Towards Financial Stability [Koh Morii]

Mori Akira's Profile

Economist. Affiliated with a think tank (United States). Specialties include exchange rate policy, monetary policy, macroeconomic policy, and financial regulation. Interacts with market participants, financial authorities, and policy makers to analyze exchange rate trends from multiple perspectives.

※This article is a reprint and revised edition of an article from FX攻略.com July 2020 issue. Please note that the market information written in the main text differs from current market conditions.

On March 13, one month or more had passed since President Trump declared a national emergency to intensify the response to the novel coronavirus outbreak. The author has been quietly spending time at home. I only go out to buy groceries or to walk around the neighborhood.

On April 16, guidelines were published for resuming economic activity halted by the coronavirus countermeasures (Stage 1: gradual return to work from telecommuting, reopening of restaurants, movie theaters, and gyms; Stage 2: resumption of classes at schools, nonessential travel; Stage 3: visits to elderly care facilities and hospitals).

However, it is considered premature to implement these guidelines, and each state is considering its own plan for economic reopening. It would be fine if this were a discussion between public health and economics dealing with the same statistics, but... Governor Andrew Cuomo of New York stated, “Even if Trump orders a reopening that risks public health for the people of New York, I will not comply.” In response, President Trump stated about determining the timing of the US economic reopening, “The president’s power is supreme (he can override governors’ decisions and set the reopening schedule).” In response, former Vice President Joe Biden, the Democratic candidate in the presidential race, criticized, “I’m not running to be the king of the United States.”

During the election campaign for reelection of the US president, there has been no instance where a president who was in office was re-elected during a recession. In the 1980 US presidential election, Jimmy Carter was not re-elected due to rising oil prices caused by the Iran Revolution. And in the 1992 US presidential election, George H. W. Bush was not re-elected due to an economic slowdown following the Gulf War. Based on past cases, the chance of Trump being re-elected is “zero.” Furthermore, the faces of world leaders are expected to change significantly.