But what will be the extent of bad debts arising from business lending? We haven't had a real recession for longer than many people can remember.
Interest on some business loans will be deferred but that just means debts will grow. For many of these loans it may ultimately be difficult to recover debt and interest. What banks are exposed to Virgin? You think there aren't similar exposures to small and large businesses?
The banks' processes for assessing and announcing suitable provisions for bad and doubtful debts related to COVID-19 and the associated shutdown are only beginning imho.
I agree with you on inflation although I saw something in the age business today that the government is looking at more tax cuts for big business as part of the recovery. To me (unless they don't care about debt any more) that implies they'll look at GST increases (maybe to 15-20%) and maybe another levy. Help big business, smash the little guy.
Neither of these will help consumer spending. I think there's a decent chance this mob will manage the crisis only to do a "Ruby Princess" on the recovery.
This could be a longer recession than some expect.
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