Economic implications of a SARS/Coronavirus outbreak

[Knobby22]

I agree Smurf. After this ends there will be a boom like none other as people stop living for the future and start living for the present.

 

[SirRumpole]

Good post Smurf.

We are seeing that already with super. Take it now and spend it like there's no tomorrow.

Because maybe there won't be.

That's pretty pessimistic. The Spanish flu turned things bad for a while but the world eventually recovered from it and today we have all this wonderful vaccine technology (we hope).

Things will eventually recover and maybe at some stage some people will regret blowing their super. Others who invested it wisely will think it's the best thing they have done.

 

[Dona Ferentes]

Socially distancing but lubricated, the other evening, the workshopping of current realities was discussed.

The conclusion; best to look upon the virus outbreak as a war. Call the pandemic World War C. So, here we are, in the middle of WWC, there are outbreaks hither and thither, the enemy is unpredictable but we mobilise and learn as we go along, plan our defences, marshall our forces. Some of the flare-ups are in unpredictable places, the outcomes of some of the battles don't go the way we hoped, some of the generals reveal their shortcomings. The population generally falls in line but there are dissenters and opportunists and nutters and quislings. Eventually the response is overwhelming, be it medical or vaccine or immunity or changed behaviours, or a combination of all, and peace breaks out.

There'll be celebrations, maybe muted because there won't be any formal ceremony of capitulation, but life should return to normal. And the best thing about WWC is that we emerge without any damaged physical infrastructure, and with benefits of technological, especially medical, improvement

 

[Junior]

Agree with the comments above, we will get back to normal soon enough, and there will be a boom. There will be 'pent up demand' and many of us will bring forward our long-term plans, and live for the now.

In Australia, I feel like we'll rely on our tried and tested strategies for economic growth; high immigration, property development and export of natural resources, tourism and education. Hopefully we can add a few new strings to our bow; renewable energy for example.

A big question in my mind, is what will Government budgets and balance sheets look like, and for how long will Zero interest rates and astronomical debt levels be manageable? In that sense, we are still in a far better position than much of the developed world, so we probably need to worry more about Europe and the US, and how they will manage going forward.

 

[over9k]

With what money?

 

[Garpal Gumnut]

With what money?

An excellent question.

Governments are moving towards deregulating printed money to become similar to gold. Money will become a commodity. It is already traded as such. Its price will move as the ability of government to mine more money via issuance and to increase inventory via devaluation.

Governments, many forget, can devalue a currency overnight to increase the value of their industry and goods for export to others.

I see a bright future. I even hope to get a new Bentley once the paupers in the UK devalue the pound.

gg

 

[over9k]

Yeah AUD's definitely been something to hold lately.


I'm a matter of hours of deciding that the past ~4 weeks of change is a new trend and pulling the trigger on quite a few positions.

Fighting an exchange rate when your own currency holdings are increasing is a pretty tough ask. Much better off holding decent stocks in AUD (if you can find any).

 

[PZ99]

What happens to our trillion dollar debt after we devalue our currency ?

 

[over9k]

What happens to our trillion dollar debt after we devalue our currency ?

It's less valuable.

Hence me saying letting inflation run for a bit wouldn't be all bad, especially with the corresponding bracket creep that it'd bring.

 

[over9k]

Related to thread:

"Working from home has saved $91 billion in commuting costs"

https://www.bloomberg.com/news/arti...oLjGckG8Dnkg6ZOtY-L6g6J4KsWuUybgC3_gTwUv-OdHA

We aren't going back to the office when this is over.

 

[Junior]

With what money?

The majority of Australians have kept their jobs through this crisis, and hopefully most of those who haven't will find work soon. Property values have held up pretty well (so far), and Government spending will likely remain at elevated levels. There's plenty of cash to spend at this stage, I would think.

 

[over9k]

The majority of Australians have kept their jobs through this crisis, and hopefully most of those who haven't will find work soon. Property values have held up pretty well (so far), and Government spending will likely remain at elevated levels. There's plenty of cash to spend at this stage, I would think.

Sure, but the government's broke. A LOT of fat (and many things which aren't fat) is going to be trimmed.

A classic case of circular flow - how do you expect growth when we're paying the debt off? Plunge us into even more private debt? Interest rates are already effectively negative/as near to zero as makes no difference.

The piper has to be paid eventually.

 

[Smurf1976]

Sure, but the government's broke. A LOT of fat (and many things which aren't fat) is going to be trimmed.

A classic case of circular flow - how do you expect growth when we're paying the debt off?

My expectation is the federal government prints money like crazy.

The states receive grants from the feds. Not hard to see say $100 billion being handed out to the states as grants for this, that and something else - things which have already been done or would normally be done anyway such that the practical effect is to wipe state debt. A workaround to the technicality that the states can't directly print money.

The states can then hand some money to local government to do things that would be done anyway eg resurfacing roads. Practical effect = wipes local government debt.

Done. Debt gets inflated away from a national perspective, repaid as such at the local and state level.

 

[Smurf1976]

Imagine how hard it will be to convince people to put money in super, sacrifice to fight global warming etc

I think it's going to be much harder to convince people to sacrifice anything now for the promise of something gained tomorrow no matter what that is.

That's not good for any sector which exits "for the future" but it's good news for anything that exists for now and which may have been avoided by consumers because it's seen as wasteful or it's unhealthy or whatever.

 

[wayneL]

I think it's going to be much harder to convince people to sacrifice anything now for the promise of something gained tomorrow no matter what that is.

That's not good for any sector which exits "for the future" but it's good news for anything that exists for now and which may have been avoided by consumers because it's seen as wasteful or it's unhealthy or whatever.

Perhaps I hang out with libertarian loons, perhaps they are just classical liberals...

But I think it's going to be harder to convince an increasing and significant minority of wanting anything to do with the current Western system of government and economics.

I think there will be an increasing trend towards individual sovereignty, with its nucleus centred around Bitcoin or perhaps some evolution of that.

To quote our late friend Samuel Goldwyn, "Include me out".

 

[Dona Ferentes]

Meanwhile, in the real world:

The Coalition has committed to expanding special access visas, including headhunting entrepreneurs and business leaders to settle in Australia.

Addressing the National Press Club in Canberra on Friday, Acting Immigration, Citizenship, Migrant Services and Multicultural Affairs Minister Alan Tudge said he was "particularly keen" on the government's global talent visa program, which offers streamlined and priority visa pathways to high-skilled and talented individuals to work and live permanently in Australia.

"We want to make sure we're attractive for that super talent, and it's some of that super talent that are real job creators," he said.

"They create the businesses, they invest and they're the types of people particularly that I'd like to be seeing come into the country as a priority."

https://www.afr.com/politics/federa...-post-covid-19-migration-push-20200828-p55q5z

 

[sptrawler]

Meanwhile, in the real world:

The Coalition has committed to expanding special access visas, including headhunting entrepreneurs and business leaders to settle in Australia.

Addressing the National Press Club in Canberra on Friday, Acting Immigration, Citizenship, Migrant Services and Multicultural Affairs Minister Alan Tudge said he was "particularly keen" on the government's global talent visa program, which offers streamlined and priority visa pathways to high-skilled and talented individuals to work and live permanently in Australia.

https://www.afr.com/politics/federa...-post-covid-19-migration-push-20200828-p55q5z

I think that has to happen,our poor education system and lack of high technology industries, is going to make it extremely difficult to develop home grown high achievers.
Also Im not being critical, just the way it is IMO.

 

[SirRumpole]

I think that has to happen,our poor education system and lack of high technology industries, is going to make it extremely difficult to develop home grown high achievers.
Also Im not being critical, just the way it is IMO.

It's the way it is because of government policy to defund universities and sell them to the Chinese.

 

[sptrawler]

It's the way it is because of government policy to defund universities and sell them to the Chinese.

It happened way before that, when government decided everyone had the ability to go to university, just not the opportunity.
So they encouraged everyone basically go to year 12, dumb as duck poo.
Also you would find if we didnt have Chinese students, they would probably have to close the science and engineering sections, because of lack of students.
Ours do arts and social endeavours.
Yes unfortunately that bit of social engineering only achieved a situation where we had to import 457 tradesmen and an oversupply of unemployable people with arts degrees.lol
Just another brain fart we are still trying to recover from.

 

[SirRumpole]

It happened way before that, when government decided everyone had the ability to go to university, just not the opportunity.
So they encouraged everyone basically go to year 12, dumb as duck poo.
Also you would find if we didnt have Chinese students, they would probably have to close the science and engineering sections, because of lack of students.
Ours do arts and social endeavours.

Yes and before that too when the unions took over the curriculum and decided it was easier to teach social studies than maths and science.

Maths and science are too hard for teachers so what chance have the students got ?