Links 5 March 2020

Global Macro / Markets / Investing:





Leith van Onselen


  1. That G7 announcement, think about it, all the entertaining sh*t flinging we’ve witnessed, may actually have undermined or significantly damaged the possibility of a globally co-ordinated response as was the case for the GFC?

  2. Commentator James Allan in the Spectator:

    “First off, we need immigration reform. Stop listening to Frydenberg or anyone else who talks in terms of GDP growth. Yes, yes, yes, Australia has the OECD record for longest time without a recession – some 27 or 28 years. GDP keeps going up. So what? Since GDP just measures economic activity, if you let in a ton of people it is almost a sure thing that a country’s year-on-year GDP will go up, as it has here. But over those same last 27 or 28 years if you compare Australia’s per capita GDP increase, which is how individual people are faring, to say Japan’s – remembering that Japan has virtually zero immigration and we have basically the democratic world’s highest per capita net immigration – it turns out they are about the same. Growth per person in Japan over that period equals what it has been Down Under.

    And it equals our per person rate without all the often significant costs of big immigration on infrastructure, on the need for welfare provision, language training and extra schools, on trying to help new arrivals fit in and more. And of course big immigration suppresses wages (which is why big business loves it). Plus there is a ton of evidence that the gains and losses from big immigration are not evenly distributed. Once per capita net immigration reaches a certain level most all of the benefits accrue to those coming into the country, not to the citizens already here. Deplorables lose while Davos Man types and newcomers win. So I’d like a significant drop in net immigration back to what it was up to about 2005 (so throughout most of the Howard years and before). Around then it was jacked up big time at the end of the Howard government, then jacked up again by Rudd/Gillard/Rudd, and it’s never got back down to where it should be. The Coalition’s natural constituency would benefit from this drop. It’s the direction most conservative democratic governments are moving. We should too. Now. A government’s core obligation is to its own citizens and lifting their employment prospects not to some bogus jobs growth target or GDP no-recession mantra that fails badly at the level of individual existing citizens.”

    • All correct! He misses the effect of immigration on our foreign indebtedness and the wholesale transfer of most of our resources, key industries and infrastructure to foreign ownership. The result is an almost TOTAL loss of sovereignty.
      The correct level of immigration, for this economy, is ZERO.

      • bolstroodMEMBER

        Couldn’t agree more.
        and the correct response to the big V iis tightly shut borders.

    • Fox and the Hound

      Yes but Japan had to do work to achieve their per capita GDP growth and we didn’t. So we win.

  3. Really hard to know how this is going to turn out.

    The mortality has been revised upwards slightly to 3.4% overall – mostly over 60 years old (or younger with significant health problems). We always knew mortality would increase as the epidemic matured – you simply can’t calculate it during the rapid expansion phase, and early estimates usually end up being low. It may move again, but 3.4% is the best figure we have at present.

    It is important to understand that this figure of 3.4% means 3.4% of cases diagnosed. There will certainly be milder cases that are never diagnosed, and so the true mortality will be somewhat lower. You can’t measure what can’t be measured, but this phenomenon will certainly be operating.

    So the virus may kill 2% of people it infects, and 3.4% of people who get ill enough to seek medical attention and get diagnosed.

    The only country that really knows how this works is China. There is more than enough reason not to trust China’s data. Everyone talks about how Wuhan’s health system got overwhelmed and that is why the mortality was so high. BUT, the Wuhan mortality was incredibly high from the outset
    21 January 270 cases in Wuhan. 6 dead. 12 critical.
    270 total cases did not overwhelm a city of 11 million. So the mortality in Wuhan was always high compared to the reported mortality outside Hubei province.

    Iran? Who knows what is going on there. Licking shrines appears to be bad. VIPs who flout infection control guidelines will be wishing they had not.
    Korea looks more optimistic with 0.6% fatality rate. But a lot of their cases came from that sect, and so probably young – middle aged adults rather than a representative cross section of society.
    The cruise ship also looks promising despite being an older group. But they were all being tested, and so we were finding all those extra people with subclinical disease and no symptoms who would not normally guess anything was wrong,

    So the mortality data (which is the bottom line for many of us) is all over the place.

    We are now seeing rapid exponential growth pretty much everywhere. It is most likely similar everywhere – with apparent differences reflecting different policies and practices regarding testing.

    Transmission is likely to only burn out when about 50-60% population have been infected and immune.

    So a realistic worst case may be 60% infected (with many not ever being diagnosed). Perhaps 2% of this 60% will die (which is the same as 3.5% of the subset of this 60% who are diagnosed).
    So maybe a 1.2% reduction in population). It may not be that bad, but that appears to be the trajectory we are following at this very earl stage of something that will unfold over months.
    To put that in perspective, perhaps 1% of the population dies each year. So this could double the death rate (and approx half of all deaths would be from COVID19).

    These figures could change a lot – who knows what will happen in Africa.

    It looks lie it will be bad enough that the government decided to release a few insights from the pandemic planning documents, including talk about increasing capacity at mortuaries and alternative arrangements if mortuaries overwhelmed.
    “Police would run security for the state’s medical stockpile and manage “mass fatalities” if mortuaries exceed their capacity, the NSW pandemic report states.”

    We will do better if we can slow down spread and stop hospitals being completely overwhelmed (as certainly did later on in Wuhan). 50mm of rain in a week is a wet week. 50mm rain in an afternoon causes flash flooding and damage.

    How well can we lock down our cities compared to China? Do you think an infected Iranian could walk into a supermarket in China?

    • Thanks Steve. It’s a bowl of spaghetti numbers wise. Just this “To put that in perspective, perhaps 1% of the population dies each year. So this could double the death rate (and approx half of all deaths would be from COVID19). ” More complicated! 2% not quite. There’s a fair percentage of those dying from the virus might be people who would have died anyway.
      This does not negate your main emphasis.

      • The Traveling Wilbur

        What? Boomers in that 1% you’re referring to end up being double-counted? Never. Happen.

        They aren’t ever part of that first 1%. They never die. They just take some time off for six months in a caravan and then return to the workforce.

        No matter what you try.

        • yeah!! My Manager has come in this morning telling me about stuff going on at a school his wife works at. Cleaner , 75 yeas old, always off on Workers Comp. Then they got her a special vacuum cleaner but now she can’t lift more than 3 kilos. Hasn’t done any real work for years. Still there!!!
          Aus changed certainly. Jobs used to go to young people – now you can’t fire the oldies – e.g. the weather girls on TV – when I was young they were hot!!!!

    • Arthur Schopenhauer

      The rainfall analogy is a great one Steve. It’ll be put to good use today.

  4. Fox and the Hound

    One I had not considered. Cinemas and by extension the film industry will be copping it good too.

    Time to sell, boys! I reckon Village Roadshow might not last the year if it has to bank on its own cashflow. It’s been struggling for a long time, I bet its theme parks are empty too. If the bids are withdrawn then look out below! Cf ALG Ardent Leisure/Dreamworld.

  5. reusachtigeMEMBER

    What ever happened to Europeans being virtually immune to the virus thing? I’m starting to feel really let down by the Twitter/YouTube/zerohedge links the preppers etc have been posting here over the last coupla months!! I don’t know what to believe anymore. My trust in youse guys is now almost ZERO!

    • a tenant cannot be evicted during lease contract without grounds?
      eviction notice period is at least 30 days

      hope at least one of kids will stick to their rights

      if they have anything else in their contract that’s illegal

  6. Just a year ago Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security (JHU) developed an index showing how well countries are prepared for a health emergency (like corona)
    USA scored by far the best, getting perfect score for detection and real time testing and reporting

    less than a year later US is the only developed country that completely failed in the response, no tests have been done or can be done, data is poor and incomplete, poorly communicated and USA is on the verge of total pandemic

    Looks like that decades of financialization made USA only good in paperwork – shiny coulourful reports from a fiction section of a library

    I don’t think will fare much better when it comes to reality

    • LOLOL. Last time I saw a Sub Continental that pissed I hit him on the pads a foot outside off stump and he was given out! Good on him though.

    • ErmingtonPlumbingMEMBER

      I wonder how much I could get for a disobedient and poorly trained human kid.

      • The Traveling Wilbur

        When you were leaving the hospital floor, did you remember to ask a nurse how much the resale value was going to drop once you got it home?

    • The Traveling Wilbur

      I’m struggling to see any outcomes from that decision I couldn’t live with.

      That said, I’ll be watching via FTA HD. And don’t live in Melbourne.

      • Many thousands of high risk people in close proximity with Australians in stadiums, public transport, pubs, etc. We are bringing forward the spread of this virus by many weeks. Any economic gain will evaporate when Melbourne shuts down a lot sooner than necessary.

          • That is exactly right. Govt psychopaths don’t want to be seen as the ones that crashed the economy even if it saves many lives. A much better outcome is many deaths, and even bigger economic crash, and plausible deniability, all in the hopes of another election win.

            Of course I am presuming they actually have some intelligence at all.

  7. Vodafone North Sydney office were all told till go home yesterday & work from home until test results on suspected Coronavirus case were known.

  8. Sh$t is getting real serious, real fast
    All that early panicking is looking prudent now

    • That is exactly what is happening. If Italy banned then Ferrari and a couple other teams don’t turn up and the event will be cancelled.

      If they desperately don’t want the event cancelled they should ban all Italian tourists,. Only permit Italians associated with the F1 teams with the strict proviso of constant monitoring and distancing themselves from the general public.