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tv   Counting the Cost 2020 Ep 15  Al Jazeera  April 12, 2020 6:32am-7:01am +03

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as lock down restrictions affect the economy kevin's trying to streamline the payment process after thousands lined up at tax offices this week because of bureaucratic hold ups and former workers are entitled to claim $119.00 a month pacific nations have been struggling to prepare for more cases while dealing with the effects of a powerful storm cycle in harold told through a number of islands just showing homes and leaving tens of thousands without power thousands are also forced into evacuation centers at a time when governments are trying to keep people apart and in other news at least 2 people have been killed and 4 others are missing after a dam collapsed in northern india it released a wave of toxic sludge several homes were engulfed in farmland was swarmed the dam contained to ash from a coal fired power station in a pradesh up to date with the headlines on al-jazeera counting the cost is next.
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hello i'm daryn jordan this is counting the cost on al-jazeera a look at the world of business and economics this week it's been a little more than a decade since the financial crisis will the pandemic push the banking and financial industry into another meltdown more jobs are lost than during the entire
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global financial crisis and millions more on the line as 2000000000 people go into lockdown. as rich nations pick up last paychecks those people on the margins of society that have no safety net from former workers in developing countries the migrants in rich nations who's looking out for them. well from a health emergency to an economic disaster as the world grapples with a coronavirus pandemic unresolved the old wounds may trigger another financial meltdown as rich nations spend trillions trying to keep businesses afloat they're relying on banks to maintain the flow of cash to industries and offering learn repayment holidays to consumers well in europe where banks have yet to recover from the 2008 north atlantic financial crisis despite a trillion euros from governments to prop up businesses there there are fears bad loans will topple some banks and financial institutions in the united states president trump's administration has been rolling back safeguards to prevent
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another crisis relaxing rules on how much money banks should have on hand to cover losses weakening stress tests and allowing more proprietary trade remember when banks would bet against their own clients well for more than a decade banks stopped using their own money to bet on markets but they have lent money to hedge funds to do just that well bloomberg calculated president trumps tax cuts that saved america's top $6.00 banks $32000000000.00 at the same time these banks cut jobs they slashed borrowing and ramped up payments to their shareholders the financial crisis has cost u.s. taxpayers an estimated $23.00 trillion dollars that's about $70000.00 per american . and in europe despite politicians saying taxpayers would no longer be on the hook for bailouts they're still happening in december germany's $4000000000.00 rescue of nor deutsche bank 0 centrally was approved by the european commission and that's
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where we're going to start this week the german government is abandoning its policy of running a balanced budget it plans to borrow 156000000000 euros to protect businesses and industries from berlin out of there as dominic cain reports. it's a scene that's being repeated around the world patience struggle for life medics struggle for resources and governments face growing demands for cash in berlin the answer appears to be borrowing lots of it fully 156000000000 euro ministers say they could do nothing else this is us mind as. in my view it's cynical if some people now start discussions that health issues should come 2nd and the economic issues take priority the top priority right now is to limit the rapid spread of the pandemic to ensure that our house system is well prepared but just as the virus attacks the population so too doesn't the economy thiel explain operates a cinema in vaughan he worries coronavirus could kill his business for me it's
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going to talk about its does it what sort of for me as a cinema operator the situation is very better since big march we are no longer allowed to have visitors the fixed cost continue we do not have any possibility to generate an income this means that there is a loss every single day félix can access direct government money as part of the new package announced but he wonders is it enough. the moment under both the state aid currently on offer is a step in the right direction we've already tried accessing it however there are a lot of server crashes because everyone is visiting the same internet site of the relevant authorities at the same time. to put this new borrowing into perspective it's worth remembering that for the past 6 years successive german governments have insisted on balancing the budget praising the virtues of the so-called shorts and black 0 effectively putting money aside for a rainy day which is why economists say at least in the short term this borrowing
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round is different what it was always meant as a as as having you know a balanced budget in normal times to make sure that in a serious crisis germany has the room to spend so if you're wondering whether this has had a soft and those who are insisting on fiscal austerity in the shorts and no that's not the case that extra strength and an emboldened them to say the reason why we can spend so much to save our economy in this difficult time is because we saved in good times so the shots and i was not abandoned just temporarily on hold. another aspect of the government policy is to allow firms to move to what's called courts are bite short working which means companies can use federal money to help pay their wage bills in the short so that they don't necessarily go to the wall in the long term. and then there are the companies who depend on seasonal workers such as in the food industry germany is about to enter asparagus season and normally
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hundreds of thousands of workers from eastern europe would be crossing borders for the harvest now many cannot and firms like hubert herndon in bavaria are feeling the pain between the 3 debates 12 for 20 today we have seen some 20 to 25 percent loss we preemptively have announced reduced working hours in order to make ends meet and not to miss any time limits we have sent people on leave and we've tried to prepare for everything that chimes with many firms across germany who hope there is an end in sight to the coronavirus crisis one which does not kill their business dominic a. ayman al jazeera berlin well joining us now via skype from edinburgh is millions of us he's chair of international banking or and finance at the university of edinburgh and amelia's has written extensively on financial regulations i mean it's great to have you on the program let me start by asking you is the banking sector prepared for this pandemic do you think no nobody's the banking sector is in
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a much months but us shape that was in than it was in 2008 but nothing like this and of course the biggest problem is the exposures held off balance by corporate loans from corporates to corporates and even one of them defaults as you understand the same corporation will be fought on its bank loans and then the status on the banking sector will be imported in directly and that's the biggest the biggest said to be yes there is that corporate default on their short term loans to other corporates this is a form of shadow banking activity that was not a regulated force 2008 and has created serious fragile it is serious
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vulnerabilities to the global financial system the are the threat that the banks face is that the spun damie and the falling g.d.p. in the nation of economic activity last for a very long time non-performing loans accumulated and. stand by capitalism. bank equally there is not sufficient to deal with this kind of of crisis do you think lessons have been learned since the 2008 financial crisis then we always fight the last crisis. so lessons had been learned and lessons have been learned and measures are in place to fight it crisis that is similar to the 2008 crisis that started from the find a sector of. caution ball to say where the shock the impact of this type of crisis which nobody could predict the shelf prices that would shut down the
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economies ease accounted for in the bank more bells in the bank capital reserves because it is not what for sure is there is a lot of lots of resilience in the event of a number of defaults in the event of some your brilliance and their willingness of central banks to support. whatever it takes unlike what happened in the early stages of the 20072008. let me a pandemic loss and the loss of g.d.p. is massive then the banking sector will face serious shoulder and see problems as well and companies during this crisis are already asking for bailouts immobile of the big problems with the 2008 bailouts that was despite the massive cash
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injections into the banking industry very little went in to help the real economy and most of it went to dividends it went to bonuses and investing in the markets i mean that's a big problem isn't it. it is and one hopes that this time what's going to be bailed out quantum is especially because there is no moral hazard problem nobody is really responsible for this type of just crisis and the 4 in the g.d.p. the 4 in economic activity so one hopes the government money time will go to bailout. households not that you support household incomes and demand so that not to have a demand shock as well as the supply supply shock that we face today but they are economy needs serious injections of government money and that should include
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self-employed people with yourself insurance no pension no entitlements and households with of course still need to face their day to day bills food bills the mortgage their credit card loans and so on and it's an interesting point you make a 1000000 about the bailouts because the european central bank has asked banks and other financial institutions to skip dividend payments so they can cover their losses there are others that yeah but there are others who wish to go ahead i want to go ahead with these payments that doesn't look good that does it no because what you do when you pay dividends to your shareholders oborne shift you take cash out of the bank and this is going to be cash that will be needed will be required further down the road for the bank who will stand the pressure to withstand the shock and awe. that could be used to rollover loans to small
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businesses or individuals or startups in order to avoid the wave of default it's very selfish and irresponsible in this environment to defy the european central bank or. the bank of england all the other regulators and go ahead being born she's and the evidence should be all together in this and we should all share the pain otherwise companies will become morally bankrupt as well as financially i mean us this time around the government such trying to help businesses directly aren't they i mean should governments take stakes in these businesses and make sure they don't pass on the money to shareholders thereby enriching them. no but they can put strings attached to the cash that they are pushing the businesses they can ask the business not to eliminate capacity for the post-crisis period for a period say of 6 months or 2 and once you get the same amount of employees the
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same output and so on so it's very important that the money that goes into the private sector is safeguard jobs and safeguards individual incomes as well as the viability of the corporation just a final point to you a 1000000 this is all very well for rich countries but what about low and middle income nations how will banks talk there and what can governments are pretty stretch with big debts anyway what can they do to help the banks and keep them alive well that's a big question and obviously what i said about the resilience of the banking sector this time around at least for a time. doesn't apply to the emerging markets what would happen there is that the world bank especially would and own organizations would help the state too with the loans that do not have
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a conditionality this is not the time for stating this is not the time to showing that they show variance balance sched this is a time of fiscal expansion so international organizations like members like the world bank regional banks all the members of the g 20 should be prepared. they're wealthy countries members of the g 20 should be prepared to lend money to this smaller countries that we can trace in order to stabilize the financial sector and their economy the shame. the same should be the case with the i.m.f. the big fear we have is that they might be imposed on this guy and there is some senseless one dish and i even though this gun this have done nothing there on it's a global pandemic there is going to be or there is
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a 3rd of the global financial crisis and they receive money because. they won't care if they stay afloat to stay solvent at the end of the day what is going to be the benefit for the global financial system for them well good luck there are financial organizations and it didn't end it can do this if we face 6 months down the line or a year down there oh it wave will shove and bugger up says ok what's going to be why that would be needed by this gain so they should do the most for their countries in order to allow them to support their finances so i mean yes we have to leave it there thank you very much i mean us of the us for talking to count in the cost thank you. well as the world grapples with a global recession it's also witnessing the fastest pace of job destruction since the great depression tens of millions of jobs could be lost despite trillions of
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dollars spent on saving businesses and industries the hardest hit sectors are the airline the hotel and tourism industry many millions on low pay and short term contracts well in the united states more than $14000000.00 people could lose their jobs that's according to experts goldman sachs says the economy could contract by as much as 34 percent and unemployment could rise to 15 percent. with unemployment already at a 45 year high many workers in india's informal economy stand to lose their jobs as $1300000000.00 people remain under lockdown it's a similar picture in many low income and developing countries in the u.k. the number of people seeking universal benefits soared to a staggering 950000 again there are similar numbers in spain and italy well as people around the world struggle with new anxiety is around the kobe 1000 pandemic there's great concern among groups in the us who live and work on the margins of society like undocumented workers and their families al-jazeera as rob
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reynolds reports now from los angeles one son theone is a day laborer. i work day to day so i have to work. this is them if i don't work. i would have enough to cover the basic necessities in a city that has nothing. at the nonprofit outreach center where something beyond goes to find work staff are preparing bags with soap tissues and information packets about covert 19 who are really concerned specifically for workers that are elderly we're really concerned about them we look at that we have a huge population of workers that are 60 and while at work many undocumented workers can't even practice basic virus prevention workers who don't have access to running water or can even wash their hands at the month senior osco romero clinic in los angeles dr don garcia treats low income families many of whom are
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undocumented they live in the shadows their exposure i could very well say on an epidemiological site could even be higher than the ordinary resident or person of the united states just because of their employment standards garcia says some undocumented people ovoid interacting with public health systems for fear of being caught like immigration authorities and deported doctors say if the situation remains in which undocumented people stay in the shadows away from the health care system during the pandemic it poses a grave risk to the population as a whole they're becoming a transmission vector to all those other individuals that they're exposed to unless government policy encourages undocumented people to come out of the shadows the danger of infection could increase for everyone robert oulds al jazeera los angeles now the international labor organization has estimated the pandemic will eliminate
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6.7 percent of working hours globally this quarter that's equivalent to 195000000 full time workers well i'm delighted to say we have via skype from geneva sung helmly he's the director of the employment. the department at the ilo sang we're living through extraordinary times aren't we and i'm guessing our best estimates as to how deep job losses will be during the crisis is obviously going to keep changing what's your prediction then in terms of the actual job losses and how difficult is it to compare this pandemic to past events. i think this is very uncertain time also it's very hard to predict what's going to happen over the course of this year. actually about it 2 weeks ago we actually made a prediction about around 25000000 job losses actually by the end of this year and at the time there was the opposition is based on the our over
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a. prediction about the g.d.p. and also the password direction of these pandemic and was how the employment will be sensitive to this economic shock so the whole these are some so we made a 40 hour initial actually prediction turn us to be rather optimistic so that u.d.p. is moving fast and also the pandemic crisis will last longer than expected and also more importantly it the way at employment is responding to the this economy show in the lockdowns are large and key and you know large scale and was a very immediate so the this actually put us in a very difficult situation to put days to what's going to happen so we actually changed our methodology a little bit to look at the what's going to happen in the next 3 months that's something we did the same time looking at just the employment i mean have enough so
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you see the unity of the world groups who've managed to get to us but their working hours are shorter and sometimes on the paid leave and sometimes people have the temporary laid off so the improvement to figure doesn't necessarily convey the fruity to of the reality on the ground that's why they actually start to actually use the working hours so young so then what's your advice to governments during this time especially as more than 2000002000000000 people are about to go into lockdown i mean there's a lot of people who stand to lose their jobs yeah exactly that's the that's the irony. concern i mean it's very important this is a crisis of fact it was deliberately manned as price at the same time and it sent time dealers who were in the business to mathematica past. this crisis themselves so his crucial and very important for the governments to take immediate action to support them and so time is everything of course the lot of governments are
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actually making very impressive move to announce this package is. not a part of that is actually for exporting the business and workers but we have to move very quickly timing is everything and also the we should put in place a very strong delivery mechanism to make sure their workers and businesses are actually benefit from this extra support in kind of the manner without any today let's just talk about developing countries if we can because the problem is a lot more difficult to get a grip of isn't it because of the huge informal sector economies in these countries how do you catch and support these individuals that i think this is basically the important question is specially for the informant workers as you notice the and then he's now spreading to different countries where typically more than 60 percent of the workers are informed workers normally in the crisis situation in former workers assume managed to actually do their economic activities but this time is
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different because the or kind of lock down the arrangement with or to restrict the movement and also the economic activities so they involve more jobs is not actually something actually these workers can can actually manage at the moment for this reason we think that the strong source of protection or income support from the government and community should be the key and international community is moving very quickly to provide the necessary support for death so young let me get a final thought from you when we come through this what should our priorities be and what's your advice to governments. i think the this for us the job is to create press so when you actually provide these force to business and also to the other person measures for example through these stimulus package our recommendations or ways that the you have to give priority on the jobs and
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employment we know the we have regular girl lessons from the previous crisis for example over a fine a surprises in the 2008 and now. you see it is germany actually they are actually putting lots of emphasis on to making sure the workers maintain their jobs and that that is the focus of the sporting business as you are and other countries they are the less emphasis put in that's ever says on this up time and the the alcan is another contrasting in germany the improvement of the problem and the situation actually somehow is quite ok and then. we have a very quickly but in other countries nike u.k. and also the united states and he takes it took quite a long time to actually getting back to the normal level of employment and when it comes to the incomes and also over or the wages for example it took almost 10 years to get back to pre-crisis
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a lever so i think what kind of recovery we want and it's very clear i mean we have to make sure the job she read our priority good means that you could income and that's a good life for the workers and that's what it all the society wants so he only thanks for talking to counting the cost thank you thank you so much. and that's our show for this week but remember you can get in touch with us via twitter use the hash tag j c t c when you do all you can drop us an e-mail counting the cost of al-jazeera dot net is our address but there's more for you on line of al-jazeera dot com c.t.c. that will take you straight to our page which has individual reports links and entire episodes for you to catch up on. but that's it for this edition of counting the cost i'm daryn jordan from the whole team here thanks for joining us the news and al-jazeera is next.
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