RECESSION OR DEPRESSION (2)

Six weeks ago in an item headed “Recession or Depression” I wrote about the inevitable economic collapse led by the tourist industry going out of business through the coronavirus plague. It’s all now come to pass with Rotorua and Queenstown, as I forecast, now ghost-towns.

As in Australia the government is considering wage subsidy for the basically menial jobs tourism delivers. That’s ridiculous.

If a hotel has no guests then there’s no point subsidising the staff to do nothing. Far better to pay unemployment benefit. But what of the hotel going broke, or the sawmills sacking their staff, or the disappearance of customers from restaurants and idiotically, specifically Chinese cafes? Air New Zealand will probably need either a loan or major capital injection as like airlines everywhere, its customers are vanishing.

Tourism locations such as Hawaii, Bangkok, Hanoi, Bali etc will be in big trouble but the worst affected will be Europe with unemployment figures reminiscent of the 1930s. Given New Zealand has 300,000 directly employed in tourism, Europe’s likely to have at least 50 million who will be jobless. And that’s just tourism. Numerous other affected commercial activities are in big trouble.

And in response. Bloody stupid central Banks are lowering already historically low interest rates, as if that’s going to make an iota of difference.

There’s only one way to ride this thing through while awaiting a proven vaccine and that’s full wage and salary payments and not just the lower unemployment benefit rate.

With money freely available and virtually cost-less and the knowledge it should be over in a year, this is the best way to deal with the issue. But there will be an awful lot of business failures in the interim as the growing panic sees the public batten down the hatches and cut back on purchasing.

On the plus side, such dramatic events makes life interesting. More to the point it should be all over inside 18 months.  It’s analogous to a health scare which once remedied, makes one appreciate life rather than taking it for granted.

 

 

16 Comments

Yes, the perspective shift is what’s valuable. Hopefully the lesson is not fleeting.

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Coronavirus is a minor thing that is hyped by a hysterical drama queen media who are trying to create the news instead of reporting it – it will be mostly gone in a few weeks. Here are the worldwide stats for coronavirus so far vs. the stats for the normal flu in the US alone this season:

Coronavirus (worldwide)
100,000 illnesses
3000 deaths worldwide

Seasonal Flu (US only)
34 million illnesses
20,000 deaths

source: https://www.livescience.com/new-coronavirus-compare-with-flu.html

The recession has been brewing ever since Labour took office – my business was down 22% last financial year & that will probably be worse by around another 8% this year. That is around the same to worse than during the GFC.

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    How will it be “mostly gone in a few weeks”? What mechanism will cause this sudden disappearance rather than continued spread?

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      People recovering from coronavirus, i.e. China, & the change of season in the northern hemisphere from winter to spring – the end of flu season.

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      I think that John is not aware that the onset of summer in the Northern Hemisphere means the onset of winter in the Southern Hemisphere. And that is even supposing that the virus spread is related to seasons. So far, only that idiot Trump is saying this, in defiance of all the experts.

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      John, you do raise an interesting point (at least for the Northern Hemisphere, though it still means those of us in the SH are stuffed).
      At the peak of the NH flu season rates of hospital admission for flu-like symptoms are 6-8 times higher in late December than they are in the middle of summer July, and this virus is apparently less able to survive outside the body in warmer and dryer conditions. There are though a couple of points worth considering, 1. the flu does still claim victims in the middle of summer, it doesn’t just disappear and 2. It seems likely that one of the factors reducing flu prevalence in the spring is that after it’s been through the community during the winter by the time spring arrives there’s high levels of natural immunity in the population to that seasons strain, this will not be the case with Covid19 this NH spring, so the virus could still find plenty of low-immunity fodder.

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    Your figures say it all: Coronovirus mortality rate 3%; Seasonal flu mortality 0.3%.
    And Coronovirus infection rate is correspondingly more infectious. The total infections are rising exponentially. Remember, it was only identified 3 months ago!

    Hope you run your business with a little more thought than you display here.

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      The flu season in the US only started 3 months ago with the onset of winter, about the same time as coronavirus appeared according to you. If during those 3 months there were 34,000,000 of seasonal flu cases (in the US alone) and only 100,000 coronavirus cases worldwide, how is coronavirus more infectious? Hardly a repeat of the black death is it.

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    Fang Zhou: Yes I am aware that the southern hemisphere is entering winter time, but we don’t have a disease ridden, overpopulated China splicing viruses to experiment with biological weapons bordering on our country, do we?

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      John. As you can see from my name, I am Chinese! Certainly do not recall the first 25 years of my life living in a land that was ‘disease ridden’!

      The animal eating practices of southern Chona are disgusting, even to most Chinese. This virus, like most of the previous pandemics, almost certainly arise from that, not a lab.

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      Amy Zhou: I suggest you have a read at the link below, and read up a bit about 2019-nCoV:

      http://www.newsweekly.com.au/article.php?id=58865&s=CTRbHU

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      Amy Zhou: Not from a lab? Here’s a research paper called ’A SARS-Like Cluster of Circulating Bat Coronaviruses Shows Potential for Human Emergence’ (Nature Medicine, 2015). It discusses splicing bat virus with mice virus that gives a different strain of the current coronavirus – capable of infecting the human respiratory system. Two of the scientists who worked on it are from the Wuhan Institute of Virology in China, where the current coronavirus first appeared.

      https://www.nature.com/articles/nm.3985

      Of further interest is this research paper below (Nature Medicine, 2015) that talks about how the research started, mentioning a scientist called PENG ZHOU (same name as you and your co-commenter Fang Zhou on this blog I note). You and Fang wouldn’t happen to know Peng by any chance would you, relatives perhaps? Maybe it’s just wildly coincidental.

      https://www.nature.com/articles/nm0815-831

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      No John, I do not know the Zhou you mentioned. You do realise that there are 1.4 billion people living in China? That is one of every 25 people in the world lives within the boundaries of Mainland China. And ‘Zhou’, is a little like ‘Smith’, ‘Jones’ or ‘Black’ etc in NZ.
      And I apologise for the confusion: Fang Zhou and Amy Zhou are both me. Sometimes I forget and use my English name Amy and revert to Fang (and then mispelt Amy above to confuse it all further)!

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    Once hospitals are overwhelmed (at about 0.01% infected) eg Italy, Wuhan, Iceland, San Marino the death rate rises from 1-2% to 5-10%. That is no minor thing. The 5% that are put in ICU get serious and likely terminal (in a few years) pulmonary fibrosis lung damage.

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Bob

MIght be a few cruise ships for sale if you want a yacht

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Politicians are reacting to public opinion.
Public opinion is created by news media.
News media are beholden to ratings and advertisers.
Find out facts for yourself, there is plenty of information other than news media.

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