Are businesses being provided lines of credit or other funding sources to continue paying employees while their income might decline in the short term? Or are they able/expected to pay out of cash reserves or existing business credit lines?
yes, the specifics aren't out yet but a package is being put together right now by the government. We don't know yet how much, but the numbers are in the billions.
The government is aware that this is a dificult situation financially for a lot of companies and are working to resolve it. A lot of it will be through delayed payment of taxes and VAT to keep cashflow.
One thing to keep in mind is that interest rates in Denmark is currently negative. That means that the government, and even large credit-worthy corporates, can borrow and actually get paid to do so.
That makes weathering a storm like this relatively easy from an economics standpoint. It's easy to delay revenue and cover fixed costs without incurring any significant financing costs.
That seems to be a cheerful economics standpoint that treats accounting as having primacy over physical supply of goods. It is good if they have a neat legal mechanism to stop companies going bankrupt but the economy is going to tank if everyone stays home and does nothing (or less than normal; in some roles that can work from home). Any economy that doesn't report that it is tanking is an economy built of lies and chicanery.
The economy isn't a GDP or stock market index; it is a complicated process for getting people what they want and need based on an estimate of how much we can afford to give them. It can't weather everyone parking up in any meaningful sense no matter what numbers are published in the ledgers.
I disagree. The interest rate is not entirely divorced from tangible reality. Rather it's the emergent manifestation of the aggregate behavior and preferences of investors, savers, and foreign traders across the entire economy.
A low interest rate is the direct result of indifference to inter-temporal substitution. It indicates that households are willing to shift consumption from the present to the future, that firms can readily defer capital investments, and that foreign producers are willing to cover temporary shortfalls in domestic production because they have high faith in the currency and financial system.
All of those things are physical manifestations of how and why it would be easy for Denmark to weather a temporary supply shock. 3-6 months of reduced economic output can easily be handled by relatively painless deferrals in demand. Danish consumers will shift back vacations, home upgrades and new cars until later in the year. Danish businesses have very well maintained capital equipment, and can stretch maintenance and upgrade cycles. Chinese and Russian exporters have very high faith in the Danish Krona, and will sell goods today for the promise of Danish goods in the distant future.
> Rather it's the emergent manifestation of the aggregate behavior and preferences of investors, savers, and foreign traders across the entire economy.
I'm no expert in Danish monetary policies; but I'm 80% confident their interest rates are set by these people:
It isn't an emergent phenomenon if a 25 person committee declares what the phenomenon will emerge to.
> A low interest rate is the direct result of indifference to inter-temporal substitution.
It is a direct response to government removing anyone who cares about the future from the market by buying them out.
> Chinese and Russian exporters have very high faith in the Danish Krona, and will sell goods today for the promise of Danish goods in the distant future.
I mean sure, but Denmark is maintaining a currency peg. None of this is reassuring free market singalling; this is all the largely the government declaring that the numbers must not look bad.
This seems enormously complicated. How can the government reliably assess lost revenue? What about businesses whose expenditures were always unrealistic and a temporary closure pushed them over the edge, should they be covered too?
Note that I’m not criticizing the solution, just remarking on how hard the problem looks.
For starters VAT and payroll taxes deadlines will be extended, more measures will come. People who have been forced to cancel major events, will be refunded.
There are no immediate promises of such measures being made. Edit: Since this is being downvoted could someone provide a source for such immediate promises? I must have missed it.
