THE COMING ECONOMIC CRISIS and its POLITICAL CONSEQUENCES

Have an election today and the government would bolt in, primarily because of Jacinda’s star power induced by the media’s obsession with her. But the election is six months away and then, I’m picking a change of government.

First, to clear the air, I like Jacinda and don’t wish the government’s demise. Long before there was any thought of her rise I admired her and Julie Anne Genter more than any other MPs. That’s because when I occasionally tuned into Parliament and they were speaking they did so enthusiastically, arguing for initiatives they thought beneficial, without ever resorting to the customary and tiresome abuse of the other side. This I found refreshing.

Second, perhaps surprising imagery-wise, I’ve voted National once in the last 40 years, that in 2014 as I was alarmed at the prospect of a Cunliffe Prime Ministership so don’t assume I’m writing this as a closet Nat.

The single issue facing the world currently, and I emphasise currently as it won’t be in a year or so, is the coronavirus crisis. Seemingly overnight it went from a detached China event to a dominant global one. All governments should have anticipated that possibility. After two months our death statistics are a standout low in the world but our hopeless media, who if they did their homework should not have been surprised. Instead they ludicrously attribute this to Jacinda’s leadership. In fact as I shall show, she’s made some awful blunders.

WHY HAVE WE PERFORMED SO WELL?

Over the last six weeks I’ve read three similar articles in the serious European press, the latest, in the world’s best newspaper, namely The Financial Times about 3 weeks back. All predicted an easy ride for New Zealand. If you want to dodge the virus and remain in a modern developed nation then shift now to New Zealand it advised, pointing out that New Zealand, has stand-out virus-combatting advantages. It’s the world’s most remote nation, an island country, thus easy to monitor visitors and a small population. Our only city of size (the virus primarily hits elderly city crowded environment dwellers) is substantially suburban without intensive occupation.

ITALY AND SPAIN

The focus of media attention has been on Italy’s and Spain’s high death rates. That’s easily explained, namely cultural factors.

First, as is often a source of teasing, Italians and to a lesser extent Spaniards remain at home until marriage, often into their 30s.

In New Zealand, Australia, Britain etc our 20 year olds are off flatting, to the mutual delight of them and their parents. Thus Italian and Spanish households frequently comprise three generations, an alien proposition in New Zealand.

As said, victims are the elderly and specially those with health conditions such as a weak heart etc. That’s a fairly common state of affairs for folk in their seventies onwards.

Furthermore in the big Spanish and Italian cities most folk live in intensive occupation high-rises which is where the deaths have occurred.

It was world news last week when a purportedly healthy 15 year old French girl succumbed. I’d wager an autopsy shows an underlying condition, such as a weak heart which would otherwise only be revealed should she say have taken up squash. That’s not an uncommon phenomenon, specially with vigorous sports.

But there’s another critical difference between New Zealand and Italy and Spain. The latter two countries are not reproducing themselves, thus their average age is significantly higher than here with a much greater proportion of vulnerable elderly folk.

That collapsing population is true of other European countries such as Germany for example. But they’ve compensated through large-scale migration. Germany has 4 million citizens of Turkish ethnicity plus many others.

A further factor distinguishing these two heavily hit countries from ours is they’re host to millions of northern European retirees, that is elderly sun-seeking folk who have opted to live there, albeit not in the vulnerable cities, but nevertheless may well be contributing to their hosts fatalities figures.

Japan and Korea are also not breeding replacement figures but again a cultural factor may apply. While both nations enjoy longevity, indeed Japan has the world’s longest life expectation, thus a high ratio of elderly, they customarily don face masks in winter to avoid colds and the flu and are also highly disciplined people.

In New Zealand, Australia and Britain, having shed their offspring off flatting, our older folk willingly see out their years together. As said, that’s not the way in southern Europe, thus their elderly are exposed to the virus to an immensely greater degree.

Our population of 5 million is spread over the size of Great Britain with its nearly 70 million people. Again, another huge advantage when it comes to infection contagion.

With our major export earner of tourism now history for some years to come, the balance of our trade involves bulk goods such as dairy, meat, wool and timber.

With say Britain, it involves intangible things to a much higher degree, such as insurance and finance, these causing a heavy interchange of people travelling. Consider the current Brexit negotiations with the European Union. The major issue is how to treat the millions of Brits living either temporarily or permanently on the continent and conversely, the millions of continentals living in Britain. So with tourism gone plus our remoteness, we have comparatively little people traffic, a greatly reduced contagion risk.

CONCLUSION

While so sudden was the virus arrival, we now know dealing with it for us was a cakewalk compared with most other nations. Mind you, if European journalists could write that about us as much as three months ago, then we should have known. But seemingly we didn’t. Six weeks ago at a small dinner party I remarked to three of our most senior government figures, “get ready to write a huge cheque for Air NZ”, the response – puzzlement.

HOW HAVE WE DONE?

Contrary to some of our Jacinda-obsessed non-analytical media, not very well.

We’ve wrongly followed overseas practices to the letter, indeed mostly to a more extreme degree. The advantages we started with meant we need not have gone that far and the economic cost will be enormous.

When the lockdown ends our major employer category, namely small and medium sized businesses will not simply start up again. Instead, a high percentage will have gone broke.

A Dominion-Post investigation revealed 400 Wellington restaurants are pulling stumps for example. They’re broke.

But economically it’s far wider than cafes. Everyone other than company receivers will suffer. The tourist related businesses; hotels, flights, travel agents, motels etc. etc. employing circa 300,000 people are gone. That’s not the governments fault but all the more reason for some common-sense with the balance of our economy which was sadly lacking.

Some economists are talking 10% unemployment. I hope that’s true but will be very happy if it’s only 25% although I expect for a time, an even higher figure.

Confidence and morale will be terrible. For example, how many architects do you suppose will be busy and therefore the construction industry. People build in good times not during, as the IMF have claimed is about to occur, a depression worse than the 1930s. People will hoard their money, driven by fear. A new car, normally an indulgence, will be put aside. The car sales industry is in big trouble, so too for similar reasons the house sales business. New shoes, clothes, furniture? You’re kidding, and so it goes. Employment agencies will have no employer customers but a huge number of jobseekers on their books, a complete reversal of six months ago.

There was never the need for such a severe approach in New Zealand, rather we just needed to propagate the hand-washing and maintaining distant measures. As for the elderly living at home, a volunteer scheme to do their shopping and take them for outings in a bubble situation with their carers, would have been enough. The goal should have been to get everyone back to work as soon as possible. Now thousands of jobs have gone needlessly.

THE FOUR WEEKS LOCKDOWN

I fit the danger category with my age and a medical condition that would see me a goner in days if I got the virus, which of course could still happen. I’m supposed to be in Paris now, furnishing a luxury apartment and discussing a library with an architect, then on to Scotland golfing, but I didn’t have to be ordered to instead go into isolation. Common sense dictated that. Furthermore I’m thoroughly enjoying it with just my partner and me in 50 acres. But what of the low-income punter with three kids in a state house? Is it any surprise to hear of the avalanche of family violence, of the women’s refuge overflowing etc?

The government seemingly gave no thought to that but instead mindless aping Britain, and Australia’s quite different situations created a ridiculous array of totally unnecessary busy-body rules as never before in this country history.  Let’s examine some.

LOCATION – You must lockdown in your home but not a holiday home. Why on earth does it make any difference? It certainly does for the occupants as a change helps tolerating it. Instead the police inspected cars over Easter, turning back those with suitcases.

EXERCISE

1) You may go for a walk but only in the vicinity of your home. What bloody difference does it make if you walk for an hour round and round the neighbourhood or a more interesting one of changing scenery. So too with cycling.

2) You cannot go swimming in beaches. Why? Because you’ll tie up police resources if you drown. Someone drowns roughly once a week in New Zealand, mostly in summer and in boating mishaps or rivers. So dozens of policemen have roamed our beaches to watch out for sinners. Madness! In the hugely improbably event someone drowned in Mission or Oriental Bay it’s an ambulance issue.

PURCHASING – You may buy food but only in supermarkets. The result; all day queues. Obviously the more food outlets the better but the half-witted government had butchers, corner grocers and the like closed. In the process they’ve destroyed numerous small businesses.

DRIVING – You must only drive for an approved purpose, i.e. food or pharmacy purchasing. What nonsense! Thus slowly going mad, confined in a small house families, were denied the relief, while still maintaining their bubbles of an outing in a car.

FISHING – Banned. Why? We’re not told. So a bloke surf-casting alone on a beach, apart from the mental relief of escape, and the possibility of fresh food, constituted a massive health threat to the community. It should have been encouraged.

GOLF –  Ban the groundsmen working despite them sitting alone on tractors in a massive land expanse. They doing that was ludicrously deemed a health threat to everyone. Golf courses already struggling now faced ruination.

Playing golf alone or in pairs should have been encouraged. Simply close the pro-shop, café and bar.  Two days ago this absurdity re the employees, was lifted but playing is still prohibited.

All of these lunatic rules were mindlessly copied from the Brits whose 70 million people in a land the size of New Zealand, raised hugely different contagion issues.

Nevertheless, in Britain they’ve now been relaxed after a series of mad Police boss declarations.

The British Police commanders (not the policemen) have featured in a series of shocking judgement scandals in recent years. Their reputation is deservedly appalling.

Last week the North Hampshire Police boss, a blowhard called Nick Adderley, announced they’d be raiding supermarkets and inspecting shoppers’ trollies to see if they’d bought any non-essential items with their groceries.

That was enough for the aptly named, no nonsense Home Secretary Priti Patel (why can’t we have Ministers who look like her?).

Priti has form in putting bighead public employees in their place.  She not only kicked this idiot’s head in but the following day extended shopping to all food outlets, newsagents, corner stores, hardware shops, hairdressers (one customer at a time) and many other activities and told the public they can buy what they want in the supermarkets. Here, purchasing magazines was declared a danger.

We seemingly have no grown-ups in charge.

DOCTORS – Visiting GPs was banned. How much suffering has that caused to people with medical problems? GPs earn middle class incomes, those not high in New Zealand thus they’re all now surviving on welfare to exist, this in a health crisis for God’s sake. It’s Kafkaesque.

CONCLUSION

The government lost all sense of proportion in their handling of this crisis. For example, the World Health Organisation advise that up to 600,000 people annually die of the flu, most I suspect in the 3rd world.

The government should have recognised early that the problem was one primarily affecting the aged and infirm. A lockdown for a fortnight points the finger at the governments naivety.

I like Labour politicians. As I’ve always said, you want a Labour politician as a dinner guest and a Nat as a neighbour, (assuming you have a high boredom threshold).

But in fairness, the Nats do understand small business; Labour don’t.

Roger Douglas made this observation about post-war incoming Labour governments. He wrote that their unawareness of practical life and governing experience made them too reliant on advice from senior public servants and academics. Instead, he claimed, they should follow their own intuition.

There’s a world-wide political swing to the right to an extent that has alarming dimensions. But it’s understandable in times of crisis. By election time the Jacinda aura will be dead in the water as she learns the truth of another famous political adage, namely Enoch Powell’s correct but sad assertion that all political careers end in failure.

THE FUTURE

The IMF say the world is heading into a 1930s depression. I believe them.

By the time the elections arises we’ll be wallowing in despair with numerous small and medium sized businesses (our major employers) destroyed and unemployment levels that don’t bear thinking about.

Borrowing billions to dish out is no substitute for people working.

The government should end the lockdown forthwith, stress the social distancing and hand-washing rules and try to minimise the damage. Then concentrate their protection efforts on the vulnerable, namely the elderly.

THE ELECTION

As Clinton famously remarked, “It’s the economy stupid” and so it’s always been.

The well proven adage that oppositions don’t win elections, rather governments lose them will come into play in the pervading gloom.

THE GREENS

In a climate of deep economic despair the Greens message will seem irrelevant and their concerns esoteric. That’s another nail in Labour’s coffin should they lose their coalition partner, as I believe they will. There’s an irony to that as with the global shutdown and little vehicle activity, reports elsewhere talk of the new found clean air and visibility.

My hill-top home has views of the entire Wellington harbour and Hutt Valley. Despite fading eye-sight, for the first time in the 51 years since I built it, I can now clearly pick out the individual buildings on the Wellington waterfront and Oriental Bay, 20kms away.

NEW ZEALAND FIRST

I won’t be surprised should New Zealand First survive but that won’t be enough to save the government. I say that as Winston and some of his hitherto self-employed MPs understand the realities of life and will begin speaking out.

By contrast, Labour politicians, typically academic, union or public service type backgrounds and view the world in idealistic ways, frequently ignorant of the realities. That has merit when changes are needed but is hopeless in earthy situations such as we now face.

To at least reduce the harm being done the government should drop to stage 2 immediately and a week later, with heavy propaganda about hand-washing, maintaining distance etc., get those still with jobs back to work.

This will result in more virus outbreaks but people get over it. It’s the vulnerable elderly who need the close attention. With every nation planning to borrow billions of dollars, once again the printing presses will be busy. But it won’t be inflationary. The Chicago monetarist theory was always silly. Inflation is solely caused by demand exceeding supply and in a shell-shocked world with mass unemployment, demand will be miniscule. In the space of a few months all the certainties of everyday life have been turned on their head. Make no mistake; politics will not be an exception. I’ll be abused for this but come back in six months and tell me I’m wrong.

250 Comments

Another thing to consider is local government, for the past 10 years they’ve actively pushing people onto public transport to take them to work in the CBDs. They’ve increased congestion by narrowing roads and hiked up parking rates.
For many this event has proven the work from home concept. Public transport is soul destroying and also now a perceived health risk. People are going to abandon it in droves, and as costs mount without recovery services will have to be reduced.

With no money for other vanity projects, and no demand for public transport, perhaps Councils will attract a better class of planner.

    The madnes behind the train connection between Hamilton and Auckland comes under the same banner…$90m already spent and no one will ever go near this.
    Plug should be pulled now.

Totally rational analysis of the current situation .
The Jacinda obsession emanating from our brain dead and lazy press core (just listen to the silly questions at 1pm daily to confirm this)will lead to the realisation by many of us that we are on to this nonsense and there will be a very vocal exposing of all the shortcomings of these to coin a phrase so called and self styled social influencers and their adored enthusiastic but lightweight leaders currently losing the plot.The unnecessary downright destruction being being enacted economically and socially hopefully will not result in widespread civil unrest and its unpleasant consequences .

    Some interesting view points. Hindsight from the cheap seats makes for over rated sensationalism of what if’s……and should of’s……….. it’s easy to point the finger after the fact isn’t it, to say we should’ve done this at this time because of this is obvious now and will fuel many a debate for some time but this is a first for our nation. It’s not about being knocked down but more about how you respond, how you pick yourself up and recover so instead of knocking Jacinda and her government we should get behind her and do what we Kiwi’s do best to win back our societal well being from the grasp of this international pandemic the road ahead will be tough but we can do it.

      Too right, Joe! The road ahead will be tough, but we can do it. Now is the time for all of us to begin taking the first steps to recovery, making the best decisions we can in order to move on. After the quakes here in Christchurch in 2011, I couldn’t quite figure what to do. But at 62 years of age, I knew that sitting on my bum complaining was NOT the answer. Now, at 71, I can still walk, I can still talk. And I can still laugh. I’ve made some new friends in my neighbourhood since the lockdown and when we can get together in larger numbers again, I’ll be helping wherever I can to organise local work projects.

      If you read the article carefully this is not hindsight from the cheap seats. It is a balls out prediction of the future (from what sounds like a very nice but likely expensive property).

      Bob was clear that this was not about knocking Jacinda, I took his fond words of her as honest. He’s knocking her decisions, and those of the plonker bureaucrats advising her.

      I think many would have a better job getting behind her if she stopped window dressing a nanny state nativity display, and instead did a bit more to make sure middle NZ have presents for their kids this Christmas.

      Now SARS-COV-2 has already spread as wide is it has the only pandemic remaining is the global pandemic of stupid indecision.

      Why should we get behind Jacinda given it’s her poor decision making re the virus and how to deal with it has destroyed our economy and so many peoples lives, lost jobs, businesses etc. Those of her supporters who currently think she has saved them from the abyss will soon realise she tossed them over it! Hopefully that happens before the election because neither she nor her Ministers despite their protestations to the contrary have any idea how to fix the mess they have created Poverty, homelessness etc will rise dramatically as tens of thousands become jobless and we all know they have all increased since this Govt came on the scene despite it being the PM’s priority to change this for the better since they took the treasury benches. If they couldn’t make a difference when the economy was tracking along not too badly, whon in their right mind would expect them to change things when it is in crisis?

      Joe, other politicians looked at this with some foresight back in January. Any knocks Jacinda Ardern and the government take now is because they knocked down that advice you’re calling “hindsight” two months ago.

    Excellent
    Agree entirely

Well said Bob

donlindale@outlook.com

I think you a quite right about the government over reacting. In the course of saving lives from covid, they have signed the death warrant of others for myriad reasons, but seem unwilling to accept that they are making any kind of trade off. They certainly wouldn’t accept that their cure is worse than the disease. Or even that it has the potential to be.
In conversation with an Australian based company this week I was surprised to learn how many activities are still happening there, including schools still being open.
The initial blanket ban on activities was understandable, but the government has been far too slow to pare back the restrictions so that they are based on risk rather than an extremely narrow view as to what is essential.
The unemployment figures are being stabilised at present by the governments wage subsidy. When that expires in about 10 weeks time, the unemployment figures are going to explode. I hope the penny drops for the Wellington bureaucracy before then so that steps are taken to minimise the ongoing damage to the country (seems a slim hope if senior figures were unable to foresee that passengers numbers for Air NZ were going to plummet).
The governments failure to get kiwibuild up and running is now even greater. It would have been a perfect program to pump money into the economy and keep thousands of people in employment.
A government that allows are situation where GPs are being laid off and hospital wards are empty in the midst of a health crisis is certainly not one that inspires hope for the rebuild.

On the button . There has been 5 death in age group under 70 in Australia they all had other medical conditions and no deaths under 60 . In NZ they are aged and infirm 70 plus , the media is making a meal about 2 dementia patients in the same hospital dying , what a blessed release of suffering for their families . This country has gone MAD

Yes, and now they are going to waste more Millions by widening footpaths to maintain “Social Distancing”. As you say they have no practical business experience. The simple way to cure what is only a temporary poblem is just to ecourage everyone to try and only use the left hand path just as cars do. Doesn;t cost a cent apart maybe a few signs to remind us.

On balance – a fairer analysis than most I have seen Sir Robert.

I have said to many people we are very fortunate in New Zealand for a variety of the reasons you mention.
One consequence of this is that many in our country run the risk of overestimating the competency of institutions in contrast to the rest of the world. Size of course being always one of the most relevant factors due to it’s inverse relationship with competence, and we are a small nation.

Still novel pathogens are never a risk to be trifled with otherwise you will eventually go bust. Mass testing, isolation, culture, and borders are all necessary measures to be robust to such future occurrences.

This event has proven the dangerous amounts of fragility in many systems that most were seemingly blind too before.

In principle the bailout of large businesses across the globe like the airlines is an absolute disgrace. Air New Zealand is a unique case, but if we must do bailouts: the equity holders should be wiped out. Otherwise we perpetuate the same perverse incentives (such as privatising gains and socialising losses) that played such a significant part in the last financial crisis.

From early on I have been a proponent of physical distancing but the farcical application has been disappointing to witness.
So too the less well-off almost always faring worse in a crisis, some of it deserved, a lot of it undeserved – unfortunate all around.

I understand your business model by catering to a high-end clientele is more recession proof, but I imagine any part of the property sector will be feeling sooner or later it due to the threat to saliency of enclosed physical spaces. It’s certainly seen the ascendancy of digital space, which always had the advantage of near infinite leverage.

    At the end of the day – it’s not the reaction that wrecked the economy. It’s the LACK of initial reaction that wrecked the economy.

    If proper borders controls had been swiftly applied it would have cut this off at the heels.
    Yet the part of the ‘rationale’ some were trying to make against doing so was because of the economy.
    The seeming impossibility of the measure (again) exposes a dangerous fragility of systems (as currently arranged).
    Here we are all the same, and a lot of that blame falls on the institutions for being too slow. With the academic types confusing absence of evidence for evidence of absence. The WHO especially has been criminally incompetent and dishonest.
    There are upsides of course, such as the stronger case than ever for fine grained decentralisation and self-sufficiency. I don’t mean to sound too gloomy.

      This government made up of incompetent academic fools , They had 5 weeks warning prior to the lock down , to start taking action & restricting travel ! Nothing was done during this period, not even basic temperature checks ! Tens of thousands traveled into NZ during this period?????. Like bob said. Even if if they had closed our borders 2 weeks earlier we would have been in way better shape!

      When Winston Peters asked 80,000 NZ’ers to come home, he was inviting trillions of viruses too. Duh!

No surgeries (necessary or even exploratory), no mammograms or prostate checks, etc. How many people have had their lives shortened or quality of life diminished. How many mental health problems have been caused. How many lives to be lost to suicide for those who have lost businesses, employment, savings and assests, homes, partners, hope, their future that they can not see. What is to be the real cost to our people in the future.

What about the fact that the Government has done an appalling job of the airports. Nz has the easiest border in the world to monitor but since the lock down travellers have been asked three little questions at the airport as they arrive and then they wonder into nz. Why lock down 4.8 million people but then let the travellers In with possibly the virus and not really monitor where these people are?
It’s ‘Mickey Mouse Management’ and typifies this government. They have a leader who loves the lense like JFK but then there are no commanders under her to execute the plan. Case and point Kiwibuild!

    Very true Paul. I arrived back at Wellington airport from South East Asia a couple of weeks before the lockdown was imposed. There were two ” public health officials” in high vis vests seated next to passport control. They both avoided eye contact with incoming passengers, looked absolutely disinterested and never spoke to one person who was incoming from my flight. You could have been almost bleeding out of your eyes and I doubt they would have paid much attention to you. The next day on the news I heard Jacinda reassuring us that the government had a team of highly trained detection officers based at our international arrivals terminals to stringently observe and question travellers entering our boarders.

      My partner came in from Taiwan the day of lockdown. There was a table of sorts set up with a couple of people in basic PPE handing out flyers, who stopped the occasional person to ask questions. I believe it has been no different until the announcement a couple of days ago that all entering NZ will now go into forced (govt) lockdown (airport hotel?). JA is just full of spin. I have come to realise you can’t believe a word that comes out of her mouth.

      Those ‘highly trained detection officers’ were the ones with four legs, inquisitive noses, and dour handlers at the end of their leashes.

Thanks Sir Robert, for a thoroughly analytical and timely essay.

Thanks Sir Robert, for a thoroughly analytical and timely essay

best article Sir Robert Jones has written for quite a while. Sometimes his attempts at humour are a little tortuous but this is well written, logical and insightful.

Yes, Go Bob.
As a result of a National Civic Defence directive the Gore District Council, after having taken the initiative to have the dump open for green waste, one in one out basis, closed it down.
Another no risk situation. We often criticise Councils and then when they do something sensible they are blocked.

    “Sensible”? That’s a very strange epithet to apply to the GO District Council RE at the best of times. But in this instance it’s nothing short of ridiculous.

    The claim by council was that the tip would be open for “green waste” only. This to encourage people to do a bit of gardening during their enforced staycations. And for this ‘vital’ (snigger) activity staff would be required to attend the coal face, so to speak, to monitor sweaty, invariably over weight, middle aged blokes humping and heaving and wrestling their branches and leaf clippings off of trailers and out of boots all the while spurting their sprays and droplets anywhere up 20 metres (YES, TWENTY metres). And I’ll bet with little or no protective gear made available.

    By no stretch of the imagination is it acceptable to expose someone to that level of risk for a few shrub trimmings. Especially as we find out more about this novel corona virus and its potentially devastating effects. If there’s any truth in this article (linked below) we’re in for a very bumpy ride and stopping it cold by maintaining physical separation may be the best option we have despite the economic impact.

    https://www.scmp.com/news/china/society/article/3079443/coronavirus-could-target-immune-system-targeting-protective?fbclid=IwAR0zDR36ghXNMBNW8-_Z6o_Jcc6YRrUqMFX7XKLCH4tye_1bAwf_bLWc-Ls

Thanks for the analysis, Bob. No doubt you’re keeping fit with 50 acres and no gardeners allowed in. 🙂

Hit all the nails on the head. Insane rules, reckless destruction of wealth and jobs, utterly clueless and supine media. The reckoning will be ugly.

Thanks for another fascinating analysis, Bob. Frightening prognosis after initial border laxity: Taiwan took three months to get to 100 cases, while New Zealand took two weeks.

Roll on Universal Basic Income, 70% tax rates, entrenched communism and lots of cheap buildings for you!

No doubt you’re keeping fit with 50 acres and 0 gardeners?

Are you predicting Trump to lose like last time? 🙂 Could be right this time. Mind you, the Dem front-runners are a choice between the demented and the insane.

If they had the brains to put up Tulsi Gabbard, she’s romp in — a medic to boot. I’m picking Hillary.

Stay well in your big bubble.

    Love your analysis of the Dem candidates and good on Tulsi Gabbard for hanging in so long but it will be Trump again for 4 more years. He will get the place back on track

Yes Bob you have most of it right

As for inflation sadly no !!

The stone has hit the pond and it was a massive stone and the ripples are heading towards the the edge of the pond .

It’s a big pond and it will take a while for the ripples to reach the edge of the pond so there will be significant drops in value of assets over the next 12 months but after that inflation will kick in .

Government spending and government printing of money will catch up as professed by Milton Friedman and inflation will occur in 12 to 18 months ( prices and costs of production will rise )

Then the ripples of the pond will be heading back up the centre of the pond and that’s rampant inflation.

Need you to punch a few more journos Bob – some of them are just brainless.

sir bob could do everyone a favour by having his opinion piece published in the granny herald that touts itself so often as the beacon of fairness etc etc./but that same failing outfit is so immersed in their embarrassing adulation of dear leader.that it would never see the light of day

A very significant new development in macroeconomics, with the potential to have far-reaching effects on community wealth building, was the announcement during the week before Easter of 2020 that the Reserve Bank of New Zealand (RBNZ) would create ex nihilo several billion dollars of new money – effectively debt-free and interest-free – to directly fund the government’s economic rescue package in response to the Coronavirus pandemic.

Notably, at about the same time, the UK’s central bank, the Bank of England, announced that it would be doing the same thing for the UK government. These unprecedented announcements effectively destroyed one of the basic tenets of neoliberalism – that government budgets must be operated in the same way that business and household budgets must be operated, namely that budget deficits must be financed by issuing debt, in the form of bonds, to the ‘market’.

In practice, the vast majority of government debt (in the legal form of bonds) is bought by banks which ex nihilo issue their own debt, in the form of bank deposits, to ‘pay’ for it, thus increasing the money supply whilst simultaneously providing themselves with a lucrative revenue stream in the form of interest that must be paid by taxpayers.

Thus a truth long-known by a few macroeconomists and monetary reformers – that sovereign governments have the power to create new money and spend it into permanent circulation without necessarily causing inflation – is in the process of becoming public knowledge.

The genie, once out of the bottle, as it were, can never be put back in. This has the potential to bring about the demise of neoliberalism.

Thank you Sir Robert. I hope that your voice is heard. I have written perhaps the first ‘book’ on this, but have given up. The groupthink is too strong, especially for a nobody (me, not you :-).

Lockdown was avoidable, with the missed opportunity in NZ, I think, not pivoting immediately when the science flipped from thinking the virus “rarely” transmitted asymptomatically to “mostly” doing so. (In practical terms, flipping from testing travelers/symptoms to all-population testing, which should be do-able in tiny NZ on a 7-10 day rotation. [Even at Germany’s 200k tests/day, NZ would be done in 3 weeks, but UK researchers reckon 10m tests/day is possible by post. Researchers also did a full-population case study in an Italian town. 10-day rotation, eradicated by the 2nd]).

Having tipped into lockdown as last resort way to halt transmission (which it does well too), with a uni-science view driving it [I think Ashley’s great, but it is not multi-disciplinary] there is now a failure again to pivot policy. Leaders must do lockdowns well, but also get out of a lockdown mentality, fast – to save lives AND economies.

It is doubly tragic as I am sure nearly all in government care, deeply, yet that depth of passion and certainty of purpose can blind anyone to alternatives. Here, the passion for eradication, which would be great, carries it further, with unintended yet avoidable consequences. Reflected pride as the only country to achieve it would further obscure those alternatives, just as safe, and better economically. (And alternative is safer than lockdown strategy if it’s not eradicated and we need pulsed lockdown, as they are triggered by rising transmission rates, and their natural consequence).

It is at least fascinating to observe again in real time (I was in DC after Iraq war start) what the research shows repeatedly; “war” mantra turning media into unreflective parrots promoting a narrative, until journalism and investigative nous returns typically a year or two later, when the “real” story will start to appear “for the first time” in books in 2 years’ time!

I think you’re right about the economic destruction (avoidable too, but we’re crashing towards it inexorably), and Sept will be very different environment. Nats may get in as you say. But my pick is still Jacinda. She is shaping up as consummate and formidable politician of our times: (a) she’s perfectly channelling Clark’s intense “on message” [sadly, too effective, blocking anything slightly off narrative, excluding diverse thinking], (b) she channels Key’s “relatable to the people” brilliantly too, (c) she has perfected the Clark/Key skill of destroying anyone daring to speak slightly off her script [US-based Kiwi scientist spoke truth to power while praising JA thrown under a bus for being slightly off narrative], (d) More empathy than Key/Clark combined, and then some, (e) global star power (last year’s shootings translating to Time, Colbert, etc; and this year’s golden prize, nearly in reach, first to eradicate), (f) Media, as you say, (g) Nats have shown no capacity for bigger picture with real solutions, picking at silly little issues that make them look petty, and focusing on issues in a way easily labeled as ‘economy or lives’ and instantly ‘othered’ [the reality is that it is indeed a false dichotomy, as JA says, but she uses it brilliantly to skewer Nats every time, But sadly misses the fact that it is a false dichotomy, and NZ could save more lives AND the economy], (h) even if Nats get around to figuring it out, speaking truth to power in a ‘war’, with media unwittingly amplifying without questioning the “on message” narrative means they’d get no traction anyway. It’s why I gave up too. As have other independents with solutions that could be much, much better.

If anyone’s interested, and so people can decide for themselves if this is tosh:
Covid-19: The Book.
Contents: https://bit.ly/2w4qFG6
Ch 1 Leadership https://bit.ly/2UuIFTw
Ch 15 Lockdown https://bit.ly/3bwNPDY
Ch 16 Full-pop testing https://bit.ly/2y3anO5
Letter to Ardern https://bit.ly/3a2EkLD
Letter to Morrison https://bit.ly/2xhTaRd
Just the Haiku: https://bit.ly/2vZC5uC
These should all be ‘friend’ links, bypassing the wall

    Ron, there were emergency Council meetings held very early in Feb outlining what was happening to the logging industry, and the closing of the Ports in China.
    Several tried to make those in power to start looking at getting everything in place regarding the closing of our borders and isolating incoming so to protect the economy.
    Govt did stop flights from China early and did isolate those incoming.
    But it was after that where it appeared the Govt went to sleep so to speak.
    My regard was solely around protecting the economy..therefor I wanted the border closed and those incoming totally isolated.
    Didnt want incoming infected apples infecting good apples already in NZ and allow the economy to progress as normal.
    Sure this would have been a huge undertaking but this could have been overcome by more active and thoughful group.
    Sadly it took those in charge a further 4 weeks before they closed the border, which left thousands incoming to roam the countryside at their will to infect .
    I was staggered to read that the PM had been convinced by a friend living in England to close down the country and border.
    Sadly there were plenty of very well connected Kiwis doing the same…and a lot earlier.
    The cost to NZ will be felt for decades ,and the finacial cost left for the younger generation to overcome.
    But I suspect the Bommers will also feel the raft of the finacial cost through all sorts of new taxes .

      Thanks Peter. Lockdown was avoidable (as soon as WHO initial advice that asymptomatic was rare, changed to the opposite, going hard out to test all could have done it), but I don’t really criticise that as that was hard to get right. But, continuing to test symptomatic only, even now, despite science, and now dozens of examples divergent from science. Also, there are several options to get out of lockdown (planB is one, as noted by Ingrid, plus mass-testing for which NZ is perfect, and secures better outcomes), but the message control is extreme. A shame. They could apply that inspirational double act (and massive narrative control, brooking zero independent thought even by MP’s, apparently) into better health AND economic outcomes, truly evidence-based, allowing rather than suppressing diverse thinking to unlock it. Mass-pop-cycled testing & we could reopen, safe, virus free in weeks, back to work, and save AirNZ with open borders, safely (nor with blunt quarantine for all, instead 5-7day prior test, and landing test, only need quarantine tiny fraction). Could truly be first country (a) safe, with high certainty, with (b) functioning, and open, economy. Current strategy is hoping for (a), with low certainty, and (b) is off the table. If they went for full (a) and (b) I’d be first clamoring to give them both knighthoods and Nobel. Still possible, maybe, but slipping away real fast.

Brilliant article.One size does not fit all. You forgot to mention the appeal by the (stasti) Police to snitch on anyone breaking the “law”

When central Govt is to pump billions into economic support it will be interesting to see what Local Govt does.A rates freeze is just status quo with minuscule pruning.The business rating differential ,which sees many Councils charge businesses 2 or 3 times normal rates, is surely due for removal (or heaven forbid- reversal ).Heavy pruning of non essential spending will be required- I won’t hold my breath!

The virus has revealed politicians as they are. And most are useless parasites. Given time and internet truthing, this may be revealed. The media shield them for now, but they are useless parasites too, and ultimately doomed. Jacinda might struggle without glossy weekly magazines. I agree with your prognosis. We need to act now and get back to work. The govt were slow to act, and will be slow to de-activate this modern Gulag they have created.

What we need. What we still need, is a debt jubilee. All debts cancelled. Take the boot off the neck of the economy. Then all to pledge, never ever, take a loan again. Grow through savings.

Holidaying in New Zealand might not be a bad thing. Learning to barter is useful. Flying frequently around the world might be over for a while. I thought the same thing riding around the streets of central Dunedin yesterday, the air was clear, and I could imagine the city 100 years ago and it was fine.

The virus sure has revealed the useless jobs. That people working and making things is the source of all value. It might focus people for a few generations. Too, it shows how fragile our modern moneyed world was. It only took the idea of a little virus, not even a proper bacillus plague, and the whole thing collapsed.

On-the-button.Thank you.

Failure to implement scientific representative sampling and adherence to the failed modeling by Imperial College London results in the destruction of our small businesses. Why Sir Bob, are Labour ministers better dinner guests, is it for comedy or do they bring better wines? Just asking.

“ Priti has form in putting bighead public employees in their place. She not only kicked this idiot’s head in but the following day extended shopping to all food outlets, newsagents, corner stores, hardware shops, hairdressers (one customer at a time) and many other activities and told the public they can buy what they want in the supermarkets. Here, purchasing magazines was declared a danger.” Bollocks. Absolute bollocks that she did any of that.

Hindsight is a wonderful thing.

Yes the economy is important…however moaning and groaning is a depressive state of mind.

Economics includes people’s mental well being.

Always keep in mind this beautiful country is for our kids and on that note Ronald McDonald house could use a donation. So if you really wish to help put your money where your mouth is and donate $100.

Totally agree with Bob, this Government has just dug a very big hole and is madly continuing to dig. Where’s the common sense gone in this country.

People talk about hindsight being a wonderful thing but many have articulated these same thoughts right from the start. However they haven’t been heard. Such a shame that hasn’t happened. If mainstream media would present divergent views, without mixing it with their own opinions, we’d be more informed and we wouldn’t be saying its hindsight. I’ll be interested to see whether http://www.covidplanb.co.nz/ gets any attention after their press release today. What I hope comes out of this is a sensible plan to handle future epidemics, so the government of the day doesn’t freak out when it happens again.

I enjoyed your article Bob, it was the most perceptive piece of writing that I’ve read throughout this crazy ordeal.

We should always try and be optimistic, but unfortunately our economy is on the road to ruin.

Commercial properties investors who cater for small and medium sized businesses are in serious trouble, as are residential property investors who have bought in poor locations. A lot of money, livelihoods and families will be broken.

We had 2 weeks more warning about what was happening than Europe, 2 weeks that were wasted.
I’m less pessimistic than Sir Bob about the future, Milton Friedman put the blame for the Great Depression on the Fed Reserve. Smarter economic policies than were implimented then should get things moving again quickly. There will be fast and cheap testing that should allow most activities to resume including tourism between nations that have the disease under firm control, Australia is nearly there already, so to South Korea, NZ will get there soon (despite this governments incompetence), so even if North America and Europe is off as a destination there’s the possibility of a quick resumption of international travel in some parts of the world.

There are other more widespread political and economic aspects to all of this as well. One is that many countries will hold China responsible for the carnage and want compensation for the damage thay have caused – there are rumblings in the UK, the USA, and Israel at the moment:

https://www.americanthinker.com/articles/2020/04/brits_deem_wuhan_virus_lab_origin_credible.html

There is also the possibility of the EU collapsing:

https://www.express.co.uk/news/world/1268349/coronavirus-news-eu-italy-germany-coronabonds-greece-eurozone-spt

Bob well done – an excellent analysis – stay well Eion

On the Button Bob
Trump again for 4 more years too

    Let’s all ignore science and peer reviewed statistical models shall we? Ok great. Let’s get back to our economic orgy! 🥴

While I have admired Sir Bob’s battling spirit I think his stating that we have overreacted is unlikely to be shown as correct when we look back at this in years to come. And we do need to take the long term view. I agree with Caleb that we were slower than we could have been to restrict travel into New Zealand but since we didn’t/couldn’t do that, enforced isolation has been one of the most important public tools left to stop this virus spreading. Everything I’ve read suggests that it is not like the flu. It is pernicious, a lot more transmissable, nasty to many who catch it, and fatal to a much larger group of people than the flu is. And we still don’t know if we can actually build immunity to it or if it hangs around in people who contract it, flaring up later. Whether we like it or not it is impacting on the world, and our response as a country, including from our leaders is rightly applauded overseas. Compared to some of the ditherers and outright nutters out there we have been well served by the speed and decisiveness shown once we did start getting some action.
I work in the “economy” and employ a lot of people. Our challenge has been how we can look after them. So far with difficulty but there is help there for people like us to do that, albeit for a short period. Until we find other opportunities for them. I don’t know what they are yet but those of us who can need to find those, make our plans and get on with doing what we can. We do still have an economy, just a different one than what we had several weeks ago. It won’t be based on incountry education, tourism and residential construction in the same way that it was.
People aren’t going to be coming here in such numbers in future, possibly for several years, and there is very little we can do about it. We don’t want hordes here who may bring new cases. And a lot don’t want to, or aren’t able to leave their home countries. Such was always going to wreck a large proportion of our economy given the number of people involved irrespective of what we do. So why not do what we can to shut this thing down?

Having done a lot of research during the lockdown I agree with what’s written here. The next 6 months may be challenging but it could also be the greatest opportunity for NZers to stand up and make a change. It’s time to take back our power.

Frederick Williscroft April 14, 2020 at 1:28 pm

You are right on the button. Talk about winning a battle but losing the war.
The media in New Zealand have been an absolute disgrace. The amount of lies and about turns uttered by the PM grows by the day. Do you ever hear the media challenge her? Never. Instead it’s the most sycophantic nauseating coverage one could imagine. I would love to be allowed into the media session and grill her. For example she has told us constantly that we had the toughest border controls in the world. As evidenced by stories told in earlier comments we had the weakest – persons just waltzed into the country, said yep I’ll self isolate and then went on their merry way. No wonder most cases are linked to overseas travel.
I hope by September this vacuous airhead is given the push.

Well said Sir Robert, the only thing Jacinda is good at is spin.The border issue was a farce and she was spouting to the public about how good security was at the airport, it was all lies. I do not want New Zealand’s recovery road with her in charge thank you.

Duncan John Anderson April 14, 2020 at 2:18 pm

Everything is 20/20 in hindsight. And so it is with Mr Jones and his opinion. Notably, he didn’t write and publish this two weeks ago. Why? Because then like everyone else, he could not really say how things would go, one way or the other. That said, the Government perhaps needs to relax things now more than it may have intended, trusting in the NZ public to do the right things in terms of social distancing and the like.

    But that’s just it. Jacinda *did* have 2020 hindsight. People already saw what was happening overseas, and told her (passionately) to close the borders immediately. She did not. The result was not a level-2 shutdown at the most, but a level-4. The cost? In real terms well over 50 billion dollars.

    Election please.

      Duncan John Anderson April 14, 2020 at 2:50 pm

      I don’t know of any government around the world that has not had to go past the Level-2 stage. Your suggested scenario does not seem realistic in all the circumstances.

    Hi Duncan, I can say that I wrote and published (much more than) two weeks ago. I have now produced a book of sorts. It hasn’t made a blind bit of difference. I’m apolitical, but I like Jacinda much like Sir Bob noted, but that doesn’t mean were not headed for an avoidable cliff with blinkers attached and a firm whip hand.

    Most countries didn’t have NZ’s advantages, as Sir Bob and your commenter noted.

    Our remoteness and time allowed us the opportunity to control arrivals. I did this in my own business, stood down people returning from the UK (and others). They were finishing their work from home periods when the government finally moved on 14 day self isolation. The government has better information than me, so why delay acting when the need was clear, and the demand for wider border restrictions widespread?
    I noted the arrival dates of many of confirmed cases on the MoH website. Many arrived in Mid March, including travellers traceable to the bigger clusters who caused much of our caseload.

    Imagine if our government had been forward thinking enough to enforce 14 day self isolation from early March after Case 1, none of the major clusters would have happened. That would be a realistic scenario

Yes it’s a horror show, and Jacinda–who is lovely (until you challenge her and then very ugly)–does not have the kind of brains that can moderate single-minded health officials like Ashley Bloomfield. People love Jacinda today because they can’t yet see the bill – but indeed, that’s going to be desperately temporary.

Here is my attempt at “saving” the New Zealand economy, if I may.
https://andrewatkin.blogspot.com/2020/04/rescuing-new-zealand-from-covid-19.html

Malcolm John Reeves April 14, 2020 at 3:32 pm

Look at https://www.worldometers.info/coronavirus/ for an update date real time presentation of the world covid situation. If you feel like it, it is possible to copy the data and reorder it in terms of deaths per million of the population. That is very revealing, Europe is doing badly despite lockdowns, the US (16th in the deaths/ million currently) is much better despite New York and fewer restrictions than Europe. Yet our media continues to highlight the US totals instead of making comparisons of an even basis. As for trying to explain why Europe is doing so much worse – read Bob’s column above and extend your thinking with respect to the nature of the US population, demographics and geography. There is a reason for differences in performance and our equal performance with Jamaica s not due to Adern

    This is no criticism, your point is valid, but the US is trailing Europe. The increase in cases is a leading indicator for deaths coming – albeit a poor one, as it reflects different testing rates/regimes. Thus Germany has high cases but high testing is reducing the rate of deaths. The US testing is not yet anything like as sophisticated as Germany’s. Disturbing (for people & economy) to see talk in US getting on top of it, yet getting on top of it in NYC doesn’t mean the US. Measures are so wildly divergent across the US, not just between states but counties, that the virus if human might be laughing and skipping about merrily. And those gaps are meaningful. Absent federal coordination without politics (neither seems likely today), watch it come swinging back into NYC in a few months.

The only elephant in the room is the national leadership or lack there of.
Change the leader and the Nats have a chance to govern again. Simon does not have what it takes. Very poor leadership by the National party executive to not recognise this.

A can see Grant and Jacinder brain storming on how they will get us out of this crisis. Grant will say ” people are saying our Economy will be cash starved and the Government will be in the same position” Jacinder ” Don’t be silly Grant we will just put up the GST and Tax Rates”

Great constructive comments Bob which show real economic inciveness from your lifetime experience in NZ business.
Ques: John Key if in power would have had more worldly experience in handling this pandemic?
History will tell us of the real business pandemic disfunction, coming from mostly career politicians that didn’t visualize our (what was a world class country) being bought to its knees (for many decades) by inexperience.

So treasury estimates up to 33% destruction of GDP. NZ GDP is ~$350 Billion implying $115 Billion lost value. Not to sound unsympathetic that equates to $13 Billion per death so far……..

Sadly mr Jones I feel you are spot on with this. But equally as sad most wont get it. Or understand it.

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