COVID-19 Stuff Here

[kiap]

Sure it can, if you like inflation.

Wait a month for even more businesses to shutdown and people out of work to get the stimulus money in their pocket, then we’ll see inflation rocket up and shit really hit the fan.

Nup. Stimulus and the consequent inflationary pressure will be needed.

The amount already put in is unlikely to be enough. Deflation is the word you don't want to be hearing.

Deflation spiral risks Depression repeat

John Kehoe Senior Writer
Mar 26, 2020 – 1.25pm

The coronavirus recession and oil price crash could push inflation below zero for the first time since the Great Depression, causing a dangerous deflation spiral that will require a huge government spending stimulus after the virus passes, a former top Treasury economist has warned.

Canberra-based Outlook Economics director Peter Downes said because the Reserve Bank of Australia will not cut the cash rate below the current 0.25 per cent, real interest rates — which are adjusted for inflation — will rise and hurt the economic recovery.

The government would ultimately need to step in and inject another huge fiscal stimulus on top of the $84 billion announced so far, he said.

Rising unemployment, weak wage growth and the oil price collapse to below $US30 a barrel after negotiations broke down between Russia and the Organisation of the Petroleum Exporting Countries will push inflation to or below zero by the middle of next year, according to his preliminary economic modelling.

Read more: https://www.afr.com/policy/economy/deflation-spiral-risks-depression-repeat-20200325-p54dvw

 

[WorkingClassRugger]

Having been out today to grab a couple of things, I'm of the opinion we're fucking doomed. Ducked into Bunnings to grab a replacement door lock for a house I'm fixing up for a relative (looters) and stupid fucking idiots all walking right next to me despite all the signage Bunnings had in place.

Supermarket not much better.

The local shopping centre has been packed with people well beyond the 500 person limit both last weekend and going from what's been posted on my messenger this weekend as well. This needs to be stopped. Social distancing only works if everyone take ownership of it. At least in order current level of restriction. We need to get it to the point where 80% of the population are staying put at home. We're not there yet. And we need to get there. Otherwise, as demonstrated in the graphs on the last page shows we're still headed to maxing out our healthcare capacity if we manage to maintain our current levels of growth.

 

[boyo]

Sure it can, if you like inflation.

Wait a month for even more businesses to shutdown and people out of work to get the stimulus money in their pocket, then we’ll see inflation rocket up and shit really hit the fan.

Because neo-liberal free-market policies are working so well in combating the Covid-19 pandemic.....Oh wait...

 

[I like to watch]

Sure it can, if you like inflation.

Wait a month for even more businesses to shutdown and people out of work to get the stimulus money in their pocket, then we’ll see inflation rocket up and shit really hit the fan.

I don’t think so.

firstly, I don’t think people are going to squander the stimulus money this time, I think they will in the main, keep it for when they might really need it.
in any event,where could they spend it?
all the majors are shutting down,and most smaller retailers are keen to do so.

if there was a spike in demand,most retailers would be more focused on clearing inventory rather than maximising prices.

 

[Pfitzy]

Canberra-based Outlook Economics director Peter Downes said because the Reserve Bank of Australia will not cut the cash rate below the current 0.25 per cent, real interest rates — which are adjusted for inflation — will rise and hurt the economic recovery.

Will they, though? The GFC hit and after stimulus, interest rates didn't do shit - I know because I fixed a few months earlier.

Now my bank is giving 3-year fixed terms of 2.33% and I'm thinking "yeah that looks tasty, but remember last time you fixed and the RBA cut rates to try and stimulate an economy?"

 

[Dismal Pillock]

waiting to pick up some garlic

lol@Derps and his stupid vampire phobia

 

[Brumby Runner]

Sure it can, if you like inflation.

Wait a month for even more businesses to shutdown and people out of work to get the stimulus money in their pocket, then we’ll see inflation rocket up and shit really hit the fan.

Ah, but will they get the money in their pockets? Wage/salary subsidies look like going to the employer, not individual employees. What are the chances of some employers doing a Seven Eleven and not passing on the full amount? And what of the million or so unemployed before the subsidy takes effect? Talk is that the employers will also get their subsidised wages. In what world will they be passed on in full, and what of the enhanced "job seeker" payment that will have probably already have been paid through Centrelink?

 

[Garry Owens]

161,000 Deaths in Australia in 2017 (0.64% of 1% of population)

2,315,000 Deaths in the USA in 2018 ( 0.76% of 1% of population )

Italy’s Annual Death Rate is about 600,000 per annum on a stated rate of 10.1 to 10.7 per thousand (which would be around 0.9% of 1% of population )

Just saying

And I find it interesting to observe the emerging attitude of the far right in the US with talk about sacrifice in the name of patriotism to save society (that they link pretty closely to economy)

Interesting, even on this thread, to feel some of those same vibes (if not so extreme) emerging

Can we , or should we ,quarantine (pardon the pun) the volume of sick (requiring hospitalisation) + acutely sick (requiring intensive care ) and the most at risk (elderly) .......from the “functioning” infected / mildly unwell + the unaffected?

The concept surrounds secondment of other private and public assets likely with the support and assistance of the armed forces to deal with the higher logistical load of treatment. And yes , I am aware that we just don’t have the volume of professionals /carers - and also , those on the front lines right now are possibly wearing increased risk as their own immune systems get compromised under the load

But rhetoric is also being used about being at war , silent enemy etc etc . By way of example, and for me - one of the great heroic and inspirational examples of humankind’s can do - during the Battle of Britain the average training time for new pilots was curtailed significantly to get bodies in the air to fight. Matter was compromised in “the normal way” things otherwise would have worked - but the preparedness to re-write your book eventually saw the RAF get to stabilise the Air Battle despite being outnumbered - and then ultimately to emerge victorious.

We are already hearing suggestions / examples of Qantas trying to redirect staff to logistic support with Coles and Woolies , people from the Health and Fitness industry to work as orderlies or anything else in low level support to help lighten any load we can

What about endeavouring to re-direct medical and nursing students who are within 1-2 years from completing their degrees to be called on , displaced specialists who are copping it from cancelled elective surgeries , persons who have previously been qualified nurses but have stayed at
home to prioritise raising their families and are not “modern qualified “

What about “field facilities/ logistics ” that deal with increased load in a combination and pulling together of all above factors and no doubt around a myriad of others that also drives hospitality / catering supply , immediate production initiatives - and there are a range of opportunities here - some of which I’ve seen in my own neighbourhood with the boys at the Milton Rum Distillery re-configuring their operations / stills over the last week to go into bulk sanitiser production. Brilliant . I think I saw something where Dyson (vacuum cleaner manufacturers ) were re-directing part of their operations to Ventilator production. Also brilliant.

There are opportunities everywhere here. And yes a large number of people need help in how they re-wire or re-direct but we have to stop thinking about what we know based on what is now the old paradigm

The new paradigm requires a lot of new creativity , co-operation and leadership - and getting past a level of thinking of what you never would have considered before

So ....with all that said - why can’t we manage both health and economy? If we continue to think , or make of it , a binary choice - it seems we’re more rooted than what we need to be in either of those choices

 

[Up the Guts]

Nup. Stimulus and the consequent inflationary pressure will be needed.

The amount already put in is unlikely to be enough. Deflation is the word you don't want to be hearing.

This is a supply shock, with reduced production we will see 1970s style stagflation. Deflationary spirals are caused by falling demand and a supply gut--something we don't have. When prices rise without increases in real production all it does is lower purchasing power of consumers negating the effect of the stimulus

I don’t think so.

firstly, I don’t think people are going to squander the stimulus money this time, I think they will in the main, keep it for when they might really need it.
in any event,where could they spend it?
all the majors are shutting down,and most smaller retailers are keen to do so.

if there was a spike in demand,most retailers would be more focused on clearing inventory rather than maximising prices.

If households engage in balance sheet repair rather than spending the stimulus, then that might prove some long-term good but it basically blunts the whole aim of the policy which is to generate spending to keep us out of the hole until businesses can start opening again.

And, in some respects, that there aren't many retailers to spend the money on adds to inflationary pressures as you have more money chasing fewer goods.

Will they, though? The GFC hit and after stimulus, interest rates didn't do shit - I know because I fixed a few months earlier.

Now my bank is giving 3-year fixed terms of 2.33% and I'm thinking "yeah that looks tasty, but remember last time you fixed and the RBA cut rates to try and stimulate an economy?"

The effective lower bound is 0.25% in Australia because the banks receive the cash rate -0.25% for holding cash with the central bank. If they cut to 0 then banks will have to pay to keep money in their ESAs. At this stage, when the banks are already losing revenue by freezing mortgages etc., I doubt the RBA will be looking to reduce their cashflows even more. Back in November, Lowe basically took negative interest rates off the table.

Short end of the yield curve basically can't go lower, look to see the long end fall as the crisis extends (i.e. buy 10+ year gov bonds)

 

[Up the Guts]

Ah, but will they get the money in their pockets? Wage/salary subsidies look like going to the employer, not individual employees. What are the chances of some employers doing a Seven Eleven and not passing on the full amount? And what of the million or so unemployed before the subsidy takes effect? Talk is that the employers will also get their subsidised wages. In what world will they be passed on in full, and what of the enhanced "job seeker" payment that will have probably already have been paid through Centrelink?

See 80% wage subsidy that was announced today.

 

[waiopehu oldboy]

NZ now has 514 confirmed cases & we've recorded our first fatality, a woman in her 70's with underlying health issues.

"The woman had initially been diagnosed with influenza that was complicated by an underlying health condition, and a positive Covid-19 test came through on Friday. The 21 staff who treated her were self-isolating."

Two real concerns here are that it happened on the West Coast of the South Island, which is sparsely populated & relatively isolated compared to most other parts of the country. Also taking 21 staff out of what would be a fairly small hospital is gunna leave a hole that won't easily be plugged & the next-nearest hospital is going to be a fair distance away by NZ standards.

On a brighter note there are now 56 people who've recovered & the 63 new cases is fewer than reported yesterday or on Friday.

PM & Police Commissioner getting really pissed off with peeps breaking lockdown for no legitimate reason, I think we'll be going from "stop & explan the rules" policy to "stop, detain & see what the magistrate says" within the next 2-3 days.

 

[kiap]

This is a supply shock, with reduced production we will see 1970s style stagflation

If China is unable to return to some level of production without prolonged delay then, yes, all bets are off. They're the middle of the chain.

But production is restarting (an internal imperative, in any case). Their issue will become the reduced demand for their exports to the rest of the world now hit by the pandemic.

Worldwide, there is reduced demand for raw commodities with no immediate shortage at the supply end of the chain. Reduced demand for oil.

Deflationary spirals are caused by falling demand and a supply gut--something we don't have.

See above. Also, the ideas below seem contradictory:

If households engage in balance sheet repair rather than spending the stimulus, then that … basically blunts the whole aim of the policy

No spend = reduced demand​

And, in some respects, that there aren't many retailers to spend the money on adds to inflationary pressures as you have more money chasing fewer goods.

But if households aren't spending?​

​

Yeah, always a balancing act with balls in the air. : P

 

[tragic]

And I find it interesting to observe the emerging attitude of the far right in the US with talk about sacrifice in the name of patriotism to save society (that they link pretty closely to economy)

Interesting, even on this thread, to feel some of those same vibes (if not so extreme) emerging

Dying of respiratory failure,gasping for your last breath in a corridor with no family or loved ones, and no one to even give you comfort measures is a pretty shit way to go.
Not to mention the lifelong impact on the health care professionals trapped in the tsunami
People who advocate that can stay at home and intubate themselves.

 

[Up the Guts]

If China is unable to return to some level of production without prolonged delay then, yes, all bets are off. They're the middle of the chain.

But production is restarting (an internal imperative, in any case). Their issue will become the reduced demand for their exports to the rest of the world now hit by the pandemic.

I don't think Chinese production really has much to do with inflationary prospects in a service based economy like Australia. As long as services are closed then real output will be falling in Australia. As output contracts but demand for still available goods remains propped up by stimulus then inflationary pressures will mount (a good example of this is home gym equipment. With gyms closing consumers have substituted to personal equipment and retailers are now basically all sold out). Of course, globalised supply chains mean that there is unlikely to be absolute shortages and we won't see as extreme price hikes as in the past but they will still mount.

Largely agree that falling commodity demand and supply lags will reduce inflationary pressures. This may wane if commodity production also starts to be locked up.

See above. Also, the ideas below seem contradictory:

The trouble with economics, one event can catalyse two relatively contradictory scenarios. I was trying to illustrate the ill-effects of both not spending and spending stimulus when production wanes.

 

[kiap]

As long as services are closed then real output will be falling in Australia.

For sure. The questions here are, how long is 'as long' (3/6/12/18+ months)? and which services? - not all will close.

I don't think Chinese production really has much to do with inflationary prospects in a service based economy like Australia.

I think it does. Take out that supply of low-to-medium-cost goods (the cost is key) which many service providers use or sell (even just IT/telco gear, or those cheap home gyms you mentioned) and costs go up. I'll leave it there, having said China should get a level of recovery - (except to add there's no easy analysis of the interdependent services sector in isolation from the wider Australian economy).

Largely agree that falling commodity demand and supply lags will reduce inflationary pressures. This may wane if commodity production also starts to be locked up.

Yep

The trouble with economics, one event can catalyse two relatively contradictory scenarios.

Dismal science, innit

 

[cyclopath]

Ah, but will they get the money in their pockets? Wage/salary subsidies look like going to the employer, not individual employees. What are the chances of some employers doing a Seven Eleven and not passing on the full amount? And what of the million or so unemployed before the subsidy takes effect? Talk is that the employers will also get their subsidised wages. In what world will they be passed on in full, and what of the enhanced "job seeker" payment that will have probably already have been paid through Centrelink?

Why is this a problem? My staff are being paid normal wages. I'm not drawing a wage myself for the next several months, most likely, at this stage. Despite what many people think, that medical workers will be "better off" in this crisis, many will not. As a surgeon, most income comes from surgery, some from consulting. Most of our surgery is going to be on hold, and fair enough. Consulting will be significantly reduced (why see lots of patients for surgery when you cannot give them a realistic time frame to perform it) AND the new Telehealth and Telephone consulting item numbers MUST be bulk billed. Given we are being strongly urged to see as few face to face, consulting income is also way down. No cash flow, nothing to pay people. It's going to be pretty tight even with me paying myself nothing. If it goes the wrong way, I'll have to loan money to the business, or borrow it. My staff depend on their wages so they won't be laid off.
So I cannot see why the subsidy should go anywhere else, for my case. I appreciate other businesses might be different and have laid off staff. Better that staff stay "employed" and have continuity of other benefits like Super than being laid off.
I've talked at length to my accountant. Any which way, I won't be "better off".

 

[kiap]

Presumably they can look at PAYE witholdings and tax returns as well.

Whatever system used, there may be some rorts but they should be police-able.

 

[WorkingClassRugger]

Calls for 90% of the population to self isolate. Which is where we need to be.

 

[Garry Owens]

To declare before I begin : I truly have concern and empathy for all effected by this scourge and I also have nothing but respect and gratitude for all front line medical personnel dealing with this at the coal face

According to WHO Data about 3,500,000 people die every year from infectious disease borne from dirty water supply

Further , over 1,000,000 die every year from dysentery

So when we talk about shit ways to die - not being able to rely upon a glass of clear water (something 99% of us have probably never had to contemplate) is pretty awful

And ultimately , because these diseases are overwhelmingly 3rd world diseases in under developed / under resourced nations it just doesn’t get the attention it requires to change these numbers.

I wouldn’t say we tolerate it. I dare say we don’t even know to have the opportunity of caring or demand we do something about it in pure humanitarian terms .

Our governments in developed society have accepted those numbers because they haven’t been deemed important enough or a direct threat to our health and prosperity.

We’ve just come to accept those numbers , that outcome of “that’s how it is” as we continue on doing what we do

Perhaps as we recover on the other side of this we might think about social equity in our own country - and - around the world in a different way

 

[Derpus]

Why is this a problem? My staff are being paid normal wages. I'm not drawing a wage myself for the next several months, most likely, at this stage. Despite what many people think, that medical workers will be "better off" in this crisis, many will not. As a surgeon, most income comes from surgery, some from consulting. Most of our surgery is going to be on hold, and fair enough. Consulting will be significantly reduced (why see lots of patients for surgery when you cannot give them a realistic time frame to perform it) AND the new Telehealth and Telephone consulting item numbers MUST be bulk billed. Given we are being strongly urged to see as few face to face, consulting income is also way down. No cash flow, nothing to pay people. It's going to be pretty tight even with me paying myself nothing. If it goes the wrong way, I'll have to loan money to the business, or borrow it. My staff depend on their wages so they won't be laid off.
So I cannot see why the subsidy should go anywhere else, for my case. I appreciate other businesses might be different and have laid off staff. Better that staff stay "employed" and have continuity of other benefits like Super than being laid off.
I've talked at length to my accountant. Any which way, I won't be "better off".

Is there a material difference? The only difference i can see is if you want to keep your employees on 100% of their salaries and swallow the remaining 20% (which would be nice). Otherwise the money should ultimately end up with the employees regardless? or am i missing something.

I suppose giving it direct to employees might avoid some scams from business owners.