Links 23 September 2020

Global Macro / Markets / Investing:





Unconventional Economist
Latest posts by Unconventional Economist (see all)


  1. Balanced comments from 32 medical experts in open letter to Boris Johnson. Note the comment that there is no apparent pattern between policies implemented and COVID deaths.

    Guess we will see if BJ takes medical advice from medical experts. Or another lockdown.

    There should be a clearly stated objective for the overall response to Covid-19. Without this, neither the overarching strategy, nor individual policy choices within it, can be evaluated. At the time of the initial major policy interventions (the March 23rd lockdown), the objective was primarily framed around ‘flatten the curve’ and ‘protect the NHS’. For some time, however, there has been an absence of a similarly clearly articulated objective.

    Any objective should be framed more broadly than Covid itself. To place all weight on reducing deaths from Covid fails to consider the complex trade-offs that occur: (i) within any healthcare system; and (ii) between healthcare, society and the economy.

    Individual policy choices within the strategy should be informed by an evidence base. The absence of similar policy interventions to those now being implemented in the past, coupled with the novel nature of the virus, means there is limited existing empirical evidence to inform the effectiveness of said measures. This means most weight should be placed on: (i) analysing what is actually occurring in relation to the outcomes we are targeting; (ii) metrics that can be most accurately measured and reported; and (iii) robust evaluations of interventions imposed, to ensure they deliver actual benefits. We are therefore concerned about the sole reliance on ‘case numbers’ and the ‘R’ to inform national and local policies, as these metrics are subject to significant measurement and interpretation challenges (and further, neither is an outcome that matters to society).

    The most pertinent epidemiological feature of Covid-19 is a greatly varying mortality risk by demographic. Mortality risk is highly age variant, with 89 per cent of Covid mortalities in the over 65s. Mortality risk is also concentrated in those with pre-existing medical conditions (95 per cent of Covid deaths). This large variation in risk by age and health status suggests that the harm caused by uniform policies (that apply to all persons) will outweigh the benefits.

    Blanket Covid policy interventions likely have large costs, because any adverse effects impact the entire population. These include: (i) short and long-term physical and mental health impacts; and (ii) social and economic impacts.

    In relation to health, the impact on cancer is especially acute. ‘2-week-wait’ cancer referrals decreased 84 per cent during lockdown. The impact of this alone has been estimated to be up to an additional 1,200 cancer deaths over 10 years (23,000 life-years lost). Cancer Research UK estimated there are 2 million delayed or missed cancer screenings, tests or treatments. The impact of this broader disruption is uncertain. However, estimates indicate it could be as high as 60,000 lives lost.

    In terms of the economy, the OBR’s forecasts are for unemployment to reach 11.9 per cent by Q4 2020. As of July 2020, net debt had risen to £2 trillion for the first time, and public sector net debt is expected to be 106.4 per cent of GDP at the end of the year.

    Set against the high costs of these policies, their effectiveness in reducing Covid deaths remains unclear. Focusing on the UK, there is no readily observable pattern between the policy measures implemented to date and the profile of Covid deaths. Caution should therefore be exercised in any presumption that such policy measures will successfully lower future Covid mortalities.

    In light of the above, our strategy should therefore target interventions to protect those most at risk. For example, Germany’s case fatality rate among patients over 70 is the same as most European countries. However, its effective reduction in deaths is based around a successful strategy of limiting infections in those older than 70.

    Finally, behavioural interventions that seek to increase the personal threat perception of Covid should be reconsidered, as they likely contribute to adverse physical and mental health impacts beyond Covid. Consideration should also be given to whether policies that are intended to ‘reassure’, may in fact reinforce a heightened perception of risk. Providing the public with objective information on the actual risk they face from Covid-19, by age and health status, would be preferable.

    • COVID tax on over 65's

      Australia is in a great position. We can sit back and let other countries experiment for us.

      It Europe gets through this upcoming winter without a significant increase in deaths then obviously we should open the borders and just live with the virus by taking basic precautions.

    • There is no trade off between the health and economic aspect of the virus. All the evidence says that. See the Deloitte chart or the charts posted yesterday. See the failure of Sweden’s strategy or the sunbelt in the US.

      The choice politicians face is to choose the level of cases, deaths and GDP.
      “No lockdown” will lead to a suboptimal level in *all* three.

      The “no lockdown” approach is in fact a no preemptive controlled lockdown approach because the virus makes lockdown inevitable either as a preemptive controlled lockdown by the state, or a delayed, panicked, sudden collapse lockdown by the private sector.

      • What did we saw in the case of Sweden? They spend 1/10 of money to support the economy compared to others and got real unemployment up by 2% and GDP down by few percent. Others spent 10 times more and have worse results with real unemployment at 20% or more.
        In Australia,we put 40% of workforce onto welfare, faked unemployment numbers by 15-20% and now claim how our economy is doing as great as Swedish?
        Why we don’t print $1tn dollars more to get our GDP up by 10% and claim how lockdown is the greatest thing for the economy ever invented?

        This kind of economic engineering is what soviet union was doing for a while before it collapsed into a chaos and poverty.

        • Down by a few percent?
          They had a 8.3% contraction in GDP in the June quarter. Much worse than Australia.
          And they’ve just started a huge stimulus package now. Way too late. But still they will still end up seeing the same blowout in debt to GDP.
          And they’ve had more deaths.
          As I said countries get to choose their case, death & GDP level.
          The strategy of delayed, panicked and out of control private sector lockdown (incorrectly called no lockdown) leads to a suboptimal level of *all* three.

          • So they had the same drop in GDP in June quarter as we did despite we spent 5 times more on stimulus?
            If they spent as much as we did they would have had growth.

            Also, real unemployment in sweden increased by fraction of ours.

            No matter how much you try to show that it’s the same it’s not. Their economy is in much better shape despite stimulating much much less.

          • Swedish public health authorities never claimed they are out of the woods, and have stated it is too early to tell. They have publicly stated they fully expect localised outbreaks.

            Even when countries hit the herd immunity threshold, sporadic cases will continue. We just won’t see it sweeping through the community.

            On the evidence available, I would still rather Swedens problem that Australia’s.

    • Its hard to argue in any direction with your acknowledgment of the uncertainties in everything. In this context, beware of over analysis. Stridency for any particular strategy is unwise.

      • That sounds like a useful overlay. When you are dealing with risks of widely unknown quantum, do you act cautiously or decisively?

        If you are on a single lane road and approaching a crest, you have confidence that the road continues beyond the crest, but you are not so sure about whether or not there is a car approaching on the other side. How do you manage the risk?

  2. Coal’s last refuge crumbles

    Draw a line down the world around the longitude of the Nile. The region to the west – encompassing Europe, Africa and the Americas – has seen coal consumption drop by a quarter over the past decade.

    The trouble is what’s happening east of the line. Consumption there rose by a quarter over the same period, and since the region already accounted for about 70 per cent of coal demand, that has driven the global tally up by nearly 10 per cent.

  3. I just caught out Domain AGAIN!

    Another property spruiker article where a FHB is paraded before us as a shining example of what you can achieve with a little hard work (and help from the parentals).

    Not disclosed that our FHB is actually a real estate agent and worked for the other agent quoted (Nic Cuni) handling the development he supposedly bought into…

    A simple Facebook search for Adam Guala brings up:
    ✅ Agent Representative Certificate
    ✅ Land job at EST8 Agency Pty Ltd with Nic Cuni
    Friend of LinkLearn, Adam Guala has all the right ingredients for an amazing Real Estate Career! #LinkLearnMade

    I’m sending this one to Media Watch in light of Domains recent mea culpa. Whack-a-mole continues!

  4. Mortgage broker fraud

    This broker suggested I could use my ABN and declare a “made-up” amount as income. While I would have to pay tax on this non-existent additional income, it would give my borrowing capacity just that little bit more to get to where I need.
    As tempting as it sounds, does this sound like fraud? Would lenders investigate to the point I would have to create “fake invoices” to prove this income? If so, I’m not quite comfortable with that and I don’t want to be prosecuted for a jail sentence or something.

    • Of course it is fraud. but the question on your mind seems to be.
      Will I get away with it?
      Probably yes you will get away with it, or better put you will get away with it until everything goes sideways at which point the bank would have good reason to refer this matter to the police for criminal prosecution.

    • Arthur Schopenhauer

      I assume the play is to declare the imagined income through a BAS, in which case the ATO will see the transaction and any bank transfers. If looks out of the ordinary, it’ll raise a flag with them.

      So it really depends on how willing you are to shoot yourself in both feet?

      (Find another mortgage broker. 😀 The one you’ve got is dishonest, and is probably doing the dirty on you too.)

      • Arthur Schopenhauer

        Ah, the whirlpool forum said the same thing as here. All for an IP. The Ponzi is the crack cocaine of finance.

    • Why would anyone spend extra money on tax just to be able to get deeper into a morgage debt he/she cannot afford into a falling market?
      Why none questions the motivation here?

    • Mining BoganMEMBER

      Betcha there was no broker and this bloke is just testing out a cunning plan he heard about from Davo down the pub.

    • Check out Denise Braley. The banks in this country have created the mortgage broking industry as a way to facilitate fraudulent lending. And no, the bank will not investigate. The bank is the one behind the fraud.

  5. The mood is changing fast on Reddit, as people wake up to the impending lower Jobseeker/Jobkeeper rates. The new part-time Jobkeeper rate is lower than the Dole.

    • Update: Reddit Melbourne moderators have just locked the major thread on Jobseeker/Jobkeeper reduction discussions, for ‘personal attacks’.
      Looks like they are losing control of the narrative.
      People in Melbourne are waking up fast, now that the free money is ending.

    • There’ll be no war. The US right wing loons are all bluster and hot air, but essential soft, weak, wedded to their luxuries, their giant SUVs, their TVs.


    Tick. Tick podcast: The economic phoney war and what will happen to house prices … Eugene Bingham and Adam Dudding … Stuff NZ

    … concluding …

    … ANZ (Bank) chief economist Sharon Zollner says we’re still in the “phoney war” stage of the economic crisis. …

    … The housing market has been shielded by plunging interest rates, the easing of mortgage lending restrictions and mortgage deferment schemes.

    “But we do expect a few wobbles in the housing market before we’re done because we’ve taken a real income hit as a country. Our ability to pay ludicrous prices for houses has actually taken a hit – that must count for something at some point.” …

    … “A lot of tourism businesses are used to a very lean winter. But from October onwards, there are literally hundreds of thousands of tourists every month who aren’t arriving. The fact that Kiwis can’t go off overseas is never going to make up for that. And so we haven’t really felt the impact of that yet either. But there’s not much we can do about it in a hurry.”
    Access recent MacroBusiness post … starting on the path of allowing affordable housing to be built …

    • It’s wow possible one of the unintended consequences of lockdown has been to give people more time to think. Therefore the sheeple may be waking up to a few truths of reality that they were previously gaslighted on.

      • The Traveling Wilbur

        Whatever additional time that COVID has unexpectedly provided the proletariat with, I’m sure we can actually agree that one of the opportunities the proles have not utilised that time for, in any way, is additional thinking.

        Some would no doubt argue that the use of the word “additional” in that proposition could be considered superfluous.

  7. Jesus, the squealing just gets worse by the day …

    Getting workers back into city offices is the key to boosting economic growth and shortening the effects of the COVID-19-induced recession, according to the country’s largest landlord.

    “If we don’t get people back into the CBDs, back into work this recession is going to be far more painful than it needs to be,” Dexus chief executive Darren Steinberg told the 2020 AFR Property Summit in Sydney on Tuesday.

    The traditional office and the CBD model was going the way of the video rental store long before COVID. And just like every other industry crushed by change, denial was and is a river in Africa.

    Every person forced to trudge into the City each day by whatever dreadful means hated it immensely (unless they were insane).

    Unless you are prepared to cut rents by 90% you can just forget about things going back to the way they were.

    I would be starting those commercial to residential conversions now and praying they let the migrants back in.


    … What lessons were learnt from the Central Bank of Ireland ? …

    RBNZ wants interest rates lower, faster; Works towards introducing Funding for Lending programme before cutting the OCR next year … Jenee Tibshraeny … Interest Co NZ

    The Reserve Bank’s (RBNZ) Monetary Policy Committee is planning to introduce a Funding for Lending Programme (FLP) before it cuts the Official Cash Rate (OCR) next year.

    It essentially wants to push interest rates lower in coming months without going back on its word and cutting the OCR before March 2021. … read more via hyperlink above …
    … Why did the Central Bank of Ireland following the 2007 crash and extensive research ( access via link below … extensive further information just updated ) take the decision to generally cap lending to 3.5 times annual household incomes ? …

    Mortgage Measures – Central Bank of Ireland . mortgage measures are aimed,-income (LTI) limits.