Monday, August 30, 2021

Mike Hosking: We're paying a huge economic price for smugness


Depends on who you ask, of course, but a reality check for the Finance Minister who has been busy this lockdown reassuring us that the economy can handle 4 weeks of level 4 for Auckland.

Two weeks for the whole country with at least two coming weeks in level 3. 

And the added time, fingers crossed for Auckland in Level 3 then Level 2. 

Quick reminder of the numbers, Auckland Council has level 4 at $100 million a day for Auckland alone in economic damage. ASB has the country at $290 million a day in level 4.

The Finance Minister says the economy was going gangbusters. 

That's not true.

The forecasts before this mess were about 3.5 percent growth for the year, that was from the OECD. 

Some others have been a little higher, some a little lower. 

3.5 percent in normal times is very good, you'd take it any day. But we won't be growing at 3.5 percent, will we?

In the first quarter of 2021, we grew 1.6 percent. 

That was good, and for many, a surprise. 

Quarter two, which was April, May, and June, we haven't got the number for yet but even if they are solid like the first quarter the damage, we are doing to ourselves now, undoes all of that and more.

Even the government say we are going to crater 6 percent. 

So even if we had grown the 1.75 percent, half the OECD forecast, that's down the drain and then some.

The light at the end of the tunnel is their belief that we will rebound like last time. 

The trouble with that is the numbers to this point are fact, and the numbers going forward haven't happened yet. 

You're dealing with fact versus theory.

Surely, there is a very large question mark over the rebound. 

Not that there will be one, of course there will, but will it be the 9 percent they claim? 

Will we be as keen as we were last time to go nuts? 

Do we have the money? 

Debt has ballooned most of it on housing. 

There has to be a limit for most people on how much they can, and want to, borrow.

The countries that have vaccinated and are open are forecasting huge growth. 

Britain is 6 to 7 percent and Singapore is the same.

We will be lucky if we get above zero by Christmas. 

Australia and New Zealand are paying a horrible economic price for failing to understand and act on the value of vaccines.

The border closure followed by the smugness that led us to do nothing comes at a massive economic price.

Smugness and complacency don’t pay the bills.

Mike Hosking is a New Zealand television and radio broadcaster. He currently hosts The Mike Hosking Breakfast show on NewstalkZB on weekday mornings.


Anonymous said...

Gangbusters! Huh! More like busted by a gang

RRB said...

It all depends on which economist you listen too, and as all free thinkers will tell you, God invented economists to give credibility to weather forecasters.