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.