As TDB has been pointing out from the beginning, the 3 Tsunami waves of Covid are:
1 – The immediate cost in human life and sickness from the virus.
2 – The economic carnage from the virus.
3 – The psychological impact of a unique universal event and the isolation and alienation and mental stress that has created.
We have passed the first peak with global deaths and sickness, we have just started the second wave of economic carnage and the psychological impact of all of this is barely beginning to be recognised.
To date Grant Robertson and Labour have told everyone listening that the inflation spike is but a blip and life will return to normal in the 3rd or 4th quarter of this year.
Inflation is but a spike and the economy will get back up on its feet with hyper tourism, exploitation of migrant labour and more international student language school scams.
That’s what will save us hu?
Nearly 400 million people across 45 cities in China are now under full or partial lockdown as part of China’s strict zero-Covid policy. Together they represent 40%, or $7.2 trillion, of annual gross domestic product for the world’s second-largest economy
…add the Ukrainian war and the instability to wheat and base line manufacturing in metals prices alongside the impact on developing economies…
Smaller countries are also struggling. Many borrowed heavily over the past decade to deal with the effects of the 2008 financial crisis and the pandemic. Now, interest rates are starting to rise, just as the prices of essentials like food and fuel leap.
…and you have geopolitical shockwave after geopolitical shockwave hitting us and snapping neoliberal free market global supply chains.
Don’t believe me? Well ask the World Bank and IMF then...
The World Bank has slashed its forecast for global growth in 2022 to 3.2% from 4.1%, anticipating a sharp deceleration from estimated growth of 5.5% in 2021. The IMF’s latest outlook arrives later Tuesday.
World Bank President David Malpass told journalists that “severe overlapping crises” are weighing on the recovery.
“There’s Covid-19, inflation and Russia’s invasion of Ukraine,” he said on Monday.
Developing countries, many of which are facing high levels of debt and a plunge in the value of their currencies, as well as soaring food prices, are of particular concern, he added.
Breaking it down: Around the world, engines of growth are sputtering as prices rise and the war in Ukraine wreaks havoc on strained supply chains.
…the ramifications of this can’t be underestimated…
Europe, which relies heavily on Russia to meet its energy needs, is especially exposed. There, much could depend on Russian President Vladimir Putin’s next move. If supplies of Russian natural gas to Germany were suddenly cut off, Europe’s biggest economy would lose a shocking $238 billion in economic output over the next two years, the country’s forecasters have said.
…these pressures are impacting America as well…
In the United States, inflation has hit a level not seen in four decades. That’s forced the Federal Reserve to consider an aggressive pullback of its pandemic-era support for the economy, boosting fears that it could hike interest rates so much that it causes a recession.
…all of this is screaming inflation and economic stagnation and recession, so Grant’s optimism that Treasury are right and that inflation is just a temporary spike that will be fixed by hyper tourism, migrant worker exploitation and international student language school scams seems less glass half full and more shards of glass half in your mouth.
I don’t think we are ready for this jelly.
There are of course winners and losers.
Luxon: Has led the Cost of living Crisis well enough, if he can manage to stop shooting himself in the foot could build National vote.
ACT: Will manage to spark the anger and resentment coming.
David Parker: Talking about taxing the rich when people will feel their poorest, will win populist resentment.
Mortgagees: Will become the sacrificial lamb to the market as OCR keeps going up.
Renters: Will be screwed by Landlords as they try to stop the mortgagee sale from the rising OCR.
Beneficiaries: Will get screwed over regardless.
Working Poor: Inflation will push them deeper and deeper into debt.
Small Business: As the downturn cripples consumer spending, any business that has survived to date will be on life support.
Treasury: Their advice that inflation is transitory seems so far from reality they may as well have a base on the moon. Will be damned when the Black Swans land.
Adrian Orr: Damned if he does, damned if he doesn’t.
Unemployment Insurance: This is an outrageous sop to the PSA and allows for white collar members to enjoy a 6 month taxpayer funded holiday between stints at MSD and Treasury. There is no way the Government can justify pouring billions into holidays for Wellington bureaucrats. This is gone.
Public Transport: The Cabinet have realised that money they pour into the bureaucracy goes no where and rather than raising benefits that then get clawed back by MSD, fully subsidising public transport puts money directly into people’s pockets. Expect more of this.
10% Inflation by December: It’s going to get worse.
Political radicalisation: The economic stress of what is happening will push people right off the edge of their rabbit holes.
Crime wave: The economic stress will trigger the gang violence and ongoing crime waves.
The Governments decision to pump billions into the banks to fund property speculation has seen the wealthiest amongst us $1Trillion richer…
An economic and political commentator says since the Covid-19 pandemic reached Aotearoa, the rich have become richer and the poor have become poorer – in part due to the Government’s policies.
…if we can look after the rich, we have an obligation to the poor.
This is why the Government must seize the possibility of fully funding universal services as a means to counter the cost of living crisis.
Free public transport, free lunch and breakfasts at school and breaking the Supermarket duopoly by setting up a new 30% player will do more to lower the cost of living than any tax cut.
Labour must have courage and vision to make fundamental bold policy changes that directly impact the pockets of renters and first time home buyers alike.
If they don’t they will get blamed come December and that will set like concrete for the election in 2023.
Increasingly having independent opinion in a mainstream media environment which mostly echo one another has become more important than ever, so if you value having an independent voice – please donate here.
If you can’t contribute but want to help, please always feel free to share our blogs on social media.