Coronavirus

[Panthera Tigris]

It was interesting that the reverse of what Lee predicted happened and this is not a criticism of you Lee - Sweden became a poster child of the alt-right anti-lockdown brigade rather than a poster child of the left social-democrats.

For me the jury is still out on Sweden and many other countries - if you can do hard lockdown successfully and eradicate, go for it. Worked in Vietnam, Taiwan, NZ, Victoria, Singapore. But other countries with hard lockdown do less well - Peru and Argentina. Super hard official lockdown but it doesn't work, as people are poor, many don't have inhouse refrigeration, they have to go out each day at high risk to markets and to work.

Thailand seems to have done really well despite political chaos and protests against the military government. Indonesia, Philippines, less well but seem to be managing without total lockdowns.

The rest of the world seem to be dealing with this so differently, I do feel for those with very long land borders as its very difficult to close borders like that, especially in relatively highly populated areas. However they seem to be focusing on keeping the infection and hospitalisation rate in a certain band. Its awkward as its a one foot in, one foot out scenario, ie. the economy can't re-open fully, only partial, and therefore you aren't really doing any of it well. They are literally just trying to buy time for a vaccine, and they say by staying open they are protecting their economy, but depending on how long this goes on for, they may be hurting their economies with what they are doing. Its like the death by a thousand cuts analogy, we cut ourselves much deeper initially, but once the wound recovers we are good to go. A lot of other countries are stabbing lighter initially but continue to slice at the wound meaning it stays damaged for longer.

It'll be interesting to see GDP declines in various countries for both 2020 and 2021 against 2019.

I’m starting to get really concerned about the prospect of complete and utter economic meltdown even in parts of the Developed world.

We now see the UK and parts of Continental Europe going into hard lockdowns with cases so high that that to get down to acceptable levels it would mean lockdowns for perhaps the next year. And as you suggest, not doing it may well be just as economically damaging or worse.

I don’t have confidence that Central Banks and governments have the means to get keep kicking the can down the road. Eventually the global financial and economic system may well break under the strain.

The day of reckoning during the global financial crisis was never entirely realised in 2008-09. Policy makers strapped bandaids over glaring structural shortcomings and never really fixed these issues. Throw the COVID strain on top of this and you’re on a knife’s edge.

If we do see catastrophic economic meltdown, leading to varying degrees of societal breakdown, the virus itself might be the least of many people’s worries.

I often hear a lot of throw away lines from the average punter who doesn’t appreciate the fact that their entire modern existence depends on a functional economic system. Lines like, “lives are more important than money.” This is ignorant of what, in a practical sense, a complete economic meltdown look like. Venezuela is one example. Lebanon is another heading that way.

If we look at how people acted early on in the pandemic in the developed world (remember toilet paper wars and grocery hoarding), when all the systems that provide us with the essentials were largely functional. I shudder how people would act under actual hardship. Within weeks people would be packs of marauding savages.

 

[bigwow]

0 again today. Vic now has less active cases than NSW & WA.

 

[MB78]

Zero cases again which is fantastic news. We need to keep this up and soon we will have our borders opened up again with NSW, then other states will follow.

 

[Ridley]

0 again today. Vic now has less active cases than NSW & WA.

That’s amazing. Wonderful figures.

 

[Tigers of Old]

I texted my interstate parents today for the first time in real hope that I might be able to see them soon.

 

[DavidSSS]

4 days of zero cases is bloody good news.

I have the 14 day trailing average at 1.93, the 7 Day trailing average at 0.86 and the 5 day Centred average is 0.40. I think active cases are down near 60 so going well.

As for the economic system, yes we all rely on it. But the globalised economic system which has come to rely on a narrow definition of efficiency, and the pursuit of profit for the few who own capital, at the cost of just about everything else, has shown itself to be very weak on resilience. When the statement comes out that we might need to sacrifice some health goals (which in the case of COVID means sacrificing people) to help save the economy then you really have to ask the question as to what sort of economy needs such sacrifices to continue to function properly.

DS

 

[mrposhman]

I’m starting to get really concerned about the prospect of complete and utter economic meltdown even in parts of the Developed world.

We now see the UK and parts of Continental Europe going into hard lockdowns with cases so high that that to get down to acceptable levels it would mean lockdowns for perhaps the next year. And as you suggest, not doing it may well be just as economically damaging or worse.

I don’t have confidence that Central Banks and governments have the means to get keep kicking the can down the road. Eventually the global financial and economic system may well break under the strain.

The day of reckoning during the global financial crisis was never entirely realised in 2008-09. Policy makers strapped bandaids over glaring structural shortcomings and never really fixed these issues. Throw the COVID strain on top of this and you’re on a knife’s edge.

If we do see catastrophic economic meltdown, leading to varying degrees of societal breakdown, the virus itself might be the least of many people’s worries.

I often hear a lot of throw away lines from the average punter who doesn’t appreciate the fact that their entire modern existence depends on a functional economic system. Lines like, “lives are more important than money.” This is ignorant of what, in a practical sense, a complete economic meltdown look like. Venezuela is one example. Lebanon is another heading that way.

If we look at how people acted early on in the pandemic in the developed world (remember toilet paper wars and grocery hoarding), when all the systems that provide us with the essentials were largely functional. I shudder how people would act under actual hardship. Within weeks people would be packs of marauding savages.

Agree with a lot of what you say, some are positioned better such as the UK / US as they can just weaken their currencies by printing more money, will drive down their FX rates but so be it to continue along with life as normal.

The one I worry about is the European Union. This was always a house of cards that at some point will fail. You just cannot have so many states at such different economic development levels with the same fiscal and economic policies. It just doesn't work in the long term. Those at the higher level of development IMO will wear this out (again the EU will print more money from the ECB) but those at lower levels of development (think back to who got hurt worst in the GFC) and it will repeat again. Countries like Germany will again prosper but at the detriment of countries like Greece, Cyprus etc.

Its a good time to be in Australia, if we can get our economy functioning strongly again, then I can see the AUD appreciating against many countries.

 

[Althom]

I’m starting to get really concerned about the prospect of complete and utter economic meltdown even in parts of the Developed world.

We now see the UK and parts of Continental Europe going into hard lockdowns with cases so high that that to get down to acceptable levels it would mean lockdowns for perhaps the next year. And as you suggest, not doing it may well be just as economically damaging or worse.

I don’t have confidence that Central Banks and governments have the means to get keep kicking the can down the road. Eventually the global financial and economic system may well break under the strain.

The day of reckoning during the global financial crisis was never entirely realised in 2008-09. Policy makers strapped bandaids over glaring structural shortcomings and never really fixed these issues. Throw the COVID strain on top of this and you’re on a knife’s edge.

If we do see catastrophic economic meltdown, leading to varying degrees of societal breakdown, the virus itself might be the least of many people’s worries.

I often hear a lot of throw away lines from the average punter who doesn’t appreciate the fact that their entire modern existence depends on a functional economic system. Lines like, “lives are more important than money.” This is ignorant of what, in a practical sense, a complete economic meltdown look like. Venezuela is one example. Lebanon is another heading that way.

If we look at how people acted early on in the pandemic in the developed world (remember toilet paper wars and grocery hoarding), when all the systems that provide us with the essentials were largely functional. I shudder how people would act under actual hardship. Within weeks people would be packs of marauding savages.

If the CCP add our iron ore to the list of items they are currently banning you can add Australia to the list of countries experiencing an economic meltdown. It's all that's currently keeping us afloat. Take that away and the economy will be in complete collapse.

 

[Althom]

Agree with a lot of what you say, some are positioned better such as the UK / US as they can just weaken their currencies by printing more money, will drive down their FX rates but so be it to continue along with life as normal.

The one I worry about is the European Union. This was always a house of cards that at some point will fail. You just cannot have so many states at such different economic development levels with the same fiscal and economic policies. It just doesn't work in the long term. Those at the higher level of development IMO will wear this out (again the EU will print more money from the ECB) but those at lower levels of development (think back to who got hurt worst in the GFC) and it will repeat again. Countries like Germany will again prosper but at the detriment of countries like Greece, Cyprus etc.

Its a good time to be in Australia, if we can get our economy functioning strongly again, then I can see the AUD appreciating against many countries.

Australia is as much of a House of Cards as the EU. All it would take is for China to ban iron ore imports and our economy would fold.

 

[bigwow]

4 days of zero cases is bloody good news.

I have the 14 day trailing average at 1.93, the 7 Day trailing average at 0.86 and the 5 day Centred average is 0.40. I think active cases are down near 60 so going well.

38 active according to Covid live site. Less than NSW and WA.

 

[waiting]

38 active according to Covid live site. Less than NSW and WA.

Yeah just heard it too.
38

Bloody great Melbourne.
Now to rebuild our state again !

 

[Panthera Tigris]

If the CCP add our iron ore to the list of items they are currently banning you can add Australia to the list of countries experiencing an economic meltdown. It's all that's currently keeping us afloat. Take that away and the economy will be in complete collapse.

Australia is as much of a House of Cards as the EU. All it would take is for China to ban iron ore imports and our economy would fold.

I absolutely agree. Often quoted is the fact that Australian sovereign debt levels are low by global standards (as a ratio to GDP). But this ignores a major piece of the puzzle. Australian households are some of the most indebted in the world. To get a true picture of how indebted a country is, one must look at both the government sector and the household sector and add them together. If the household sector collapses, private debt collapses and Governments have set the precedent over the GFC and the last decade that this household debt will essentially be moved onto the sovereign balance sheet in a desperate attempt to keep the whole house of cards from collapsing. So in the end our indebtedness as a nation, whether it be sovereign or household debt, is the same load of dirty washing.

As for China. on a long term basis, China needs us more than we need them. Over 1 billion souls to feed and house, who now expect an indefinitely rising standard of living. If they fail at this task, their whole societal deck of cards also collapses. This takes an enormous amount of resources - productive agricultural land, raw materials, energy, water etc. Resources they do not have. In fact, productive agricultural land in China is shrinking due to pollution and land degradation. Not only that, China is running out of usable fresh water, due to pollution and mismanagement as well as pure demand.

The CCP knows all of this and the precarious position they face (from a long term strategic perspective). So the tactic is to try and play chicken with smaller to middle powers, like Australia, to see who blinks first. And those vulnerabilities we both point out puts Australia in a weak position to be able to weather the storm in the short to medium term. And hence, leads us to being vulnerable to being bent over to be *smile* up the arse by the CCP. Even though in the long term China actually needs us more than we need them.

They play a far better and smarter strategic game than us, just a shame that our leadership (on all sides of Politics) are too dangerously intellectually shallow to see it and wake up.

 

[Panthera Tigris]

Agree with a lot of what you say, some are positioned better such as the UK / US as they can just weaken their currencies by printing more money, will drive down their FX rates but so be it to continue along with life as normal.

The one I worry about is the European Union. This was always a house of cards that at some point will fail. You just cannot have so many states at such different economic development levels with the same fiscal and economic policies. It just doesn't work in the long term. Those at the higher level of development IMO will wear this out (again the EU will print more money from the ECB) but those at lower levels of development (think back to who got hurt worst in the GFC) and it will repeat again. Countries like Germany will again prosper but at the detriment of countries like Greece, Cyprus etc.

Its a good time to be in Australia, if we can get our economy functioning strongly again, then I can see the AUD appreciating against many countries.

I think money printing has it's limits. It is already hitting major diminishing returns. There is the danger that they overshoot the runway by printing too much, trashing their currencies completely and killing any confidence in these fiat currencies as a store of wealth and mode of exchange.

Despite the fact that we are no longer on a gold standard, gold still holds very real tangible monetary value in the overall mechanics of a nation's capacity to create money. The fact that the US maintains 4.7% of their GDP in gold bullion leaves them a bit less vulnerable than countries like Japan, UK and indeed Australia (who all sold most of their gold reserves for bargain basement prices in the 1990s and early 2000s) if we all continue down this money printing route as a race to the bottom.

 

[Althom]

I absolutely agree. Often quoted is the fact that Australian sovereign debt levels are low by global standards (as a ratio to GDP). But this ignores a major piece of the puzzle. Australian households are some of the most indebted in the world. To get a true picture of how indebted a country is, one must look at both the government sector and the household sector and add them together. If the household sector collapses, private debt collapses and Governments have set the precedent over the GFC and the last decade that this household debt will essentially be moved onto the sovereign balance sheet in a desperate attempt to keep the whole house of cards from collapsing. So in the end our indebtedness as a nation, whether it be sovereign or household debt, is the same load of dirty washing.

As for China. on a long term basis, China needs us more than we need them. Over 1 billion souls to feed and house, who now expect an indefinitely rising standard of living. If they fail at this task, their whole societal deck of cards also collapses. This takes an enormous amount of resources - productive agricultural land, raw materials, energy, water etc. Resources they do not have. In fact, productive agricultural land in China is shrinking due to pollution and land degradation. Not only that, China is running out of usable fresh water, due to pollution and mismanagement as well as pure demand.

The CCP knows all of this and the precarious position they face (from a long term strategic perspective). So the tactic is to try and play chicken with smaller to middle powers like Australia to see who blinks first. And those vulnerabilities we both point out puts Australia in a weak position to be able to weather the storm in the short to medium term and hence leads us to being vulnerable to being bent over to be *smile* up the arse by the CCP. Even though in the long term China actually needs us more than we need them. They play a far better and smarter strategic game than us, just a shame that our leadership (on all sides of Politics) are too dangerously intellectually shallow to see it and wake up.

I'm not sure I believe the story that they need us more than we need them, especially in the long term.
In the long term they'll source iron ore from their own operations in Africa and from countries like Brazil.
Coal they'll get from Indonesia, Russia and South Africa.
They do need reliable sources of good quality food products however just watch our so-called allies rush to fill the gap left due to our barley, wine, lobsters etc being banned.
I expect dairy products to be next. NZ/EU/UK/US will fill that gap or the CCP will just buy out our dairy industry in its entirety and supply themselves.
Our Governments just stand there and watch this all happen.

 

[Panthera Tigris]

I'm not sure I believe the story that they need us more than we need them, especially in the long term.
In the long term they'll source iron ore from their own operations in Africa and from countries like Brazil.
Coal they'll get from Indonesia, Russia and South Africa.
They do need reliable sources of good quality food products however just watch our so-called allies rush to fill the gap left due to our barley, wine, lobsters etc being banned.
I expect dairy products to be next. NZ/EU/UK/US will fill that gap or the CCP will just buy out our dairy industry in its entirety and supply themselves.
Our Governments just stand there and watch this all happen.

I was torn on this previously. But with further reading lately, I am more leaning towards the story that they need us more than we need them - in the long term that is. And they know it. Hence why they're trying to twist our arm around our back into submission now.

There are murmurs that certain factions within the CCP are not entirely happy with the hard lined tactics being aimed at middle powers of the likes of Australia and Canada. For the very reason that they see it as a risky gamble. From a CCP perspective sure, it pays off and we blink first. But there is some concern from this faction that it comes back to bite them on the arse longer term if the short term gamble doesn't pay off. Just remember, over the longer term many of these countries that you mention will be undergoing enormous development themselves, with huge populations. So there will be some competition for those resources domestically.

But like you hint at, another part of the strategy is playing all these smaller to middle powers off against each other. For instance, for all the fawning over St. Jacinta and what a "strong woman leader" she is (such as over COVID and the Christchurch attacks) her and her leadership team have proven just as clueless as our idiot political class and probably even more susceptible to bending at the knee to the CCP whims. So they will gladly rush in and sell their premium agricultural produce to China, while self righteously finger waving and tutting us for being so rude to their CCP frenemies.

But again, this all comes back to CCP strategic, tactical nous. Right wingers (in the economically liberal mould in leadership here in Australia) are easily bought. They are simply blinded by the $$. They'll sell their soul - and country - for personal (or their mates') monetary gain. While the left wingers of the likes of Ardern (and some in the left faction of the ALP here in Australia) have a default position of hating the status quo. So US hegemony in the case of foreign policy is something they detest. This lends them to the tendency to do anything to see the status quo they dislike undermined and unraveled. And leads them to the foolish, mistaken belief that their "enemy's enemy is their friend" for want of a better description. The CCP has identified these weaknesses in both the left and right side of western political order and uses these as tools against us.

 

[IanG]

I think money printing has it's limits. It is already hitting major diminishing returns. There is the danger that they overshoot the runway by printing too much, trashing their currencies completely and killing any confidence in these fiat currencies as a store of wealth and mode of exchange.

What diminishing returns? And google modern monetary theory.

 

[Panthera Tigris]

What diminishing returns? And google modern monetary theory.

I've read whole books on Modern Monetary Theory. Don't need to google it. And yes there is merit in aspects of it. But just like any economic theory (such as the neoliberal religious adherence to trickle down economics) , you can't apply every aspect of it religiously. Because in it's entirety it doesn't stack up in the real world.

Funny, even the original writers and theorist on MMT, do reserve chapters about the limits of it. Namely, growing the money supply beyond the capacity of an economy. But the more ardent political proponents of MMT totally ignore this chapter. As they are simply using it as a barrow to push their underlying ideological bent.

 

[DavidSSS]

Yeah MMT is far more subtle and aware of the limitations than you would know by reading the papers, as I'm sure IanG is aware.

I figure the powers that be have little choice but to kick the can down the road, much as they did after the GFC. The alternative would be to turn off the gravy train they have become accustomed to.

DS

 

[IanG]

I've read whole books on Modern Monetary Theory. Don't need to google it. And yes there is merit in aspects of it. But just like any economic theory (such as the neoliberal religious adherence to trickle down economics) , you can't apply every aspect of it religiously. Because in it's entirety it doesn't stack up in the real world.

Funny, even the original writers and theorist on MMT, do reserve chapters about the limits of it. Namely, growing the money supply beyond the capacity of an economy. But the more ardent political proponents of MMT totally ignore this chapter. As they are simply using it as a barrow to push their underlying ideological bent.

In terms of stacking up its never been adopted by any country so we don't actually know, however I am willing to acknowledge that like all economic theories it probably won't stack up in its entirety as you say but that doesn't mean we can't adopt at least some aspects. reading Bill Mitchell's blog he says Japan does in fact do so and has yet to suffer hyperinflation. As I understand the theory the main issue is inflation once an economy gets near to capacity but I'd argue that neither the US now Australia are close to it.

 

[IanG]

0 new cases and 0 deaths again.