Apparently the government is announcing their fiscal response to the coronavirus today.
There wil be a lot of comparisons to the ALP's response to the GFC. This should not occur. It was entirely possible to have a depression without a fiscal response back then. A number of countries did indeed have a depression. All adopted austerity instead of fiscal expansion.
Australia in fact avoided a recession although none of the critics who proved badly wrong ever fessed yup to being wrong in their analysis.
It is different this time.
Supply chains are affected. You cannot sell anything if you do not have supplies.
Only certain people can work from home if affected. Nurses, people who work in supermarkets,, doctors, dentists etc all cannot work from home.
The government should aim to spend big not small. Since monetary policy is clearly not working fiscal policy needs to step up. It won't if the government tries to portray itself different to the ALP in 2008. This is why the RBA has been urging the Government to spend big on infrastructure. The government has been deaf.
Back then we knew it was the December quarter which would be critical to avoiding a recession hence the cash splash was targeted then. It worked. This time around it is the June quarter that is all important. as the March quarter will undoubtedly be negative.
I suspect the government will spend to little and unlike the ALP will not avoid a recession. This of course would have consequences for the budget.
If so they will hoisted on their own petard!!
Whoopsy.
I should have added the similarities between a bank run and a toilet paper run.
Some people need to understand economics! Know your subject.
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