Australian (ASX) Stock Market Forum

Economic implications of a SARS/Coronavirus outbreak

Jump to new
IFocus said:
I think a recession is going to happen regardless its all the debt blowing up that really worries me.
Click to expand...
Recession almost inevitable (says Alan Kohler)
The Australian economy was ... fragile, as shown by the December quarter national accounts, and not in a strong position to handle the crisis as the government claims it is.

Consumer spending growth of 0.4 per cent in the quarter underpinned the insipid GDP growth of 0.5 per cent. Net exports contributed 0.1 per cent.
Click to expand...
Population growth last year was 1.6 per cent — 0.4 per cent per quarter, the same as the increase in consumer spending. No one spent any more — there were just more people spending.

The increase in population in 2019 was 381,600. Included in that were 268,000 temporary visas for Chinese people, of which 134,000 are students. And then there is tourism. Short-term visitors from China have been running at about 1.4 million a year. In other words, most of Australia’s economic growth has been the result of extra people, not an increase in the productivity or wealth of the people already here. Most of the extra people aren’t coming now...
Click to expand...
the anecdotal evidence of changes is
a) overwhelming
b) dramatic
c) self-evident

The second-order effects are where the blows are going to come from. Job losses, reduced or altered spending patterns, belt-tightening.
 
SirRumpole said:
Remember, increases in Newstart and pensions are forever, no government will reduce them once they are given, so there has to be an increase in recurrent income to balance it.
Click to expand...

I would support a substantial increase in Newstart. It is just a starvation figure at the moment and if many more people are thrown out of work they will need more support than the current pittance. And frankly I would review the situation for 2 income households where one person loses their job and is deemed ineligible to get support becasue their partner is working.

I don't know if current Old Age pensioners need an increase. Frankly I would target any increase to those paying high rents. IMV pensioners who own their own home and have some other small pensions or income are in as good a position as any in our society and I suggest much better off than people who will lose shifts, jobs and businesses as the coronavirus unwinds. As Rumpy points out adding new long term commitments to our pension costs would be problematical.:2twocents
 
IFocus said:
One of the biggest economic implications is actually the Government response right across the board on managing the virus / information and of course monetary...
Click to expand...
RBA is monetary policy (interest rates and money supply)
Government is fiscal policy (tax rates, levels of government spending and, likely soon, stimulus ... to influence aggregate demand in the economy)
 
moXJO said:
Im in two minds about stimulus.

On the other hand, people will suffer. Not sure the banks would cope with a lot of defaults. Small businesses would really wear it.
But at some point it will hit anyway. So what's the way forward?
Click to expand...

Yeah. This is a very real short term and longer term problem.
Honestly I don't think our current economic system and framework is fit for purpose to offer a cogent way forward.
Why ? Lots of reasons. Firstly I see much of our current " economic progress" as false. I suggest that trying encourage people to buy more and more "stuff" that is wasteful or creates secondary effects of pollution and poor health/social outcomes is not that good for us. Makes money but is it progress ?

Secondly from what I see the huge push in the current economic system is AI and automation everywhere. Retail and transport for a start are slated for big changes. I still haven't seen any serious indication of how new careers will be created as many traditional ones are destroyed.

Solutions ? Maybe a nasty world wide virus that.............:cautious:
 
 
Looking at the financial markets, I think an issue is that the USA hasn't yet experienced the "boom" in infection numbers which other countries have seen. They've got some cases and it's increasing but they haven't had the sudden acceleration that has occurred on some other places.

One that happens, and it will, then we'll see another major drop in the markets and the prospect of a bottom being formed is my expectation.

Currently 436 cases in the USA versus 949 in France and 5833 in Italy. Considering that the US' population is about 5 times that of France and 5.5 times that of Italy, it hasn't really got going yet for the Americans. When it does, Wall St will panic. :2twocents
 
basilio said:
Yeah. This is a very real short term and longer term problem.
Honestly I don't think our current economic system and framework is fit for purpose to offer a cogent way forward.
Why ? Lots of reasons. Firstly I see much of our current " economic progress" as false. I suggest that trying encourage people to buy more and more "stuff" that is wasteful or creates secondary effects of pollution and poor health/social outcomes is not that good for us. Makes money but is it progress ?

Secondly from what I see the huge push in the current economic system is AI and automation everywhere. Retail and transport for a start are slated for big changes. I still haven't seen any serious indication of how new careers will be created as many traditional ones are destroyed.

Solutions ? Maybe a nasty world wide virus that.............:cautious:
Click to expand...
It is essentially a Ponzi scheme. Eventually the world will run out of greater fools.
 
wayneL said:
It is essentially a Ponzi scheme.
Click to expand...
Speaking of which, I had to check the date to confirm it wasn't the 1st of April after reading this.

https://www.news.com.au/finance/eco...s/news-story/2fc4560c782ed83d3a2696c4e4522fb1

The last thing we need is more Ponzi economics which try to do more of the same in the false hope of getting a different result.

Note that I'm not opposed to people of any particular race but I most certainly am opposed to the idea of constant growth in population so as to avoid a technical recession. It's madness really. :2twocents
 
Smurf1976 said:
Speaking of which, I had to check the date to confirm it wasn't the 1st of April after reading this.

https://www.news.com.au/finance/eco...s/news-story/2fc4560c782ed83d3a2696c4e4522fb1

The last thing we need is more Ponzi economics which try to do more of the same in the false hope of getting a different result.

Note that I'm not opposed to people of any particular race but I most certainly am opposed to the idea of constant growth in population so as to avoid a technical recession. It's madness really. :2twocents
Click to expand...
The Australian way smurf, it is a quick fire way of fixing the problem, but long term it will be our demise IMO.
 
Governor of New York has declared a state of emergency: https://www.theguardian.com/world/2020/mar/07/coronavirus-us-deaths-new-york-emergency-florida

Italy has now locked down 16 million people or about a quarter of the country's population: https://www.abc.net.au/news/2020-03-08/coronavirus-italy-quarantine-milan-northern-regions/12037302

This would seem to be escalating very rapidly and I'll go out on a limb and say that at this rate we could well see major disruption in Australia within the next 3 weeks. At this stage I don't think it's unreasonable to expect we're going to end up at that point. :2twocents
 
Smurf1976 said:
Speaking of which, I had to check the date to confirm it wasn't the 1st of April after reading this.

https://www.news.com.au/finance/eco...s/news-story/2fc4560c782ed83d3a2696c4e4522fb1

The last thing we need is more Ponzi economics which try to do more of the same in the false hope of getting a different result.

Note that I'm not opposed to people of any particular race but I most certainly am opposed to the idea of constant growth in population so as to avoid a technical recession. It's madness really. :2twocents
Click to expand...

'Experts' like this are driving people to vote for Pauline Hanson.

The reason that wages have been stagnant for so long is that there is an oversupply of labour. Employers don't need to increase wages because there are plenty of people who will work for less.

As for saying people who avoid Asian countries are racist, that's plain ridiculous. It's just sensible to avoid countries where there are infection outbreaks which is the reason we have travel bans.

We are becoming a low wage economy based on service industries that has little room for innovation and all our smart people are leaving for countries that have tech dependant jobs that pay more and are more intellectually stimulating. What we need is less people, but better educated and higher paid ones and some high tech industries to keep the best and brightest here. Otherwise we will become a nation of hairdressers and waiters.
 
Dona Ferentes said:
RBA is monetary policy (interest rates and money supply)
Government is fiscal policy (tax rates, levels of government spending and, likely soon, stimulus ... to influence aggregate demand in the economy)
Click to expand...

:oops: Yes didn't sound right when i wrote it, note the RBA has no ammo unlike the GFC and with the FED attacking with .5% and no effect we can rule out monetary policy as being an option not that they wont try.
 
sptrawler said:
A good article on the state of play, regarding the economy.

https://www.abc.net.au/news/2020-03...rison-stave-off-a-recession-covid-19/12037522
Click to expand...

Excellent story. Couple of salient points in the article.

In addition to this, a range of measures were instituted to stabilise our banking and financial systems.(in last GFC )

Bank deposits up to $1 million were guaranteed, investors were banned from short-selling financial stocks and our banks were given access to the Commonwealth balance sheet so they could refinance their offshore loans.

Without this last measure, all our banks would have folded as global credit markets seized.

...Perhaps the biggest problem with our economy is household debt.

It is hovering at around world-record levels when compared with income at a time when wages growth is barely registering a heartbeat.

Despite this, as you can see from the graph above, consumption lifted in the lead up to Christmas, possibly as a result of the tax rebate and last year's two rate cuts.

A boost to household spending power — whether it's delivered through a lift in Newstart, income tax relief, or a direct payment — should deliver a boost to consumption, helping keep businesses afloat and workers employed.

Another possible measure could be a loan facility, not unlike drought relief to farmers, that would deliver a debt moratorium to small and medium sized businesses hit by the virus-induced downturn.
 
5800 on xjo was where I thought I'd get interested in looking at stocks again.
 

Similar threads

DB008
  • Poll
Coronavirus (COVID-19/SARS-CoV-2) outbreak discussion
311 312 313
Replies
6K
Views
362K
DB008
DB008
wayneL
The economic implications of a Harris presidency
2 3 4
Replies
79
Views
7K
wayneL
wayneL
MovingAverage
Post Corona...
7 8 9
Replies
160
Views
15K
Smurf1976
Smurf1976
greggles
Companies that are doomed due to the coronavirus outbreak
Replies
14
Views
3K
Dona Ferentes
Dona Ferentes
greggles
Shorting stocks/sectors affected by the coronavirus
Replies
6
Views
919
basilio
basilio
Top