But there is a massive problem with the support that the government is supply. It is being delivered by way of loans. And there are three problems with loans.
First, they have to be repaid, and that means that the priority of businesses over the next few years will become the repayment of government-backed funding, rather than investment in our future, including making sure business can operate on a sustainable basis. This will suppress the recovery.
Second, because loans are liabilities they are used to calculate whether or not businesses are insolvent. Precisely because so many businesses will make substantial losses during the course of this crisis, which is why they require new funding, many now be insolvent, and these loans only compound these problems. That is not their desired outcome, and it is highly counterintuitive that this is their consequence.
Third, because little active consideration is being given to those receiving these loans many might be going to businesses which need have no place in what is coming to be called the ‘new normal’. They are not part of the sustainable economy we need.
What this means is that the system of providing funding by way of loans is flawed, to the extent that it might actually be harmful to the recovery from the current economic crisis that we face. That makes no sense at all.
For a decade now we’ve been told that the Green New Deal – indeed all pensions saving – must be funded by loans, not equity.
Stump thinking presumably.