What I'm saying is that if the virus respreads throughout aus, even if all the lockdowns are not reimposed (which victoria shows us they obviously would be), people are not going to return to crowded venues etc even when they have the (legal) option to.
Usually 20y behind...Agreed - but worth noting that it's quite difficult to, say, eat food or drink beer with a mask on. We also need to think back to the fundamentals of superior vs inferior goods too and wonder which of these things the public thinks it really can do without vs has no choice but to take the risk with.
I don't see why AU wouldn't see very very similiar patterns of behaviour to the U.S - if the virus was to spread here, all we'd need to do would be to think of australia as being a certain period of time behind the united states.
Dunno. Huge bounce in the U.S overnight though so we'll see how the ASX does today.
What we do know with certainty is that there's now at least another 6 weeks before things even begin to return to normal again.
Appreciate that there is a cost of being in a bubble, and while we are paying for it I sincerely hope we (and eventually the world) are learning massively from it. We are the only larger (western) nation (adding in NZ) that has developed the bubble, and it is susceptible and extremely fragile. We need to know how to keep its advantages minimise the costs of keeping those advantages and be a leading light. Victoria is exactly what we risk into the future, and we will learn how to get on top again. We cant throw in the towel yet.Usually 20y behind...
More seriously, it is just a question of when: either that respan in Victoria spreads everywhere or we will have to wait for the next one from an airline pilot delivery freight, an illegal immigrant landing in northern Australia, a torrent straight islander dealing with png.
The notion of staying in a bubble and being safe is ludicrous.so now, tomorrow or next winter, we will get it.let's be real and make sure we are ready for proper treatment and correct society reaction, and live with it...
Would love to hear other views, especially opposing ones.
What people haven't discussed much is what happens when we hit 'normal'. We're seeing extraordinary stimulus and money printing across many countries. So I thought I'd park the 'this is the way to deal with it' and talk about the long-term results of these financial activities.
Right now we're seeing huge unemployment and government deficits. Assuming we get a vaccine or herd immunity, what will the result of this be?
I liken this to something like US spending during WW2. Massive deficits run by government to reach a goal - somewhat similar to now.
Have a read of this section about inflation in the American economy (from here - emphasis my own):
Between April 1942 and June 1946, the period of the most stringent federal controls on inflation, the annual rate of inflation was just 3.5 percent; the annual rate had been 10.3 percent in the six months before April 1942 and it soared to 28.0 percent in the six months after June 1946 (Rockoff, “Price and Wage Controls in Four Wartime Periods,” 382)
Given the massive levels of debt we're seeing worldwide, my own preference would be to go down this path, rather than the deflationary mess Japan are seeing. I'm not sure what the differentiating factors are that cause each scenario though.
If the inflationary environment took hold, you'd see everything go up in price, relative to government currencies. (Australia would have the same result, given the massive government spending, stimulus and tax cuts). As soon as a vaccine hit, total money and credit would increase, so people can afford a lot more.
As a result, my base case is massive asset price inflation over the next five years due to coronavirus.
The biggest risk to this scenario being inflation doesn't take hold - but I don't think we know exactly how to stop/start inflation TBH
Would love to hear other views, especially opposing ones.
NSW next?Appreciate that there is a cost of being in a bubble, and while we are paying for it I sincerely hope we (and eventually the world) are learning massively from it. We are the only larger (western) nation (adding in NZ) that has developed the bubble, and it is susceptible and extremely fragile. We need to know how to keep its advantages minimise the costs of keeping those advantages and be a leading light. Victoria is exactly what we risk into the future, and we will learn how to get on top again. We cant throw in the towel yet.
Hold tough Vic, we are behind you and wish for success.
We were in the top 10 at the beginning!NSW next?
I note we have climbed back to 71 on the ladder (list of countries by total cases of COVID). Best was 72.
Cannot see it being anything but ugly, problem is Governments / Central Banks are far more now prone to intervention on much larger scale applying unproven theory that really no one knows where is will end up.
Not the answer you are looking for
Well the real problem is the debt burden. That's a chicken that is going to come home to roost eventually. Inflation would indeed ease the debt burden but the reserve bank will also pump interest rates in response to it, which would bone everything. It'd be a classic stagflation damned-if-you-do-damned-if-you-don't scenario. The question I guess would be what the central bank response would be and how much government policy will/will not relate to it.
let's be real and make sure we are ready for proper treatment and correct society reaction, and live with it...
Europe is restarted, i have nothing else to say.whereas we are just waiting to be hit again .Trouble is, that's a multi-year strategy realistically and one that won't look overly different to what we're doing now in the medium term.
Slowly let the virus spread so that hospitals can keep up etc. Realistically that means subdued business activity for an extended period in order to implement such a strategy and therein lies the problem. Can business really cope with years of restricted patronage to make that work? We allow them to open but not to the point where too many people are in the restaurant or on the tour bus together. We have AFL games but only once every 3 weeks at any given location, we can play cricket but we cut it to a single day. etc.
For anything other than international tourism, the "bubble" would seem to offer a much faster return to normal if it can be achieved. A fully functioning domestic economy, minus international travel, versus a heavily subdued domestic economy for the next few years but we allow international arrivals.
Even for the parts of the country heavily reliant on tourism, well if Australians in the big cities can't travel overseas then no doubt many could be persuaded to take a trip to the NT or regional WA or Tasmania or wherever.
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