park pond
Victoria Park, Glebe

News from the front desk Issue 471: If you’re feeling discombobulated by the crazy mental contagion of our world right now try this for some unsolicited advice: a good night’s sleep, an early morning walk in the sun, a bit of nature. The grass is still green, the sky mercifully blue, the ground solid underfoot. The ducks preening near the pond. The sensation that the world is spinning out of control will slow and maybe still for a while.

It helps if you’ve read one or two of the economists in the morning who casually and authoritatively mention that all this is will pass. The pandemic will become endemic, they say – normalised, like the regular flu. We’ll build immunity. Besides, we have deaths all the time that we don’t much remark on because we’re used to them. Like the thousands that die on the roads each year (1194). Or the tens of thousands that die each winter because their houses are poorly insulated or they can’t afford the heating (in 2015, about 10,338). Perspective helps.

Economically, we will soon be over this and get back to normal because our financial world is not too out of whack, the economists say.

We’re not sure about that. Recently we called out Australia’s economy as a house of cards. Four interest rate cuts in 12 months, an insecure gig economy, people struggling on the edge, while the asset bubble reaches stupid heights and a small cabal of fossil fuellers tells the government exactly where to spend our money and how. It’s enough to make anyone nervous. Especially when there’s (yet another) unprecedented event.

But during that calm walk you might think, what isn’t a house of cards?  When you think about it, all economic values are collectively agreed concoctions. A house, in worth, is not a cent more than what we collectively agree it’s worth. Same with cars, money, even food.

Everything other than our magnificent environment (when it doesn’t turn on us) and our best human relationships – neither of which we can put a price on by the way – have no intrinsic value other than what we agree they have.

Usually that’s based on an ephemeral feeling or passion, which we are prepared to trade: less restaurant dining/more holidays, less car travel/cleaner air, less coal/better planet.

When something as mad as this virus comes around it’s worth remembering that it’s up to us to sift out the things that really matter to us and not worry about the transient rest.

So when we face the prospect of lock down (maybe two weeks too late) is that for all our fabulous technology and wealth creation, all of it pushing us into atomised being, it’s the prospect of not “grazing with the herd” that’s the most scary thing of all.

What, no conferences, universities, parties or big messy crowds like the Easter Show? No working with colleagues and getting excited with creative buzz?

Over Christmas, we got a taste of what losing nature feels like. Now we’re getting a taste of what losing our human connections might feel like. Big lessons.

We should always honour our teachers.

Meanwhile, from the heart of the property industry

Meanwhile from the heart of the property industry came an early morning call on Friday from a very well placed senior figure to say he could not make our 11 am appointment at the studio for our new podcast series because he’d been up all night talking to his global network of colleagues about the virus and what it means to business. And the talks would continue all day.


But still, what followed was gold: a frank and intense peek into the heart of the machinations serious leaders are grappling with in the property industry.

We decide to hold over the rest of “News from the Front Desk” until next week … this stuff is too hot.

Yep, there is hysteria and contagion.

With the economy, our source pointed to global debt that “since 2007 has increased by 50 per cent”. Reuters says by the end of last year it had surged to $255 trillion.

In China, debt is 305 per cent of GDP, which includes the “grey market debt” (debt issued by state owned enterprises and reissued, also including business to business debt over which we don’t have clarity).

“The numbers coming out of China are very interesting; I don’t believe most of them.” His people in places south of Shanghai say the area is still closed and businesses don’t have the cashflow to keep going six months. Still, it’s interesting that China hasn’t started a stimulus package. Maybe a show of confidence that it’s not needed – rightly or wrongly.

But more than anything, our source is dramatically concerned that the Australian government has been so slow to move.

“We’re 19 days behind Italy.

“They could have, they should have … and in hindsight this government will be criticised and punished if they don’t take decisive action. Any company leader would.”

Property values

In the property market things could go either way. “Following the ‘87 crash the property market boomed because people wanted real assets. Those who can still access debt and are highly liquid will probably take the opportunity to pounce on some assets.

“Following the ‘91 crash premium property tanked by 60 per cent. People don’t believe that, but it happened. I don’t expect that will happen now by any stretch of the imagination because as long as you can access liquidity [which was not possible after 91] people will continue to be active in the market.”

Behaviour patterns will change

What could happen – and this echoes others we’ve spoken to recently – is that there will be “fundamental behaviour change” such as remote working.

The current situation will open up the opportunity for this to become embedded.

“It’s interesting about co-working spaces; do you really want to be going into an office with a bunch of people you don’t know?”

In his patch, which is significant, our source says, “We’ve been controlling our offices in a very disciplined way. We’re trying to be ahead of the curve. Banning non-critical travel, telling people not to come into the office.”

We share the morning’s news titbit that one person living in Singapore says her temperature is being taken six times a day in public buildings. Why not here?

Singapore is quite easy to contain, and it acted fast, our source says. “It’s just 5 million people and pretty easy to shut the borders”. But this doesn’t mean that business aren’t suffering a big slow-down.

He’s been following this “trusted” Twitter feed from the beginning of February to understand what’s happening from the health contagion point of view.

“It’s been driving my thought processes and it’s a very realistic approach.”

The stockmarket

What’s hard to understand is why it took the stock market so long to react. One report had said it “dawned on them” after the previous weekend. “How could it ‘dawn’ on them when anyone looking at the statistical model could see well before with certainty what was happening?

“This is not a black swan event. Viruses have been travelling the globe for thousands of years.”

So why is the stockmarket so immune to reality and fundamental evidence?

“Ah, the madness of crowds,” he says, quoting Charles Mackay.

“It’s all about sentiment.

“We won’t hit the bottom until all hope is lost.”

One thing is sure, there will be the “buying opportunity of a lifetime” in the next year.

It’s all connected

Underneath the whole crazy stockmarket behaviour is that it’s driven by separated segmented groups all driven by self-interest – “they’re not understanding that it’s not about just the economy or buildings or the planet, it’s all interrelated, It’s holistic.

“And the only way to build a sustainable model is to put all the pieces together and demonstrating leadership at the same time. Thinking about intergenerational equity.”

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  1. Well put Tina, all the more reason to deploy the Kate Raworth Doughnut Economy model ASAP to expedite the hope, by properly allocating our values – and valuations.
    Our #MetaLoop is one such multi-modal platform for doing just that.

  2. fantastic article, it IS all connected and there have been some very big learnings and some huge mistakes over the past months.