Jacinda and Grant are heroic when it comes to big calls in the midst of crisis, but when it comes to actual progressive reform, they are as Bernard Hickey points out, still peddling tinkering rather than transformative change…
The global response to Covid-19 has turbo-charged this doom loop with over US$26tn of fresh government spending and central bank money printing, most of which went directly to corporates and asset owners in the form of grants, much higher asset prices and lower borrowing costs.
The numbers are just as obvious here. The Reserve Bank has printed just over $52bn to lower mortgage rates, which has lifted the value of property assets by more than $400bn. The government handed over $16.6bn to businesses during Covid to convince them not to sack staff. It worked, but it also meant businesses have banked an extra $20bn over the last year. Many businesses were backed by government guarantees, policy changes and subsidies, including for aviation, freight, selected tourism businesses and banks.