Dow Jones plummets 1029 points, will the Wuhan Virus impact NZ election and why Mike Hosking is an arsehole

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Damien Grant and I have been pointing out on Magic Talk Radio to anyone who will listen that the Wuhan Virus is far more dangerous than being anticipated and will have an enormously negative impact on the global economy.

In short, we are all underestimating the impact of a pandemic.

Today as the enormity of what a pandemic will look like starts cutting through into the markets, the Dow plunged 1029 points alongside global markets all falling which coincides with major slow downs that were already occurring in most developed economies…

Some of the world’s biggest economies are on the brink of recession

Take Japan: The world’s third-largest economy shrank 1.6% in the fourth quarter of 2019 as the country absorbed the effects of a sales tax hike and a powerful typhoon. It was biggest contraction compared to the previous quarter since 2014.

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Then there’s Germany. The biggest economy in Europe ground to a halt right before the coronavirus outbreak set in, dragged down by the country’s struggling factories. The closely-watched ZEW Indicator of Economic Sentiment in Germany decreased sharply for February, reflecting fears that the virus could hit world trade.

Bank of America economist Ethan Harris points to the number of smaller economies that are hurting, too. Hong Kong is in recession and Singapore could soon suffer a similar fate.

Fourth quarter GDP data from Indonesia hit a three-year low, while Malaysia had its worst reading in a decade, he noted to clients on Friday.

Meanwhile, engines of growth like China and India slowed in 2019. Fourth quarter GDP data for the latter comes out this week.

…the woke be screaming on twitter that any criticism of the wuhan virus is xenophobic and racist and that it doesn’t kill as many people as the flu blah blah blah.

I’d humbly suggest to the woke that this isn’t a bloody identity politics issue, it is a public health issue and economic emergency.

The truth is that the virus is far more infectious than anticipated, it can hide without symptoms, it is more lethal than the flu and the global nature of supply lines means infection in one place has impacts everywhere.

The WHO have already today warned that we are talking about months, not weeks to stop the virus and that doesn’t take into account if it becomes a pandemic, which it most certainly looks like it will.

This is going to hurt NZ because we have put all our cows in one Beijing paddock and because Australia, who is our second largest trading partner after China, has put all their mines in one Chinese paddock as well.

Our cow has fallen down their mine.

This hurts our tourism, our exports and of course the actual cost of the sickness on productivity and quarantine disruption not to mention 1% of the population dying.

This means that come the election, there is s very good chance of there being a recession.

Our reliance on simply being the producer of raw materials to one market has bitten us in the arse.

Luckily, the Government has the capacity to borrow far more than most of our trading partners so the home fires can stay burning, which brings us to Mike Hosking being an arsehole.

Today he bemoaned giving a pittance of an increase to beneficiaries by arguing...

Most who got a 3 per cent wage rise did so because they did something productive. They made more, produced more, worked more – that’s the productive side of the economy. That’s how you incentivise people: there is reward for work

Beneficiaries got the same rise, that’s the non-productive side of the economy. Nothing more was produced, but more was put into it. And that is why the money is gone and we are borrowing.

Economies grow because of productivity not because of non-productive spending. You need one to fund the other, and one must be stronger than the other. That’s how you move forward, run surpluses, and afford to cover difficult days.

A level of redistribution, the likes of which we are currently experiencing, leads nowhere sound fiscally. It makes us increasingly vulnerable to global shocks, and we are too small to be running that risk.

…listening to multimillionaire Mike Hosking’s thoughts on beneficiaries is like listening to Trump’s views on feminist folk music.

With an economic recession looming because of the virus, the poorest will need MORE support, not less and that support is going to be required by everyone, not just beneficiaries.

This Government was founded in 2017 under the shadow of an expected market correction which would allow Winston to make large structural change to the neoliberalism he detests, (although as Chris blogs today, that desire to fight neoliberalism is driven by protecting crony capitalism) so the Government does have a blueprint as to what to do if the opportunity of a crisis presents, so who should Labour save if the recession hits?

Dairy Farmers: They are up to their eyeballs in debt from dairy intensification. To get them to agree to helping everyone else, you need to help them and this could be a once in a  generation move to get them to change their allegiance to National. Underwrite all Dairy farm debt on the agreement that they revert from Dairy to planting forests.

First home buyers: You can’t leave them for the wolves of the Market, underwrite their mortgages through Kiwibank.

Mum and Dad’s investment property: You can’t wipe out an entire generations wealth base, again underwrite one property over the family house through KiwiBank.

Corporations: They will turn up with their golden begging bowls and beg for bail outs. Fuck em, let them burn.

Banks: Only save Kiwibank, the others can burn.

Property Investors: Anyone with more than a family house plus one property investment can burn.

Tax amnesty for small and medium business: They are the ones who will suffer the most, allow a tax amnesty with the usual penalties cancelled.

Welfare: Everyone will be scrambling for some type of welfare, it will need to be increased, and the draconian punitive crap dumped.

Immigration Freeze: We will need to freeze immigration at a time of economic crisis because everyone will be fleeing.

Rent Freeze: Don’t allow greedy Landlords to benefit from a crisis.

Remember, with the climate crisis producing cheek to jowl overcrowding and biosphere degradation, the ease with which viruses can jump between species is increasing. This pandemic is the future under catastrophic climate change.

Buckle up.

15 COMMENTS

  1. …anyone with a single investment property can have their corpses fed to the gulls… oh, that’s right Wokester is centre-right, like Damien Grant and Chrisfran Trotter 😉

  2. Why encourage Mike Hosking by calling him an arsehole? That’s the diatribe that he feeds on, it puffs him up and gets his blood racing through his veins, he wouldn’t ever need Viagra. Are you hoping that he’ll puff up, and puff up and end up like Python’s Mr Creosote?

  3. Once investors on ‘the market’ realise the threat to their profits, they will pressure governments to accept the new virus, and sacrifice those it kills, while the show will go on.

    • When I heard there was a high powered govt meeting to discuss the millions we’re losing with no Chinese tourists I thought what you’re describing Marc – except it would be govt led.

      • Government led, of course, after immense pressure from the business lobbies. NO government in NZ Inc can stay in power without the business sector tolerating them.

  4. Battle is lost: Capitalists will force governments to accept the new disease and carry on as per usual, who cares about a few dead.

  5. ‘Banks: Only save Kiwibank, the others can burn.’

    You seem to have forgotten that TSB is a locally owned bank that puts its profits back into the community. (It was the only trust bank that voted not to list on the share market, and the only trust bank that didn’t get gobbled up by Westpac.)

    On the matter of a global financial meltdown, and the US Fed NOT saving the markets:

    http://charleshughsmith.blogspot.com/2020/02/no-fed-will-not-save-market-heres-why.html

    ‘The greater the excesses, speculative euphoria and moral hazard, the greater the reversal.

    A very convenient conviction is rising in the panicked financial netherworld that the Federal Reserve and its fellow dark lords will “save the market” from COVID-19 collapse. They won’t. I already explained why in The Fed Has Created a Monster Bubble It Can No Longer Control (February 16, 2020) but it bears repeating.

    Contrary to naive expectations, the Fed’s primary job isn’t inflating stock market and housing bubbles, though punters are forgiven for assuming that, given the Fed has inflated three gargantuan bubbles in a row, each of which burst (1999-2000, 2007-08 and now 2019-2020).
    The Fed’s real job is protecting the banking/financial sector from a richly deserved and long overdue implosion. Blowing speculative asset bubbles is a two-fer, enabling rapacious, parasitic financiers and banks to profit from debt-serfs borrowing and gambling in rigged casinos (take your pick: student loan casino, housing casino, stock market casino, commodities casino, currency casino, etc.).

    Blowing guaranteed-to-burst bubbles also generates a bogus PR cover, the Fed’s beloved “wealth effect,” an idiots’ delight belief that the greater the speculative bubble, the more tax donkeys and debt serfs will spend, spend, spend on defective junk and low-value services they don’t need–in essence, speeding up the global supply chain from China et al. to the local landfill, all in service of Corporate America profits.

    The Fed’s secondary interest is maintaining some measure of control over the financial sector and the real-world economy it ruthlessly exploits. Just as the Fed gets panicky if interest rates start getting away from its control, the Fed also gets nervous when its speculative bubbles get away from it via infinite moral hazard:

    When punters no longer care whether the Fed actually intervenes or not, so powerful is their faith in eventual Fed “saves,” the Fed has lost control and that’s not what the Fed wants.
    The Covid-19 pandemic is a godsend to the world’s central bank, the Fed. Recall that the Fed has a dual mandate: protecting U.S. financiers and banks and global financiers and banks. The Fed thus has the equivalent of Triffin’s Paradox, the dual role of the U.S. dollar as a domestic currency and as a global reserve currency.

    The two roles are not always compatible and conflicts may arise, requiring sacrifices to keep the entire overheated machine from coming apart.

    To re-establish the essential linkage between punters’ speculative greed and its actual interventions, the Fed must let the current euphoric faith in its “guarantee” to rescue infinite greed crash to Earth. As noted earlier, the Fed lords are foolish but not stupid. They understand speculative bubbles always pop, and so the Covid-19 pandemic is just the excuse they needed to let the air out of the current grossly unsustainable bubble.

    “Buy-the-dip” punters are placing bets on the belief the Fed can’t possibly let the current bubble pop. Oh yes they can and yes they will. All bubbles pop. That leaves the Fed with an unsavory choice: either be viewed as responsible for the bubble bursting or engineer some fall-guy to take the blame and give the Fed cover for its self-serving incompetence.

    It’s also instructive to note, as many have, that the Fed enters this global recession with very little policy ammo. Interest rates are so near zero already that a couple of rate cuts will do very little good in the real economy. As for buying Treasury bonds, this is also overblown; at the rate U.S. Treasury debt is rising, all the Fed will be doing is sopping up fiscal-deficit debt nobody else wants.’

  6. Underwrite all Dairy farm debt on the agreement that they revert from Dairy to planting forests.

    If “forests” means more of these horrible cloned-pine plantations that wreck the soil, displace all native flora and fauna, damage the environment in many ways and, according to some studies at least, can become a Climate Change liability, …then “forests” may not be the best way to go. We could end up with a worse problem than we have now. And, the logs are not really moving atm, workers have been laid off.

    There are other options, from simple diversification, with some areas dedicated to regrowing our own native bush, … through a wide range of far more enviro-friendly land uses, including use of some stock, … to larger orchards, for example.

    All along the Eastern B.o.P quite a few former dairy farms have already diversified into orcharding and these are generally doing very well. If you’re driving down the coast from Tauranga southwards, you’ll see some of them. They include kiwifruit, avocado orchards, blueberries and other berries, citrus, fejoas, nut farms, even vineyards, and in warmer spots some sub-tropicals. (I hear that they’re even growing a few mangoes here now. – The upside of global warming 🙂

  7. As long as we in AO/ NZ are ready to embrace change, and to re-think our values and our priorities as a nation, and are prepared to adapt, then the challenges that we are now facing can present an opportunity. The biggest problems are likely to surface where we try to hold on to old ways that simply don’t work any more. (Those who worship their money gods could be in trouble. )

  8. Why does RNZ News quote Trump, downplaying the economic downturn from the virus? The man is a liar, I hate that our National Broadcaster gives him oxygen.

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