Nations across Asia are scrambling to prop up their deteriorating economies as the Coronavirus continues to spread. Some are so obsessed with growth that they are handing out free cash to citizens.
Hong Kong Hit Hard
The Hong Kong economy has been battered over the past year or so as protests and rioting gripped the island nation. The Coronavirus (Covid-19) outbreak has added to Hong Kong’s woes as the country plunges into recession.
According to reports the government has unveiled a budget packed with giveaways which include a one-time cash handout to its citizens. One of the main features of the annual budget announced this week is a payment of HK$10,000 (approx. US$1,280) to each permanent resident of the city aged 18 or older.
The cash handouts are part of a $15 billion stimulus package but economists are not convinced that giving away free money is the solution.
Crypto industry insider Anthony Pompliano called it insanity adding;
“Governments are so addicted to growth that they are doing cash giveaways!”
LATEST EXAMPLE OF THE WORLD GOING INSANE:
The Hong Kong government is handing out $10,000 Hong Kong dollars (~$1,200 USD) to about 7 million citizens.
This is part of a $15+ billion stimulus package.
Governments are so addicted to growth that they are doing cash giveaways!
— Pomp 🌪 (@APompliano) February 26, 2020
Binance boss Changpeng Zhao commented that it is a rare occasion they actually gave it to the people.
“Usually, it’s just printed and the people won’t see a penny of it. But still, unlimited supply…”
He added that because the HKD is pegged to the USD they can keep printing more as the FED does. The general consensus is that it is all bullish for bitcoin which cannot be printed dues to its limited supply.
Asia Feels The Squeeze
Hong Kong is not the only country scrambling to keep its economy afloat. Singapore also announced cash handouts in its budget last week, pledging a one-off payout of between S$100 (approx. US$71.5) and S$300 for residents aged 21 and older. The move comes as part of a stimulus package of over a billion USD to help households cope with expenses.
China’s economy has been one of the hardest hit being the epicenter of the outbreak. Draconian restrictions imposed by Beijing to contain the epidemic continue to hamper both the movement of people and the recommencement of economic activity.
According to the SCMP regional authorities have cut or deferred taxes, fees and social security payments, in addition to providing subsidies and rental assistance. They have also asked banks to roll over debt at lower interest rates for businesses and individuals.
Thailand, whose economy is heavily dependent on tourism and exports, has urged citizens to take vacations and spend their money on discounted accommodation and services, but has yet to splash the cash.
South Korea is also preparing to turn on the fiscal and monetary taps with interest rate cuts while some landlords are cutting rent to tenants to help mom-and-pop store owners who are struggling to make ends meet.
The fallout from the Coronavirus outbreak could linger for years and may even induce another global financial crisis.
Are free cash handouts helpful to struggling economies? Add your thoughts below.