in a world where another corona virus is bound to emerge... now to the nitty gritty... masks:
11/ A nurse in a major English teaching hospital told me: we had to cancel training because there was only one mask; now there's advice masks are not needed - where are the masks, where is the testing of NHS workers?
12/ As for the pathetic evasions on the Imperial modelling U-turn: let's have a forensic interview, not more political theatre.... finally...
13/ The government needs to take command of the economy. The unions and Labour front bench should not be there to make helpful suggestions: we should demand full participation in decision making - and empower local government to lead the response...
14/14 The answer is state ownership, state direction of investment and research, massive borrowing, monetisation of the debt, direct and universal income support - loans and tax breaks for businesses won't work fast enough because trickle down never does.
