A very expensive bazooka

What we have done here – or will do from Friday – (“All shops and businesses will be closed”), is to shut almost everything down.
Let’s unpack the “wisdom” behind this decision a little, however.

This step is more extreme than anything yet taken in the UK, Germany or Australia, let alone those countries/states which have best controlled the epidemic – despite their proximity to China – such as South Korea, Japan, Taiwan, Hong Kong, or Singapore.

The economic pain that will be inflicted by this decision, over and above the actions already taken to stem the Covid-19 epidemic, is going to be excruciating. This will bankrupt many businesses (many of which, especially the non-corporates and “small” ones, notably restaurants, are already in dire straits); send thousands into unemployment; and further immiserate many of those living hand to mouth in the informal sector.

In short, we will tank our already tottering economy. It will also lead to a collapse in tax revenues, and probably give us the “final” push over the fiscal cliff.

The lockdown is, I’m afraid, going to be a financial disaster – and the disasters that flow from that, for many, many people. And I don’t believe I am exaggerating.

Government has decided then to pull out and fire a huge and very expensive bazooka, but is it going to hit its target?