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Dairy prices slip; US retail sales shrink; US exports fall; US Govt financing situation worsens badly; Germans rattle the ECB; RBA sees 'stronger' recovery; UST 10yr yield at 0.65%; oil up and gold unchanged; NZ$1 = 60.6 USc; TWI-5 = 66.6

Dairy prices slip; US retail sales shrink; US exports fall; US Govt financing situation worsens badly; Germans rattle the ECB; RBA sees 'stronger' recovery; UST 10yr yield at 0.65%; oil up and gold unchanged; NZ$1 = 60.6 USc; TWI-5 = 66.6

Here's our summary of key economic events overnight that affect New Zealand, with news of sharply lower retail demand worldwide.

First up today, the overnight dairy auction brought little change in overall prices with the index down -0.8% but the key WMP and SMP prices both up +0.1%. It was prices for butter (-5.8%) and cheese (-6.8%) that took the index lower. Volumes offered for sale in this auction were a light 16,442 tonnes, not only reflecting the season, but also the lower New Zealand milk production. They are also similar to the same auction this time last year. In New Zealand dollar terms, prices were down -2.4% on a firm Kiwi dollar.

In the US, the latest update of the Johnson Redbook for weekly retail sales puts them down almost -9.3% on a year-on-year basis and -12.6% on a month-on-month basis. Given that the retail industry in the US was worth US$6.3 tln annually at the latest reading, that fall is equivalent to at least -US$750 bln - and probably falling. A reduction in demand of that size is a world-scale event. These falls come as consumer debt reached record levels.

The retail trade is a big part of their giant services sector, and that result is backed up -and more - but the latest services PMIs for the US. Both the internationally benchmarked Markit one, and the more widely watched local ISM one are recorded record falls, far below what was seen in the GFC. These results end an almost ten years of continuous expansion in this sector.

Their service sector may be contracting, but the full US trade deficit is widening again as exports fall more than imports. US exports to China fell -15% essentially making the US-China trade deal a failure. US imports from China hardly changed.

The situation is dire for US Federal Government finances. It says it needs to raise US$3 tln in the current quarter by selling bonds. It is a level that will likely overwhelm markets and can only be achieved by the US Fed being a major buyer with QE money. And in the third quarter it indicated it will need to borrow another US$677 bln in Q3. (It borrowed $500 bln in Q1.) By any measure, this is panic borrowing. Already US Federal debt exceeds US$23 tln - and they are probably only now just getting started.

Retail sales data is also out for other jurisdictions. In Hong Kong, they have recorded an eye-watering -42% decline on a year-on-year basis and that was only for the March year. And Singapore has recorded a -13% drop on this same basis and also only for March. Both are more evidence that consumer demand is collapsing worldwide.

In Europe, the German Constitutional Court has ruled the Bundesbank to halt participation in the ECB's bond-buying programs unless it can show the policy is ‘proportionate’. But the ECB is unbowed by the decision.

In Australia, the RBA left all its policy positions unchanged in its regular monthly rate review. But it did hint that when the recovery comes, it could be stronger than others assume.

But, almost 1 mln Australian workers have lost their jobs since social-distancing measures to limit the spread of COVID-19 ramped up. Payroll data from the tax office shows the number of jobs slumped by -7.5% between March 14 and April 18 in a workforce of 13 mln. And this is just the start. Even for those who haven't lost employment, household finances are under pressure. These sudden changes are not only going to hurt demand in a major way, they will also change household spending attitudes for a very long time.

The latest compilation of Covid-19 data is here. The global tally is now 3,630,900 and up +155,000 from this time yesterday which is a much faster rising rate.

Now, just under 33% of all cases globally are in the US, which is up +22,000 since this time yesterday to 1,193,000. This is a slower rate of increase. US deaths are now more than 70,000 and they aren't really getting on top of the pandemic. Global deaths now exceed 255,000. We are back looking at the Brazil numbers being reported and there is an unnerving acceleration there. Russia and India are getting a similar profile of fast-rising infections.

In Australia, there are now 6849 cases (+24 since yesterday), 96 deaths (+1) and a stable recovery rate of just under 86%. 66 people are in hospital there (-4) with 27 in ICU (-1). The Aussies have lingering issues at meat processing plants in Victoria.

There are 1486 Covid-19 cases identified in New Zealand, with zero new cases again yesterday. One probably cases was determined not to be coronavirus. Twenty people have died, unchanged, almost all geriatric patients. There are just four people left in hospital with the disease (unchanged), and none are in ICU. Our recovery rate is now up to almost 88% and rising.

Wall Street is higher today, thinking the easing of lockdowns will bolster economic activity and restore profits. The S&P500 is up +1.8% so far. Overnight, EU markets clawed back some recent losses, up about +2%. Shanghai returns to trading today after their long weekend holiday. Yesterday both the Australian and New Zealand equity markets booked gains.

The UST 10yr yield is little-changed in opening trade in New York, at just over 0.65%. Their 2-10 curve is holding at +46 bps. Their 1-5 curve is marginally steeper at +20 bps, and their 3m-10yr curve is at +55 bps. The Aussie Govt 10yr yield is up +2 bps at 0.86%. The China Govt 10yr is unchanged at 2.52% but will be back in business later today after their long weekend public holiday. But the NZ Govt 10 yr yield is marginally firmer, up +1 bp to 0.59% maintaining the huge gap to both the Aussie and US equivalents.

Gold is unchanged today, still at US$1,707/oz.

Oil prices are up sharply today. In the US, they are currently at just on US$24.50/bbl and a rise of +US$4.50. But it will need to rise above US$30 before any domestic fracking resumes. International oil prices are just on US$31/bbl.

The Kiwi dollar is marginally firmer overnight, and is now at 60.6 USc. On the cross rates we are still at about 94 AUc. Against the euro we are up again, today by more than +½c to 55.9 euro cents. That means the TWI-5 is just a little bit firmer at 66.6.

Bitcoin is little-changed again today, up less than +1% at US$8,815 and with very little overnight movement. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Our exchange rate chart is here.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

121 Comments

Keep on sunbathing. Covid 19 - "20-fold greater in the Vitamin D Deficient. BAME, African Americans, the Older, Institutionalised and Obese, are at greatest risk. Sun and ‘D’-supplementation – Game-changers? Research urgently required.
...Vitamin D status is significantly associated with clinical outcomes (p

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People with pale skin, evolved because of adaption to less sun further away from the equator and improved ability to synthesise vitamin D. If you have pale skin in NZ, you will easily be able to get sufficient Vit D, provided you are not inside with the curtains closed and slathered in sunscreen, you do not need to sunbathe. 10 mins outside per day is sufficient for most people. Especially if you also eat eggs and fish too.

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Not sure about that. Ease of attaining Vitamin D varies massively throughout the year and the time of day. A 10k minute walk at 9am in May will provide minimal Vitamin D.
At this time of the year you want exposure around middle of the day and probably for at least 20 minutes with as much skin exposed as possible.
Unless you are really worried about skin cancer...
In which case you take a supplement.
I have mentioned the value of Vitamin D many times on this website.

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Yeah, that's true Fritz, there is great variation, but equally, the body fiercely defends its vit/mineral balances. So even if you don't get the "recommended daily allowance" you might not have a deficiency anyway. There are many, many factors. I'm just highlighting that Vit D synthesis is easier in NZ than northern europe, where the research above was done and that you absolutely do not need to sunbathe.

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The other interesting thing is that I read some research recently that suggested that it is not just Vitamin D from sun that has benefits, there are other factors from the UV exposure that have benefits. Obviously moderation is important, you don't want to burn....

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Yup! It's bizarre to me that anyone ever thought otherwise though. The sun is literally life giving. Of course we evolved to benefit majorly from it, just like most living things! Sun bathing is dangerous for white people though because whilst the pale skin aids Vit D synthesis it can also lead to folate depletion (cancers and birth defects) so just as darker skinned people need to adapt in countries with less UV to get more Vit D. Paler skin people need to be wary of over exposure.

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Curve of 'Flu season' matches pretty exactly to population vitamin D levels. Our ancestors necessarily had to spend a lot of time outdoors - we evolved for that sun exposure. But now large numbers spend all day inside. Taking Vit D supplements is very sensible for anyone who doesn't get a solid dose of sun every day.

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All this would be why I haven't had the ful for years then I guess. Interesting.

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I doubt it's as simple as this. It would be more likely that you weren't actually exposed to influenza during those years or that you had existing immunity to the strains that were circulating at the time. Clearly we wouldn't need to bother with flu vaccines if vitamin D alone prevented it. I imagine people spent a lot more time outside around the time the Spanish Flu hit, yet that killed ~50 million people.

It does however seems fair to conclude that deficiency of vitamin D likely increases the severity of infectious disease, likely from compromising the immune response somewhat.

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The science on inflammation is all still pretty new and very complicated, involving thousands of interactions. but it's being implicated in so many health issues from heart disease to schizophrenia. Inflammation is good when you have an illness or infection, but the problem seems to be a constant low grade inflammation that is messing up homeostatic regulation in several systems (especially endocrine). It's not fat that clogs up your arteries, for instance, it's plaque and the plaque is increasingly understood to be inflammation related. It was assumed that it was saturated dietary fat caused that, but after decades of searching, they have just not managed to provide strong evidence for that mechanism. However, polyunsaturated fats (especially trans fats) have been found to cause inflammation. Where as certain previous labelled "bad fats" are now recognised to reduce inflammation.

Many things cause inflammation in the body, and that inflammation then reduces all the effectiveness of all processes within the body.
Vitamin D is definitely important to regulating inflammation and vitamin D is also a fat soluble vitamin when consumed, so we may have been inadvertently harming ourselves all these decades with the "low fat" fad, especially in replacing saturated fats with vegetable oils.

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Fat is good.

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Have you done study in this field ginger?

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Noooooooooooo. I'm just a massive geek. Painfully so.

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In that case... the world needs more geeks. -)

Also since cholesterol has been turned into a bogeyman, we have lowered our levels.
However vit D is made from cholesterol under the skin thru UV light from the sun.

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They are also re-thinking the whole cholesterol thing too.

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Apparently very old people are found to have very high levels of cholesterol.

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Have you ever looked into the quite old claim around the interaction between sunlight and sweat in Vitamic D production?

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> However, polyunsaturated fats (especially trans fats) have been found to cause inflammation. Where as certain previous labelled "bad fats" are now recognised to reduce inflammation.

This is a big call, link please

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What seed oils are really doing to your body
https://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=6&objectid=1…

Omega Fix for Obesity: How the Right Fats Fight Fat
https://articles.mercola.com/sites/articles/archive/2016/11/07/omega-3-…

How to Optimize Your Omega-6 to Omega-3 Ratio
https://www.healthline.com/nutrition/optimize-omega-6-omega-3-ratio

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This was recently on tv which supports the first link. https://www.bbc.co.uk/programmes/articles/3t902pqt3C7nGN99hVRFc1y/which…

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It's not a big call at all if you keep up to date with medical literature. I have posted some links, but this is the tip of the iceberg, you could spend weeks reading, there are 100's of studies over the last 2 decades.
My own personal stance is that people conflate dietary fat with bodily fat. But it's not that simple. Having excess bodily fat, especially visceral fat, appears to cause inflammation. But so too does consuming excess of certain dietary fats (particularly transfats). Fat cells become insulin resistant before any other cell in the body (sometimes a full 10 years before the insulin resistance shows up in glucose dysregulation), which has been shown in the research of Joseph Kraft and hyperinsulinemia is a state of inflammation too. https://profgrant.com/2013/08/16/joseph-kraft-why-hyperinsulinemia-matt…
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4424767/
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3247279/
https://www.ncbi.nlm.nih.gov/pubmed/16713393
https://www.sciencedirect.com/science/article/pii/B978163067036800024X
https://www.health.harvard.edu/staying-healthy/the-truth-about-fats-bad…
https://www.the-rheumatologist.org/article/researchers-probe-the-role-o…
https://www.sciencedaily.com/releases/2013/03/130305145145.htm

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Why stop at sunbathing. Try everything: the worst you can do is kill yourself.
The Aussies have gone a bit quiet on the headlice/scabies treatment, but I see the president of Madagascar is enthusiastically marketing an artemisia-based malaria treatment, giving Donald Trump competition with his hydroxychloroquine.
https://www.sacbee.com/news/coronavirus/article242484581.html
https://www.france24.com/en/20200505-covid-19-in-madagascar-the-preside…

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Also "Obesity could shift severe COVID-19 disease to younger ages".

I am still guessing this might turn out to be endocrine dysregulation and inflammation related. Vit D also plays an important role in managing inflammation within the body too, so the BAME and obesity data might actually correlate.

https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)3102…

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Yes that may also help to explain why the coronavirus has had such a huge impact on the soaring death rates in the US, though most would agree that it's down to Trump lack sufficient management in controlling the Covid-19 virus outbreak.

Even just two days ago the Toddler and Chief was warning that "As many as 100,000 people could die of coronavirus in the US." That looks to be a rather server under estimation considering that they're already up to 71,838 virus deaths. It's more likely to be 200,000 dead from the coronavirus in the US and certainly before the next election in November. Will they have it under control by then is questionable.

BBC Coronavirus: Trump warns US death toll could hit 100,000. https://www.bbc.com/news/world-us-canada-52526189

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No wonder so many smiles about. we don't appear to be sinking, [though] it probably is a relative thing.
"Already US Federal debt exceeds US$23 tln - and they are probably only now just getting started."

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As per One roof house price will not crash below 20% so does admit and giving away what they do not want to say in public is that Houes Price Can Fall By 20%

https://www.oneroof.co.nz/news/37874

Now onwards will be bombard by false /fake news/articles/opinion by so called experts to create a false Narrative to fool average Kiwi, specially FHB who feel missed out (FOMO) and may fall for it only to realize that their equity/deposit has vanished.

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Have they planned for enough?

Leaked documents show the Ministry of Social Development preparing for an extra 300,000 benefit applications, in response to an expected tidal wave of unemployment created by the Covid-19 pandemic.

https://www.google.com/amp/s/amp.rnz.co.nz/article/f0bfa8a3-b306-40d8-b…

The agency said it had hired 330 more staff in recent weeks and redeployed other staff to the front line as well as making it easier for people to deal with MSD online.

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Anticipating an increase of up to 13% in unemployment? That doesn't line up with official govt line on expected unemployment does it? Govt will do everything they can to forestall that till after election, no matter what the cost.

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One problem we have is, once shy...
The early release from L3 well has been poisoned. The PM will have MoH saying, look don't repeat the damage Winston caused.

Remember Winston boasting how his Dept. overturned initial medical advice (rolling Ministry of Health).
He said it was the Ministry of Foreign Affairs and Trade (MFAT) that convinced health officials to keep the border open to some in both directions, and the reason he brought this to the public's attention was because they deserved to be thanked.

https://amp.rnz.co.nz/article/c991152f-831a-40a5-a0cc-629a0db416e3

Peters said while this was "understandable and appropriate advice" from a health perspective, Cabinet ministers rejected that as it was "inconceivable that we [would] ever turn our backs on our own".

"We built from scratch managed isolation and quarantine systems to mitigate against the heightened health risk posed by returning New Zealanders. It was the right thing to do."

Remember the early 2 week close (in order to build the systems mentioned), would have been the best investment ever!.

Contributing factors, inexperienced PM, invisible Minister of Health, wounded Winston (locked out by Bridges).....
Note it was MFAT, not Tourism, not Business, rolling Health advice.

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Wait till you see the budget money scramble.
Fortunately, after doing away with all measurement of government departments when she took office, our dear leader also had the foresight to eliminate pesky Regulatory Impact Analysis for all new government spending until August 31st.
Funny timing that, what happens around September? Ahh yes.........

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Andrewj, have you had any decent rainfall yet?
How are the grass and crops doing?

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Other end of the country, but Northland has had a welcome dousing in the last 5 days

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a little but to late to save us.

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Have you used all the hay and sileage you stored for that rainy day?

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Hay and silage are an expensive option, many farmers started feeding expecting an autumn, ended up 8 weeks later with the feed gone and their stock worth a lot less. Hay used to be affordable but I try not to do any, I just can't get it in the shed at a price that makes it worthwhile, it's also hard on my fertility, PKE is probably a more worthwhile flexible option. I think I'm going to be okay as I went into this with almost no stock on.
I've written more further down this page.

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I've heard there is no hay Canterbury north.

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and friends say Southland has had a 'perfect storm'.

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I heard a farmer in Hawkes Bay stated using Silage he stored for the last 7 years for such an event - must be a shrewd or listening to the scientists.

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I have done that before, some was 15 years old and still good. Either way his stock are worth less now, he still has no feed, the only thing that's changed is he now has less options.

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Aint that the truth

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Is the hole in the boat loose spending, loss of transparency and accountability, or cumulative debt?
"Sir Roger Douglas has cut to the chase saying the amount of Government cash pouring out the door to large companies [ eg."wealthy law firms" ] with no obligation to pay it back is not only wasteful but beggars younger generations."
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…

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A friend manages a professional practice and was told apply for the wage subsidy as soon as it was unveiled. Money was in the bank 48 hours later. Average salary of the partners @500k.
Another friend who works part time as a sole trader lost half his pay for two weeks. He applied thinking it would reimburse the lost pay (around $500) and got $4200. He was worried at first, then embarrassed. Another friend’s son earned $100 a week part time in a cafe. The owner applied for him, and got the $4200. Don’t know how he split it. Madness.

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Yet my son applied and only got 1200. MSD need I say more?

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That's simply the Nature of helicopter money surely

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Socialism breeds greed just as fast as capitalism does. But I do think there will be an accounting at some stage. That law firm being mentioned - the accounting should be very public.

See Tom Joad's comment below, very good.

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But a greedy capitalist goes out of business when his leaner competitor eats his lunch. Hence the turnover in Dow Jones top ten over the decades. No such mechanism in socialism - with socialism most of us will be lucky to get lunch.

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Correction (as ususal with this commentator) with overpopulation and over resource draw-down, there aren't enough lunches to go around.

Irrespective of ideology.

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Overpopulation predictions are so 1970's PDK. Stick "The Population Bomb" in the compost pile mate.
"From his perch 10 feet above the ground, he’s monitoring two drones—a driverless tractor roaming the fields and a quadcopter in the air—that provide detailed readings on soil chemistry, water content, nutrients, and growth, measuring the progress of every plant down to the individual potato. Van den Borne’s production numbers testify to the power of this “precision farming,” as it’s known. The global average yield of potatoes per acre is about nine tons. Van den Borne’s fields reliably produce more than 20.
...Since 2000, van den Borne and many of his fellow farmers have reduced dependence on water for key crops by as much as 90 percent. They’ve almost completely eliminated the use of chemical pesticides on plants in greenhouses, and since 2009 Dutch poultry and livestock producers have cut their use of antibiotics by as much as 60 percent."
https://www.nationalgeographic.com/magazine/2017/09/holland-agriculture…

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On the other hand PDK is making my New Years prediction look genius!

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Doesn't take long tpo spot the flaw in a Profile post

And there always is one. Or two, in this case.

Depletion of finite resources is the problem - those tractors run on fossil fuel, not on human labour. That overpopulation is fed on fossil energy.

And fossil energy, despite having some Profilific lackeys, is finite. So all 'thus far' projections are twaddle.

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Yep, and same professional firm partners have given all salary folk a 20% haircut, they expect to more than make it (their portion) up in the partners bonus pool next March.

It's an ill wind....

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It was very dumb to distribute money that way. NZ just follows whatever the UK does. They must have used people income as per their IRD tax return for salaried and waged people and the last income tax return for self-employed and those who do not pay PAYE. Would have been hell of a lot cleaner and who have left a permanent record for who has got paid what (as opposed to pay a middle man who then pays someone else). They could then allow employers to put people receiving the benefit on ice (i.e. no obligation to pay salaries and wages).
Please note that I told this from Feb, so I am not making this comment with the hindsight knowledge.

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Sweetener to get into lockdown, no questions asked..

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Questions are being asked as we speak Henry - but keep pushing your barrow.

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Yes, look above above the post about MFAT, rolling original Health advice.

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Seems the wuflu has a specific difference from the bat virus, not a normal transcription mutation, but instead the insertion of a specific 4 base-pair piece of code that creates a way for virus to enter cells. Such insertions are hugely unlikely in nature, but have been done many times by researchers over last 15 years. Proximity of outbreak to Wuhan lab doing bat virus research happens makes this a smoking gun. https://www.youtube.com/watch?v=uZUJhKUbd0k

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"How did that polybasic furin cleavage site PRRA get into COVID-19?"

A very good question not being asked or answered.

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Im asking the question why shouldnt I go into my nice clean office since there are no new infections hsppening. I will be in my office today. Theres only so much time you can spend doing your kids schoolwork. We have hand sanitiser next to each door.

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In a very short time you'll probably be able to.

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NEWSWEEK: Dr. Fauci Backed Controversial Wuhan Lab with Millions of U.S. Dollars for Risky Coronavirus Research
https://www.newsweek.com/dr-fauci-backed-controversial-wuhan-lab-millio…

But just last year, the National Institute for Allergy and Infectious Diseases, the organization led by Dr. Fauci, funded scientists at the Wuhan Institute of Virology and other institutions for work on gain-of-function research on bat corona-viruses.

In 2019, with the backing of NIAID, the National Institutes of Health committed $3.7 million over six years for research that included some gain-of-function work. The program followed another $3.7 million, 5-year project for collecting and studying bat corona-viruses, which ended in 2019, bringing the total to $7.4 million.

Many scientists have criticized gain of function research, which involves manipulating viruses in the lab to explore their potential for infecting humans, because it creates a risk of starting a pandemic from accidental release.

SARS-CoV-2 , the virus now causing a global pandemic, is believed to have originated in bats. U.S. intelligence, after originally asserting that the coronavirus had occurred naturally, conceded last month that the pandemic may have originated in a leak from the Wuhan lab. Dr. Fauci did not respond to Newsweek's requests for comment.

-------------------

Newsweek Bombshell: Covid-19 Virus Lab-Made? Fauci Connected?

https://youtu.be/R6y8dlhoMpo

https://www.newsweek.com/controversial-wuhan-lab-experiments-that-may-h…

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dp.

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Foyle - Havent you been keeping up with latest developments. The Commander in Bleach said it came from the lab.

That means it didn't.

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Indeed, when you have Trump promoting an idea that automatically sets 80-90% of the world implacably against it regardless of its merits.
China have to do everything it can to downplay this - pulling on all its soft power (it is source of a lot of money for western universities and media) to get useful mouthpieces to contradict it, and virus researchers have motive to contradict it as if true the backlash could mostly end their field of research.

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Throwback Wednesday to the mysterious 'vaping illness' across the US in August 2019
https://www.nytimes.com/2019/08/23/health/vaping-death-cdc.html

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This mysterious vaping disease has disappeared now? Or is it called covid19 now?

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Petition of Jennifer Branje:call to abolish non-resident freedom camping. www.parliament.nz.
Any who agree with this, please sign the petition.

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Got a link to the petition itself please?

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Thanks

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Suggest the Government needs to get ahead of a developing narrative around the wage subsidy by intensive auditing and encouraging whistleblowers.

Clearly it was a good move to keep people in wages and employed but raises a few questions:

1. All employers that applied were paid 12 weeks up front - if your workforce went back to work after 5 weeks (construction, forestry, manufacturing etc.) do you have to pay back 7 weeks worth?

2, If you received the wage subsidy then laid people off after 6 weeks do you have to pay back 6 weeks worth?

3. If you declared revenue would fall by 30% but your subsequent 2021 tax return shows this is not the case what proportion of the subsidy do you have to pay back

I think the measure was a good stop-gap but I strongly believe there needs to be retrospective accountability to be fair.

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I know there's a few dodgy shearing contractors that claimed and didn't pass on.

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You can only be a dodgy shearing contractor with a few dodgy farmers to make it work - is that what you are saying?

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Bull. One does not beget the other.

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Report them please.

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The criteria for self employed folk is, or was, a 30% drop in any one month from January to June over the same month in the previous year.

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Accountability? Morality? Nah not when it comes to money, everyone is just out for themselves, that's the economic lesson of the last few decades, and governments have been actively encouraging it. The government claims that people will need to pay it back, but it's highly doubtful they would do anything about it unless it was clear someone was cheating the system (too much time/money spent to investigate for what it's worth).

The interesting part is all the people that had to work. Think about it, those that had to work were exposed to higher risk and were generally in lower pay brackets (Supermarket workers, petrol station attendants) or middle pay brackets (Nurses/old folks homes workers). For their increased exposure and probably harder than normal work, they got... well nothing. But if you sat around doing nothing for 12 weeks... you get free money! And you listen to the howls of outrage when those 12 weeks are up... the government will likely have to continue paying, which will be abused more and more.

The perverse incentives are real and growing by the day. How will we pay it all off? Oh, young people will have to pay more taxes.

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Yes this current form of governance/economics/finance...call it capitalism, social democracy, neoliberalism....but its full of moral hazard.

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Don't forget prisons. Not a pretty place to work but necessary. I understand they've already been told there will be no pay negotiations/increases this year. Further erosion of living standards.

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1. No
2. Yes
3. It covers a 30% revenue drop in any one comparative month - so tax return wont show this

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You look at all the borrowing, unemployment etc. Government's could collapse from this, many companies including banks will collapse BUT the share market is going up, great time to get out because only a fool would stay in.

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We had 6 mls of rain, which is on top of the 4 mls on Sunday so we finally got some moisture, but it's cold and we need 100mls or even more, my dams are empty, the creeks are dry and my pasture is shot, snow on mountains is down low and big frost forecast tomorrow.
I sent lambs to the works this morning, they have been booked in for 5 weeks, they needed a drench 4 weeks ago but i was worried about withholding periods so they went back a little probably due to worm loading.
This drought has been the worst I have ever known, the consequences will flow through our regional community for years. I have friends who have had to kill and kill capital stock, they still have no feed and I suspect soon they will have to send more stock to the works as winter sets in.
These farms have had cost increases above the CPI for years and years often over %8 inflation pa.
Many of us are now paying 20-30-40-50k or more a year in rates, we have insurance costs over 20k. I think the gov't should look at rate and insurance relief, rates are unaffordable. I have friends on 700 acres of hill country, carrying sheep, paying 27k in rates, I have a friend with 1000 acres coastal hill country paying over 30k in rates.
If the gov't doesn't act I wouldn't be surprised to see farmers defaulting on rate payments like what happened in 2008.
The driver this morning told me they have many trucks in the deep South Island, bringing lambs up to kill in the north.
Many of those lambs will have come from up here during the drought and now begin the journey back, that's because they cannot get them killed in the south and now have a feed crisis.
Everyone I talk to talks of a depression, friends farming in the States are worried as meat works back up ethanol and feed grains tank due to lack of demand. No one is expecting to be unaffected, My usual spend at farm store is between 1 and 2 k ,last month was $79.43 this month will be similar, my fuel spend was $43. What other country has provisional tax?

Farming is really going to hurt when winter happens and as farmers try to restock during the coming stock shortage.

The world is in crisis and if you listen to this at 32 mins in you can see what's happening in Europe.
https://www.youtube.com/watch?v=mA689dioNhA

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I fueled the tractor up yesterday and got some oats from the seed store, I've never planted oats this late but this year is not, in any way normal. So i'm about to head out, hook the drill up and spend a day with the heater on and hopefully a decent podcast or two, with luck this variety of Oats will strike and I will get something to eat in July/ August. The hills could be slippery but I should get around okay.

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It's amazing how a bit of rain on bare-ish soil can make it so slippery.

I've gone from being able to get everywhere on the farm, to having trouble even on the tracks.

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My tractor has a bit of grunt, 120 hp 4x4, it's weighs 5376 kgs. It can really hang on and dig in when it needs to, having said that the full drill is nearly 4 tonnes so i'm dragging a lot of weight up a hill.

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Fragile.
Not a accepted word unless by DGM over the last ten years.

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As always, great to hear the unadulterated news from the front. Oats has kept many a Scot alive through hard times, so here's hoping for a good strike.

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i will try to write some more tomorrow. As and example my cousin has a really good flat farm with heavy flats, he just told me he normally has 1200 ish cattle on, at the moment he has 600 cattle and half those are on feed. This is a very difficult time even for established farmers like him, the other thing to remember is it only get worse from now till early September.

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The Hawkes Bay hasnt had a two year drought for a while has it Aj? I am thinking this is it. The dreaded winter drought. Summer dry, winter dry, spring dry, summer dry. So it spreads into 2 years. Was it 87/88 the last one? I might have to look that up. I think 81/82 was bad as well.
We have had a good dose of rain. But I cant see me wintering the usual stock numbers. I will be down up to 25%. I see Wendys in the states is running out of mince for their beef patties. One might think that is good for us but once they get back to killing, there will be quite a back load of cattle. I can see prices plunging in our spring. Time will tell. Fingers crossed for your oats Aj. Hit it with some N.

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N doesn't really work in a year like this, after such a long dry period the N levels are naturally high. It's too cold anyway, big frost due in the morning three frosts last week. Whatever happens now it's going to be slow.
We did have big droughts in the 80's and again in 2007-2008 but never had the heat of this year. We just needed one easterly to break through, it just never happened this year.
Yes, looks like the States is a mess as is Europe, if the recession is bad then prices for commodities could be low, my friends in the States are saying "this is teaching people how to live without meat".

It was really cold this morning I was out at 6am getting lambs in and didn't put enough clothes on, hands were frozen. Glad to see the back of the ram lambs, they were getting annoying habits.

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Lol i bet they were. About the n, thats what i thought last year on the ryecorn after the drought. Eventually I relented and piled it on in late may in the form of dap and soa mix. A bit of rain and the ryecorn turned a dark green n grew. Being central plateau we were getting frosts.
Yes I forgot the temps. That is the difference. Whole summers of 30° days is a game changer. Not sure how to approach this coming summer. Summersafe country means nothing now.

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How I worry about this playing out is your local store and service station fold, then getting supplies you need gets a lot harder. Goes across the board really, well see deflation on crap we don't need and a shortage will create inflation in things we do need.

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The situation is dire for US Federal Government finances. It says it needs to raise US$3 tln in the current quarter by selling bonds. It is a level that will likely overwhelm markets and can only be achieved by the US Fed being a major buyer with QE money.

This explains both sides of the QE divide (which, then, isn’t really a divide at all). The inflation critics don’t factor balance sheet constraints in their view of this outdated “base money.” Neither do central bankers, which is why they expect bank reserves to be equivalent to “liquidity” at the least. To the latter, laundry tokens are a command to the banking system from Santa which, in theory, is always beloved and obeyed without question.

Thus, the central bankers think QE will be effective but not inflationary while the critics all think it will be over-effective and very inflationary. Neither want to concede the reality. So long as the real monetary stuff of the banking system reigns supreme and independent, the long-ago financial innovations banks came up with for the real economy, QE won’t be either of those.

Here in May 2020, it’s as if none of this had ever happened. Once more the financial media fills with regrets that Jay Powell will become too successful with all his “money printing.” In combination with President Trump’s flirting with a $4 trillion deficit, hyperinflation here we come!

The dollar will surely plunge to zero, they’re saying again, Treasuries are definitely going to get priced in the same range, and consumer price inflation is guaranteed to be on par with Weimar Germany. How could it end up any other way? Didn’t you see the $1.5 trillion!!

In other words, there’s this sense that authorities risk taking these (ineffective) rescues too far. And while that could be true, it won’t matter in the realm of the monetary system. Why? Because authorities don’t get to decide where that line is. The banking system does. So long as it does, and so long as it remains detached in this manner, the only risk is the one we’ve been stuck with ever since August 2007. The same one that was just handed another “L”-shaped boost, a second GFC-level deflationary mistake. No matter what level of bank reserves, global dollar shortage. Link

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The man who started global lockdowns with his scary models has quit because he was caught breaking the UK lockdown with someone else's wife.
"Ferguson revised down his projection of total UK deaths due to Covid-19 from more than half a million to “20,000 or less, two-thirds of which would have died this year from other causes” (in other words, a net 6,700)."
https://www.bbc.com/news/uk-politics-52553229
https://www.thetimes.co.uk/article/coronavirus-the-economic-legacy-of-l…

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Wasn't he the guy who ran the UK foot and mouth outbreak?

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He was involved as a young fella but did not run it.
KeithW

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You'd be better just ignoring the troll, KW.

Whether the fellow had a liason or not, has nothing to do with the rights or wrongs of the lockdown strategy. Attempts to conflate them may work at talkback level, but I'd like to think we can be above that here.

On a lighter note https://kunstler.com/clusterfuck-nation/when-the-birdies-sing-like-the-…

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PDK what has happened in the UK is catastrophic, economics matter down at the personal level, especially.

https://www.telegraph.co.uk/business/2020/05/04/half-adults-now-paid-st…

Hypocrisy should have a cost when you are operating at his level, his wife no doubt will extract it

https://www.telegraph.co.uk/news/2020/05/05/exclusive-government-scient…

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AJ - nup. Economics may well impact individuals NOW, but depletion/degradation will impact many more, much deeper, LATER.

It's like not wanting to get your hair wet on the Titanic - possibly better to swim to a lifeboat, in relative terms.

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The UK government was briefed on the Imperial Model in mid march, several countries had already implemented quarantines way before that including China and Italy. Why are you spreading misinformation Profile?

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Because it fits the idiotic narrative that "this is just a flu"...

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I don't think it is just the flu. Pandemics are common i.e.1957 Asian flu with 116k dead in the US alone. 225k population adjusted. 2 million globally back then. Difference being no lockdown of healthy, low risk people and no sending the economy back to dark ages.

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Did they have ventilators back then in most hospitals/ICU's?

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Yes Ginger some countries reacted much faster - I recall verifying for you Taiwan was boarding China inbound planes in December when you claimed that was misinformation... As for Ferguson - what misinformation? "Ferguson revised down his projection of total UK deaths due to Covid-19 from more than half a million to “20,000 or less, two-thirds of which would have died this year from other causes” (in other words, a net 6,700)." That is quite some climb down. As events have rolled out I guess his mind was on other things.
I always provide links so the punter can decide for themselves.
https://wwwnc.cdc.gov/eid/article/26/7/20-0574-f1

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Profile, yeah, I had mistakenly assumed back in the earlier phase of the pandemic that the WHO were a neutral organisation and had no idea that Taiwan had been well aware of the risks in December but had just been ignored by the WHO.
However, you being aware of the early Taiwan CDC intervention, does not mean you are somehow correct about everything else. Same would be true for myself or indeed anyone. Scrutiny is healthy. The UK already has well over 20k deaths and several assessments have shown that the current deaths are WAY above what would be expected at this time, within the time period but you never refer to them, only the things that suit your narrative. I can't access the article you posted earlier as its behind a paywall. I would need to read the context of the revision before I could assess the "climb down". There are numerous reports that highlight the true number of deaths are massively under reported. But it's also true that the infection rate is significantly higher, maybe x16 higher....making the mortality rate lower. It's a new virus. No one understands it yet, lots of mistakes will be made. I supported the initial lockdowns because of this. Countries needed to buy time to increase testing and treatment capacity because overwhelmed health systems would have been catastrophic not just for virus victims, but everyone with any potentially life threatening health issue, who could no longer access treatment. Taiwan was already significantly more prepared than many other countries so you are not comparing apples with apples. I agree that if lockdowns continue, the economic effects could be devastating but the economic effects of a global pandemic, especially with multiple waves of infection, would be devastating too. It's far too soon to be crowing about who was right and who was wrong. This is all experimental and new. Nobody wins during a pandemic. Nobody has the right answer because there are no answers yet, it's all best guesses and preliminary research. Unless there is something major we don't know about, I think NZ is staying in lockdown longer than it should be, currently, I feel like we could be at level 2 already. The world can't stay in perpetual lockdown until there is a cure or vaccine. The world would collapse into chaos, riots and war. The stress is showing already, just a few months in. But you appear not to consider nuance. That lockdown could be a useful short term strategy but a dangerous long term strategy (which is my perspective). In a complex situation there are no black/white solutions.

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Europe’s level playing field has disintegrated - and so has Mr Barnier’s Brexit
https://www.telegraph.co.uk/business/2020/05/05/monetary-union-ever-end…

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There's clearly some working week pattern going on in most countries test results which seem to show a seasonality to their confirmed cases. Check daily increase charts to see it. It seems to be high number of results at the start of the week, unlikely this is due to more positive tests, most likely just due to more tests being conducted. You should take this into account David when making statements like "... up +155,000 from this time yesterday which is a much faster rising rate."

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"The story is worrying, as we see a mutated form of the virus very rapidly emerging, and over the month of March becoming the dominant pandemic form," said lead author Bette Korber, a Los Alamos computational biologist. "When viruses with this mutation enter a population, they rapidly begin to take over the local epidemic, thus they are more transmissible."

https://www.zerohedge.com/health/coronavirus-mutates-now-dominant-more-…

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That's an interesting read, thanks. It makes the whole pandemic so much more difficult to get to grips with, especially as all the early modelling and research was from China and based on the early strain. But also, I guess this means that the early infections recently found to have existed in Europe in December may have been the earlier mutation and hence why the infection rates don't increase as rapidly in December/Jane/Feb despite those being months where respiratory viruses typically spread more easily. Man, I hope they are wrong on the immunity/antibody side of this though, the world cannot afford any more lockdowns financially. If we get a second wave, I just don't see how it will be possible to have another round of strict lockdowns. The first ones, at least bought some time to increase testing and treatment capacity but beyond that, I think the cost will just be too high. It could trigger a systems collapse.

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Hey, GN, some commenters positively look forward to a systems collapse. It makes the chafing from their constant toting of 'The End is Nigh' signs seem worthwhile.

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No, Waymad. Reconstruct your sentence.

Some commenters look forward to beyond the system collapsing, positively.

And some of us demonstrate how to live (a) beyond it and (b) in a manner at least aboe to cushion the impact.

go well

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I've said from the outset this is a trend, not an event. I could be wrong, but I suspect trying to eliminate it is folly. I also said at the outset to eat well, sleep well, reduce stress, take vitamic C, get some exercise, get outside and get some vitamin D, as the best defense. Worry about what you can do more than what you can't control.

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How do you know the system hasn't already collapsed? Dalio thinks we've reached the end of this long debt cycle which basically means the current debt system, as we have known it since Bretton Woods ('45) and movement away from the gold standard, could be coming to a close. What we have known may no longer be true going forward. Governments and large corporations, right down to households may default on debt as we can't produce sufficient earnings from additional stimulus (interest rate drops or QE/helicopter money) to service the newly created debt. It will be a scramble to see who is left holding the bad debt - like a game of hot potato. 'Here catch this...'.

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Finally now even newshub is forced to mention that house price will fall as writting is on the wall - is inevitable so no point in denial BUT again trying to boost RE industry by advocating that good for FHB to buy right now :

https://www.newshub.co.nz/home/money/2020/05/coronavirus-covid-19-could…

Trying to promote RE to FHB though mentioning fact that price fall is good for FHB but at the sametime should caution FHB to wait as the fall it will be but has not even started and one should not try to catch a falling knife.

No doubt opportunity for FHB whouse jobs or business will survive but only to thouse FHB who are able to overcome FOMO and wait.

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With shockingly bad news coming from every sector ( other than food retailing ) , the RBNZ has the audacity to suggest we will be at 95% of normal GDP in Q2 .

Do they honestly think that we, the productive sector, who pay wages and salaries, rents , interest on business loans, and almost all the Taxes will swallow such nonsense ?

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I suspect they are not so much thinking that we "will swallow such nonsense" but that we will, nevertheless, hold our noses and Vote 'em back in....

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Check this out.
Scaling up hi tech manufacturing!

CCN tell how GM were able to from standing start, produce ventilators in 17 days.
GM, They went to a partners existing factory, 3D imaged everything, and copied the setup in their facility.
GM, also 3D imaged each of the 700 components in the supply chain and built a supply chain to service the facility.

From the 1:25 mark.
https://edition.cnn.com/videos/tv/2020/05/03/exp-gps-0503-navarro-on-tr…

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Retail Landlords Reel as Big Luxury Brands Threaten to Close Stores if Rents Aren’t Slashed
https://wolfstreet.com/2020/05/05/retail-landlords-reel-as-big-luxury-b…

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Good news in that road projects need not be selected for the shovel ready support the construction industry funding.
Unless it's going back to trades school.

https://i.stuff.co.nz/national/300005927/transmission-gully-project-a-c…

One told RNZ they would drive past different sections of the road and see the same contractors ripping up the work they had done earlier in the day and starting over.

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And another example.

https://www.rnz.co.nz/news/national/415919/seven-month-delay-to-christc…

It's not as straight forward as it seems.
A lot of completion risk in these road projects.
Time for learnings, non?

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