What next post-virus?

Discussion in 'Markets & Economies' started by sammysilver, Apr 17, 2020.

  1. sammysilver

    sammysilver Well-Known Member Silver Stacker

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    We've just had a taste of a SHTF scenario. I've come through okay; plenty of food, cash, petrol in car, living in a couple of residences, helping others where needed. Preparing now for the future, I see 5 time frames.
    1. End June - distancing relaxed, businesses restarting.
    2. End September - spectator venues reopened, all surviving businesses operating.
    3. End December - start of the new normal, unemployment at 10% plus, new underclass established.
    4. End March 2021 - vaccine available, start of the new post-virus world.
    5. End December 2021 - lessons learnt and some forgotten, socialism the new paradigm as we look after the new underclass.
    That said, I doubt if there will be any big winners outside of the 1%, many people will have a post depression attitude to living. Which brings me to an important sub 1%, the stackers, what have we learnt and what will we do into the future?

    First prediction is that we will see a two month dip in a month's time as premiums fall as supply meets demand. Following this, metals will slowly rise as investors embrace metals and cryptos as alternatives to shares.

    Second prediction is that property will be in the doldrums for about five years as unemployment, single incomes, and reduced earnings hit both the rental and purchase markets. The upwardly mobile generation Y will probably fare best in this scenario.
     
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  2. JulieW

    JulieW Well-Known Member Silver Stacker

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    Insightful.
     
  3. 66rounds

    66rounds Well-Known Member Silver Stacker

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    There is no post virus. Welcome to your new reality. The one health global government thanks you for your patience. Please move along the soup line quietly.
     
    Last edited: Apr 17, 2020
  4. Shaddam IV

    Shaddam IV Well-Known Member Silver Stacker

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    If the government doesn’t let people re-open their businesses, go back to work and put planes back into the air within the next 6 weeks the future of the Millennial and Gen Z generations will be in ruins. For a flu.
     
  5. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Not so sure for Gen Z. Generally, a recession in early life, before 30 years old, is better than in mid-life (Gen X and older). A loss of job in mid-life, a middle or upper management job is much tougher psychologically. A recession hits the middle class the hardest. The wealthy will be ok though, from the boss of a company with 500 local workers to 50 local workers + 500 WFH workers in the Philippines is still a winner. If you get my hint.
     
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  6. Skyrocket

    Skyrocket Well-Known Member Silver Stacker

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    Me thinks so too. Our world powers will never let this good crisis go to waste. We will lose many of our rights for good. I expect the planned ban on cash will surely happen now. Tracking for all will never go away once they implement that too.
     
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  7. madaw1

    madaw1 Well-Known Member

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    Very well planned long time ago-don't wait for vaccination-you will be suprised how perfect has this been planned...
     
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  8. jultorsk

    jultorsk Well-Known Member Silver Stacker

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    Pick your poison?
    --
    Morrison flags unpopular reforms ahead
    Scott Morrison has signalled that after the immediate coronavirus-induced crisis, tough and unpopular economic reform decisions are inevitable.

    "Never let a good crisis go to waste," Winston Churchill famously said.

    Now Scott Morrison is signalling that after the immediate coronavirus-induced economic crisis, tough and unpopular reform decisions are inevitable.

    The International Monetary Fund forecasts the local economy to shrink a huge 6.7 per cent this year, the biggest contraction since the Great Depression in 1931.
    Australia faces its greatest economic crisis in generations, with coronavirus containment measures poised to lift unemployment towards 10 per cent.
    Reserve Bank of Australia governor Philip Lowe warned the national cabinet on Thursday the status quo economic policies of the past two decades will not be enough to support employment, investment, productivity and people's living standards in the years ahead.

    So Morrison, Treasurer Josh Frydenberg and state leaders must develop a ruthless national economic blueprint in coming months.
    Sacred cows that were deemed political no-go zones must be on the table.
    Morrison warns past election pledges may be broken.
    Former Treasury secretary John Fraser says, "Morrison is right - it will have to be something out of the ordinary given the circumstances."

    Top of the list should be a taxation overhaul, permanent industrial relations changes to make it easier for struggling firms to take a chance on new employees, a coherent energy and climate framework and cutting red tape that is strangling small business.

    The 125 recommendations in former Treasury secretary Ken Henry's 2010 landmark tax review are an obvious starting point.
    The current arcane tax system is incapable of efficiently and fairly raising the revenue required for future years.
    Australia has the second-highest tax impost on business profits and personal income combined out of 34 of the world's leading economies, the Organisation for Economic Co-operation and Development says. It raises 58.8 per cent of total federal and state government revenue from these sources, well above the OECD average of 34 per cent.
    High corporate taxes deter investment, an obvious clash with Morrison's preference for the recovery to be led by business investment.
    Generations of future workers alone can't repay the looming $1 trillion debt incurred by today's beneficiaries.

    As reviews by the IMF, OECD and other independent economists have repeatedly said, Australia must switch its tax mix to raise more revenue from less economically damaging consumption taxes.
    The 10 per cent goods and services tax rate is about half the average rate of consumption taxes overseas.
    The politics of the GST are considered dire. Morrison has ruled out touching it despite exploring possible changes as treasurer.
    An alternative could be to scrap the GST and adopt Henry's idea for a simpler "cash flow" business consumption tax on a much broader base, including food, health and education.

    For business, cutting the 30 per cent corporate tax rate would be costly for an indebted federal budget.

    So revenue raising offsets and alternatives must be considered, such as reducing the generosity of tax breaks for capital gains, curtailing franking credits and cutting the roughly $40 billion in superannuation tax breaks.
    The 50 per cent capital gains tax break for individuals has mainly been used by people to invest in relatively passive and unproductive assets such as housing and shares already listed on the stock exchange.
    The CGT discount replaced inflation indexation in 1999. Inflation and interest rates are significantly lower now so asset prices are less likely to be eaten away by inflation.
    Labor's 2019 election policy to half the capital gains tax discount to 25 per cent seems sensible.

    A bolder revenue neutral company tax reform would be to adopt a corporate cash flow tax proposed by Ross Garnaut. economic adviser to the great reforming prime minister Bob Hawke.
    Garnaut says Australia faces a much deeper crisis than during treasurer Paul Keating's "Banana republic" warning in 1986.
    A corporate cash flow tax would give immediate 100 per cent tax deductions for new business investment - a powerful incentive to invest and boost the nation's waning productivity.
    Higher productivity is the surest way to achieve higher wages.

    The radical proposed corporate cash flow tax would raise more revenue from businesses earning oligopoly profits such as toll roads, electricity transmission companies and Silicon Valley technology giants.
    High investing and innovating firms such as biotechnology darling CSL would probably pay less tax.
    Multinationals engaged in contrived cross-border profit shifting, debt deductions and tax haven abuse would pay more tax.
    Small businesses which cannot exploit international tax arbitrage and are not earning super profits would be winners.
    "It can be revenue neutral, increase productivity and economic growth, Garnaut says.

    It is a reform that likely has considerable interest among tax economists at Treasury.
    Given Garnaut and former Labor minister Craig Emerson are pushing the idea, the Labor Opposition would probably offer support it.
    If Frydenberg is as economically ambitious as he is politically, pursuing the reform would require deft management of squealing from a minority of big and powerful corporate losers.
    Moreover, Morrison has successfully worked with state leaders during the health crisis.
    The national cabinet can be a vehicle to tackle vexing federalism issues.

    The Productivity Commission's 2017 report, Shifting the Dial, has 28 recommendations to boost productivity. Twenty two require state action to improve our health, skills, the functioning of towns and cities, the efficiency of markets and effectiveness of governments.
    NSW Treasurer Dominic Perrottet is open to expanding the GST. Other reluctant states may also rethink their opposition with their budgets crippled by collapsing property tax revenue.
    Perrottet is desperate to transition from ludicrous stamp duty on property purchases to a phased in land tax for real estate owners.
    The enormous economic and social benefits include people moving closer to work and new jobs, less congestion, home upsizing by growing families, downsizing by older people and less volatile revenue streams for states.
    To achieve the politically fraught shift from a one-off stamp duty to an annual land tax, states may need commonwealth bridging finance or debt guarantees to fill the revenue gap during a phased in transition.

    Morrison and Finance Minister Mathias Cormann insist they do not want to raise overall tax levels to pay for the more than $200 billion in emergency spending.
    Growing the economy out of the crisis will be the plan. But that inevitably means a switch in the tax mix to sharpen incentives to work and invest. One dollar of tax raised from one tax can be more or less economically damaging than $1 of tax raised from another source.
    "The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing," France's finance minister, Jean-Baptiste Colbert, once famously declared.
    In other words, the largest possible amount of revenue with the smallest possible amount of economic and political damage.
    That's what this crisis demands.

    https://www.afr.com/policy/economy/morrison-flags-unpopular-reforms-ahead-20200415-p54k0e

    edit: Pardon the long post. It's intended mainly for any fellow stackers with little to do whilst in self-quarantine.
     
    Last edited: Apr 17, 2020
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  9. JulieW

    JulieW Well-Known Member Silver Stacker

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    Appreciate the long form actually.

    This will be a day indeed if Henry's tax reforms are brought forward. To date I think there's a couple of the 125 that have been tinkered with but the rest are too commonsense and fair for our expensive politicians to introduce.

    The one I most immediately thought of was Labor's rules on cash dividend payments . There's a few bucks lying on the table there, let alone some simple rules rendering bank accounts and companies in places like the Caymans to be no longer the cash cow they currently are.
     
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  10. Lustre

    Lustre Member

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    1. Will be earlier than that for some states (maybe also NT and ACT) or expect a mutiny. Basically all except eastern seaboard. Tasmania is equivocal for the next few weeks at least.

    Not sure you can vaccinate this one. We’ll see. Might be a bodgy one like the flu vaccine, which is about timing and only covers about 2-3 strains out of the 4 each season. Sometimes it’s just 2.

    What did we learn? The most important lesson was to adopt crypto early and in quantity. It was laid out on the table. It was the lesson of the metals retold by non boomers.

    It will likely happen again in another form that is at first esoteric and so new it seems hard to apprehend and so is only done so by the few. Meantime everyone gets a bit older and some become like the boomer. This is the progression of life.

    As for the predictions, the US mint website has stopped its rollout schedule. This suggests a squeeze is coming. It may be countermanded by a drop in the broader market. Metal equities with proven resources, good management and cash in spades should be monitored for a buy in. There are just a handful in Australia.

    Yes property is dependent on employment. At the end of the last recession in the 1990s, there were truly magnificent bargains, but few had the money so they sat there. That’s the place to be at that time, even though it really sucks on the other end. Until money is changed by definition to something more prosocial, the inevitability is a raw deal.
     
  11. l***g

    l***g Active Member Silver Stacker

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    You forgot about the two civil wars in the USA in 2020.
     
  12. Lustre

    Lustre Member

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    Yes I forgot
     
    Last edited: Apr 17, 2020
  13. alor

    alor Well-Known Member Silver Stacker

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  14. Lustre

    Lustre Member

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    Mike Maloney’s channel has a correlate to this in digital certificates as money, in the latest post. Not much new under the sun, though nicely retold with contemporary data.

    Basic analysis = convergence between big data and fiat debt currency lords.
     
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  15. OneDay

    OneDay Active Member Silver Stacker

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    I think this picture shows what happens after the virus.

    bootstamping.jpg
     
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  16. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    All they can do is more of the same. More socialism, more bubbles and more lies from dear leader.
     
  17. metalzzz

    metalzzz Well-Known Member

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    If you want a picture of the future just buy a ticket to the Olympic Games Opening Ceremony
     
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  18. madaw1

    madaw1 Well-Known Member

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    Post Coronavirus World...
    [​IMG]
     
  19. alor

    alor Well-Known Member Silver Stacker

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  20. madaw1

    madaw1 Well-Known Member

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    They were working hard towards this-vaccine is probably already prepared(with chip)-just waiting for the people to be more tired and relaxed...
    Edit"There is always the chance that this scenario won't happen-the power is inside every of us if we wake up....
     

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