Coronavirus - New Zealand
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@dogmeat said in Coronavirus - New Zealand:
@JC The money they are spending now is new borrowing so it hasn't taken money away from any other area of spending.
they have also borrowed for the recovery which will see additional infrastructure spending
Finally if people lose jobs and companies go under the economy contracts. The government has taken steps to mitigate both those scenarios. That's supporting the economy surely. But yeah they are running the economy in a way we haven't seen since the early 80's. Hopefully they aren't ruining it as much as Muldoon did.
The money they are spending now is also through quantitative easing. QE is like a stock split in a company - the company is the same, with the same revenues and assets, but instead of 1m x $10 shares you now have 2m x $5 shares. QE devalues the worth of each unit of productivity in the economy, exactly like inflation does.
The idea that borrowing is a way out of this is something I'm sceptical about. Even at low interest rates the principal has to be repaid. The net core debt currently stands at $60bn, about 20% of GDP. That's pre-recession GDP, by the way. The already announced debt expansion is $25bn, and the consensus GDP contraction for this year is 10%. So we can expect net core debt to rise to 30% of GDP by year end at a minimum. If the debt growth is $60bn, which has been touted, that will equate to 43% of GDP. Then the doom-mongers estimates of %50 don't seem so fantastic. I don't know how the government intends to repay that using tax revenues from a temporarily crippled economy. But hey, I'm sure Grant and Cindy have economics expertise that outweighs mine.
Finally if people lose jobs and companies go under the economy contracts. The government has taken steps to mitigate both those scenarios. That's supporting the economy surely.
This is an interesting point. Some, @Baron-Silas-Greenback for example, would no doubt argue that mitigating the scenario is the least they could do given that they are the ones dictating the conditions that lead to the job losses. You're right, the economy contracts under those circumstances. But it's legitimate to ask if it was necessary in the first place. And it's not sustainable.
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@JC this may seem a dumb question, but who are the 'borrowing' from?
Given most Govts. are doing this to try to keep their economies heads above water, they cant all be borrowing from a single entity, is it just a big money go round or is 'borrowing' just making more money?
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@dogmeat said in Lockdown Check In:
GP's and Pharmacies have been given 15mill each (last week) with more to come
So the govt is picking more winners and losers..... work at a pharmacy = winner, work at a butchers = loser.
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The RBNZ issues Treasury Bonds. Effectively they are promises to repay the face value plus a specified interest amount (called the coupon) at a future specified date. These are tradable in the open market. They are issued by tender, and there is a register of tender counterparties who are allowed to bid. These institutions then sell them on into the retail market.
Edit: If you have a Kiwisaver account your provider may have some of your portfolio made up of Treasury Bonds. They have lowish returns (especially now) but are considered low risk.
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@Baron-Silas-Greenback Are you trying to be deliberately obtuse or contrary? If so congratulations.
Work in an essential industry with no alternative options or work in a non essential industry with options.
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@taniwharugby said in Coronavirus - New Zealand:
@JC nah I think my KS is made up of all the companies losing value worldwide
I prefer not to look at my KS. I'm not going to need it for some time anyway
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@dogmeat said in Lockdown Check In:
@Baron-Silas-Greenback Are you trying to be deliberately obtuse or contrary? If so congratulations.
Work in an essential industry with no alternative options or work in a non essential industry with options.
Are you posing a false dichotomy to prop your weak argument or just being stupid? If so congratulations.
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Leaders of big business that will benefit from a lock down killing off small business competitors n NZ support a lockdown.... shocked.
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@JC I don't disagree with anything that you've written which is why I made the point that NZ is in the fortunate position of having had two decades of careful Finance Ministers and had by world standards low govt debt going into the pandemic.
Don't get me wrong I do think this is going to be very difficult both individually (for all but a few) and collectively, but the 30's demonstrated the folly of cutting costs in times like these.
In terms of the govt dictating the circumstances that led to the job losses does anyone really think we should have left the borders open and even if we had would tourists have still been coming?
In terms of the broader impacts - large tranches of the economy should gear up again reasonably well. Countries will still need to buy our food, construction will get a stimulus, but I think the point being missed is that if we had sustained and high death rates a lot of companies wouldn't have suvived that scenario either.
There's a lot of criticism of actions that the govt has taken, and, despite the view of others I have been no big fan of this govt, however I have yet to see a single alternative option put forward that couldn't be distilled down to leave everything open - we will be OK.
2nd time today my clumsy fingers have completely changed the meaning of what I meant to type. Apologies @JC
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@dogmeat said in Coronavirus - New Zealand:
@JC I don't agree with anything that you've written which is why I made the point that NZ is in the fortunate position of having had two decades of careful Finance Ministers and had by world standards low govt debt going into the pandemic.
Don't get me wrong I do think this is going to be very difficult both individually (for all but a few) and collectively, but the 30's demonstrated the folly of cutting costs in times like these.
In terms of the govt dictating the circumstances that led to the job losses does anyone really think we should have left the borders open and even if we had would tourists have still been coming?
In terms of the broader impacts - large tranches of the economy should gear up again reasonably well. Countries will still need to buy our food, construction will get a stimulus, but I think the point being missed is that if we had sustained and high death rates a lot of companies wouldn't have suvived that scenario either.
There's a lot of criticism of actions that the govt has taken, and, despite the view of others I have been no big fan of this govt, however I have yet to see a single alternative option put forward that couldn't be distilled down to leave everything open - we will be OK.
Close the borders, All visitors go into a govt controlled quarantine for 14 days. Enforced a lockdown on over 65s and vulnerable people, massive aid package to ramp up support for these people around home deliveries and mental health.
Leave schools and all businesses open, with hospitality restricted to keep strict logs of all visitor's. Subsidise local tourism ventures whilst also giving aid package to market them to locals -
@Kirwan the baron gave an example. Which IMO was ridiculous.
As soon as you are in a situation where there is a complete lockdown except for essential services then you have to define "essential". It's the govts role to do this. They explained their rationale behind excluding butchers and greengrocers etc. You don't have to accept it but there was a degree of thought behind it.
Personally I think the govt has allowed too many companies to push the envelope. If we have to have a lockdown I'd prefer it to be short and brutal so that we maximise the opportunity to return to some sort of normality as quickly as possible.
Of course many would not have enforced the lockdown
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@Baron-Silas-Greenback said in Coronavirus - New Zealand:
All visitors go into a govt controlled quarantine for 14 days.
this is what is happening from midnight tonight, which should have happend when the rest of NZ went into lockdown.
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@canefan said in Coronavirus - New Zealand:
@Virgil said in Coronavirus - New Zealand:
Wow just 29 cases today, it’s working isn’t it?
Let's keep it up and get the fark on with life on the other side asap
Yup! 2 more weeks of this and we maybe in a place to start the recovery.