Coronavirus - New Zealand
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@JC said in Coronavirus - New Zealand:
@Hooroo said in Coronavirus - New Zealand:
@JC said in Coronavirus - New Zealand:
@Hooroo TL;DR = Too Long, Didn’t Read
I’m not suggesting the entire economy will tank. Major exporters will probably weather the storm, with the caveat that if NZ appears to be doing better than our trading partners the NZD is likely to strengthen and repatriated income will be lower.
But the internal SME sector is likely to be decimated. As well as the impacts I related above, that will have the additional negative effect of the companies and their employees paying lower or no tax
I guess that is what I am trying to understand from the likes of you (In terms of your thought process around this)
I'm talking about the economy as a whole. If out biggest components of it are still going well and will likely see an increase in revenue in the short term given where our FX rate is and the primary commodities are increasing in price currently. Won't the impact on the economy as a whole be OK overall? There will just be subsections of pain?
Just on GDP most commentators think that’s going to take a hit of at least 10% year on year. That’s pretty optimistic I think:
i. There are stories of primary producers that have containers on the water now who are being told the recipients can’t pay.
ii. Others can’t get hold of containers and we are actually bringing in shiploads of empty containers.
iii. Small businesses (1-19 employees) recorded sales of $153bn in FY2018, So just based on sales alone you’d expect that taking most of them offline for a month will take 8% or $12bn out of the GDP for a start.
iv. Some supposedly essential businesses aren’t able to generate much turnover as they have no customers. Gas stations, chemists, GPs, builders, banks and FIs are a good example of this.
v. Consumer discretionary spending is probably as low as it’s ever been.
vi. FIs aren’t lending. They’ve tightened up their lending policies for personal loans for two reasons: they don’t want to lose money and they don’t want to get accused of predatory lending behaviour. Mortgage lending is, understandably, at a standstill. They are also preparing for large increases in loan impairments, so once we are out of the lockdown it will likely be some time before lending comes back to normal.
It could go on for a while. The biggest hurdle to recovery is consumer and business confidence. You can’t convince people who are worried about losing their jobs to spend, or companies who worry about their survival to invest. Normally though there is some offset because people sit on their savings and earn interest, which is a direct GDP contributor, but right now savings rates are close to zero. And that money is going to be idle on banks’ balance sheets, because it’s not going to be lent.
There’s also a big unknown. We don’t yet have any data on how the shortfall in personal earnings correlates to people who have no savings or disposable income. It’s all well and good to contribute 85% of wages, but who is absorbing the rest? Families that regularly burn through all their weekly income - and more - will struggle with 15% less. Businesses? A company with 20 staff has to keep paying 3 people’s wages with no revenue. At minimum wage that’s 9 grand in 4weeks. You tell me what kind of turnover the average company has to generate at normal margins to be able to recoup that $9k?
I’ve been drinking and the notification of your post disappeared when I clicked on it. Can you respond to this so I read it when sober as I am really enjoying your opinion.
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It's strange how long it has taken - and continues to take - some economic and business commentators to move past the GFC as their regular reference point. The spectre of the 1930's economically has been clearly looming for about four to five weeks.
The social distancing requirements in the workplace are impacting on businesses still able to operate, who in some cases are down by as much as a third on their normal employment levels as a result. Those distancing requirements don't ease at the end of level 4, so that portion of the workforce won't be back any time soon, regardless of whether lockdown is a short sharp one. And that's employment in essential industries...
The flow on employment effects and impact on consumer confidence is going to be massive. From a back of the envelope estimate a couple of weeks ago, about 15% of the NZ labour force works in tourism and international education supported employment alone. Most places seem to be in a similar boat though. The job data out of the USA, though not surprising, is still absolutely staggering.
@JC said in Coronavirus - New Zealand:
i. There are stories of primary producers that have containers on the water now who are being told the recipients can’t pay.
I vaguely remember an economic history of the great depression suggesting NZ experienced it quite differently to the rest of the world. Unlike most places, our main exports were still in demand, but the ability to pay a reasonable price went through the floor. So it was still a shithouse time for employment and industry here - just for different reasons. 'NZ industries are price takers on the world market' is the phrase springing to mind...
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If I was enrolled in the Hooroo school of not giving a shit about strangers. I would be pleased with how NZ and Australia are going respectively. If NZ crashes badly and Australia does not? I will make shit tons of cash... if my business survives the next few months.
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@canefan said in Coronavirus - New Zealand:
How nice of 3 rich guys with zero risk to speak on behalf of business.
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I'm not smart enough, nor educated enough to say why, but I always thought another economic crash was coming. I based that on the fact that central banks were fighting a new war with old weapons, and the low interest rates spawned bubbles everywhere. Business and consumer confidence has never really recovered from the last crash, but in a weird coincidence no one saved any money, people paid down their debt. Debt that was mainly on overpriced housing.
Then we get this, a worldwide shock where entire economies shut down. No one has savings to call on. Countries lock down borders and stop a huge number of industries. People can't work. Business owners can't trade. Yes some are still working, but really, the economy has ground to a halt. If it hadn't, governments wouldn't be shelling out unheard of amounts of cash.
My fear is, how long do the wheels take to start rolling again? A society that started cash poor are even worse now. Also, they are spooked. And they've burned their leave. Who is going out to spend money? Which countries are taking your exports? What stimulus is required to get money moving again?
I am very wary of the future. The longer this drags, the longer it takes to restart.
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@Baron-Silas-Greenback They spent their own time and money to try to help out the country in a time of need. I know they all have a lot of it but good on them
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@mariner4life said in Coronavirus - New Zealand:
I'm not smart enough, nor educated enough to say why, but I always thought another economic crash was coming. I based that on the fact that central banks were fighting a new war with old weapons, and the low interest rates spawned bubbles everywhere. Business and consumer confidence has never really recovered from the last crash, but in a weird coincidence no one saved any money, people paid down their debt. Debt that was mainly on overpriced housing.
Then we get this, a worldwide shock where entire economies shut down. No one has savings to call on. Countries lock down borders and stop a huge number of industries. People can't work. Business owners can't trade. Yes some are still working, but really, the economy has ground to a halt. If it hadn't, governments wouldn't be shelling out unheard of amounts of cash.
My fear is, how long do the wheels take to start rolling again? A society that started cash poor are even worse now. Also, they are spooked. And they've burned their leave. Who is going out to spend money? Which countries are taking your exports? What stimulus is required to get money moving again?
I am very wary of the future. The longer this drags, the longer it takes to restart.
Based on the list of our top 15 export partners, if China and Australia recover fast we may be in position to do okay. China took a massive hit but they have a pretty powerful economy and a lot of money so maybe we can step in while other nations are unable to supply. Of that list how long the USA and UK take to recover will be of significance
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@JC said in Coronavirus - New Zealand:
@Rapido said in Coronavirus - New Zealand:
My hunch is 28 days short sharp pain will do less damage to the economy than a drawn out half arsed approach.
28 days which includes school holidays, plus 2 stat holidays. 18 working/trading days for many.
Let a hairdresser or dentist stay open but with desultory turnover but still all the costs? Or shut stuff down , reduce all costs, subsidise wages, defer mortgages. Shift the pain to the commercial landlords who shift it to the banks.
Wont work for all, for some time is money. Can't save everyone, let the 'creative destruction' begin as the textbooks say.
Can’t agree. “Creative destruction” is pretty offensive really. The majority of businesses that go to the wall represent the sweat, dreams and livelihoods of individuals and families all over the country. They will not recover. Many will have guaranteed their debts with their personal assets and they will lose their homes, in many cases their families, and in some cases their lives. They will not be able to borrow any more money to start again. They will fail to pay their debts, often to other small businesses, leading to more of the same. Recession, too, is a virus. What most small and medium sized businesses want is to be in control of their own destiny, not have failure forced on them by someone who has no idea of what is needed to keep a business afloat in good times and bad, or empathy with the sense of helplessness when you see the hurt felt by your family, your employees and their families, and the community who depends on you to deliver your services and pay your debts. And it doesn’t matter how smart you are or how honourable your intentions are, you can’t do anything about it. Because you have been ordered not to.
BTW, shifting the pain to the banks? Like that actually ever happens... The banks will do fine. And if they don’t, the squeeze will go onto their customers, and there’s nothing the government can do to stop them.
I think the distinction needs to be drawn between long established businesses, which would be viable 99% of the time, but without government assistence may fail and may be imossible to rebuild, and less established/sunset businesses whose vaibility was questionable anyway. Capitalism works in part by the weak perishing and the strong surviving, albeit plenty of luck involved along the line. So some constructive destruction is positive. A huge issue with the lockdown is the danger of the baby being thrown out with the dishwater.
Two things in the post CV world:
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Availabilty of finance for cash flow marginal/negative 'lifestyle projects' isn't likely to recover for some time. So less interesting consumer choices and [self-]employment opportunities going forward; and
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Lack of immigration and muted credit growth is likely to mean property/housing values will stagnate. Those who got used to spending more than they earned, relying on their home as an ATM, are going to find it a tough new world. There is a second order effect, because that is also likely to mean less new build, and a massive reduction in home improvements, so the downstream employment will remain impacted for at least a year or two.
That said, some might observe that CV didn't create such weaknesses, it merely exposed them.
No easy answers, for Cindy or anyone.
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@Chris-B
Re: discussion in media about M Bovis and lessons for Covid19, look at a recent Keith Woodford articles at interest.co.nz.Edit. Actually maybe not, just had a look but couldn't find one. Was sure I read one there a week or so ago.
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@Baron-Silas-Greenback said in Coronavirus - New Zealand:
If I was enrolled in the Hooroo school of not giving a shit about strangers. I would be pleased with how NZ and Australia are going respectively. If NZ crashes badly and Australia does not? I will make shit tons of cash... if my business survives the next few months.
Why would I be pleased? I don’t get that.
I just wonder, given what is going on world wide that if we did much different would we have much of a different outcome? I doubt it.
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- Another death today, another Rosewood Home resident, so 5 deaths in total, 3 from Rosewood Home
- Additional 19 cases, 15 confirmed and 4 probable, taking total cases to 1349
- 75 recovered, taking total active cases down to 798
Should hear what level 3 will look like later this week, including (obviously) any changes from current.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12324415
Agree with this, Aussie is our biggest tourism market, so while it's not going to save the tourism industry from a massive drop, it would salvage something, and likewise for aviation job losses.
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@voodoo said in Coronavirus - New Zealand:
@Godder would personally make me very happy too!!!
How would that happen? The govt has put us (at great cost) on the road to total elimination of the virus, unless Aus can do the same then we cannot let them i without 14 day quarantine. We have been told repeatedly the dangers of exponential growth, now the govt is going to pay a price for the line of scare mongering.
By taking this path when nobody else has, then we have no option but to remain isolated as the rest of the world forms its own networks. -
@Baron-Silas-Greenback said in Coronavirus - New Zealand:
@voodoo said in Coronavirus - New Zealand:
@Godder would personally make me very happy too!!!
How would that happen? The govt has put us (at great cost) on the road to total elimination of the virus, unless Aus can do the same then we cannot let them i without 14 day quarantine. We have been told repeatedly the dangers of exponential growth, now the govt is going to pay a price for the line of scare mongering.
By taking this path when nobody else has, then we have no option but to remain isolated as the rest of the world forms its own networks.I am curious as to your thoughts on how the New Zealand economy is going to be different given everything that is happening in the world despite our lockdown. Do you think the New Zealand economy would be significantly different had we done it under your thought process?
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@Hooroo said in Coronavirus - New Zealand:
@Baron-Silas-Greenback said in Coronavirus - New Zealand:
@voodoo said in Coronavirus - New Zealand:
@Godder would personally make me very happy too!!!
How would that happen? The govt has put us (at great cost) on the road to total elimination of the virus, unless Aus can do the same then we cannot let them i without 14 day quarantine. We have been told repeatedly the dangers of exponential growth, now the govt is going to pay a price for the line of scare mongering.
By taking this path when nobody else has, then we have no option but to remain isolated as the rest of the world forms its own networks.I am curious as to your thoughts on how the New Zealand economy is going to be different given everything that is happening in the world despite our lockdown. Do you think the New Zealand economy would be significantly different had we done it under your thought process?
Yes.
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@Baron-Silas-Greenback said in Coronavirus - New Zealand:
@Hooroo said in Coronavirus - New Zealand:
@Baron-Silas-Greenback said in Coronavirus - New Zealand:
@voodoo said in Coronavirus - New Zealand:
@Godder would personally make me very happy too!!!
How would that happen? The govt has put us (at great cost) on the road to total elimination of the virus, unless Aus can do the same then we cannot let them i without 14 day quarantine. We have been told repeatedly the dangers of exponential growth, now the govt is going to pay a price for the line of scare mongering.
By taking this path when nobody else has, then we have no option but to remain isolated as the rest of the world forms its own networks.I am curious as to your thoughts on how the New Zealand economy is going to be different given everything that is happening in the world despite our lockdown. Do you think the New Zealand economy would be significantly different had we done it under your thought process?
Yes.
Significantly? I don’t. Somewhat? Yes.
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@Hooroo said in Coronavirus - New Zealand:
@Baron-Silas-Greenback said in Coronavirus - New Zealand:
@Hooroo said in Coronavirus - New Zealand:
@Baron-Silas-Greenback said in Coronavirus - New Zealand:
@voodoo said in Coronavirus - New Zealand:
@Godder would personally make me very happy too!!!
How would that happen? The govt has put us (at great cost) on the road to total elimination of the virus, unless Aus can do the same then we cannot let them i without 14 day quarantine. We have been told repeatedly the dangers of exponential growth, now the govt is going to pay a price for the line of scare mongering.
By taking this path when nobody else has, then we have no option but to remain isolated as the rest of the world forms its own networks.I am curious as to your thoughts on how the New Zealand economy is going to be different given everything that is happening in the world despite our lockdown. Do you think the New Zealand economy would be significantly different had we done it under your thought process?
Yes.
Significantly? I don’t. Somewhat? Yes.
Cool you don't think having all businesses open and tourist ventures helped would significantly change the economy. Ok
Logic would dictate that you also don't believe that closing all non essential businesses has had a significant impact. Each to their own I guess.
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@Baron-Silas-Greenback said in Coronavirus - New Zealand:
@Hooroo said in Coronavirus - New Zealand:
@Baron-Silas-Greenback said in Coronavirus - New Zealand:
@Hooroo said in Coronavirus - New Zealand:
@Baron-Silas-Greenback said in Coronavirus - New Zealand:
@voodoo said in Coronavirus - New Zealand:
@Godder would personally make me very happy too!!!
How would that happen? The govt has put us (at great cost) on the road to total elimination of the virus, unless Aus can do the same then we cannot let them i without 14 day quarantine. We have been told repeatedly the dangers of exponential growth, now the govt is going to pay a price for the line of scare mongering.
By taking this path when nobody else has, then we have no option but to remain isolated as the rest of the world forms its own networks.I am curious as to your thoughts on how the New Zealand economy is going to be different given everything that is happening in the world despite our lockdown. Do you think the New Zealand economy would be significantly different had we done it under your thought process?
Yes.
Significantly? I don’t. Somewhat? Yes.
Cool you don't think having all businesses open and tourist ventures helped would significantly change the economy. Ok
Logic would dictate that you also don't believe that closing all non essential businesses has had a significant impact. Each to their own I guess.
Yes I thi k having all businesses open would have had a catastrophic effect on human life. I also think no matter what we did in NZ, the affect of the global economy would have been very bad for NZ