Stabilising the global economy
Sir, – The shock to the the global economy caused by the Covid-19 pandemic is deeper and faster than has been witnessed in living memory. While central banks and political leaders are taking drastic measures to calm markets and provide compensation to industries and individuals who suddenly find themselves in dire circumstances, there are perhaps two further measures that could be implemented.
First, the suspension of stock-market trading. These markets represent bets on the future. With every sector of the world economy slowing apace, traders cannot price the future. The extraordinarily violent sell-off we are witnessing is a clear expression of their fear. The stock market in New York was closed for several days after 9/11 to restore calm. A suspended period of two weeks would have a beneficial effect as we adjust to a new normal.
Second, there are an estimated €3 trillion dollars held offshore and untaxed by the top 500 US companies. Now is the time to impose a one-off tax of 50 per cent on these funds, equivalent to the sum that the US government is now pledging to borrow to stabilise the economy, and inject them into the areas of the economy suffering most. Given the extent of the current crisis, is there really any credible argument against such action? – Yours, etc,