COVID-19 Stuff Here

[Teh Other Dave]

The most probable outcome was a recession under ScoMo at some point, or at best a break in the 29-year growth. Whether it could have been rescued by stimulus is up for debate BUT if it was stimulus in the form of infrastructure building, well we could use some in the energy sector. Heap of easy yards to be made politically in decarbonisation via wind farms and transmission upgrades.

Yeh nah, they'll just be building more Westconnexes.

 

[Garry Owens]

I dunno

I wonder whether this is the true fork in the road re : investment into alt energy ?

This is a chance to walk away from rinse and repeat

 

[Derpus]

The thing i find curious about this economic challenge is that stimulus isn't going to be enough - unlike the GFC. It's not a matter of ensuring spending continues because there is no where to spend.

Be interesting to see how we dig ourselves out of it.

 

[Up the Guts]

I've never suggested it would be magnitudes worse than the great depression.

Your original claim:

many behind that are acting like this would be the sole cause of the impending recession. Which it is not. All this has done is brought forward that timeframe.

So either you think:

a) consistent with the current modelling mapping the effects of extended lockdowns, we were on track for a Great Depression like recession before all this occurred since 'all this has done has is brought forward that timeframe'; or

b) you don't think the outcomes of the lockdown will create much more damage than we were on path for and that recession is significantly better than the ones our current forecasts are telling us will occur.

But please enlighten us as to the true cause of the economic impact of shutting down.

Have you studied much microeconomics? It doesn't really matter where you are in the business cycle, businesses operate on the margin and will be forced to shut down in zero revenue periods to absolve themselves from fixed cost losses. It's the reason a business like QANTAS, which turned over a billion dollars in pre-tax profits, is likely going to receive bailouts in the future. Small businesses operate even closer to the margins and owners won't have sufficient capital to restart the businesses after zero revenue periods.

Which is why nobody was suggesting it.

See above, it clearly was suggested.

The fact is the Libs - being "superior economic managers" - refused to take pragmatic financial measures to keep a society on an upward trajectory. Rising debt, no real wage growth, denial of increases to Newstart, and a raft of tax cuts (mostly for people who didn't need them) put on the table as some kind of salve.

They've done nothing to arrest the upward motion of net debt against GDP that Labor left them after the GFC, and chained themselves to the anchor of a future surplus which in real terms - at $7B - meant very little when the previous treasury under Joe Hockey declared a Budget Emergency but the red arrows kept heading north.

Interest rates at all time lows. National consumer debt at all time highs (housing going mental) and very few levers left to pull for the RBA and others.

The most probable outcome was a recession under ScoMo at some point, or at best a break in the 29-year growth. Whether it could have been rescued by stimulus is up for debate BUT if it was stimulus in the form of infrastructure building, well we could use some in the energy sector. Heap of easy yards to be made politically in decarbonisation via wind farms and transmission upgrades.

Not sure I understand the relevance of any of this. What, the economy was looking late cycle so, fuck it, we may as well kill it completely?

 

[Garry Owens]

@ Derpus : re : Nothing to spend on ......

Sure there is

There will be a fuck tonne of spending on things that provide comfort and reassurance as there always is on the back of significant events

EG : There is a school of thought that 9/11 was an exercise in economic terrorism as much as the physical act. See Alan Greenspan’s facilitation of consumerism on acid in the aftermath that basically sowed the seeds of the GFC

 

[Up the Guts]

The thing i find curious about this economic challenge is that stimulus isn't going to be enough - unlike the GFC. It's not a matter of ensuring spending continues because there is no where to spend.

Be interesting to see how we dig ourselves out of it.

Yeah, bang on. This isn't a demand side problem. It's supply side. It doesn't really matter how much money you give consumers (even if they are hand to mouth households) when industrial production is non-existent.

 

[Up the Guts]

Sure there is

There will be a fuck tonne of spending on things that provide comfort and reassurance as there always is on the back of significant events

EG : There is a school of thought that 9/11 was an exercise in economic terrorism as much as the physical act. See Alan Greenspan’s facilitation of consumerism on acid in the aftermath that basically sowed the seeds of the GFC

Mate, in none of those cases did we have prolonged shutdowns in industrial production. You need production for individuals to spend things on. This is a supply side issue, even perfect little first year Keynesian macro students can draw out their AD/AS diagrams and tell you that spending isn't much help for supply shocks.

 

[Garry Owens]

Fair enough

But honest question - what is prolonged ?

I mean it’s a supply dislocation right ? Not something where supply can’t be brought back on board reasonably quickly

I’m not being glib - I’m just not a theorist or an intellectual on matters such as this . I’m a coal face / transactional guy in a Res Dev business ( Capital Raising across both Debt and Equity stacks )

 

[WorkingClassRugger]

Your original claim:




So either you think:

No, I said we were headed for 'a recession'. Show me the exact quote where I said on the scale of the 'Great Depression'

a) consistent with the current modelling mapping the effects of extended lockdowns, we were on track for a Great Depression like recession before all this occurred since 'all this has done has is brought forward that timeframe'; or

b) you don't think the outcomes of the lockdown will create much more damage than we were on path for and that recession is significantly better than the ones our current forecasts are telling us will occur.


Have you studied much microeconomics? It doesn't really matter where you are in the business cycle, businesses operate on the margin and will be forced to shut down in zero revenue periods to absolve themselves from fixed cost losses. It's the reason a business like QANTAS, which turned over a billion dollars in pre-tax profits, is likely going to receive bailouts in the future. Small businesses operate even closer to the margins and owners won't have sufficient capital to restart the businesses after zero revenue periods.

No. Not much microeconomics. But a fair amount of macroeconomics. Which is relevant in determining the overall heath and direction of an economy both on a domestic and global scale. I also have friends and acquaintances that hold Masters Degree/PhD's in Finance and/or Economics who see the data on a daily basis that indicates we are heading towards one. I take those guys insights and opinions onboard when I form my opinion on the matter.

See above, it clearly was suggested.


Not sure I understand the relevance of any of this. What, the economy was looking late cycle so, fuck it, we may as well kill it completely?

 

[Up the Guts]

Fair enough

But honest question - what is prolonged ?

I mean it’s a supply dislocation right ? Not something where supply can’t be brought back on board reasonably quickly

I’m not being glib - I’m just not a theorist or an intellectual on matters such as this . I’m a coal face / transactional guy in a Res Dev business ( Capital Raising across both Debt and Equity stacks )

When this starts to wind down we'll probably see a pretty decent relief rally in equities and other risk assets but that will paper over a bit what is happening in the real economy. Unlike in 08, the financial plumbing should still be ok so financial markets should be able to start operating relatively smoothly again. The issue will be that in the real economy, many businesses won't be able to cover their fixed costs and will not be able to open again. If they can it'll likely be with labour and/or wages cut to reduce costs which means higher unemployment. At the same time, lost wages while businesses are closed means less money in the pocket to spend after this is all over.

 

[Up the Guts]

...

Originally you said, "all this has done is bring forward the impending recession." It's clearly not all it has done, as you now agree it has launched us onto a trajectory of, at the least, a much greater recession.

Most of macroeconomic thought at the moment is predicated on DSGE models. Basically, you establish equilibria in microeconomic settings and then build econometric models to make macreconomic predictions. Unfortunately, these models predict that supply shocks are less than ideal for economies no matter what the state of their general health.

 

[Froggy]

It's all very well talking about prioritising the health outcomes over the economic, particularly if you are in a job/profession unlikely to be dramatically impacted.
What I can tell you out here in the real world of small business, is that there would be lucky to be one in 20 small businesses that could sustain any more than three months without an income. The decisions that people like me make (in my business once we return to 'normal' conditions it will be three more months without any income) are about putting off people with children and a mortgage. This is a human cost, which, if done on a large scale, manifests itself in depression, substance abuse, domestic violence and at the worst end, suicide. As I've said before, the long term effects could dwarf anything the pandemic does to us.

 

[WorkingClassRugger]

Originally you said, "all this has done is bring forward the impending recession." It's clearly not all it has done, as you now agree it has launched us onto a trajectory of, at the least, a much greater recession.

Most of macroeconomic thought at the moment is predicated on DSGE models. Basically, you establish equilibria in microeconomic settings and then build econometric models to make macreconomic predictions. Unfortunately, these models predict that supply shocks are less than ideal for economies no matter what the state of their general health.

A deeper recession than we may have had is still a far sight different to one of the magnitude of the great depression. Again I ask you. Show me the exact quote where I suggest it would be worse than that. Show me.

 

[WorkingClassRugger]

It's all very well talking about prioritising the health outcomes over the economic, particularly if you are in a job/profession unlikely to be dramatically impacted.
What I can tell you out here in the real world of small business, is that there would be lucky to be one in 20 small businesses that could sustain any more than three months without an income. The decisions that people like me make (in my business once we return to 'normal' conditions it will be three more months without any income) are about putting off people with children and a mortgage. This is a human cost, which, if done on a large scale, manifests itself in depression, substance abuse, domestic violence and at the worst end, suicide. As I've said before, the long term effects could dwarf anything the pandemic does to us.

My mother is a small business owner(hairdresser). Closed her business as of today for the foreseeable future thanks to the current crisis. Fortunately she's well ahead in terms of her rental payments and has provided her staff with their holiday pay in order to get them to the point where they can get the supplemental newstart payments.

 

[Up the Guts]

A deeper recession than we may have had is still a far sight different to one of the magnitude of the great depression. Again I ask you. Show me the exact quote where I suggest it would be worse than that. Show me.

I don't understand what I'm meant to be showing you? My whole point is you are saying that a lockdown isn't going to send us into a recession any worse than one we may have already had, which is just not true:

https://www.smh.com.au/politics/fed...itals-and-shopping-malls-20200326-p54e42.html

 

[Up the Guts]

It's all very well talking about prioritising the health outcomes over the economic, particularly if you are in a job/profession unlikely to be dramatically impacted.
What I can tell you out here in the real world of small business, is that there would be lucky to be one in 20 small businesses that could sustain any more than three months without an income. The decisions that people like me make (in my business once we return to 'normal' conditions it will be three more months without any income) are about putting off people with children and a mortgage. This is a human cost, which, if done on a large scale, manifests itself in depression, substance abuse, domestic violence and at the worst end, suicide. As I've said before, the long term effects could dwarf anything the pandemic does to us.

Exactly, the health costs of an economic crisis are being completely overlooked. As I posted previously, mortality increases 60% with the loss of one's job, Westpac have Australia's unemployment rate at 11.1% by June. 3.2 million filed for jobless claims in the US this week. Back of the envelope calculations show America's jobless rate could land anywhere between 10.5% and 40.6% but sure 'all this has done is bring forward' the recession we were going to have anyway so no big deal. The fallout is going to cost thousands of lives on the current trajectory.

 

[Dctarget]

You guys seemed to enjoy the graph I posted yesterday, so I'll upload today's. All credit to Dr. Scott Wordley (a former lecturer of mine) and his team at Monash.

 

[Dctarget]

Here's the passage that went with it:

Day 16 Scoreboard for Saturday 28th March (8:00pm data):
3,637 total Australian confirmed cases (37 less than the 3,674 we predicted).
470 new (507 predicted yesterday).
+14% single day increase.
TODAY THE CURVE FLATTENED SIGNIFICANTLY by -2%
+14% daily increase (rolling 3 day average)

N.B - We earned our trio of Mitigation Flags yesterday by achieving a -1% or greater reduction in the 3 day average, for the third straight day.
This signaled the START of Phase 2: Mitigation on Day 16.
We will soon switch away from the exponential growth model to a new logistic or sigmoidal one, that factors in a daily reduction in our growth rate of cases (smoothing factor).
We will also start to monitor “active cases” based on the sum of our new cases in the last 10 days (only). If we can reduce and maintain our confirmed case growth below 5% for 3 out of 4 consecutive days, this will signal we have entered Phase 3: Suppression.
While we’ve made some encouraging progress this week, we want to caution everyone against overconfidence or misrepresenting these results. For comparison, Italy claimed their third Mitigation Flag on the 1st March, when they had only 1,694 confirmed cases. Australia has almost double that number of confirmed cases currently. We will have to work very hard to avoid a similar (if not worse) fate.

 

[Pfitzy]

Think we are headed back over +15% once today's figures are finalised

 

[cyclopath]

If they fuck up any significant portion of the Australians to be repatriated from OS (including a decent chunk from Indonesia with low testing / high death rates = bad), then we could be in some strife. Especially if the cavalier approach to isolation continues.