Economics and recovery

The current situation in NZ is that we are heading into an economic downturn. This is starting to bite.

The most recent 1News Colmar Brunton poll reported that 92% of those surveyed considered that the government “had responded appropriately to the coronavirus outbreak” – up from 62% when the same question had been asked in February. To a second question, 86% rated the “government’s response to the economic impacts of the coronavirus outbreak” as good or better.

Yet, at virtually the same time, the Commission for Financial Capability was reporting its own survey data showing that already one in ten households had missed a mortgage or rent payment because of the Covid19 emergency, and that 34% of households had already experienced some financial difficulty, and a further nearly 40% felt on the brink of doing so.

A similar recent survey by Research New Zealand reported that 75% of respondents were concerned about the impact the crisis was having on their children. That survey also reported that there have been significant increases in the level of concern about losing one’s job (67%), being able to pay the mortgage (59%) and being able to pay the rent (61%).

So, while at a more global level, New Zealanders are happy with the way the government has responded to date, they are becoming increasingly concerned about the longer terms impacts on their families, the future of their jobs, and their capacity to meet their weekly outgoings.

Peter Dunne,

It’s fairly clear that our current government does not have an idea as to what to do. But Treasury is assuming a rapid recovery, as does Scott Adams. I think that this will an error. Hope for this, but don’t plan for it.

So, when Mr. Adams speaks, I pay attention. New ideas are fairly rare and I like to steal mine while they’re fresh. As noted, many times he’s very perceptive in ways the news media forgot about being when they first caught Trump Derangement Syndrome. In this case, I think Scott is wrong. Everything may still be there, but you can no longer restart the economy to the previous levels than you could resuscitate Grover Cleveland by giving his corpse CPR. I mean, I can give CPR to a steak, but it still won’t moo.

Just like Grover Cleveland, everything is there, but putting him in a lawn chair and propping him up with a tropical cocktail (with umbrella) won’t really help. Everything’s there.

But it’s really not.

Just like you can’t restart a heart after a few weeks of it sitting on the bedside table, you can’t restart an economy after months of it sitting dead in Coronapause©.

Let’s take the human body analogy a bit farther. A business is an organism. It consumes money and raw materials and produces goods and services as a byproduct. You could even call that byproduct a waste if it had anything to do with Kardashians. Companies eat metal and energy and use employee labor to pop out automobiles and beer and knee braces and fruitcake bloomers. And where would we be without fruitcake bloomers???

A lack of oxygen makes cells in your body die. No oxygen, no cells.

In business, a lack of money causes employees to die. Oops. They don’t die, they just don’t come in anymore, unless your business was in the Soviet Union, where ‘being terminated’ had an entirely different and completely Schwarzenegger-free meaning.

The Wilder

The Wilder has indicated he has more to say on this. What I am seeing is nominal prices remaining he same, but marked discounts. We were getting roses today. Kea said the number of orders were about a tenth of what there were last year, and (as I worked a little late) the store stayed open to let us get and pay for our order. Things are getting tight: the longer you wait for things you don’t need right now the better the price, and most people know this.

The government is rescuing what they consider strategic assets. Here getting out — selling to the government — early is better. There won’t be any money left (with any real value) for the last strategic tourist asset.

The economy is not everything, but it matters. When people get poor, they too often fall into despair, and you see this in the diseases related to that — from increased infectious diseases to a large increase in alcohol consumption. The Russians at the end of communism showed how the collapse of morale destroyed generations. Perhaps they are showing a way out of it as well.

For the current path is more akin to the late Soviet: centrally planned destruction called reform, than a functional nation which the neoTsar seems to have made. We would do well to examine this example.

And avoid the collapse of Venezuela, which occurred over the same time span.