Many business across the World are struggling to cope due to the coronavirus pandemic. Like Antoine Gara says, there’s no moral hazard in using the available tools‧‧‧
Many business across the World are struggling to cope due to the coronavirus pandemic. Like Antoine Gara says, there’s no moral hazard in using the available tools of government and finance to help these businesses survive the disruption. In economics, moral hazard occurs when someone increases their exposure to risk when insured, especially when a person takes more risks because someone else bears the cost of those risks. This cannot be furthest from the current situation. This is not the result of small businesses doing a bad job. This is the time, similar to War time, when Governments must implement massive intervention like temporary government-backed rescue funds, federal loan guarantees, tax relief, cash relief payments, fiscal stimulus, and other measures like loan forbearance. In a time where the current monetary policy does not allow central bankers much room for manoeuvre, it is up to the fiscal authorities across the world to fill the gap and make it clear that they will do “whatever it takes” to help small businesses survive the coronavirus.
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As an Investment Consultant and Specialist, Pompeo Pontone is a Professional Investor with 25 years’ experience in the fields of Investment Management, Quantitative Finance & Derivatives Trading and Data Science.