Where is all the money coming from?

Businesses and economies around the world will take a severe hit from the costs and effects of the Covid-19 coronavirus.

New Zealand has already announced $12.1 in spending to prop things up. It equates to about 4% of our GDP.

That amount is likely to grow substantially, and will add to borrowings. But that’s only small change in the international finance pond.

Across the Tasman: What Australia’s $189bn coronavirus economic rescue package means for you

The government has announced a second major economic rescue package worth $66bn, on top of an initial $17.6bn package and more than $100bn in emergency banking measures to prevent against a credit freeze.

Framed as a “safety” package, the second wave of stimulus ramps up support for small business and also includes a major boost to welfare recipients and for people who lose work as a result of the Covid-19 pandemic.

In total, the government has now committed economic support worth $189bn – almost 10% of GDP – and has also flagged more packages as the crisis unfolds.

UK Government: Support for those affected by COVID-19

On 17 March, the Chancellor announced an unprecedented package of government-backed and guaranteed loans to support businesses, making available an initial £330 billion of guarantees – equivalent to 15% of GDP.

This was on top of a series of measures announced at Budget 2020, the government announced £30 billion of additional support for public services, individuals and businesses experiencing financial difficulties because of COVID-19, including a new £5 billion COVID-19 Response Fund, to provide any extra resources needed by the NHS and other public services to tackle the virus.

Just announced in the US: Senate, White House reach $2 trillion stimulus deal to blunt coronavirus fallout

Senate leaders and the Trump administration reached agreement early Wednesday on a $2 trillion stimulus package to rescue the economy from the coronavirus assault, setting the stage for swift passage of the massive legislation through both chambers of Congress.

National Post: Trump and his children banned from applying to US$2 trillion stimulus plan

Together with Fed intervention, the proposed legislation amounted to a $6 trillion stimulus, according to White House economic adviser Larry Kudlow, or about 30 per cent of annual GDP.

The package will likely more than double a U.S budget deficit that was already set to hit $1 trillion this year before the outbreak. It also may not be the last infusion of government spending in response to the spread of the virus.

The US has had growing deficits and growing debt since the GDP in 2008:

As of February 2020, federal debt held by the public is 17.23 trillion and intragovernmental holdings were $6.02 trillion, for a total national debt of $25.3 trillion

 

At the end of 2018, debt held by the public was approximately 76.4% of GDP and approximately 29% of the debt held by the public was owned by foreigners. The United States has the largest external debt in the world.

https://en.wikipedia.org/wiki/National_debt_of_the_United_States

When the US package was announced the country was heralded as ‘the greatest country in then world’, as they tend to do. That may refer to the greatest debt in the world. That’s one thing trump has been biggest and best at, growing debt.

There’s some big numbers here, and this is just four countries.

Where will all this support package money come from? Are loans already secured?

 

Brexit – UK leaving EU today

Years after a referendum decision to leave the European Union the United Kingdom will leave the European Union Friday night at 23:00 GMT (midday Saturday NZ time).

BBC – Brexit: UK to quit EU at 23:00 GMT, as PM promises ‘new dawn’

The UK will officially leave the European Union at 23:00 GMT, ending 47 years of membership.

In a video message to be released an hour earlier, Prime Minister Boris Johnson – who led the 2016 campaign to leave – will call Brexit a “new dawn”.

Pro and anti-Brexit demonstrations and marches are being held across the country, as the UK flag is taken down from EU institutions in Brussels.

Little will change immediately, as the UK begins a “transition period”.

Most EU laws will continue to be in force – including the free movement of people – until the end of December, by which time the UK aims to have reached a permanent free trade agreement with the EU.

That’s a short timeframe for reaching a free trade agreement, they usually take years of negotiations and politics.

BBC Live – UK gets ready to leave the EU

Summary

  1. The UK leaves the EU at 23:00 GMT on Friday
  2. Prime Minister Boris Johnson will publish a video message to hail the “dawn of a new era” at 22:00
  3. Labour leader Jeremy Corbyn urges the country not to “turn inwards” after it leaves the bloc
  4. A special cabinet meeting has been held in Sunderland – the first place to declare a pro-Brexit vote on referendum night
  5. Scotland’s First Minister Nicola Sturgeon says Brexit day is a “pivotal moment” for Scotland and the UK
  6. Supporters of the EU held a procession through Whitehall to “bid a fond farewell” to the union
  7. Brexit supporters have been gathering in Parliament Square ahead of a celebration event which starts at 21:00

May played a part, but not a very successful part.

Polls show that UK voters are have mostly been marginally against Brexit.

BBC – Brexit: Do Britons now agree about leaving the EU?

Despite the Conservatives’ election success, polls conducted during the campaign suggested – as they had done for the last two years – that there was a small but consistent majority in favour of remaining in the EU.

On average, the last half dozen polls before the election put Remain on 53% and Leave on 47%

How people would vote in another referendum

But that’s irrelevant. The referendum was the poll that mattered, and although it was very controversial the vote was for leaving the EU:

  • Leave 17,410,742 (51.89%)
  • Remain 16,141,241 (48.11%)

So after three years of political wrangling, including two elections, the split from the EU is happening.

Boris Johnson versus Scotland’s right to choose

Nicola Sturgeon:

1/ Tories are terrified of Scotland’s right to choose – because they know that when given the choice we’ll choose independence. Tories have no positive case for the union – so all they can do is attempt to deny democracy. It will not stand.

2/ The problem for the Tories is the longer they try to block democracy, the more they show the Westminster union is not one of equals and fuel support for independence. This response predictable – but also unsustainable and self defeating. Scotland will have the right to choose.

3/ @scotgov  will set out our response and next steps before the end of this month – when we will also again ask @ScotParl  to back Scotland’s right to choose our own future.

It looks like Johnson will succeed on enabling the United Kingdom to be independent of the European Union, but opposes Scotland’s right to choose whether to be independent of England.

Boris Johnson now PM of UK

In the increasingly less united United Kingdom the Conservative Party has chosen Boris Johnson to take over as Prime Minister from Theresa May.

Missy reports:


Anyway, as you will know Boris won the leadership election as expected, today he was officially sworn in as PM by the Queen and immediately set about doing his cabinet reshuffle.

24 July 2019 is becoming known as the summer’s day massacre as Boris culls the cabinet.

So far he has sacked 18 from cabinet.

The big appointments so far are:

Chancellor – Sajid Javid
Home Secretary – Priti Patel

Expected: Dominic Raab to be named Foreign Secretary


Financial Times: Sajid Javid picked as chancellor in first Boris Johnson appointment – latest news

Guardian: Boris Johnson cabinet: Sajid Javid, Priti Patel and Dominic Raab given top jobs – live news

An interesting lineup of names with just ‘Johnson’  being of English origin (the new Prime Minister’s multi-cultural full name being Alexander Boris de Pfeffel Johnson).

Guardian: In full: Boris Johnson’s first speech as prime minister – video

“Anything less than a clean break from #EU will be a betrayal of the Referendum vote”

It’s not surprising to see that a majority those who voted for Britain leaving the European Union think the referendum should be honoured.

‘Remainers’ lean strongly towards their EU preference rather than the referendum.

Political will holding up Brexit

Remember Brexit?

“Brexit proposals are not undeliverable but rather it is political will holding up negotiations” – curiously that’s the view of the politician in charge, the United Kingdom’s Brexit Minister Dominic Raab.

Reuters: UK’s Brexit proposals are not undeliverable, it is about political will: Raab

Raab also said Britain shouldn’t have a closed mind in negotiations and was open to listening to other suggestions to help break the impasse on outstanding issues.

Also:

The Independent: Three Tory ministers back new Brexit referendum, Conservative conference event told

At least three government ministers privately support giving the public another vote on Brexit, a former minister has claimed.

Dr Phillip Lee, who quit the government in June in order to speak out on Brexit, said he knew of other ministers who were “on the cusp” of resigning over the issue.

The MP warned a fringe event at the Conservatives‘ annual conference that the party was now “on the side of angry men, against women and young people”.

Asked how many Tory MPs privately support the campaign for a Final Say referendum, Mr Lee told the Conservatives for a People’s Vote event: “I suspect there are significant numbers of colleagues who see the argument for a second vote.

BBC: All you need to know about the UK leaving the EU

A referendum – a vote in which everyone (or nearly everyone) of voting age can take part – was held on Thursday 23 June, 2016, to decide whether the UK should leave or remain in the European Union. Leave won by 51.9% to 48.1%.

That was over two years ago. Progress is slow.

When is the UK due to leave the EU?

For the UK to leave the EU it had to invoke Article 50 of the Lisbon Treaty which gives the two sides two years to agree the terms of the split. Theresa May triggered this process on 29 March, 2017, meaning the UK is scheduled to leave at 11pm UK time on Friday, 29 March 2019. It can be extended if all 28 EU members agree, but at the moment all sides are focusing on that date as being the key one, and Theresa May has now put it into British law.

So is Brexit definitely happening?

The UK government and the main UK opposition party both say Brexit will happen. There are some groups campaigning for Brexit to be halted, but the focus among the UK’s elected politicians has been on what relationship the UK has with the EU after Brexit, rather than whether Brexit will happen at all. Nothing is ever certain, but as things stand Britain is leaving the European Union. There is more detail on the possible hurdles further down this guide…

What’s happening now?

The UK and EU have provisionally agreed on the three “divorce” issues of how much the UK owes the EU, what happens to the Northern Ireland border and what happens to UK citizens living elsewhere in the EU and EU citizens living in the UK but talks are now focusing on the detail of how to avoid having a physical Northern Ireland border – and on future relations. To buy more time, the two sides have agreed on a 21-month “transition” period to smooth the way to post-Brexit relations.

 

Dysfunctional democracies

There seems to be growing dysfunction in democracies with important associations with New Zealand.

United Kingdom

The United Kingdom continues to struggle with it’s exit from the European Union after a controversial referendum in 2016 chose Brexit by a fairly close margin. It is claimed that the referendum was unduly affected by social media manipulation similar to what happened in the US election, also in 2016.

Prime Minister Theresa May made a disastrous decision to have a snap election and seems to have gone downhill from there. Her Conservative Party has been in a close contest with the opposing Labour Party in the polls for some time, largely because of the arguably equally unpopular leader Jeremy Corbyn.

Not only does UK politics look in dire straits, their future as a country, especially as a trading nation, looks precarious. They are struggling to sort out an exit of the European Union, and that is delaying attempts to negotiate with alternate trade partners.

The Telegraph: Theresa May is showing how thorny a ‘clean Brexit’ could be so voters reconsider her plan

The Telegraph: Who do you think should be the next leader of the Conservative Party?

Over the past few months notable Conservative politicians and outside voices have questioned Theresa May’s ability to lead the party through Brexit and beyond. This in turn has cast doubt over the stability and longevity of the Prime Minister’s position in the top job.

 

United States

Who is in the most disarray, the Republicans or the Democrats? Both Donald Trump and Hillary Clinton deserved to lose the 2016 presidential election, and it’s arguable that the worst person won.

Trump has had some short term wins with some policies, especially with huge tax cuts, but the effects of resulting huger debts may case major problems in the future, especially if the record length bull run in the markets hiccups, as it inevitably will at some stage. the odds are that that will be soonish.

Trump has had a shambolic approach to trade ‘negotiations’, and a high risk approach to international relations. He often seems to work (or tweet) at odds with his top officials, and has questionable inclinations towards appeasement with Russia (while his country increases sanctions for interference in their democracy).

National Security Adviser John Bolton: U.S. sanctions to stay until Russia changes its behavior

Trump’s claims of great success in his meeting with Kim Yong Un seem to have been premature: Trump says Pompeo won’t go to North Korea, criticizes denuclearization progress

And his potential legal problems grow. Graham: Trump Will “Very Likely” Fire Sessions After Midterms – sacking everyone who won’t support his attempts at interference is unlikely to save him in the long run.

Much of the world watches in wonder at what the most powerful democracy in the world has become.

While many stupid and troubling things are by Trump there’s hope that his big mouth and little fingers won’t work there way towards the big button – however there are risks that Trump might escalate attempts to divert from all his problems by choosing a military sideshow, a common ploy of tyrants who can make their people revere them.

But the Democrats look in disarray after the disastrous Clinton presidential campaign. Hillary may be considering another shot at the presidency, which would likely dismay many, and there is no clear alternative (although in US politics it’s a long time until the next presidential election (2020). Trump was just an unlikely contender in a crowd of wannabe candidates two years before he won.

Australia

Our relatively) close neighbours the Aussies have a new Prime Minister that most Kiwis are unlikely to have heard of (Scott Morrison, after two leadership votes in a week. The deposing of Malcolm Turnbull adds to the procession of Australian Prime Ministers who have failed to see out a term in office.

See Out with the not very old Aussie PM, in with the new.

The change of leadership looks like a bit of a move right, but looks likely to be tested at an election soon, if Turnbull resigns and the Government loses it’s one seat majority.

Labour’s left has been riven by ructions in the not very distant past.

Depressing

This could be quite depressing for those who yearn for healthy democracies and competent politicians and parties. Is democracy self imploding, or can it recover?

Meanwhile, New Zealand

Here we have a three party government that has it’s challenges, and it’s critics, but the big local political stories of the week have been about the leak of expenses details several days before they were due to be released, and the semi-demotion of a Minister who didn’t properly record or advise having a meeting with someone who could potentially be a big benefit to the country.

Trump visiting United Kingdom

Donald Trump’s controversial visit to the United Kingdom has begun, at the same time a poll has been released saying that 50% of British people polled don’t want him to visit, but with Trump claiming “I think they like me a lot in the UK’.

BBC – Donald Trump: US president heads to dinner with Theresa May

The event at Blenheim Palace, Oxfordshire, is expected to focus on post-Brexit trade, and comes days after Mr Trump said the UK was in “turmoil”.

Protesters have gathered outside the US ambassador’s residence in London, where the Trumps are staying tonight, and near Blenheim Palace.

Extra security is in place to police the protests, but Mr Trump has said that Britons “like me a lot” and that he feels “fine” about any such protests.

Speaking at the Nato summit in Brussels before he arrived, Mr Trump said the UK was a “hot spot right now”.

Trump has had a say on Brexit – Donald Trump: Brexit is turning out ‘a little bit differently’

The US president said “Brexit is Brexit” but it was turning out “a little bit differently” with the UK “partially involved” with the EU.

“Maybe they’re taking a little bit of a different route,” he went on.

Mr Trump backed a Leave vote ahead of the 2016 EU referendum, when he was a US presidential candidate, and he was asked for his views at the Nato summit press conference.

“It’s not for me to say,” the US president said.

“I’d like to see them be able to work it out so it can go quickly, whatever they work out.”

Guardian: ‘I think they like me a lot in the UK’, says Donald Trump – video

Her Majesty’s Official Birthday

Queen Elizabeth was born on 21 April 1926, but for some reason her ‘Official Birthday’ is about now in the United Kingdom.

 

UK election results today

Voting continues in the UK general election at the moment. Polling stations close at 10 pm – UK time is 11 hours behind (their daylight saving time) – so that will be 9 am NZ time.

Polling stations will close at 10pm this evening and an eagerly anticipated exit poll will follow shortly after.

The reason it is so eagerly anticipated? Exit polls are almost always in the right ball park when it comes to predicting the final result.

So we should get an idea from the exit polls mid morning here, with more detailed results coming out through the our day.

Despite the polls closing dramatically during the campaign it seems unlikely they will have closed enough for Jeremy Corbyn’s Labour to beat the current Prime Minister Theresa May.

The Telegraph:  General Election 2017 Live: Polls predict Tory win as May and Corbyn vote 

Theresa May is on course to increase her majority in the House of Commons with a final General Election 2017 poll giving the Tories a lead of eight points over Labour as the nation heads to the ballot box.

The Conservatives had as much as a 24 point lead when the snap election was called by the Prime Minister.

But Ipsos MORI’s final 2017 election survey for the Evening Standard, which was undertaken on Tuesday and Wednesday this week, puts the Conservatives on 44 per cent and Labour on 36.

Meanwhile, a YouGov poll that was published on Wednesday evening put the Tories on 42 per cent and Jeremy Corbyn’s Labour Party on 35, a lead of seven points.

So it looks like the Conservatives should win fairly comfortably unless there is an unprecedented poll discrepancy.

The results will emerge from the UK during our day here.

EVENING UPDATE:

BBC Summary

  1. General election ends in a hung Parliament
  2. Conservatives set to win 318 seats
  3. Labour predicted to get 262
  4. Theresa May promises ‘period of stability’, but Jeremy Corbyn urges her to quit
  5. Nick Clegg loses his seat, but Sir Vince Cable is re-elected
  6. SNP’s Westminster leader loses his seat

http://www.bbc.com/news/live/election-2017-40171454

There are 650 seats so 326 are needed for a majority, theoretically, but Sinn Fein don’t front up, and as they have 7 seats (at this stage) 323 should be enough.  But May’s gamble has come up short. She may be able to get support from one or more other parties but that weakens the Conservatives considerably, which is the opposite of what May wanted.

A blatant pitch for more power has backfired. The big lesson for New Zealand is the danger of having self serving snap elections.