Depression looms as rapidly as Covid spreads

Written By: - Date published: 10:45 am, April 7th, 2020 - 93 comments
Categories: Economy, jacinda ardern - Tags: , , , ,

New Zealand, like many other nations, is hurtling towards economic depression faster than Covid-19 spreads.

“We are going to have a depression,” said Bernard Hickey, one of the country’s leading economic commentators.

“This is like an asteroid hit the global economy.”

“When you have gross domestic product drop 30 percent fall in a quarter, you will have GDP fall 17 percent in the year, which is more than we had in five years of depression.”

The OCED forecasts Aotearoa’s hardball stance of total lockdown to fight the virus will smash the economy down 30 percent this quarter compared with around 15 percent in Ireland, 22 percent in Australia and 25 percent in the US.

The government has already poured multiple billions of dollars to prop the economy – equivalent to 6 percent of GDP. Treasury has acknowledged unemployment will likely jump from 4 percent to at least double digits, with some economists forecasting a staggering 30 percent rate – far worse than in 1930s.

An Auckland Chambers of Commerce survey out on Sunday reported nearly one third of 1000 businesses surveyed stating they will never reopen.

Infometrics economist Brad Olsen says people are dreaming if they think the economy will bounce back to normal.

“I think that’s what a lot of people are still holding on to or thinking about. There is no normal return that we go into post lockdown.

At the urging of government contracted epidemiologists, Jacinda Ardern’s government has taken what many accept as swift, bold emergency action.

But not everyone agrees the action is right. Some argue the cure is worse than the cold.

“We are using a sledgehammer to squash a flea and in doing so are bringing the house down,” says leading academic epidemiologist Simon Thornley of Auckland University.

He says most modelling of projected deaths from Covid is hyperbolic, just as previous ones for swine and bird flu were. Public health risk is serious, and he believes a more moderate lockdown as practiced in Australia, Sweden, Japan and Korea could be equally effective and far less costly.

Sweden’s government epidemiologists have controversially argued for “a slow spread of infection and that the health services are not overwhelmed”, but its government has coped criticism, with 401 deaths (at April 5), or 37 per million compared with 28 in Denmark, 12 in Norway and 4.5 in Finland.

The Netherlands has more radically supported the herd immunity approach. It calls its response “intelligent lockdown”. Prime Minister Mark Rutte says he wants to treat people as adults. Restaurants , bars and the famous cannabis coffees shops are shut but most other businesses remain open. The death toll in Holland however, far exceeds Aotearoa’s ratio at 1766 out of 18 million people.

The six epidemiology models our government here is relying on had projected a death toll, assuming no concerted response, at around 23,000, with one suggesting 80,000 casualties.

Ardern said on Monday that historic data from the Sars virus said that failure to have a comprehensive lockdown would have resulted in 4000 cases against the current tally of 1106 (as of Monday).

To date only one of the 1106 cases has died and she suffered chronic pulmonary smoking –related disease, so like the vast majority of the world’s death toll had co-morbidity. Actual cases in Aotearoa are likely to be far above 1100 due to acknowledged testing inadequacies. So the actual fatality rate here has is in reality well below 0.1 percent of the actual population.

Thornley, taking his lead from John Ionnidis of Stanford University, one of the world’s leading sceptical epidemiologists, says there are multiple variables and unknowns in all models and estimates of death rates in previous pandemics, such as Ebola, bird flu in 2006 and swine flu in 2009 were astray by factors of up to ten.

Early estimates put the mortality rate of swine flu as high as 10 percent, but it panned out “much, much, much, much lower” – at a similar rate to seasonal flu, Thornley said in an interview.

“Alarming numbers like 23,000 deaths or 80,000 draw headlines and attention but the detail is much more subtle.”

He and Ionnidis both cite data from the cruise liner Diamond Princess, because it is one example where an entire population was tested. Adjusted for the high average age of the sample, 10 deaths out of 800 passengers and crew translates to a population death rate of 0.2 percent, or around double the rate of seasonal flu – one in a thousand, he says.

The pivot of the health system to total focus on Covid has had adverse consequences for those with other conditions while expending huge economic resources to fight this one virus will have multiple long-term damaging effects throughout society, Thornley says.

Aotearoa has already witnessed swathes of job-slashing by leading employers such as Air New Zealand, Sky City, Fulton Hogan and Fletcher Building, the country’s largest construction company.

Already fragile industries, such as media and retailing, will largely be wiped from the economic landscape, Hickey says. Some media businesses, such as magazine group Bauer, publisher of iconic titles such as The Listener and NZ Woman’s Weekly, have already gone belly up.

Aotearoa post Covid may be barely recognisable. Most cultural institutions like the Royal NZ Ballet, NZ Symphony Orchestra, professional theatre, galleries sporting and pastime clubs were already precariously placed due to the small population base to support them.

Even in this rugby-mad country, NZ Rugby, along with all other professional sports bodies are dangling just as perilously. Netball franchises have already gone belly up. Like the daily newspaper, many of these entities will disappear.

International Monetary Fund’s top official, Kristalina Georgieva, on Saturday said this economic crisis will be “way worse that the global financial crisis”.

“Never in the history of the IMF have we witnessed the world economy come to a standstill.”

Indications of what is likely to happen here came from 6.6 million jobless claims made in the US this week – with no previous rise remotely close to that.

Migration, that has underpinned Aotearoa’s robust economic growth this century will come to a standstill as will the country’s biggest earner, tourism.

“It is absolutely astonishing how fast and big this,” says Hickey. “There are an awful lot of businesses that are going to go down and there are an awful lot of house prices that are going to go down. Politically it is going to be really, really damaging.”

Friday’s decision by the Reserve Bank to suspend bank dividends indefinitely effectively stymies the mostly Australian bank owners from getting their money out in the foreseeable future, if ever.

Ardern flatly rejects a less rigorous approach, as advocated by Thornley and others. In her daily news conference on Sunday, she said the “go hard, go early” strategy was working and would be less painful economically long-term.

“A strategy that sacrifices people in favour of, supposedly, a better economic outcome is a false dichotomy. It has been shown to produce the worst of both worlds – loss of life and prolonged economic pain.”

Since the Level 4 lockdown began on March 26, new daily cases have mostly numbered between 70 and 90, with most being related to returning travellers and few instances of community transmission. Eradication is this government’s goal.

Ardern said studies of different responses to the 1918 Spanish flu pandemic showed “those countries that worked zealously to stem the spread did better in the economic aftermath.”

Hickey believes Ardern has taken the only politically palatable approach.

“We all have elderly relatives and, if we could shut it out of this country, they could live for quite a bit longer not to mention all those in south and west Auckland and Porirua (near Wellington) who have underlying health issues, who will get wiped out.”

In any case, Aotearoa will have an enforced partial lockdown as the world’s borders are shut.

He says New Zealand has economic resilience in that it is food producer, near self sufficient in energy, and has a relatively small export sector that mostly comprises food the world desires.

He harks back to the breakout from the 1930s depression when the Reserve Bank lent the government money to start a massive house-building programme. The bank last month announced a $NZ30 billion quantitative easing programme and he believes that can, and will be, expanded to begin a massive infrastructure build.

“We can print our way of this.”

(Simon Louisson formerly worked for Reuters, the New Zealand Press Association, and The Wall Street Journal).

93 comments on “Depression looms as rapidly as Covid spreads ”

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  1. Adrian 1
    7 April 2020 at 11:00 am

    So we will have a depression the same as everybody else in the world but with a fraction of the deaths and with a smidgen of luck the only country to eradicate it. I know which option I want to take.

    You realise self-isolation is no biggie for economists as nobody wants to talk to them anyway and 2 metres is considered far too close to a cohort that talks so much shit.

    Economists know the cost of everything and the value of nothing.
    BTW, there is no evidence that “herd immunity ” is possible with a corona type virus.

    • alwyn 1.1
      7 April 2020 at 11:41 am

      You say "So we will have a depression the same as everybody else in the world".

      Did you not notice this bit from Mr (or Dr) Thornley?

      “We are using a sledgehammer to squash a flea and in doing so are bringing the house down,” says leading academic epidemiologist Simon Thornley of Auckland University. ……………… he believes a more moderate lockdown as practiced in Australia, Sweden, Japan and Korea could be equally effective and far less costly."

      In other words he is saying that we will not have a depression like everyone else. We are going to be far worse off as we are destroying a very large part of our economy unnecessarily.

      The major mistakes we made were to do nothing for the first six weeks or so. We did not put arrivals into quarantine. We did not arrange for supplies of either ventilators or Confid 19 testing kits. We simply ignored it until far too late and then shut our whole economy down in an enormous crunch.

      Why did we not start the way that the WHO was proposing? Test and test and test. Then follow up all contacts.

      • Adrian 1.1.1
        7 April 2020 at 11:48 am

        Is that the same Sweden, Japan and now Singapore who are backtracking as fast as they can?

        • Muttonbird 1.1.1.1
          7 April 2020 at 12:01 pm

          Thornley praised Sweden's approach.

          Sweden = 477 deaths.

          alwyn: It's just a flea.

          • alwyn 1.1.1.1.1
            7 April 2020 at 12:56 pm

            I certainly didn't approve of what I had read about Sweden.

            I wonder how South Korea is getting on? Apart from being about 10 times New Zealand population they seemed to the one most like New Zealand. South Korea certainly followed the that had followed the "go early, go hard" approach that we ignored for so long.

            • Muttonbird 1.1.1.1.1.1
              7 April 2020 at 1:26 pm

              Thornley did and you are endorsing what Thornley said.

            • lprent 1.1.1.1.1.2
              7 April 2020 at 3:44 pm

              I am always amazed out how the right constructs false fact myths.

              South Korea didn't do "go early", they were pretty late in starting their measures. It was a classic exponential growth in the weeks after their first cases. Pretty damn obvious in the curves.

              They did go hard once they started. Of course it helped that they hadn't destroyed their medical systems and have been a nation under threat and still at war for so long that they obey orders. Their inherent capacity per capital medically is at least an order of magnitude greater.

              Whereas we have the self-entitled kiwi disease vectors and enormous hordes of tourists.

              Face it – you are being an idiot trying to equate different systems. Perhaps you shouldn't have banked that wealthy targeted tax cut made possible by cutting health and other services eh?

              • alwyn …
                7 April 2020 at 5:15 pm

                I think your memory of what happened is a trifle confused.

                Have a look at these stories. While you do so you might keep in mind that New Zealand did essentially nothing until about 20 March. Indeed it was not until 14 March that the Government decide not to ahead with a large public gathering the following day.

                "On 16 January, the South Korean biotech executive Chun Jong-yoon grasped the reality unfolding in China and directed his lab to work to stem the virus’s inevitable spread; within days, his team developed detection kits now in high demand around the world."

                "Most importantly, South Korea immediately began testing hundreds of thousands of asymptomatic people, including at drive-through centres"

                https://www.theguardian.com/commentisfree/2020/mar/20/south-korea-rapid-intrusive-measures-covid-19

                "Amid these dire trends, South Korea has emerged as a sign of hope and a model to emulate. The country of 50 million appears to have greatly slowed its epidemic; it reported only 74 new cases today, down from 909 at its peak on 29 February. And it has done so without locking down entire cities or taking some of the other authoritarian measures that helped China bring its epidemic under control. “South Korea is a democratic republic, we feel a lockdown is not a reasonable choice,” says Kim Woo-Joo, an infectious disease specialist at Korea University. South Korea’s success may hold lessons for other countries—and also a warning: Even after driving case numbers down, the country is braced for a resurgence."

                "Behind its success so far has been the most expansive and well-organized testing program in the world, combined with extensive efforts to isolate infected people and trace and quarantine their contacts. South Korea has tested more than 270,000 people, which amounts to more than 5200 tests per million inhabitants—more than any other country except tiny Bahrain,"

                https://www.sciencemag.org/news/2020/03/coronavirus-cases-have-dropped-sharply-south-korea-whats-secret-its-success

                You will observe that both these stories were published before we did anything.

                As for your last statement. I suggest you tell us whether you handed any tax cuts back to the state or to your local DHB. I'm sure you were only to quick to give them any extra money you had. Well did you?

                • Psycho Milt …
                  8 April 2020 at 7:39 am

                  So, all the NZ government needed to do to emulate South Korea's approach was turn NZ into a high-tech industrialised country with massive chemical technology and laboratory capability, and make NZ society a lot more obedient to authority? And it hadn't even started on achieving those things back in January? Incompetence!

          • UncookedSelachimorpha 1.1.1.1.2
            7 April 2020 at 2:09 pm

            Or corrected for population:

            Deaths per million

            Sweden – 37

            S.Korea – 3.6

            NZ – 0.2

            (https://ourworldindata.org/coronavirus-data)

            • alwyn 1.1.1.1.2.1
              7 April 2020 at 5:21 pm

              Thank goodness that the Ruby Princess got back to Australia. We would have been at 2.2 otherwise. I wonder if we could have sent them on their way if the Captain had declared a medical emergency and refused to leave the wharf in Napier? Does anyone know what the law would be?

              • Psycho Milt …
                8 April 2020 at 7:40 am

                If this, if that. If the dog hadn't stopped for a shit it would have won the race. The figures are what they are and no amount of yeah, buts changes them.

      • Stunned Mullet 1.1.2
        7 April 2020 at 12:08 pm

        Undoubtedly the government will have got things wrong, everything is all very simple in hindsight.

        Did they make decisions that would've been significantly different than a National lead government ?

        In my opinion no or at least only at the very margins – the government of any stripe in situations like this is lead by and follows the advice of the relevant experts in the bureaucracy.

    • New view 1.2
      7 April 2020 at 5:42 pm

      Adrian, you talk like you have no job no mortgage and are living off the tax payer. “ so we will have a depression like every one else “. Sort of sounds like it doesn’t affect me. It will. If you are a superannuate like myself and have no mortgage you will be ok. Others won’t be so lucky. Where do you fit in Adrian ?

      • Psycho Milt 1.2.1
        8 April 2020 at 7:44 am

        We'll all be affected regardless of the approach the government takes – the impact is global. Bleating that it would affect us less if the government were only willing to let more people die just makes right-wingers look callous.

  2. bill 2
    7 April 2020 at 11:19 am

    There are somewhere in the region of 800 000 – 900 000 recipients of the wage top up scheme in NZ, yes? And I imagine a vast chunk of those jobs will disappear.

    But hey, disaster capitalists will do just fine out of all this if our governments give them the space to "do their thing".

    The US Congress has already essentially gifted US corporations between 4 and 5 trillion dollars. That's a lot of cash to buy up distressed assets across a world in the midst of a depression, no?

    • Wayne 2.1
      7 April 2020 at 4:11 pm

      How many of those jobs will disappear. If they are in international tourism, yes they will go, at least for the next 18 months to 2 years. That is about 100,000 jobs, or about 4% of the workforce. That will have a knock on effect, so probably another 50,000 jobs may go in the short term. Immigration will dry up, or perhaps more accurately will change. I suspect quite a few New Zealanders will come home, offsetting the usual immigration.

      Some jobs which disappear in the short term will quickly come back as demand picks up.

      Overall I would say unemployment by June will be 10 to 15%. Government funded infrastructure, both big and small (name your pet projects), will take time to absorb some of this. But by the end of the year it might have resulted in 20,000 to 30,000 new jobs.

      In addition there will be incentives for more on shore processing. Not just incentives but also some controls. Maybe another 10,000 jobs.

      So the big hit in the medium term is probably mostly in tourism, hospitality and retail. It is hard to see unemployment getting below 10% in less than a year, even with the govt infrastructure projects. Unemployment at that level has two big fiscal effects for government. Substantially increased welfare payments and substantially less taxes. So there will be government deficits for some years to come.

      Government debt will be in excess of 40% of GDP within 12 months, which given the level of private debt in NZ is pushing up toward the limit. I reckon the government debt limit is somewhere around 60% of GDP. To put that in perspective, that is $120 billion extra borrowing. Government debt is currently $60 billion. So there is quite a lot of scope for government to do quite a lot. I suspect they may have to bail out local government, along with quite a lot else.

      I would note that govt debt going to 60% of GDP gives very little scope to deal with the next emergency. The GFC and the Christchurch earthquake put govt debt up to around 35% of GDP by 2012. It has taken 8 years to get it back down to 20%. The govt will not want debt to go above 40% of GDP, so that they retain capacity to deal with the next massive emergency, which, who knows, may come a lot sooner than in another 10 years.

      Hence it is my view the government should consider an Economic Recovery Summit, perhaps around mid to late June. The government will need to reach out to get the ideas to help New Zealand get going. It would need to be broad based so ideas can come in from all directions.

      • bill 2.1.1
        7 April 2020 at 4:59 pm

        I really do wish people would stop viewing government spending in the same way as household spending and citing it in terms of percentage of gdp – it's just ideological clap trap.

        That aside – yes, government is going to have to spend money back into the economy while possibly binning adherence to some WTO rules in order to protect New Zealand from international predatory capital.

      • lprent 2.1.2
        7 April 2020 at 5:57 pm

        Figures are about right – the biggest hit will be tourism and hospitality, which as well as the direct money effect will also impact employment..

        We will get problems with exports that aren't simple commodities because an effective vaccine is likely to long way off (later for the reasoning). That means that travel for business will remain constrained. It would cause issues for market opening.

        The coronavirus family of diseases really doesn't have any proven vaccines. People have been trying on the coronavirus version of the common cold forever (hell they can't even get one for the more common rhinovirus version). CV's look to be way harder to produce for than the filoviruses like ebola. Even a decade after SARS they didn't sound like any of the approaches were getting close to being widely producible. They were more at a test phase.

        Personally I think that we'd be lucky to get one in 5 years. Certainly we're more likely to get a medical treatment to prevent extreme effects earlier. This is obviously going to suck hard for a tourist industry

        Hence it is my view the government should consider an Economic Recovery Summit…

        We've had a few of these before. It has been hard to see any wide benefits from them in the real world a decade down the line in my opinion.

        Why do you think would such a summit be anything apart from another talkfest timewaster?

        I am thinking of the “Jobs Summit” in 2009 as the last one where the main actual take out effect is to say that the poorest and most vulnerable need to sacrifice more, and all of the relief after the GFC was given to the wealthy to dribble down.

        The most obvious effect from it was that we dramatically increased immigration, caused a housing bubble that we didn’t throw resources at to cure, and the businesses got what they wanted from a compliant cabinet.

        In fact what happened economically was we got increasing wealth disparities and way more people in hopeless economic penury. Up until covid-19, and even now, you can still find them hidden in street corners.

        • Wayne 2.1.2.1
          7 April 2020 at 6:23 pm

          There have been three relevant summits that I know of. The Economic Summit of 1984, the Innovation Summit of 2000 and the Jobs Summit of 2009.

          By far and away the most effective was the 1984 Summit. The thinking was to a significant extent responsible for the reforms of the Lange Douglas government. Now I know that Standardnistas are not keen on those reforms, probably the pace of them more than anything else. To my mind the reforms were essential. New Zealand had to break out of the level of stultifying regulation that was holding the country back. Anyway another time for that discussion.

          Why a summit now? Because we are now at the same level of crisis as in 1984, though of course it has different features. Some innovative and imaginative thinking will be required. The government and its advisors do not have a monopoly on that. Done well a Summit will galvanise action and get people behind it. It should be able to produce enough for either of the major parties (and the smaller ones as well) to get something meaningful out of it.

          There is going to be an election in September, hence why I think the Summit should be in June. No matter who wins the election, they will have an enormous job getting the country going again.

          • lprent 2.1.2.1.1
            8 April 2020 at 11:39 am

            The 1984 summit was the only one that did yield some useful changes. Personally in 1984, I was about to leave the country permanently ASAP before that summit because the economic situation was both unsustainable and provided no obvious political room for improvement.

            ….probably the pace of them more than anything else.

            The pace was forced by the economic requirements. The main problem was the extent of the changes in some areas and very limited changes in others that needed short-term attention to get rid of a long term problem.

            For instance, it led directly to the crippled state of our health system to deal with the kind of epidemic we see now. There was a reason that we had a pretty monolithic health system in 1984. It had been directly related to public health issues from the first half of the 20th century – like we have again. The SOE model of public services is in most ways a major impediment to dealing with crisis.

            It also entrenched the outright stupidity of the Muldoon superannuation system that was short-term political benefit, and a long-term economic liability.

            //—

            The innovation summit was a long term political failure because clearly there wasn't enough of buy-in across the political and business spectrum. The clear result of the summit was to focus support on nurturing the kinds of startups that ensured that there was room to decrease risks to future employment. It focused on startups.

            The National party and some of the larger and rural businesses reacted strongly against that focus, and the entire intent of it was killed by the 2008 onwards by National. Quite simply they shifted the supported basis of the innovation from nurturing startups via funds or MFAT support in overseas markets to supporting existing enterprises that were already well funded by venture capital or parent companies. Basically that was worse than useless because it drained support for startups developing markets in favour of those who already had markets. This is why we have now have a major paucity of small companies in NZ developing new ideas to both sell and to develop employment from.

            //—

            The Jobs summit seemed to have gone for low-return commodity goods only. Mostly tourism and immigration stimuluses as far as I can see. As well as a major expansion into the low return and high damage commodity trade of international dairy sales.

            Obviously the focus on tourism and immigration industries wasn't a great decision for the long term. We now have housing construction deficits. Neither of those industries being viable for the foreseeable future. And there are a lot of people going to be unemployed for quite a while because there was an undue focus on unsustainable veyr monolithic industries and not enough on developing a much wider base to the economy.

            Done well a Summit will galvanise action and get people behind it. It should be able to produce enough for either of the major parties (and the smaller ones as well) to get something meaningful out of it.

            I don't think that any of them have been done well. I think that in each case they distorted policy because it allowed too much short-term ideological bullshit from loudmouths and not enough analysis on long-term consequences.

            Bad idea generally.

      • Nic the NZer 2.1.3
        7 April 2020 at 8:16 pm

        Wayne, despite your multiple claims of its existence there is no upper limit to govt debt. You may have some vague recons that there is a limit around 60% of GDP but there is simply no institutional possibility for such a limit to exist. We can immediately see this from other sovereign countries which enter this pandemic with govt debt ratios already well over this mark. Countries like the UK and Japan are not facing additional economic difficulties. Even countries in the Eurozone are only facing difficulties due to the fiscal limitations they place on each other (which is mostly temporarily suspended). So if you are going to keep pushing this false narrative the onus is on you to explain why the govts debt would impact its spending abilities at the institution it oversees (the RBNZ).

        • Wayne 2.1.3.1
          7 April 2020 at 11:28 pm

          Nic,

          There is no formal limit, but there is a practical limit. That is when too much borrowing leads to a downgrading of New Zealand's credit rating, when the interest margin rises, and when the interest bill takes too much of total government. At that point it becomes much harder to convince banks and institutional investors to buy NZ govt stock. And they are the main purchasers.

          I judge that point would occur when govt debt is around 60% to 70% of GDP, which is lower than the US or the UK. The reason being the overall level of indebtedness. In short, compared to other countries we have a high level of private debt.

          That still gives the government huge headroom. At 70% it would be half of annual GDP, that is $150 billion of extra debt. So far the covid crisis will have cost the govt maybe $15 billion, taking into account both the direct new expenditure and the likely loss of tax revenue. So there is still a very big margin. But it is not endless.

          As for QE, well, it works if there is a prospect of future growth. It won’t if the economy is contracting.

          • Nic the NZer 2.1.3.1.1
            8 April 2020 at 9:22 am

            Wayne, these are not sufficient factual basis to make the case you are trying to make from them.

            The important underlying institutional fact is that the NZ govt spends in NZ$ and these are all & only issued by the RBNZ. In the case of payments to and from the govt the transfers happen in a system of accounts operated by the RBNZ. The RBNZ can't be short of 'funds' to make these payments occur so the ratings and bond holders don't have any influence (basically there is another purpose behind govt debt mechanics).

            Probably the most transparent and simple way this could work is for the govt to legislate that its spending now occurs via a mechanism where its account has an unlimited overdraft with the RBNZ. It just makes payments from its accounts and if there is an interest rate then the treasury pays the interest on the overdraft to the RBNZ and the RBNZ then collects the profits on that lending and eventually remits any profits the RBNZ makes back to the govt (as it does already). This makes it transparent that the govt is always going to be able to make all its payments.

            Having grasped this we are now able to tackle the impacts of QE. Even when operating in the secondary markets the RBNZ will end up holding more of the govts bond debt after QE. The govt will eventually pay these bonds back to itself, so the govt is already funding itself via this policy. This will also have the impact of reducing the interest payments due on govt debt. In summary we are already operating an equivalent system to the one described above (this fact is also bolstered by emergency measures written into the RBNZ act where the finance minister can force the RBNZ to lend to the govt without legislative change).

            Now interestingly as can be observed when the govt makes a payment then the NZ$ reserve balances of the non-govt institutions increase (the large NZ financial institutions which use the RBNZ settlement system). These reserves are the same as what the RBNZ will lend to these institutions at its monetary policy rate. So when govt payments occur then there can be a system wide surplus of these reserve balances above what they need to make due payments. So if the RBNZ is going to maintain control of the monetary policy rate and generally raise the wider cost of borrowing in NZ above minimal levels then it becomes necessary to remove the impact of the govt spending into banks. This is the real reason that the govt collects its spending back in govt bonds. There are of course other ways that this could be arranged but this is beside the point. So as you can see there is a reason behind the govt borrowing but its not in any way that the govt can potentially be short of funds.

            "At that point it becomes much harder to convince banks and institutional investors to buy NZ govt stock. And they are the main purchasers" – Wayne

            Its also important to highlight that the mechanism above is the reason that these banks have a surplus to lend into NZ govt stock, but the important question regarding what you said is what else are they going to do with that surplus of funds. Anything else they could do with it will not reduce the system wide surplus of reserves so ultimately there is no alternative to lending it back to the govt. Your understanding that there is some alternative however is inconsistent with the phenomenon of negative monetary policy rates and negative interest rates on govt debt which have been seen overseas, e.g the question of why an institution would lend to the govt while losing money. But the explanation above is fully consistent with this system wide surplus understanding in an environment where the central bank facilitates that sitting on reserve balances costs more than lending to the govt. The point is if there was an alternative then in this environment then those similar institutions would not be paying the govt to lend.

  3. Treetop 3
    7 April 2020 at 11:22 am

    And what will a depression teach humans?

    Survival, self sufficiency, what is and what is not important. To avoid owing and not to ask for a loan/credit. To walk when able to instead of taking the car. To cut back on non essential groceries and to ration the electricity/gas. To shop in the op shops and to plant vegetables in the ground. To not have a pet as it is too expensive to feed and vet fees are unaffordable.

    A long list indeed. Adapting to change will be necessary for everyone.

    At the beginning of the decade I said to a casual friend, "I will be a happy woman if I get through this decade." It has now come down to a month by month time frame for me.

  4. Sanctuary 4
    7 April 2020 at 11:32 am

    When this is over, give every adult New Zealander a government prezzie card with a value of $500 and a six week window to spend it. It must be spent in a local small business that was characterised as non-essential during the lock down.

    the cost would be about two billion, and it would pump money into businesses that are in urgent need of cash flow.

    • Treetop 4.1
      7 April 2020 at 12:57 pm

      Some people will be saving $500 on petrol during the lockdown.

      Not sure of the cut the government is missing out on during the lockdown.

      • lprent 4.1.1
        7 April 2020 at 3:52 pm

        Our costs haven't gone down markedly. We were already only filling the car every 6 weeks and mostly using it for a shopping basket.

        I haven't serviced the bike at 2000km as planned.

        Household coffee costs have risen.

        Our power and network costs are about the same – the standard has its steady power drain that overshadows mere humans.

        We haven't been able to get new hardware.

        I have a simple life. Mortgages, rates, and body corporate fees account for most of my costs.

        • Incognito 4.1.1.1
          7 April 2020 at 11:38 pm

          Household coffee costs have risen.

          You can say that again! I’m running at 1 cup every 117 min and my blood pressure has more spikes than a coronavirus.

    • bill 4.2
      7 April 2020 at 5:09 pm

      Better (by my way of thinking) to use that $2 billion in buying up the approx 2 billion litres of petrol and diesel that New Zealand burns through every year, and then distributing it for free at "point of sale" on a hard sinking cap so that we wean off of fossil in a timely fashion and in a way that minimises inevitable levels of disruption to peoples' lives.

      Not resuscitating unnecessary and stupid parts of the economy that's essentially in a coma at the moment would be a good thing to.

      Too imaginative and bold. Won't happen.

  6. Barfly 6
    7 April 2020 at 11:37 am

    Well I am involved with a sporting club…asset heavy, no liabilities and a fair whack of $$ in the bank. I'm getting the list done for building work, painting ,carpeting and furniture buying for when this crap shoot is over. We will do our little bit to contribute to the economy.

    • Sanctuary 6.1
      7 April 2020 at 11:45 am

      My wife and I also plan to spends a bit more for at least a month after this is over.

    • McFlock 6.2
      7 April 2020 at 12:54 pm

      Lucky bastard 🙂

      My local theatre is a money drain at the moment, but we're still hopeful and still paying rent. The main problem is that many grants funders are postponing their meetings, which might take out a few paycheque-to-paycheque operators. But neither plague nor puritans could end theatre, so this won't, either 🙂

    • Grafton Gully 6.3
      7 April 2020 at 2:34 pm

      An opportunity too to replace the wood burning open fire in the bar with a gas fire – some lovely models out there. You will at the same time reduce bad health effects from the fine particulates in the smoke that every winter settles over the playing fields and neighbouring suburb.

  7. pat 7
    7 April 2020 at 11:47 am

    Listening to a cpl of business spokespeople on RNZ earlier today about the dire state of businesses after approaching 2 weeks of lock down it was obvious that there are a large number of barely viable businesses in NZ….and that was the case pre covid.

    If a business hasnt the reserves to meet the current months outgoings as many claim then they will need to look very hard at their viability going forward…and if they dont their bank will be in any case.

    • Stunned Mullet 7.1
      7 April 2020 at 12:12 pm

      Many businesses in NZ are small and depend on money coming in the door to pay the proprietors a wage and cover outgoings no different from a wage/salaried employee.

      • pat 7.1.1
        7 April 2020 at 12:17 pm

        The largest outgoing in most businesses is wages and that cost has been mitigated by the wage subsidy….either these businesses are trying it on or they were dead men walking anyway

        • Stunned Mullet 7.1.1.1
          7 April 2020 at 2:09 pm

          The wage subsidy is @ a maximum of $586 per week – for a small business combined with their outgoings it is not going to save them if they've got significant tout goings – think of businesses such as the little cafes and coffee shops that are owner operated. They're in an incredibly tough situation.

          • pat 7.1.1.1.1
            7 April 2020 at 2:22 pm

            I dont deny they are in a tough position, what im pointing out that this months rent /lease payment shouldnt be expected to be earned in the week its due…its called undercapitalisation…. we have had less than 2 weeks of lockdown and so therefore last months takings were at most marginally impacted (there will be exceptions such as tourism centric business but their future cannot realistically expect to continue at its existing level)

            If business think its tough now they are in for a rude awakening

    • Craig H 7.2
      7 April 2020 at 12:13 pm

      Agree, when I was looking at starting a business, 3 months working capital was recommended.

  8. Ad 8
    7 April 2020 at 11:55 am

    Simon, it's good manners if you are quoting from people to cite where the quotes come from.

    Uncited in your post are pick-out quotes from Bernard Hickey, the OECD, NZTreasury, Auckland Chamber of Commerce, Infometrics, University of Auckland, Prime Minister Ardern, the International Monetary Fund, John Ionnidis, and six epidemiological models.

    Far too easy to take it all out of context, and far better to give them a bit more embedding into their own argument.

  9. Sabine 9
    7 April 2020 at 12:22 pm

    here is hoping that the government has a plan to get out of lockdown and let us start working again.

    so far, i am happy that we don't have hundreds of people dead and that our healthcare system is still functioning.

  10. bwaghorn 10
    7 April 2020 at 12:38 pm

    As the world economy tanks lots of kiwis are going to come home ,which will replace foriegn migration, will it be a positive or a drag?

    • Sabine 10.1
      7 April 2020 at 4:05 pm

      do we have jobs for them?

      i doubt.

      • Craig H 10.1.1
        7 April 2020 at 5:28 pm

        Hard to say, but migration creates demand which creates jobs, albeit usually in food and housing.

        • Incognito 10.1.1.1
          7 April 2020 at 5:37 pm

          Uncontrolled spikes in immigration can put pressure on existing infrastructure. Just like the CPI, it should be within a certain band, IMHO.

          • Craig H 10.1.1.1.1
            7 April 2020 at 9:40 pm

            Agree, have to manage immigration with respect to infrastructure, but if we have net migration of 50000 because New Zealanders are returning home from overseas in droves, we have no ability to manage that spike using immigration policy, so would have to manage/build infrastructure more heavily.

        • KJT 10.1.1.2
          7 April 2020 at 9:48 pm

          As has been proved, it simply displaces existing jobs, and it costs more than it gains.

          • Craig H 10.1.1.2.1
            7 April 2020 at 11:20 pm

            MBIE, the Treasury and the Reserve Bank disagree with your assessment as the overall outcome as far as NZ is concerned. The positives and negatives in terms of GDP roughly even out (RBNZ assumes 0.02% GDP per capita increase because of immigration), and the displacement is only really applicable in entry level jobs.

            However, with a massive increase in unemployment on the horizon, and whole industries disappearing overnight, immigration will reduce significantly as migrants on employment-based visas will lose jobs as NZers replace them when the roles are advertised as required.

  11. Adam Ash 11
    7 April 2020 at 12:39 pm

    We must remember that we cannot solve our ‘problem’ using the same thinking which got us into the mess in the first place.

    Our ‘problem’ of course, is not Covid-19. It is inequitable distribution of wealth and social care. It is serious decline in water and air quality, it is over-exploitation of natural resources like fish stocks, it is the monster of climate change.

    Throwing money at ‘think big’ projects devised by bosses of Fletchers, Fulton Hogan and the like will not address any of our real problems.

    Covid-19 is an opportunity to wipe the social and economic slate clean, and to start anew with a fresh social paradigm that pulls us out of the current global death-spiral.

    Our leaders must take this opportunity to renew and repair our social condition, and avoid any suggestion that they are trying to drag us back to the abhorrent business as usual we have now so usefully put behind us.

    • Ad 11.1
      7 April 2020 at 2:21 pm

      Why not be a bit more concrete about what you are expecting the government to do, over and above what it is already doing.

      They are already dropping about $1b a week on us.

      Any policy area in particular you have in mind?

      • Adam Ash 11.1.1
        7 April 2020 at 4:24 pm

        Certainly.

        Things to do ( in no particular order):

        1 Assist every farmer in NZ to switch to carbon-neutral environmentally beneficial operating methods. That will clear up 30% of our emissions while ensuring sustainable profitable businesses for the whole farming sector.

        2 Review and fix shortfalls in our local food production efforts to ensure we have minimum sustainable food supplies produced locally.

        3 Develop and deploy methods of horticulture that are not impacted by drought.

        4 Invite a good manufacturer to establish a solar panel, battery and electric vehicle factory in NZ for our benefit. Once production underway stop all registration of fossil fueled vehicles and require phase out of all fossil fueled vehicles over ten years. That will reduce our emissions by over 20% and ensure that our transport systems are immune to any oil supply problems.

        5 Electrify all public transport now. Put the order in today.

        6 Quickly realign the focus of all health care (including training up ‘barefoot doctors’) onto prevention of unwellness in the community and rapid detection and treatment of disease at community and base hospitals. Move the ambulance to the top of the cliff.

        7 Massively increase allocation of personal protective equipment to all medical, first responder and essential service workers.

        8 Train and provide more relief staff for over-worked medical and essential service staff.

        9 Transfer all military staff to support border control.

        10 Develop fresh water harvesting and reuse systems for public water supply in drought stricken areas.

        11 Improve reconnaissance, communication and aid transport systems (helicopters especially) for our Fire and Emergency and Emergency Management services.

        12. Fully fund St Johns Ambulance.

        13 Education: Refocus government supported education on core skills of that are of benefit to society. Strong focus on Civics: what it means to be a functioning member of a polite civil well behaved caring society.

        14 Double the police force.

        15 Reformat all Laws and promulgate them so folk know what they are. No point expecting folk to obey laws they don’t know or understand. By the time a child is 5 it should know The Ten Big Laws and the consequences of breaking them. By 10 it should know The 100 Important Laws. By school leaving The Thousand Laws and How to Live By Them.

        16 Identify critical commodities and commence building local strategic stockpiles. Crude oil (of a grade Marsden Point can process). Nitrate and phosphate for fertiliser. Lithium, cobalt, lead, carbon. Additives for production of various alloys of steel and aluminum. Build the tanks and silos and warehouses to store them.

        17 Plant some trees. Plant something to overwhelm the wildling pine infestation with something useful.

        18 Install battery and ‘other’ electricity storage and build consented renewable generation units to allow mothballing of our remaining fossil fueled electricity generation.

        19 Go to a Minimum Guaranteed Income for all to help folk through the transition.

        20 Use Social Credit methods to fund the changeover, ensuring the spending does not attract debt or interest.

        21 Electrify all railway services.

        22 Set up a sailing ship building and manning industry for low-emission coastal freight.

        23 Improve our defence systems for protecting our economic zone and fisheries. Build locally and deploy air and sea drone surveillance systems and ‘enemy’ drone killer systems at our outer perimeter.

        24 Reinstate ‘Learn while sitting at the master’s feet’ training for all trades and professions and abandon NZQA.

        25 Treble the spend on road maintenance and safety upgrades. Decent footpaths and off-road cycle and walk routes.

        26 Fit every living room and bedroom with insulation, double glazing and heat pumps powered from on-house solar panels and batteries.

        27 Increase home care funding and support for all disabled and elderly to allow them to stay at home with family longer if they wish.

        28 Reinstate and expand services for drug and alcohol rehabilitation and psychiatric services.

        29 Commence development of new continuous arterial road routes located at least 100 metres above current sea level to provide long term transport resilience as sea levels rise.

        30 Support local forestry and milling operations by developing environmentally correct practices and developing new timber building technologies.

        31. Require all new buildings to be built to very high thermal and comfort standards using only home-grown materials.

        32. Provide generous direct funding of local sports and cultural activities to sustain fitness and cultural wellbeing.

        33 Actually do get high quality broadband to every home and device. Ask Starlink for help.

        34 Rehash the electricity market to put all profit back into the pockets of the consumer.

        35 Increase aid, support and interaction with our Pacific neighbours.

        36 Build another Cook Straight power cable link and upgrade the backbone high voltage distribution network in both islands.

        37 Lay power cables to Haast and Stewart Island.

        To name but a few.

        There are, of course, a whole bunch of things we should not be doing too, but if we focus on the likes of the above suggestions the bad will be overcome by the good.

        • Ad 11.1.1.1
          7 April 2020 at 11:22 pm

          Sigh.

          This is just a supermarket list.

          1. Takes decades and is pretty pointless

          2. We have plentiful local food production already

          3. Thousands of hectares more are in drought-resistant production through water storage projects over this term and previous two terms

          4. They're not coming

          5. Underway in Auckland already. Wellington region won't be told.

          6. We've reallocated our health system already – both last year and in the last 3 months

          7. Happening already

          8. Takes at least 5 years

          9. Unnecessary – existing programme already working

          10. We're not Israel. More dams are underway.

          11. Drones and satellites are cheaper, more accurate, and safer

          12. Wait for Budget May 8th

          13. They've just denationalized all polyptychs to direct courses nationwide

          14. Already increased massively – and no need for it

          15. Pointless, and useless simultaneously

          16. No need when we don't manufacture using them

          17. Already a government programme

          18. Policy goal shifting from current 90% to 100% renewable by 2035 already underway

          19. Government has just guaranteed worker incomes for all businesses who need it

          20. Meaningless

          21. We're going to spend the next 15 years and over $8b just rescuing what we have with deeper and deeper subsidies, plus a few more stretches of track. You could give everyone two electric cars for free with that.

          22. With bunker oil collapsing in price, and neither Mersk nor Wolff interested, this is a global non-starter. We do leisure craft for the rich.

          23. Already have one of the best managed fisheries in the world

          24. Apprenticeships are back.

          25. They're already funded to do that.

          26. Every under insulated house – required already for landlords under this government

          27. Does anyone want this?

          28. See last years' budget on mental health

          29. A few really vulnerable areas like state highways in major cities have already had height rebuilds over the last decade. Otherwise, it's just not the threat we thought it was.

          30. Already government policy

          31. Thermal requirements for new builds already in place

          32. Collective sport is dead for a good few years

          33. Crown Fibre Holdings has been rolling out state support for this for over 6 years

          34. Best of luck

          35. Actually the walls are about to go up

          36. Upgrade completed 5 years ago, further upgrade last year. New Transpower telco cable completed this year.

          37. Only if demand is higher than for local solar units

          • Adam Ash 11.1.1.1.1
            8 April 2020 at 12:30 am

            Thanks Ad! Great response. I beg to differ somewhat. What’s your list then?

  12. Carolyn_Nth 12
    7 April 2020 at 1:40 pm

    A point on a detail mentioned in the post: Professor Skegg, at today's epidemic select committee said NZ was correctly going for "elimination". Skegg distinguished this from "eradication".

    So, elimination means the virus will not be totally eradicated from NZ. Covid-19 will still be present, but in such a small amount as to not be a problem.

    I don't know what the statistics are that differentiate "eradication" (no Covid-19 at all in NZ) from "elimination."

    But Skegg says elimination is achievable.

    • Incognito 12.1
      8 April 2020 at 12:30 am

      New Zealand therefore had a major choice. A more familiar mitigation strategy or a more ambitious elimination approach. Technically, elimination is the eradication of an infectious disease at a country or regional level, with the term eradication reserved for global extinction of an organism. Disease elimination has been applied to a wide range of human and animal infectious diseases, though an effective vaccine is often required.17

      https://www.nzma.org.nz/journal-articles/new-zealands-elimination-strategy-for-the-covid-19-pandemic-and-what-is-required-to-make-it-work

      • Carolyn_Nth 12.1.1
        8 April 2020 at 9:35 am

        Hmm. Interesting. Skegg, however, did not differntiate eradictaion and elimination in this way. He seems to be a bit vague or slippery around the differnces.

        The NZ Herald reported this yesterday from the epidemic committee.

        He [Skegg] said New Zealand was in a "brilliant" position and the envy of the western world as the only western country in a position to eliminate the virus.

        Elimination meant reducing the number of new cases to zero or a very low number.

        If eliminated, the lockdown could be lifted and hotels, schools and restaurants could open, while new outbreaks could be managed by rapid identification, contact-tracing and self-isolation.

  13. UncookedSelachimorpha 13
    7 April 2020 at 2:14 pm

    If we can completely eradicate C-19 from NZ, then impose a robust quarantine at the border…then life in NZ could be very pleasant. We will have some impact at the borders (trade, people), but many aspects of life within NZ could be close to normal (and think of domestic tourism without so many tourists – better than normal maybe!). While we wait for the actual solution – a vaccine.

    Might become the envy of the world.

  14. barry 14
    7 April 2020 at 3:55 pm

    I think Simon Thornley has just blown his credibility.

    There have been 11 deaths so far out of the 712 people removed from the Diamond Princess with 10 still in ICU. That is 1.5% death rate with the best medical care in Japan. Of the rest not much is known but at least some of them have since been confirmed infected and died. If the same happened to the NZ population it would be ugly indeed.

    There are alternatives to NZ approach, but if we can end up the only country outside China with no Covid-19 we will have a huge economic advantage.

    • Jeremy 14.1
      7 April 2020 at 8:23 pm

      All the deaths were in people over 70, likely with serious pre-existing conditions given what we know from other in depth studies from China and Italy of this cohort. Only about 3,000 of the 3700 people were tested, so you can add at least a couple hundred to this number when you also include non-tested or possibly even recovered infections.

      Once controlled for age, the infection fatality rate comes in 0.05% to 1.1% 95% CI, with a mid point of 0.3%. This correlates relativity well with the constantly updated estimated IFR of 0.1% to 0.26% the CEBM at Oxford is keeping track off (taking into account all good datasets). It is also worth noting that that as many as 88% of people may dying with coronavirus, rather than from it.

      These numbers are not particularly scary (although the infectiousness is a threat to the Health System if measures aren't taken) and certainly not worth blowing up the global economy for, which is the track we're on and I think the point Dr. Thornley was trying to make.

      • barry 14.1.1
        7 April 2020 at 9:48 pm

        "Dying with the disease" is meaningless. The people may have had other serious problems but there is no doubt that the virus shortened the life of the vast majority of them. The age of the worst affected people is advanced, but unless we are just going to allow them to die, they inevitably overwhelm the health system if the outbreak is left uncontrolled.

        Some people like to bag the numbers from China, but based on all the evidence the official numbers are not far off. Their cases are almost all resolved and is a bigger, more diverse sample. Also the Wuhan medical system was stretched to the limit without actually breaking. The case mortality rate in Hubei was just over 4%, while the rest of China it was about 1%. It shows the value of giving your medical system some headroom. Don't let it get overwhelmed like Italy and Spain.

        The countries that have tried to avoid lockdowns, seem to all end up there in the end. Even japan is slowly shutting down. The advantage of doing it early is the problem doesn't get too big.

        We could try to go like Germany or South Korea with lots of testing, and have a topnotch well-resourced medical system to cope with the infected. However we have not resourced our hospitals anywhere near as well and I think it would be a high risk strategy.

        There is no exaggerating the advantage we will have if we can eliminate the virus. It has a good chance of working and should be much cheaper than the alternatives.

        • Jeremy 14.1.1.1
          8 April 2020 at 2:11 am

          The difference between dying with and from the disease is of crucial importance, to understand why takes a simple thought experiment: imagine that this virus was the most infectious one ever, and everyone in NZ was infected at the same time, on an average day in NZ approx 100 people die of all causes, the actual number of deaths due to the virus would be the number of people above this who die. These numbers are being tracked in a number of countries and are not alarming.

          No, the numbers from Wuhan do not show that the number of deaths spiked there due to the hospitals being overwhelmed, they show the massive under-reporting of cases there, as is usual in the early stages of epidemics. For example; when the repatriation flights happened in last week of January to NZ and a number of other countries, most countries tested all of this random selection of people from across Wuhan, and 0.9% were positive. Out of a metropolitan area of 20 million this means there were approx 180,000 actual cases at the time the official count was approx 3,000. The fatality rate in the rest of China is lower because they captured and tested a much higher percentage of the actual cases – we're seeing this globally, wherever wide spread testing is done, fatality rates plummet.

          Eradication only makes sense if the rest of the world also manages to eradicate this too. Given how wide spread and infectious this is, the idea is laughable in my opinion. So the question becomes, OK we eradicate this and then what? There is no guarantee an effective treatment or vaccine will ever be found, so we're going to keep NZ closed permanently once this has burned through the rest of the world? And the stats come out about how little danger this poses at the individual level after herd immunity has been reached? The world moves on (and stops looking for a vaccine and effective treatments) and we're at a massive disadvantage because we're closed and everyone else is open again.

          We have a perfectly viable alternative now, a very strict quarantine of the elderly and ill, while everyone else gets this as quickly as possible to protect them.

          • barry 14.1.1.1.1
            8 April 2020 at 8:25 am

            The number of excess deaths in Bergamo get pretty alarming. They may have peaked at 200% on top of normal death rates. For Italy as a whole (normally 2000 per day) it got to a 50% increase. This may not be sustained (it has dropped due to the lockdown), but the evidence is that it would go on until the target population is all immune or dead.

            'we're seeing this globally, wherever wide spread testing is done, fatality rates plummet.'

            We can assume that Germany is the gold standard (High quality of health service & massive testing). It has over 100 000 cases with nearly 2000 deaths (CFR just under 2%) with nearly 6% deaths in cases with an outcome. Their average age of case is about 45.

            'We have a perfectly viable alternative now, a very strict quarantine of the elderly and ill, while everyone else gets this as quickly as possible to protect them.'

            We have no reason to believe that immunity will be long-lasting, which means that we may need to repeat this forever.

            Protecting the elderly has so far proved to be impossible. A strict quarantine would deprive them of contact with their families. The huge number of (low paid) workers required to look after them would also have to be protected. Where do you draw the line? What does it mean for the hospitals?

            I think an immediate future without international travel sounds a lot more attractive that a continual cycling between relative levels of lockdown.

            • barry 14.1.1.1.1.1
              8 April 2020 at 10:24 am

              Excess mortality for Europe is mapped here

              https://www.euromomo.eu/slices/map_2017_2020.html

            • Jeremy 14.1.1.1.1.2
              8 April 2020 at 12:03 pm

              Northern Italy is a special case due to; age, air pollution levels, anti-biotic resistance, etc. the data is showing this.

              Iceland is the gold standard, they have tested a far higher percentage of their population than any other. They tested over 5400 people between March 13 – March 20 and had 48 positive cases, or about 1% of their population, translating to an actual case count of approx. 3600 (i.e. 1% of 360,000), when documented cases were 600 – 700 showing the staggering numbers of cases being missed in Italy, France, the US, etc as Iceland has tested far further and earlier and still missed 4-6x, above it is likely Wuhan missed 60x cases, there are other examples. In Iceland in the 2-3 weeks since this essentially random sample (although it still would have been biased to self selecting symptomatic bias) 4 to 6 people have died (depending on how long it takes from infection to death on average – still unknown exactly) this translates to a very, very low IFR, but they seem to have done an excellent job of shielding their elderly and vulnerable.

              In the testing done so far there have been very strong immunological responses in monkeys (if I remember correctly they have also measured it in humans – I can't find the report I read a couple of weeks ago) showing that full immunity with likely last a few years, and in general (although it can only be speculated at this stage) it's the novel nature that is dangerous, once you have had something once the immune system will launch a response early even after full immunity ends, that means you are asymptomatic or just get cold or flu at worst the second time around – unless you are very elderly or immune compromised (which is what is happening in 95% of the cases this time around), but normal colds can kill up to 8% of vulnerable people in a nursing home outbreak in the right circumstances.

              I said in another thread this is a question or health versus health, because secondary and tertiary effects are very real and must be considered, and we are picking by far the worst option from a number of alternatives.

              • Incognito …
                8 April 2020 at 1:52 pm

                Your second to last paragraph is full of unsupported statements and claims and sounds like the stuff one reads in Reader’s Digest. The onus is on you to provide sources and links that can be verified so that we can tell what is what and whether it is reliable at all. To me, it looks like a load of ignorant BS.

                • Jeremy …
                  10 April 2020 at 7:27 pm

                  Sorry for the late reply. The immunological response was from the abstract of a study I read about the Spanish Flu, and why elderly people were spared in the main, the opposite of what is happening here. The main theory is that there was a much less severe influenza pandemic 50 years prior of a similar strain and that those over 50 had an immunological response similar to that I describe above. I'm not a doctor however and happy to be corrected.

                  I'm not presenting a journal article for peer review. People can take or leave I what I say, but I've read a few dozen reports and pre-peer reviewed articles, the totality of which make up my arguments.

                  I'm confident that when people realise the long term damage to our health caused due to economic damage when compared against that the virus can cause, it will become obvious that any country that used full lockdowns and closed their borders long term made a grave mistake.

                  In 6 months there are going to be a lot of very, angry unemployed people with a legitimate animus to governments globally.

            • Adam Ash 14.1.1.1.1.3
              8 April 2020 at 1:09 pm

              ‘…future without international travel’

              Indeed. We used to get about 500,000 tourists arriving here each year. Say each of them spent a dollar at your venture giving you $500,000 revenue pa.

              In a future where access is strictly controlled to ( for arguments sake) just 500 verified clean tourists, then you would be in a position to charge each $1000 for the same experience you used to offer. But with fewer customers to attend to your offering could be enhanced.

              The 500 lucky ones would really enjoy the ‘remote’ and ‘wilderness’ experience, being assured of being alone at venues. No more boats queuing and tooting to nose into waterfalls in Milford Sound.

              There would be useful environmental benefits too due to reduced numbers

              Strict rationing and testing of every tourist could provide a very unique and expensive experience for the visitor and allow dome fragments of the tour and hospitality industries to survive.

    • Simon Louisson 14.2
      7 April 2020 at 10:00 pm

      Remember Thornley adjusted for the fact that most cruise passengers are elderly

  15. Ad 15
    7 April 2020 at 4:03 pm

    Let's hear from writers who can help us think and imagine our way out of this.

    The rest are doomculters.

    • Sabine 15.1
      7 April 2020 at 4:06 pm

      well then why don't you write an uplifting post about how you imagine our way out of this. 🙂

  16. Wayne 16
    7 April 2020 at 4:21 pm

    Adam Ash,

    That is a huge list, and would completely bust the country financially. What would your top ten be?

    By the way I don't think NZ should try and build electric cars, as also suggested by Simon Wilson. Modern vehicles are hugely complex with tens of thousands of parts. They need a global (or at least a continental) supply chain. The only car New Zealand ever built (as opposed to assembled) was the Trekka in the 1960's. That was real basic, with probably less than a tenth of the parts of a modern car, but it still had an imported engine and drive train.

    • lprent 16.1
      7 April 2020 at 6:01 pm

      the Trekka in the 1960’s

      And most notable because it was pretty dangerous to anyone who thought it was an off road vehicle. A sort of high sided station wagon with a high centre of mass.

      It also had all of the reliability of the skoda engine. Fall out of tune at a moments notice. It was wise to learn how to manually retune it at least once a fortnight. Same with the skoda sedan I had in the last 70s. It did drive, but was off tune more often than not.

      I was so glad to get back in a land rover after driving one for a while.

    • KJT 16.2
      7 April 2020 at 9:33 pm

      You are assuming that city commuter and freight, electric vehicles have to be the same as our current ones.

      They don't. And building them is easily within the capability of our design, composites and engineering industries.

    • KJT 16.3
      7 April 2020 at 9:38 pm

      The cost of not anticipating and adapting will be even greater.

      So. What do you suggest? The current trajectory, which will have us overrun with better armed and more numerous climate refugees within 50 years? As half the world crops fail.

      • Adam Ash 16.3.1
        7 April 2020 at 11:53 pm

        KJT. I couldn’t agree more. Our leaders seem to have absolutely no ability to reflect on the lessons of history, and so are liable to repeat the same mistakes. To many of us the signs of impending difficulties are clear.

        However among the ruling class the application of critical thought to our present social, political, environmental and economic circumstances is weak. We ignore the teaching of Sun-Tsu (The Art of War)?at our peril.

    • Adam Ash 16.4
      7 April 2020 at 11:29 pm

      Wayne, there are three phases: during the crisis, immediately after when we all hit the streets again, then the ‘and we all lived happily ever after’ phase.

      The aim is to get money directly into people’s pockets and have that money do lots of work before it gets into overseas banker’s or shareholder’s pockets.

      Jobs must be real, not makework schemes like the dehumanising useless Project Employment Program of old. So we need new clearly-defined agreed national targets.

      #1 During the crisis probably the most we can do is get ‘otherwise unengaged’ staff to provide relief and backup for medical, resthome and essential service staff. Idle sparkies can ride shotgun with linesmen; TF soldiers could give lone police patrols a buddy. Hotel room service could relieve resthome and hospital staff. Lavish provision of good PPE will help with preserving bubbles.

      #2 After the crisis brief induction and then on-the-job training will provide a flood of teacher’s aids to help with special needs and take some strain off teachers.

      #3 New roading and infrastructure projects are allowed where the project supports a strategic need and manpower and plant are available. New roading spines located 100 metres above sea level are ok, coastal roads not. Build all those consented renewable energy projects and mothball fossil fuel generation. Build a new cable across Cook Straight and upgrade the main power transmission system in both islands to cope with increase demand from electric transport and the upcoming demise of gas supplies to the North Island.

      #4 Carry out all required maintenance to hospitals and schools (using newly trained labour where possible).

      #5 Build storage facilities for stockpiling critical commodities and commence stockpiling.

      #6 Rebuild farms (all of them) to function without impacting water or air quality.

      #8 Reformat water supply and wastewater infrastructure to allow drought-stricken parts of the country to function for as long as possible.

      #9 Electrify all transport services starting with rail and bus, Reinstate passenger rail routes to replace ‘crashed’ air services.

      #10 Insulate every living room and bedroom, double glaze windows, provide heat pumps, solar panels and batteries to provide resilience and ease peak power demands.

      Those ten would be a good start, and would see the creation of many many new jobs. The rest of my list (earlier) will follow in due course.

      The key guiding principle must be that ‘business as usual’ is gone for ever, and only programmes which put us on a sustainable, equitable, path to a better social, environmental and economic future (recognising especially the threat of climate change) will be pursued.

      Worth a crack, IMHO.

    • RedLogix 16.5
      8 April 2020 at 8:25 am

      Modern vehicles are hugely complex with tens of thousands of parts.

      Actually no. EV's typically have around 20 – 30 moving parts. In many ways they're much simpler mechanically, but far more complex electronically.

      And NZ's manufacturing/tech sector has progressed enormously since the days of the Trekka.

      With some of the right talent in charge NZ/Aus could set up a local EV manufacturing chain without too much difficulty.

  18. pat 18
    7 April 2020 at 6:37 pm

    "This dire prognosis has prompted a flurry of activity as organisations like Greenpeace New Zealand cobble together draft stimulus packages to respond to the crisis. Shaw says he is personally agitating for a climate-friendly stimulus package."

    https://www.newsroom.co.nz/2020/04/07/1119407/covid-19-stimulus-is-climates-last-chance-saloon

    How much support will such a strategy receive?….think it reasonable to assume more than previously but will it be enough to overcome vested interests and uncertainty?

    • Ian 18.1
      7 April 2020 at 7:30 pm

      Good to see the provincial growth fund folk have finally recognised that water storage and irrigation are very good investments for our small,semi bankrupt country. I expect major projects will be back on the agenda now that the tourism bubble has popped,boom,bang.

      norman and shaw need to change their narrative if they want to be taken seriously.

  19. Craig H 19
    7 April 2020 at 9:38 pm

    Is this a good time to bring back Kiwibuild as a programme aimed at state houses? (probably with a different name)

  20. greywarshark 20
    8 April 2020 at 9:09 am

    This from Bernard Hickey:

    “We all have elderly relatives and, if we could shut it out of this country, they could live for quite a bit longer not to mention all those in south and west Auckland and Porirua (near Wellington) who have underlying health issues, who will get wiped out.”

    I think that the elderly and others with chronic disease should be considered for sure, but the economy shouldn't be sacrificed for them. The economy is how we live, how we provide for ourselves. We have to make changes.

    The economy has to change, and micro businesses need to keep going, need funding so they can keep going, we need to shop locally and help the young people running the local businesses keep going. Micro business is the neolib correct response to destroying our previous economy with freemarket imports flooding the country. Imagine the country covered with throwaway imports, clothing, toys, etc stretching out and smothering like the muddy flood water that covered Southland in February.

    Use our imaginations, try to understand, think one thing per family about what could be done to change things for the better for people and the country. Have a website where people could put up positive ideas and how and why they would help and how they would be implemented. This would help the country prepare for change and have a voice in it. Make it easier to get change through Parliament, start a series of experiments, pilots around the country where areas wanted to give something a go that could be good practice for everybody and try it out and keep tabs and report to the Manager.

    Don't give up, get smarter and less conservative. Technology is enforcing change. People must retaliate and establish how much, how far, and just how we can keep people at the front and top.

  21. Adam Ash 21
    8 April 2020 at 1:27 pm

    Greywarshark, you say ‘I think that the elderly and others with chronic disease should be considered for sure, but the economy shouldn't be sacrificed for them.’

    This is personal. I’m classed as ‘elderly’. Are you saying I should be left in the hallway to die to save your sorry fiscal arse? Please explain why I and my mates should let you throw us under a bus on the off chance you may live your life (which is obviously devoid of a drop of human decency) a little longer?

    Just askin’ for a friend.

    • greywarshark 21.1
      8 April 2020 at 5:07 pm

      Adam Ash

      Do you write here to discuss and learn, or to state your wants and opinions and impress others with your well-argued position of entitlement because you exist?

      We are in a world-wide difficulty, and were before Covid-19. One of the problems is the overlarge number on the planet's surface wanting to draw from it for their upkeep. There is doubt that there will be enough, and even less with rising seas covering agricultural land and islands.

      Some of the biggest flat land developments of housing in NZ are for the elderly. Do you see where there might be a problem with more agricultural land going under concrete and bitumen? There are more people dying over 85. If they retired and received the pension at 65, they have been receiving it for 20 years. Are they grateful, do they feel part of a community and ALL want to put something back into the community WHERE it is needed? Or do they feel entitled to have their health looked after, and to sit back and enjoy life as healthy citizens pleasing themselves? If you think that these two situations converging, longer lives, and greater numbers of older people don't constitute a looming problem then you are apparently one of a majority.

      At the same time there is not enough housing for young people who are being forced away from young family to work because work is good for them, it is said although that is a morally defunct platitude, then why is work not good for the elderly, who apparently can't be asked to do even a morning's work to support their society.

      If you have a desire to deal with our present problems, you could organise a bunch of old boys and girls who still have good functioning brains, and press the government to bring in again, the system of valuing work for no pay, or a small honorarium, that would enable people of all ages to use their skills or time and be recognised as being valued workers. With so many jobs being lost to machines, it is time to reshape the environment. There will be less actual money in the system, but as money is just officially sanctioned promises, we can still manage to have a comfortably off society with less poverty, if we enable people to do something of benefit to all, and get paid with internal NZ vouchers that are widely accepted and bankable backed by the Reserve Bank.

      Now there is something for you to chew on. How will we manage in the future? What changes will you make? For me I want to live and contribute till I die, and I would like to have the choice of managed demise ie managed euthanasia of my choice done through legal channels. I am 78. If you would like to help me have my wish please vote for euthanasia of choice.

  22. greywarshark 22
    8 April 2020 at 1:30 pm

    I think that the terms of any post have to be tightly limited. If the idea is to discuss how to deal with economic depression, then the words virus and Covid-19 must be eliminated from the post heading. It is hard to corral thoughts and drive them along the virus-free route at present.

    Even depression must be tightly described as in either 'economic depression' or 'depression affecting mental health'.

  23. pat 23
    8 April 2020 at 1:58 pm

    "A net 35% of firms expect lower capacity utilisation, which is the lowest reading since 1991.

    Compared to the same month a year ago, a net 53% of firms report lower activity, and a net 28% already report having fewer employees.

    "This is clearly a very deflationary shock," Zollner said."

    https://www.interest.co.nz/news/104474/anz-business-outlook-preliminary-april-reading-shows-record-lows-across-board

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