Coronavirus - New Zealand
-
@Godder Particularly like the last paragraph. We have to cushion the blow for businesses, through no fault of their own, are going to fail.
Those are good suggestions on how the banks can come to the party there.
I hope we get to lockdown 3 and 2 very quickly so we can start the recoverly. THe longer we leave it, the worse the depression is going to be.
-
@Kirwan said in Coronavirus - New Zealand:
I hope we get to lockdown 3 and 2 very quickly so we can start the recoverly. THe longer we leave it, the worse the depression is going to be.
I'd like a category of Distanced businesses & services to go with Essential ones at Level 4 in the interim. It's good that the groundsman at the golf course can (finally...) get back to work, but the owner/operator lawn-mowing round could do the same. Anything that can be safely done to lessen the impact, even it it's only around the fringes while at Level 4.
-
@Godder said in Coronavirus - New Zealand:.
Side note - a lot of owners of small businesses are in personal financial trouble because of personal guarantees. One of the reasons for companies as a legal entity was limited liability, but personal guarantees have made that a lot less of a reality. I would like to see personal guarantees banned to make limited liability companies actually limited liability, or if that isn't done, at least make them void if the failure was due to the pandemic (similar to the safe harbour announced for trading while insolvent if the insolvency is principally due to the pandemic). If someone added mortgages on residential property to fund business, I wouldn't be upset about that either...
Personal guarantees are rife, banks (to some degree), other financial institutions (to a great degree) and suppliers all do it. If you are a recently established small business you may find it difficult to get a supply account without one. I had a guy talk to me who had an educational company that he started with his wife. His business plan was good but the way his business developed was nothing like it. He was paying his power out of a personal account, his MFDs and his business car were provided on lease under a personal guarantee and his landlord (a law firm) had a lien on their house, which they exercised. They were bankrupted but not before losing their family home, transport and marriage. But here’s the thing, they were a going concern with a few tweaks, if they had just sought some advice from an experienced mentor and accountant, and if they had stayed away from the predators. And I have to say their bank tried to save them as much as was reasonable.
-
@Donsteppa a L2.5 or L3.5 sort of thing.
I think these need to be moving targets.
I honestly cant see the benefit of remaining in lockdown past the original date (although this is a Thursday, so maybe make it the following Tuesday the 28th since ANZAC Day is mondayised - although another day at home...)
Was interesting watching Breakfast this morning and how a couple on there plus some viewers saying stay in lockdown aslong as needed...I wonder if they are all on full pay?
I know some teachers who say they think we should stay in lockdown for another 2 weeks...
apparently WHO are relasing some 'rules' for countries rto follow post-Lockdown.
This is the key part I think, how countries deal with things coming abck to whatever the new normal is.
-
@taniwharugby Yeah, some people are not understanding the pain this is causing.
-
@taniwharugby said in Coronavirus - New Zealand:
@Donsteppa a L2.5 or L3.5 sort of thing.
I know some teachers who say they think we should stay in lockdown for another 2 weeks...
Ha ha! Of course they are. Full pay and no work.. It's a doddle
-
@taniwharugby said in Coronavirus - New Zealand:
apparently WHO are relasing some 'rules' for countries rto follow post-Lockdown.
If true, that's only going to fuel the conspiracists. The WHO can't say they've demonstrated the level of competency for an unelected body to be telling countries how and when to provide their citizens with the liberties they used to enjoy.
-
@antipodean said in Coronavirus - New Zealand:
f true, that's only going to fuel the conspiracists. The WHO can't say they've demonstrated the level of competency for an unelected body to be telling countries how and when to provide their citizens with the liberties they used to enjoy.
I saw a headline today with WHO saying world food supply chains are at risk...as if people werent panic buying enough already you fluffybunnies!
-
Some interesting assertions here. Were are in extraordinary times.
-
@pakman said in Coronavirus - New Zealand:
@Godder said in Coronavirus - New Zealand
This is all relatively direct spending. What about indirect spending? Conservatively, we have already wiped 10% off GDP and increased unemployment to 10% (from 4%), and probably increased underutilisation to 15% (from 10%). GDP is simply a measure of spending in the economy, and if $31 billion didn't get earned or spent, that's a lot of money not available to buy a coffee with, to go out for dinner, to buy clothing, get a haircut (people still get haircuts, but fewer in a year). It's not going to be essential spending that gets cut, it's the discretionary spending.
If we just opted for social distancing and quarantining/isolation for border arrivals instead of lockdown, how many small businesses go to the wall in a year anyway because their income is down 20-30% and falling with no way to make it viable because their bank and landlord won't assist them? How many business owners increase their hours to 70-80 per week in an unsustainable and ultimately futile attempt to make it work? How many broken marriages, mental breakdowns, suicides do we get in that pathway? Is it more or less than the current pathway? Do we get worse or better outcomes from going tough now and soft later, or from going softer now but tougher for longer?
The premise of the current plan is that the total pain will be less if we get it done quickly than if we drag it out, especially because government can provide a lot more support in a short space of time than over a longer time frame.
We should see the next part of the government's financial support package this week - our current support is a good start, but hopefully this week provides a lot more support for small businesses especially as they need it.
Side note - a lot of owners of small businesses are in personal financial trouble because of personal guarantees. One of the reasons for companies as a legal entity was limited liability, but personal guarantees have made that a lot less of a reality. I would like to see personal guarantees banned to make limited liability companies actually limited liability, or if that isn't done, at least make them void if the failure was due to the pandemic (similar to the safe harbour announced for trading while insolvent if the insolvency is principally due to the pandemic). If someone added mortgages on residential property to fund business, I wouldn't be upset about that either...
Good post! As someone who, (pre CV) returned to NZ every nine months or so to visit elderly parents, I've gotten the feeling over the last two or three years that people collectively have been spending beyong their means.
Whether that's right or wrong, I don't think the business cycle will ever be abolished, so businesses which can't withstand a 20% fall in turnover for a year or two aren't really viable. IOW, CV in such cases won't cause their demise, so much as being the catalyst. Such businesses shouldn't be financed with lots of borrowing and can't afford high rents. Personal guarantees are only pouring fuel on that fire. But probably imprudent for the banks to lend without them?
I do think that post CV rent levels will come under threat -- if SMEs go broke the next tenant will need lower outgoings. And highly geared landlords will also be under the cosh.
Be that as it may, if CV severely curtails international tourism, business travel and immigration it's safe to say GDP will take a big hit.
Within that, a hard short lockdown seems more sensible, because debt/overdue payments are time related. But once the virus is all but gone (4 -8 weeks), I can't see the point of schools being closed, shops not being generally open subject to social distancing and people going back to work where WFH is less productive. Sport can be played, perhaps with some crowd restrictions.
But no V shaped recovery either way.
Are you joking? You think companies that cannot handle a 20% drop in revenue for a couple of years running aren't really viable?? If that is a prevailing thought we are screwed.
-
@Baron-Silas-Greenback Wouldn't be many left would there.
In nice simple numbers a $1m revenue business @ 20% margin could have a profit large enough to look after a small family. Take that away for 2 years...what was very viable now isn't.
-
@Snowy said in Coronavirus - New Zealand:
@Baron-Silas-Greenback Wouldn't be many left would there.
In nice simple numbers a $1m revenue business @ 20% margin could have a profit large enough to look after a small family. Take that away for 2 years...what was very viable now isn't.
I know you were going for simple numbers, but 20% margin is also generous (but certainly a minimal goal). Many business are waaay below that, but they are viable because they still make money for the owners, or they are growing/being repaired
-
@Baron-Silas-Greenback said in Coronavirus - New Zealand:
@pakman said in Coronavirus - New Zealand:
@Godder said in Coronavirus - New Zealand
This is all relatively direct spending. What about indirect spending? Conservatively, we have already wiped 10% off GDP and increased unemployment to 10% (from 4%), and probably increased underutilisation to 15% (from 10%). GDP is simply a measure of spending in the economy, and if $31 billion didn't get earned or spent, that's a lot of money not available to buy a coffee with, to go out for dinner, to buy clothing, get a haircut (people still get haircuts, but fewer in a year). It's not going to be essential spending that gets cut, it's the discretionary spending.
If we just opted for social distancing and quarantining/isolation for border arrivals instead of lockdown, how many small businesses go to the wall in a year anyway because their income is down 20-30% and falling with no way to make it viable because their bank and landlord won't assist them? How many business owners increase their hours to 70-80 per week in an unsustainable and ultimately futile attempt to make it work? How many broken marriages, mental breakdowns, suicides do we get in that pathway? Is it more or less than the current pathway? Do we get worse or better outcomes from going tough now and soft later, or from going softer now but tougher for longer?
The premise of the current plan is that the total pain will be less if we get it done quickly than if we drag it out, especially because government can provide a lot more support in a short space of time than over a longer time frame.
We should see the next part of the government's financial support package this week - our current support is a good start, but hopefully this week provides a lot more support for small businesses especially as they need it.
Side note - a lot of owners of small businesses are in personal financial trouble because of personal guarantees. One of the reasons for companies as a legal entity was limited liability, but personal guarantees have made that a lot less of a reality. I would like to see personal guarantees banned to make limited liability companies actually limited liability, or if that isn't done, at least make them void if the failure was due to the pandemic (similar to the safe harbour announced for trading while insolvent if the insolvency is principally due to the pandemic). If someone added mortgages on residential property to fund business, I wouldn't be upset about that either...
Good post! As someone who, (pre CV) returned to NZ every nine months or so to visit elderly parents, I've gotten the feeling over the last two or three years that people collectively have been spending beyong their means.
Whether that's right or wrong, I don't think the business cycle will ever be abolished, so businesses which can't withstand a 20% fall in turnover for a year or two aren't really viable. IOW, CV in such cases won't cause their demise, so much as being the catalyst. Such businesses shouldn't be financed with lots of borrowing and can't afford high rents. Personal guarantees are only pouring fuel on that fire. But probably imprudent for the banks to lend without them?
I do think that post CV rent levels will come under threat -- if SMEs go broke the next tenant will need lower outgoings. And highly geared landlords will also be under the cosh.
Be that as it may, if CV severely curtails international tourism, business travel and immigration it's safe to say GDP will take a big hit.
Within that, a hard short lockdown seems more sensible, because debt/overdue payments are time related. But once the virus is all but gone (4 -8 weeks), I can't see the point of schools being closed, shops not being generally open subject to social distancing and people going back to work where WFH is less productive. Sport can be played, perhaps with some crowd restrictions.
But no V shaped recovery either way.
Are you joking? You think companies that cannot handle a 20% drop in revenue for a couple of years running aren't really viable?? If that is a prevailing thought we are screwed.
It's endlessly depressing that many continue to think of businesses in abstract terms rather than them being the futures of the owners, employees and their families. If the way forward is for everybody having to work for either the government (state or local), a large corporation, or gigging then please count me out.
-
I thought this was an interesting post from #barbarian. The pandemic will have far reaching consequences regardless of how each individual government handles it. This is disruption pain and suffering on a global scale I can't ever recall seeing in my lifetime. This is world war level stuff
-
@Crucial said in Coronavirus - New Zealand:
Hope I'm not Booboo-ing this (have purposely kept away from Politics like threads) but thought it made interesting reading
So the big plan is to push something that wasn't economically viable before a recession during an actual recession? Powered by positive thinking? Who is going to fund it? HE is absolutely loaded..... why doesnt he do it? And therefore why didnt he do it previous to the WuFlu if it is such a great idea?
-
@Baron-Silas-Greenback said in Coronavirus - New Zealand:
@Crucial said in Coronavirus - New Zealand:
Hope I'm not Booboo-ing this (have purposely kept away from Politics like threads) but thought it made interesting reading
So the big plan is to push something that wasn't economically viable before a recession during an actual recession? Powered by positive thinking? Who is going to fund it? HE is absolutely loaded..... why doesnt he do it? And therefore why didnt he do it previous to the WuFlu if it is such a great idea?
So gross reading yet another gleeful article about how to push an agenda they support.
-
@canefan said in Coronavirus - New Zealand:
I thought this was an interesting post from #barbarian. The pandemic will have far reaching consequences regardless of how each individual government handles it. This is disruption pain and suffering on a global scale I can't ever recall seeing in my lifetime. This is world war level stuff
To be sure, just because all have it bad, doesnt mean some cant be much worse though. So it isnt regardless of how each govt handled it at all, I refuse to give every govt n the world that cop out.
-