Welcome to The Second Great Depression

In his masterpiece, The World in Depression, Charles A. Kindleberger concludes the major cause of the Great Depression was a paralysis of leadership caused by the decline of the UK and the immaturity of the US. Neither was able to provide leadership and put themselves forward as the economy of last resort after the 1929 crash.

Kindelberger argues that during the 19th century, global growth was balanced by the UK’s decision to keep its economy open. When the home country boomed, capital flooded in to invest, but imports surged and offset the depletion of capital elsewhere. When the home country swooned, capital sought higher returns offshore, boosting growth elsewhere and therefore exports from the UK, softening the downturn. This mechanism prevented recessions from spiraling into depressions.

When the UK’s political and economic weight dramatically declined through the first 30 years of the 20th century so did this mechanism. And to make matters worse, when 1929 arrived the US was not ready to shoulder the burden of global leadership. When trouble came, it closed its trade borders. The globe was leaderless and deprived of all external demand.

This analysis has two important points to make about our current situation. The first is that for the past couple of business cycles, the world has enjoyed a remarkably similar parallel in its macros settings. As the US boomed through the late nineties internet economy then again through its post-millennium housing bubble, capital flooded in, causing some to argue that the widening current account deficit was a result of a surplus of investment opportunities. The result was an imports boom, which boosted the peripheral or emerging markets, in particular China.

Then, as the US weakened, and monetary and fiscal policy was eased, capital flooded outwards to emerging markets, again especially China.

The second point to draw from Kindleberger is that the UK/US global leadership impasse is a clear parallel with the US/China today.  The US is no longer willing, or in a position, to be the engine of global demand; the political price for its working classes is too high. Equally clearly, China is not yet of sufficient size, power or sophistication to lead the world into a new economic era through an open economy.

Indeed, it is worse than that. The Chinese system is a half-pregnant capitalist autocracy with completely different priorities to those of a liberal democracy which will lead to even more perverse political economy outcomes.

We can see this already today in the remarkable, and shocking, push to blame the US for the Chinese derived pandemic. Rather step up as global leader, the Communist Party of China has ordered its diplomats to spread the vicious lie that America planted the virus in Wuhan.

Let me reiterate, it’s not not ratbag media or fringe nutjobs or shadowy psy-ops at work. The CCP diplomatic corp is doing this. It is an open declaration of psychologial war.

Such an extreme gambit exposes where CCP thinking is at. It has clearly concluded that its relationship with the world is about to collapse. That the trade deal with the US is dead. Indeed, that its relationship with the US in general is over. And that it is worth sacrificing because the Party’s prospects are better if it can channel public rage offshore, away from itself.

This desperate gamble also implies that the CCP accepts that its social contract with the Chinese people has fallen victim to the virus. As the economic model ends, the CCP can no longer guarantee wealth accumulation in return for autocratic rule. So, instead, it has moved to aggressive natioanlism as its last redoubt.

Less extremist versions of this pardigm shift can be multiplied across every nation on earth.

Returning to Kindelberger and The Great Depression analogy, following the crash of 1929 and recession, the US deployed the Smoot-Hawley tarrifs and global trade unwound as well, dragging out the downturn for years, superbly illustrated in Kindelberger’s famous web chart:

Similar policy will play a deglobalistion role today as it did in the 1930s. We have created a fragile system with absurd concentration risk in China, selling out our production diversity for a dream of temporary wealth. Tony Abbott is an early mover, via The Australian:

But what so many countries are now discovering is their dependence on global supply chains (and ultimately their dependence on other governments) for a host of products that don’t normally seem that important; but are suddenly realised to be absolutely critical in a crisis, like the 80 per cent of the basic ingredients of all the world’s pharmaceutical drugs that are reportedly sourced from China.

Now, I’m in favour of freer trade because it eventually produces greater wealth. As the prime minister who finalised trade deals with Australia’s three biggest trading partners, including Japan,

I’m not just a theoretical free trader but someone who’s actually made it happen.

It’s not freer trade that’s the problem, but freer trade with people who don’t really believe in it: its one-sided implementation by countries that see trade as a strategic weapon and the somewhat naive way most democracies have let our strategic rivals exploit it. So if good is to come from this crisis, it must focus countries’ minds on the need to be self-reliant as well as rich.

This has been the real “China virus”: not the contagion sweeping out of the wet market of Wuhan, but our over-dependence on just one country, not just for inexpensive finished goods, but for vast swathes of our supply chain. This has been our deepest complacency, trading off long-term national security for short term economic gain; giving up deep things for shallow ones.

Not too late, I hope, we can now ponder whether a self-respecting country can afford not-to-have some serious capacity for manufacturing, when it comes to essential drugs and vital health equipment, as well as sophisticated electronics, and the wherewithal of national defence. Can we ever afford not-to-have adequate stockpiles of essential commodities (such as fuel, let alone lifesaving drugs) on hand here at home? I doubt it very much.

We cannot. We never could. And so free trade will be crimped, if not go into full reverse, as nation’s bristle at one another’s withdrawal from globlisation in a leaderless era.

It will be made worse, a lot more so, by the actions of the private sector, which will no longer make simplistic choices about offshoring and global sourcing. There will be intense moral and capital pressure not to do so.

In summary, the first casualty of the Wuhan flu will be the immediate shutdowns and enormous blow to global ouput.

The second casualty will be the financial system and a major banking crisis, deflating asset prices.

In an echo of the Great Depression, the third casualty will be global trade as degloblisation leaps forward.

Finally, and most importantly of all, geopolitical crisis is upon us in a way that will likely make all three worse.

Like the Great Depression, the shock of Wuhan flu is a structural blow to a boom period in global output and the geopolitical structures that delivered it. It is so vast that it is impossible to capture with any sense. All we can say is that the depression ahead will be severe. Though it probably won’t be as bad as the 1930s in headline numbers because we have better Keynesian tools to manage and disguise it, it will be entirely bad enough. The recovery will be slow, halting and in the end, probably inflationary.

For China, the CCP has rightly indentified that it is facing the end of its globalisation period and an existential threat to itself. Its growth will never be the same again and its descent into the middle income trap both much quicker and more irretrievable.

For liberal democracies, a great reversal awaits. The housing inflation economic model is finished. Prices will crash, savings will rise and consumption shunt structurally lower. Production will re-orient backwards towards real output.

For Australia there is nothing ahead but more pain. We went more overweight than any other nation fragile globalisation and de-indutrialisation, with gross value-add for manufacturing at a proposterous 5% of GDP, well under half that of the UK and even less versus the US. Our position vis-a-vis the US/China tension is about to turn entirely untenable as well. As China deflates, we repatriate production, pull back from the mass-immigration economic model, and seek to rebuild defence, it will be a long and difficult road demanding vastly improved competitiveness via huge internal deflation, a much lower currency, and some tariffs.

For investiors, liquid assets are now everything. The future is extraordinarily uncertain and being nimble is vital. Property is the worst place to be: illiquid, leveraged and exposed to monetary convulsions. Wealth should be positioned to weather any and all kinds of rolling shock – both deflationary and inflationary – via fluid combinations of stocks, bonds (both inflationary and deflationary) and forex to take advantage of the tactical pivots within this paradigm shift.

The active, tactical asset manager is about to become the vital cog in every investment machine.

Welcome to The Second Great Depression.

David Llewellyn-Smith is Chief Strategist at the MB Fund which is very conservatively positioned for coronavirus risks including a falling Australian dollar. 

David Llewellyn-Smith
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    • ‘We’ may not have a choice. As the crisis’ effects become more severe, the pollies will become more desperate – and desperate means ‘authoritarian’, which means no more freedom for YOU. Your ‘wealth’ will be commandeered (to one or other degree) by the State for the ‘good of the nation’.

      • Unfortunately I think Australias doubling rate is closer to Italies and Spain, due to the lack of “community spread” testing.
        I hope each and all get through this looming disaster.
        Thank you to MB, ZH etc for their non-mainstream coverage and comment.
        Best wishes all and hope to see ya’s on the other side !

        • DelraiserMEMBER

          I suspect you are right.

          Nowhere near enough testing; me being a case in point. I have a few suspicious symptoms but do not meet the testing criteria. I’ve self isolated but how many in my boat will plug away regardless?

  1. We should demand war reparations from China for their bio weapon virus leaking out. Hmm a level 4 lab that just happens to be in Wuhan hey. Some coincidence. They knew that this will kill the west and if they lose a few hundred thousand Chinese we’ll who cares plenty more where they came from.

    Finally China might be called to account for their shocking wildlife trade where they are depleting wildlife for bs traditional medicine. Time for the world to say enough of the bs Chinese medicine from the Middle Ages.

    • The operative word is ‘might’ as in ‘if grandma might have wheels, she might be a bicycle’. Sad fact is: who’s going to grow a pair of gigantic balls and stand up to Pooh? Can’t see anyone in the “civilized world” doing that. Even Trump, for all his bluster, backed right off.

      So I ask again: who?

      • Does the Box Hill police station still have the flag representing the hideous Chinese regime flying proudly above?

      • Like I keep saying, you want to screw China, get a ubiquitous global internet underway. Disunion in China will spread like wildfire. Elon is onto it. Peachy will poo poo this idea.

        • Nah, I like internet.

          It’s the pathway to enormous release for me and many others.

          Imagine how chilled out China will become when all the young blokes there can finally view the torrents of pr0n that ya westerners take for granted….

    • Yep

      And there was the Canadian professor and the husband – wife Chinese biochemical researchers who were expelled.

      Even accusations of virus being sent to Wuhan by post from the Canadian facility.

      Reprisal for arresting that Huawei royal family member Meng Wanzhou (daughter of the founder) in canada just months back, methinks.

    • Ronin8317MEMBER

      This kind of conspiracy rubbish is why China have come up with the story about the virus being spread by American soldiers.

      • Arthur Schopenhauer

        Yep. Our government has had 3 months to get its sht together and it’s done FA of nothing.

    • ErmingtonPlumbingMEMBER

      Though Im always open to the fun of Conspiracy theory speculation, with a leaning towards anything is possible, im thinking that if this virus isn’t just a random natural phenomenon of a mutated virus crossing species into humans out of this scummy “exotic” wet market and turns out to be a genetically engineered “bio weapon”, what is the most likely motivation or cause of its release?

      To me Occam’s razor would suggest, especially with China’s record of dodgy QA adherence, that that a release from this level 4 bio research facility was probably not government mandated.
      Most likely some subordinate lab assistant, tasked with disposing of/incenerating the laboratory animals they test these viral creations on, deciding some cash could be made selling these diseased animals down at the local wet market.

      All this Global calamity could have simply been caused by the greed of some low level plebian individual trying to make a few buck on the side.

      Boring I know,… but the simplest explanation.

    • War reparations?

      What for?

      Because we were too stupid and lazy to listen to Bill Gates and many others years ago?


      “.. In 2014, the world avoided a horrific global outbreak of Ebola, thanks to thousands of selfless health workers — plus, frankly, thanks to some very good luck. In hindsight, we know what we should have done better. So, now’s the time, Bill Gates suggests, to put all our good ideas into practice, from scenario planning to vaccine research to health worker training. As he says, “There’s no need to panic … but we need to get going….”

      COVID-19 is only a problem because our leaders were too freaking lazy and stupid to spend the tiny amounts required to respond quickly to a potential viral threat.

      • So, the conclusions are;
        (1) Our leaders were too freaking lazy and stupid.
        (2) Bill Gates was right.

        These are not exactly new. After all, this has been the case for many things over many years, including nuclear power.

        And the trend will continue, unfortunately.

    • We might reconsider the industrial food machine slaughtering cows pigs chickens sheep unnecessarily also ?

    • Jumping jack flash

      Their SARS bioweapon is severely hobbled for the R&D effort. Only affects the elderly and people with existing conditions. You can imagine what the real one looks like!

      The first SARS leak a few years ago was nowhere near as bad and easily contained. They’ve made considerable advances in the transmissibility from the looks of it.

      As soon as I found out that China started throwing mud around by blaming the US for this, it removed any doubts I had about the origins.

  2. adelaide_economistMEMBER

    Ah yes, Tony Abbott. Now he says we can’t afford to be without critical manufacturing. After the way he consigned the auto industry to the dustbin without a second thought. Before the inevitable complaints about ‘boganmobiles’, it was well-known to anyone with a serious interest in the industry that a huge part of Australia’s advanced manufacturing capability (the little we had) was dependent on the auto industry for the 20 to 80% of their sales which kept them viable and able to maintain skills and capability for other industries. Nah, too expensive to keep but naturally we had billions upon billions available for the usual boondoggles from negative gearing for existing housing through to the franking credit for retiree debacle.

    It’s been obvious for decades that industry policy of any sort was too hard for Canberra and sadly it wasn’t even really ideology to my mind that drove it, but in reality just a lack of intellectual will and capability. After all, if everything is imported, then we don’t have to worry about all the messy stuff that goes with having an industrial base of any consequence. I feel pretty safe saying this, since I’ve said it for a long time, but industry policy in this country should have done whatever it took to maintain at least one functioning plant of any key material – for precisely a situation like now, or indeed, a serious trade war. I read two days ago that Australia can’t even produce the tin we need to can the ‘plentiful’ food we keep being told we make in abundance. That is an utter failure of our political parties of all stripes.

      • happy valleyMEMBER

        But, but we do have three domestic manufacturers of TP, albeit one of three announced plans last year to move all their production to Thailand because it saved them say, 30% in costs.

        Just think – if we had no domestic manufacturers, we would be “up sh.t creek without a paddle”?

    • “It’s been obvious for decades that industry policy of any sort was too hard for Canberra and sadly it wasn’t even really ideology to my mind that drove it, but in reality just a lack of intellectual will and capability.”

      Spot on. Not one of them understands science and innovation either. The public service has been gutted of people who once might have. So we got the funeral service economy. One bloke in Wuan eats a pangolin stir fry and grandparents drop dead all over the world. True Globalisation. Profit is leveraged against health, environment, amenity, culture and security – and if you don’t like it you are a racist.

      • Ah yes, the “racist” moniker. The ultimate mud slinging insult to shut down any form of reasoned debate on why successive governments, politicians, lobbyists, and greedy private citizens subjugated an entire working class into the degraded unliveable shithole Australia has become.

        I’m racist because I’m anti-globalist. I’m racist because I’m a proponent of a sensible federal immigration policy. I’m racist because I believe in civic duty. I’m racist because I believe culture matters.

        “There was a proposal to isolate people coming from the epicentre, coming from China,” he said. “Then it became seen as racist, but they were people coming from the outbreak.” That, he said, led to the current devastating situation.
        Source: https://edition.cnn.com/2020/03/18/europe/italy-coronavirus-lockdown-intl/index.html

    • ErmingtonPlumbingMEMBER

      All that nationalism from Abbott the Wana be Churchill in our hour of need, with ScoMo, as impotent as Chamberlain, at the helm.
      Thing is this grub is unforgivably responsible for nailing the final nail in the coffin of our strategically important Auto industry.
      He is a Straight up traitor who now is lamenting the dire position he, and those like him, have put our Nation into!
      The Slimy fken cnvt.
      How dare he now claim to champion Australian Manafacturing while praising his own “free trade” credentials at the same time!

    • Arthur Schopenhauer

      Yep. Politicians failed to understand that industry is an ecosystem not a winner takes all race. Everyone has to cooperate to some extent, or the whole lot collapse. Frenemy is the word.

    • factory worker

      100% correct, but you know what amazes me is that most politicians that I speak to believe they can resurrect Aussie Manufacturing. They say this with such ease that it makes my blood boil.
      Now maybe we can get back to our 2000 era manufacturing base but it will take at least 20 years, that’s not 20 years of private investment that’s 20 years of sustained government support and we’re not talking narrow targetted support.
      Nobody with a clue about manufacturing is going to spend a penny of their own money or a moment of their own time just so they can be a55F#cked a second time at some Politician’s whim. Nope, it’ll need to be all Government money and trust me there are plenty that will rort the system so you need to double whatever amount you think you need and than double it again and double it again.

      • Easy. Just spend the 8.8 billion on government support for manufacturing instead of the bond market. Tariffs and capital controls seem to have worked in the past.

        • factory worker

          That’s a drop in the bucket, we already have 10 times that amount being spent on learning how to make Submarines (apparently we already forgot everything we knew from making the Collins boats) and not a penny of that money is flowing through to the broader Aussie post manufacturing economy.
          There will be lots of opportunities to spend over $100B and all of them will need to be funded if we want to simply get back to our 2000 era skills base.

  3. Will there be a public discussion about the ruinous ideology of the globalist/neoliberalsl and their unholy union with the progressive/multiculturalists? Never!
    The traitor morrison dictated my gym will close tomorrow at midday… I’m not happy.

        • Nah, I don’t own the gym.
          I use the gym for weight training, I have had a basic set up at home over the years with some benches and free weights, however it’s a bit boring on your own, and you really need the cable and other machines. There is no room for this stuff at home and it’s expensive.
          If I was just going for weight loss there wouldn’t be a problem with gym closing.

      • I had to laugh – we have a heap of gyms in the area, most of them opened in the past 2 or 3 years with mixed success, (to put it mildly). On Saturday morning, another gym just opened! I give them three months at best. What timing.

    • I’ve got kettles and trx rings ready to go. Just switch to body weight exercises lunges pushups running burpees manmakers TGUs etc

      Might be a good time to get a power rack and weights and bench ? Cheap if nothing else

      • With my gym closing down I’m walking up the local hill for exercise and consider other regimes for home. Had to look up manmakers. What a ripper. I’ll give that a go.

    • Regarding the closing of a gym:
      What law are they using to close it. What law are you breaking if you open your gym.

  4. So the plan for Australia is print lots of money which will generate inflation on top of the imported inflation that will arise from our falling currency. Then wait for people to react as their standard of living drops through the floor, hopefully somehow producing leaders of integrity and vision which will build the nation up again. Why would anyone care that deeply about the people who live in Australia? I don’t see anyone here stepping up. There are few kinship ties, no shared history, no shared faith. So the leaders of the near future will only have either self interest or ideology to inspire them. Is that a recipe for the production of leaders of integrity and vision?

    • Maybe, if this is not too delusionally optimistic, this sort of crisis is what will build a new spirit of community and toughness and support – and perhaps knowing the government is full of sh!t actually helps because we will develop an alternative coping strategy that doesn’t just rely on whinging to the government for everything.


      • Very delusional. “Community”. LMAO. You significantly overestimate the average human.

      • Suffering can bring people together, or it can drivethem apart even further. Why bother to come together though if you have no kinship ties, faith or history? It’d be much easier to break apart into groups that do share these features. Multicultural societies do not have a history of longevity.

      • Read “a paradise built in hell”

        All about communities who rallied when faced with disaster vs those who relied on corrupt/useless governments. One was fine, the other totally fooked

    • I know people are wedded to the idea that foreigners think of straya as some latter-day paradise and maybe many will just tough it out, but honestly, if things become economically dire enough, lots will depart – leave their debts and other problems behind. Start afresh back home or elsewhere. I’d like to think community spirit will come to the fore but I fear for the social fabric could be in trouble.

      • The Grey Rider

        Good…then we need to shut the gate to stop them from returning if/when better times return.

  5. I build control boxes for a local farm machinery manufacturer.

    Local farmer here isn’t putting in the next crop because the suppliers can’t say when the weed control chemical will be available. Chemical manufacturing outsourced to china.

    • happy valleyMEMBER

      40% of active pharmaceutical ingredients manufacture outsourced by the global industry to China. China has the west by the short and curlies?

      • ErmingtonPlumbingMEMBER

        What about all them “Rare earths” China supposedly dominates.
        I remember reading somewhere that the supply of a number of these minerals used to be Australian dominated before China cornered the market.
        A future opportunity for our Country?

        • Ronin8317MEMBER

          Where are we going to dump the radioactive waste that is a byproduct of processing rare earth? This is why China managed to corner the market.

        • Could be. Basically the problem is that processing these things is so toxic that only China is prepared to do it cheaply (ie they just wreck their environment and pollute it and poison their workers). Whereas processing it here costs a lot more because believe it or not we still oblige companies not to do that stuff.

          That’s why China has the market. If we’re gonna do it (properly) I’m keen but we’ve got to accept that the end product (iPhones etc) are gonna get more expensive. And we’d need a radioactive waste dump somewhere (I reckon Scomo’s house but open to suggestion).

        • Definitely. There are several rare earths explorers in the country who will have active mines soon. The issue is the processing of the material to extract the elements. It’s a dirty and dangerous business. And highly environmentally unfriendly – which is why the Chinese do it. At this point in time we’d mine the material and ship it over there anyway. Sigh.

        • factory worker

          That’s a true Aussie speaking, Australia needs to mine and refine Rare Earth minerals.
          But here’s a novel idea, how about we discover some unique properties of Rare earth’s (like Yttria-stabilized Zirconia) and use this knowledge to build the worlds most efficient Fuel Cells (stupid me: we already did that) but just imagine the fun that Aussies could have with a bucket full of Gadolinium-doped Ceria. Aussie’s have the smarts to separate this into it’s constituent elements
          How good is Straya!

        • LYC tried to do it with their manufacturing in Malaysia and it has been a political nightmare (pretty sure due to Chinese influence in the process). This is the sort of thing that could work as a bit of gov stimulus – build the processing in the middle of nowhere in OZ. But then so is building renewables with a bit of gov assistance (with less byproduct downside). Even in this armageddon scenario I think the politics will make sure it doesn’t happen.

        • buttzilla seventeen

          buy Lynas @ <$50c? yup. Dumbass day-traders elevating it above $1 tho. Seriously, why is day-trading, let alone HFT allowed? whoTF invests for less than a second or a day? is that investing? I guess if it was a longer mandated period, you wankers would rort / game that scenario also.

      • Mining BoganMEMBER

        Hey, has that idiot popped his head up since his snakes are more dangerous rubbish?

        He’s unhealthy. Go WuFlu virus!

    • I know someone who works for a chemical trader — buys (from China) and sells to the farming communities here.

      A few months back, they had heaps of chemicals but no one to sell them to as the farmers weren’t planting. Made plans to shut the business down and then … the rains came. Farmers rushed to plant and the entire stock of chemicals was hoovered up in no time …. but now the chemical traders can’t get the chems.

      And those actually bringing stock in face a 14-day quarantine for all containers – just to add to the logjam.

  6. I read last week that “The last 70 years of economic prosperity, that we have had the luck to enjoy, is over”.
    Your post seems aligned and just as true.

  7. – Disagree. My opinion is that the “Western World” was able to avoid “deep” recessions because of thing the austrian school love so much, a thing called “Savings”. Thanks to “Savings” consumers were able to maintain a certain level of spending and keep the economy “afloat” during the 20th century. Those savings were missing in the19th century and there were more “recessions”.

    • Aren’t ‘Savings’ just a residual component of economic calculations? ie: ‘There’s this stuff here that’s left over – it must be Savings!”.
      We don’t have Net Savings – we have, massive, Net Debt. There’s a big difference? Otherwise, why is every Government on the planet hurling ‘savings’ at its peoples to keep them afloat?

      • – Agree. My savings consist of (aussie) T-bonds (= debt).
        – But you have to think e.g. “Pension funds”, “Super funds”. From those funds retirees receive a steady stream of income which allows them to continue to spend. and that supports the (aussie) economy.

        • ErmingtonPlumbingMEMBER

          Super sucks 100s of billions of dollars out of the real economy and corrales it for decades within the rapacious, financial services, casino economy.
          Are you talking Shyte or just talking up your book?

          • – WOW, what an anger !!!! Yes, “Super” doesn’t have a good reputation and for a good reason.
            – No, I am NOT “talking my book” !!!!
            – But I simply explain why “Savings” have saved the western world from larger & deeper recessions like in the 19th century. But these savings also have enabled the build-up of larger amounts of debt during (especially) the 2nd half of the 20th century and the last 20 years.

      • I think a lot of Aussies “savings” are their house, which more then likely has a mortgage over it.

  8. Poppycock!

    The current state of affairs is nothing more than the Anglo West’s deliberate toleration of free unregulated capital flows for geopolitical advantage and the dismal failure of that strategy.

    Countries like Germany, Japan, Korea and China CANNOT run mercantalist trade strategies WITHOUT accommodation of the consequential capital flows by their trading partners.

    It is simply impossible to a run a trade surplus and to hold down your exchange rate unless someone (usually elites in other countries) permit you to export capital.

    Those unproductive and predatory capital flows were permitted and encouraged so as to bind the mercantalists to the leadership elite in the west who profited from the arrangement and left their middle and working classes to pay the price. That is the process by which our industries, land and other assets and claims on our future income were sold off.

    There is no need for hysteria but there is a need for a simple recognition that OUR leadership and their dedicated minions in politics ( eg clowns like Tony Abbott), the media and academia have allowed this situation to arise and the only solution is to regulate capital flows that are unproductive, predatory and unsustainable.

    Regulating unproductive capital flows is not difficult and can be applied with steadily increasing rigor so that all countries have time to adapt and adjust.

    But this is not going to happen while the debate is controlled by a bunch of gibberish middle class folk who were programmed by our universities during the 1970s right through to today to repeat bone headed free capital flow mantras.

    At best they are willing to criticise aspects of free trade agreements but once you start talking about the capital flow movements that underlie and drive the trade relationships they ram their thumbs in their ears and start yammering “Can’t hear you”.

    • ErmingtonPlumbingMEMBER

      Lets hope this gives our Primary producers the fairer share of GDP and price on their goods that they deserve.
      Good news.

    • Hang on a sec. where’s all the DEflation I was told we were to look forward to?

      I can see me doing Peachys all year this year.

    • Pasta that was 3 weeks ago 1.80 is now 2.60

      Item substitution due to shortages means inflation of 100% in some cases

    • adelaide_economistMEMBER

      Yes, but it’s not just fresh produce. Most supermarkets have pretty much abandoned sales on everything (I’m sure if questioned they will say it’s to discourage hoarding).

      Woolworths online for example always used to have weekly half price, online only and buy more save more deals across thousands of products – and they have been absent from the website for weeks now. Completely gone – not just on high demand items, but for everything.

      I can only hope at least some of this profit windfall is being returned to the growers and manufacturers who actually put the effort in to create these products but knowing the markups and trade practices of the majors, I am not going to hold my breath.

  9. Are these lockdowns just delaying the inevitable?

    Is it worth everyone spending the next 6 months in isolation only for us to go back to work in 6 months time with the virus still circulating?

    The virus will still be circulating in Australia 12 months from now. There’s no vaccine coming.

    Old people will have to spend the next several years of their lives never venturing into shopping centres, never visiting family, just stay home in isolation.

    That’s not going to happen. That’s worse than dying. So even the old people 12 months from now will be taking their chances with the virus.

    At some point, every country will make the choice to go back to work. People need to eat. Even more so in developing countries.

    Take South-East Asia. These shutdowns can only last one month maximum before the poor literally start dropping dead from starvation. People in poverty live day to day. They make money then spend it on food. Don’t make money that day, don’t eat.

    I can guarantee that hospitals in South-East Asia won’t resemble the scenes in Wuhan or Milan. No, old people will just die at home. And everyone else will just go about their lives as normal.

    The virus will exist for several years minimum. Even if we somehow eliminate the virus in Australia, it will still exist elsewhere in the world. Do we just shut the borders for the next few years while we wait for a vaccine. You just need a few infected foreigners to slip through and it begins spreading again.

    I think we need to get measures in place with regards to social distancing, mandatory face masks in public, temperature monitoring before entering any building, and then we get on with things.

    • reusachtigeMEMBER

      This virus is never going away now. Once it has expired the weak, which could take years, it will remain in our system for all time ensuring shorter human life spans. We just need to accept this now.

      • ErmingtonPlumbingMEMBER

        At least if everybody dies by 30 years old they get to be virile and shaggable right up until they die.
        Who doesn’t want that?

        • PalimpsestMEMBER

          who doesn’t want that? Those of us that are no longer virile or shaggable, with our laughably small property portfolios.

    • Just a requirement for mandatory face masks in public will shut everything down. How many facemasks are available now, let alone in a month or two if everyone had to wear one.

      • I reckon one each is enough, I have zero evidence but I reckon a quick burst in the microwave after each use will render a disposable mask virus-free and reusable in under a minute!

    • Ronin8317MEMBER

      The vaccine will be out by next year, so it’s a matter of trying to survive the year as best as we can.

      Wuhan has shown what needs to be done to stop the virus after it become a pandemic : lock everyone up in their home for a month and it’ll go away.

    • Here is a simple faaarken idea. How about we just do NOTHING. Let the virus do its thing. Kill a few people. The number is irrelevant. The weak will die and the strong survive. So Faaaaarken what.

  10. Death to Stamp Duty receipts
    Real Estate Agents
    The Block
    Scott Cam’s ambassadorship
    Bullshyte jobs in the gig economy
    Permanent Residency applications
    Sprawling developments
    Bbq discussion topic #1
    New phones every year
    “Cafe culture”
    (please add below as you see fit)

    • Chicks with tattoos.
      Cage fighting.
      Leaf blowers.
      Women drivers.
      Disingenuous and overly generous coverage of lame women’s sport.

    • – Useless hipsters and their trends and BS job titles.
      – Jimmies coming here to do Deliveroo or Uber eats delivery
      – RBA thinking is has any influence over the economy.
      – BS policy thinking.
      – The Liberal party.

      • “– Jimmies coming here to do Deliveroo or Uber eats delivery”
        Sorry, but I think the lockdown is going to cause an explosion of those services that will continue long past the end of the pandemic, and I can’t see the end of cheap foreign labour being called just yet

        • counter point: Jimmies can’t scoot to your door on en e-bike with a Jungle Curry if the restaurants themselves have closed shop. Remember, the entire hospo industry only profits through wage theft to begin with. Now that the FWO is watching, margins are otherwise thin.
          Q.E.D. If you are a 457 or whatever, you are boned! Pack your bags and head home.

  11. F%($ the Chinese Coronavirus Party. If they’d been honest about the figures the world might not be in this strife.

    • PalimpsestMEMBER

      Yes, we can say that, given our vastly superior handling of the situation. If only they’d been as good as us.

    • In their defence ( ducks to avoid incoming stones!) they probably thought it was just another Swine Flu. That came and went; 20,000 died and no one turned a hair. maybe it is similar; we won’t know until it’s over.
      But if Corovid19 was the obvious threat to us all that is appears to now be, then Locking Down Australia!; closing the borders; dishing out $100 billion would have been done in December. Why wasn’t it? For the same reason, probably. None of us knew how bad it was… ( and it’s probably worse than we are being told)

    • Ronin8317MEMBER

      China stuffed up by not quarantining everyone in Wuhan when it first started, and they paid the price for it. China shut down the entire country for a month!! If that is not enough warning for the West, I doubt another 0 in the numbers published would have mattered. In Italy, one single super-spreader was responsible for infecting over 150 people, and nobody tested him because he never went to China : he got infected in Germany by someone coming back from China. That’s the real fallacy : virus doesn’t discriminate, and by labelling it a ‘Chinese virus’ it lured people into a false sense of security.

    • China is scum, Australia lacked leadership, I wonder if Tony Abbott would have closed the border earlier…

      • adelaide_economistMEMBER

        Based on his regular habit of only talking about doing the right thing long after he had the chance to do it, I doubt it.

  12. ApproachingZero

    Australia knew it was going to be bad when Italy went pear-shaped. We’ve had at least a month to prepare. The government could have shut our borders completely with true quarantine for incoming citizens, propped up the education industry at a sustainable level, promoted domestic tourism (maybe even provided vouchers), limited imports and exports to critical goods.

    If they’d done that we’d still have a functional economy, people could be out spending, going to restaurants and pubs. We produce three times as much food as we consume, we could continue to export the rest. Now we have a completely crippled economy, the tourism, hospitality and education sectors are wiped out anyway, but now we have myriad other problems to deal with. All because Scott “My Kids Are Enrolled” Morrison didn’t want to shut the borders before Hillsong’s happyclapfest, backed up by “medical” advice from Brendan Murphy.

    When the dust settles we need a royal commission to get to the bottom of the decision-making process, with criminal repercussions.

  13. A key factor s the change in expectations of our community over time. My parents were children of the Great Depression – they would not believe how we have allowed our society to become so fragile. They were aware they needed to be self-sufficient, so nearly every house had a vegetable garden and many kept chooks, so in a push they could feed themselves. They would not go into debt, if you could not pay for an item you did not buy it. I grew up eating things such as tripe and brains and other offal. The ethos was to be self reliant, waste anything, be prepared for the rainy day that would inevitably come. My grandparents were as poor as church mice but refused to claim the pension, they would rather go hungry than rely on others. They would look at the current generations and be disgusted.

    • Great post. I am disgusted by most people. What a bunch of soft cox we have become. There are many posting on this site. Virtue signalling puzzies constantly being fake nice to one another. You know who you are.

    • Ronin8317MEMBER

      The cost to plant a vegetable garden and keep chooks is more than the cost to buy them from the supermarket. There is no saving there.

      • We just had someone rock up to the farm and buy 2 chooks for $60. My 13 year old nephew started breeding/showing chooks a couple of years ago. Advertised them on facebook. I think he’ll do ok. Took more eggs home with him to go in the incubator.

      • two plus twoMEMBER

        You’re missing the point if you think that saving money (and time for that matter) is the primary goal of self sufficiency.

    • Good points. Today we have a population that has:
      – no savings
      – huge debts
      – highly unrealistic expectations of the future ( all rosy, she’ll be right)
      – almost no self reliance (gumint’s got my back, bro)

      Makes me really optimistic for how society will handle the coming economic hardship. Fingers crossed we have enough adaptable people in our midst.

  14. At what point is the trade off between saving the lives of maybe 150,000 mainly sick and elderly , not worth destroying the functioning of the entire country and the personal freedoms of the remaining 25,000,000 residents?

    I don’t remember anyone being asked what they would prefer ?

    If democracy was respected for climate change, which involved the extinction of the entire race, why has it been bypassed to maybe save the lives of 100,000 elderly?

    No personal moral judgement here, but why the double standard ?

    • “No personal judgement here”. Certainly sounded like one to me. You are to be applauded for such a thought. You are correct. Let the weak die.

    • Ronin8317MEMBER

      The answer is that the shutdown will happen regardless. You can do it early and shut down for shorter, or do it later and shut down for much longer. A city where people constantly drops dead on the street will not function.

      The following pattern is inevitable : case> 1000 means border shutdown, cases > 10,000 means business shutdown, cases > 100,000 means everyone’s door is welded shut and they have to stay inside their own home, cases > 1,000,000 and society breaks down, and suburbs will be burnt to the ground with everyone inside it.

    • Reports from Iran indicate that 15% of their fatalities are under 40. That’s around 1 in 6, or the roll of a dice. Not good odds when it’s life or death. I wonder if all the young people complaining about the inconvenience of it all and saying “let the old people die” would be so sanguine if they had one chance in six of being killed along with the wrinklies.

    • If Covid19 were a static unchanging virus then I would tend to agree, however from what we have seen so far this is a very young virus (brand new to humans) and it is still discovering itself. This virus will morph into as many forms as it finds effective and efficient, Covid19 is as far removed from a static (just modified at the fringes) Flu virus as one could imagine.
      It’s active, it’s changing, it’s game on for humanity.

      • It wasn’t – nor should it be.

        Democracy has no place in science – all that matters are data. Evidence is the sole judge of scientific truth.

    • If there was a virus that only attacked people in their 30’s, would the Boomers be willing to shut down everything and let their Super funds and investment properties take a hit. Or would they just tell people in their 30’s to isolate themselves inside and deal with it.

    • innocent bystander

      are the health care workers at risk elderly?
      plenty of them ill/dying in Italy?

  15. Had lunch with a mate yesterday who’s in charge of several hundred people (his department) in a medium/large service based company here. Reckons at least 20% company wide will be fired and most will go to 3 or 4 day weeks for a while. Consider that kind of scenario on a broader scale in this country.

    I’m sure the property market will be fine though and I’m sure there’ll be no need for a fire sale of that IP.

  16. I’m interested to see what happens if our finance function in Bangalore India get struck down with Covid-19, or just one or two of the leadership team there, the rest cannot operate without those leaders. However I strongly doubt we would bring it back to Australia, way too cheap in India, possibly have additional accounting heads in Australia, but not the entire function.

    • On a similar thought process. Won’t someone think of those scam call centres in India? How will they survive the depression?

        • I am kind of wishing I lowered my expectations and bought a home outright at this point in time. But thanks all the same.

    • Ronin8317MEMBER

      It won’t be the coronavirus. It’ll be the free-falling AUD which will shift everything back to Australia.

      • You mean, once we start to resemble the 3rd world every one will take advantage of the cheap labor here?

  17. I’m on the record as telling Bcnich that his only problem was he wasn’t bearish enough. I’ve been calling a new depression since bubblepedia days. For anybody with an ounce of common sense, who wasn’t swept away in the ocean of greed, it was patently obvious how things would go.

  18. Hi all,
    Have been requested to provide advice at work so here are a few brief resources regarding stand downs:


    https://www.fairwork.gov.au/about-us/news-and-media-releases/website-news/coronavirus-and-australian-workplace-laws (a list of useful questions and answers here)


    The Commission has not had to deal with such an unprecedented situation and therefore guidance on stand downs affecting the entire economy (rather than a single business) has not been tested at law.

    With respect to section 524(1)(c), a stand down may only apply where the employer cannot reasonably be held responsible for the stoppage of work. Therefore, where the workplace is requiring fewer employees to attend work due to a downturn in demand for example, the employer cannot rely on the stand down provisions under the Act. This is because a stoppage of work has not occurred.

    • Mmmm … I wonder how many disgruntled employees would be willing to test that in a court right now.

      • I think the real tests will come when employers hand you a new contract at 20% lower pay. Your choice is to accept or consider the contract terminated at the initiative of the employer. Your options are then unfair dismissal (due process) or unlawful termination (breach of contract) – or both. Can’t see many cases getting up. You’d want to be well heeled to afford the legal fees.

        Welcome to the shyte show

  19. SnappedUpSavvyMEMBER

    I can forsee a lot of anger in Australia, morrison needs to be hung to satisfy the masses

    • blacktwin997MEMBER

      Wouldn’t a simple guillotining be more ergonomic for all concerned? Also quicker to reload.

      • I like the way you think. But before we commit ScoMo to the Nation Razor I just want to clarify if we are proposing to hang him by the balls or the neck?

        • blacktwin997MEMBER

          Why not have both? (as they said in that taco ad) More labour intensive of course but hopefully the resulting arrangement will become known as the ‘Morrison Trampoline’ and encourage some crowd participation.

          If it’s any help in getting you around to the guillotine supporter side, boomen’s preliminary MB guillotine design includes a number of locally important features such as a stubby holder and hand sanitiser dispenser.

  20. David you need to repost your great article on the National Narrative and keep it permanently on the MB page highlighted. This shit is going down hard. If the Lib-Lab gang are around with their permanent prosperity plateau platitudes we are totally fucked to come out the other side. These fucks will defend the status quo all the way down to a Berlin Bust ala 1945. No one is going to advocate let alone be listened to by the masses that the new Aussie Economy of Houses and Holes is history. Argentina or East Germany style are possibilities. The nation is indoctrinated on the houses and holes mantra as much as the Hitler Youth and some serious shit always presents itself in a global meltdown that is not on the horizon yet. Beat your drum on the National Narrative loud proud and clear. Thanks for the great work over the years boys.