Just how much is enough? As the zeros multiply in the global bail-out packets designed to fend off a global recession, Forsyth Barr broker Ken Lister believes that should be a question everyone should be asking.
"How much needs to be pumped into the system for this to work? Is it possible to tell or are governments squaring their jaws and giving it their best shot?"The New Zealand Government's bail-out package is starting to pale in comparison with some of those being implemented around the world.
Research supplied by Mr Lister showed that the largest stimulus programmes, as a share of GDP, had been announced by governments in the United States, Japan, China, India, Norway and Australia.
"The sheer size of these programmes will turn into huge fiscal deficits this year and, given that we expect only a very lacklustre recovery later on, also over the next couple of years."
Economic data out from last month again illustrated that the current economic downturn was happening very quickly at the same time all over the world, he said.
Latest figures on industrial output had fallen dramatically - around 10% year-on-year in the US, about 15% in most European countries and by about a quarter in Japan.
Last year, during the first phase of the crisis, governments were adopting measures to secure the functioning of financial markets.
Nearly all of the 30 OECD countries responded to financial market problems with vast liquidity injections, in many cases unlimited guarantees for private deposits and for bank loans or debt.
More than half of the countries also applied capital injections into their ailing banking sector and cut interest rates aggressively, Mr Lister said.
"Given that we expect only a very weak economic recovery in the medium term, governments will probably find it hard to quickly bring down these ballooning deficits."
Forsyth Barr research forecast that the US would have a deficit of about $US1.1 trillion ($NZ2.2 trillion), or 7.5% of GDP in the 2010 financial year.
A sluggish economic recovery would have only a slow impact on tax receipts, Mr Lister said.
However, an increase in expenditures for unemployment benefits and the increasingly ageing populations of many developed nations would be a major drag on national budgets for years to come.
Government debt levels around the world would rise much more strongly than was assumed until recently.
The situation looked most severe in Japan, where the Government recently had to abandon its object of balancing the budget by 2010 and stabilising the "debt mountain", which had already risen to 170% of annual GDP.
"The relevant point for investors is whether governments can bring their budgets and deficits back under control.
Risk premiums have already gone up massively in some countries, reflecting the markets' increased scepticism over the ability of some governments to meet their payment obligations."
In a modest economic upturn, governments were likely to find it tough to implement the necessary tax hikes, Mr Lister said.
It could be tempting to deliberately allow inflation to rise as a simple way of eroding a country's real debt burden.
But higher inflation ultimately meant higher interest rates which made servicing debt more expensive.
The extent to which governments chose, and were able to use inflation in that way, depended on the independence and credibility of their central banks and the maturity structure of their expanding debt.
The European Central Bank appeared to be in a better position to fight off state-sanctioned, structurally higher inflation than the US Federal Reserve or the Bank of England.
Although the longer-term implications were relevant for farsighted investors, politicians were currently more interested in whether the medicine they had administered would have enough of an effect.
"After all, you first put the fire out, and then worry about the water damage."
At times of extreme uncertainty, households and companies might simply save tax cuts and rebates they received which then failed to stimulate consumption, he said.
Spending programmes often took a long time to achieve their objectives, sometimes not until the economy had picked up.
Despite all that, Mr Lister believed that the fiscal packages represented a "very welcome" set of stabilisation measures given the scale of the economic crisis.
In the US, the greatest impact of the recently-passed package should come in the second half of the year, giving a significant boost to the economy into next year.
"It is still uncertain whether this will be enough to bring about self-sustaining growth in the US, and the global economy generally."
