For someone like me who has been worried about the lack of targeted and timely measures by the Fed, yesterday’s moves represent a huge leap in the public sector response, Mohamed El-Erian writes for Bloomberg.
“The United States made encouraging progress on Tuesday in responding to the coronavirus, led by the public sector and involving supportive changes in private sector behavior.
“The efforts won’t prevent the global economy from falling into a sharp recession, but they will help many Americans better navigate this extremely difficult phase of the crisis.
“This whole-of-government approach is not limited to the executive branch and its work with the Fed. There were also other signs of better collaboration with Congress, including on a sweeping fiscal package that is said to be benefiting from a level of bipartisan cooperation not seen on Capitol Hill for several years.”
He’s also encouraged by the fact that companies are “demonstrating a stronger spirit of cooperation, especially in the health-care, pharmaceutical, banking and technology sectors,” including openness, collaboration, and embracing open-source research.
Next, he writes, governments need to figure out how to prioritize “what will be an avalanche of bailout requests, including clarity on the why, how, when, how and exit strategy.” Airlines, he says, are not the exception, “but rather a leading indicator of the types of shock coming to the vast majority of sectors.”