I think he got banned.
Printable View
I think he got banned.
At a time when we need his guidance and positivity as well as his condescension and disdain.
So the OCR might get to 4% by this time next year but will start falling again towards the end of 2024. Or sooner if the housing market or stock markets fall too far. A tough two years for new home buyers with a mortgage (if they didn't fix) but at least they are on the ladder. Rents continue to go up as well, but not as fast, but note rents will not likely fall again in 2024.
6% of the mortgage got paid through inflation (currency devaluation) over the last year. With mortgage rates at 5% homeowners are still the winners no matter how many whiney stories we will hear over the next couple of years and possibly a few sad ones as well where they did over extend, despite help from the RBNZ.
I still haven't found the economic paper that shows that a 1%-2% inflation is better than prices falling or staying the same.
I guess Orr is doing something to fight CPI inflation but he will have an eye on asset price deflation no doubt. Interesting no political party wants to point the finger at the cause of inflation as I assume they will want the same soft policies from the RBNZ when they are in power. And Adrian looks tough as he now changes from arsonist to firefighter.
https://www.stuff.co.nz/business/mon...rsttime-buyers
If banks stress tested new borrowers at 7% mortgage rates that would indicate potentially how high the RBNZ will let rates go before they become dovish or stop and hope inflation subsides.
We might already be near the top of the tightening cycle with mortgages at 6-6.5%
https://www.interest.co.nz/bonds/116...increased-high
Adrian will keep us guessing but there is no way he will put CPI inflation ahead of asset price deflation.
I note in the article he will get back to the magical 1%-3% range. Interesting that I think Powell said a while back that he could let inflation run a little hot to make up for the deflationary period, but no central banker will suggest having a deflationary period to make up for the high inflation.
What sort of emissions reduction could be achieved by not having an extra 50,000 people come into the country each year?
https://www.nzherald.co.nz/business/...KALEX2PK5BP7A/
Seems silly to worry about cow farts when you are working against emissions by running an economy based on more people consuming more stuff. (stuff manufactured in China who use coal as a main source of energy)
Reading the herald this morning enraged once again at central banks.
https://www.nzherald.co.nz/business/...I7P5VJCZ2D4VI/
Tough guy Orr may be raising interest rates a bit, but funding for lending goes on. I guess FFL juices the housing market without affecting the CPI too much.
Jenny Ruth had an article in the herald but they don't seem to show up online, I guess as she writes for a competing publication.
https://businessdesk.co.nz/article/o...money-printing
Former Bank of England (BOE) governor Mervyn King has decried money printing by central banks around the world in reaction to the covid-19 pandemic, labelling it a mistake.
Interesting article, basically central banks are not doing any self assessment as to whether their actions are a good idea.
I guess investors on this site will be happy that yields are going up on fixed interest and even dividend yields, provided the economy doesn't crash and take down earnings.
Sad that central banks feel the need to constantly save the speculators.
I wonder if Japan is a glimpse into our financial future.
https://www.zerohedge.com/markets/ja...l-markets-bank
Sounds suicidal.
An excerpt from Bill Bonner's daily newsletter. Bill is a bit too libertarian for my tastes but always interesting to read.
Either they voluntarily abandon their inflation policy…or let it run its course.
The pain will be severe, one way or the other. Stopping inflation now will mean huge losses on stocks, bonds, and real estate. Businesses will go broke. Millions will lose their jobs as the economy corrects two decades of Fed mischief.
But sticking with the inflation policy will be much worse. The longer it goes on, the more distorted, indebted, and fragile the economy becomes. ‘When the money goes, everything goes’ — including the political system…and the social norms that a civilised society depends on.
That said Japan is still a very cohesive society, but I guess the yen is only just starting to lose the trust of the world markets.
Tough choice but Adrian earns over $700,000 a year and owns a couple of houses so you can guess which way he would lean if making a choice between the two options.
Be great to hear how Tesla God is getting on, his faith in central bank lunacy may have been shaken. It may be tall poppy syndrome or envy but it is hard not to enjoy (just a little bit) the potential downfall of someone who has been so definite/smug.
Maybe "downfall" is too harsh but "an opportunity to see an alternative view".
Aaron …hope you’ve read this Orr speech to an international audience
Awesome stuff
But no answers to current problems …never mind as Reserve Bank is akin to the being Tāne Mahuta of New Zealand’s financial landscape.
https://www.rbnz.govt.nz/hub/publica...eech2022-06-13
Orr came across as an uneducated buffoon. He insulted the intelligence of his international audience with his childish maori metaphors for central banking systems.
As he was speaking on how NZ was incorporating the Māori World View within Reserve Bank operations, it was appropriate. Anyway, it remains to be seen, whether this nod to the Treaty of Waitangi will make a difference to the relative economic disadvantage of Māori in NZ. The RBNZ is bound by the government remit to the Reserve Bank.
And like the NZ school curriculum leaves out the history of the Moriori
https://www.rnz.co.nz/programmes/the...2-ep-7-moriori
I did see a note in the herald this morning but it highlighted how the media is more about s**t stirring than educating. A rare occasion for me to agree with David Seymour.
Māori were the young and poor population most affected by inflation.
Māori home ownership was 47 per cent compared to 71 per cent for European New Zealanders.
"It has probably hammered Māori the most. That fact makes Orr's rhetoric so galling.
"In the middle of a cost-of-living crisis that hits Māori hardest, the Reserve Bank Governor is giving a speech about why the Reserve Bank is embracing te ao Māori. If it were not so serious, it would be quite amusing."
Ironic the man most responsible for shutting people out of the housing market says the following.
The inability to use property as collateral has limited the opportunities for Māori to accumulate financial wealth and grow businesses.
What current problems are you talking about? Inflation? 1-3% is ideal why wouldn't 8% be even better, especially in asset prices. The asset owners get richer faster while the poor get what they deserve for being lazy and stupid (or non-aspirational as Mike puts it)
Adrian will just be knuckling down and coping like the rest of us. If his petrol bill has gone up $100 a week I am sure he will budget and squeeze it into his $15,000 per week salary. Maybe he already has an electric vehicle to protect the whenua and taonga of NZ.
Adrian is Awesome. I can't wait for him to start pumping the housing and stock market again.
The govt and RBNZ would have learnt their lesson about inflation, don't give the printed money to the people they spend it and push up the CPI. Give it to the banks they can dish it out to those that have enough collateral and this only pushes up asset prices which are not reflected in the CPI making everything awesome once again.
On another topic TeslaGod has copped a life ban for something.
I did reply to the notification but nothing in the sent box so I am unsure if you got my reply.
Wipeout, so much money going up in smoke.....
'One in 10 Kiwis are now holding crypto assets, according to the latest survey conducted for markets regulator the Financial Markets Authority.
And direct investment in shares has overtaken term deposits in popularity for the first time in the survey, although KiwiSaver remains by far (64%) the most held type of investment.'
its not his Maori metaphors that concern me , other than that they are a distraction. I actually think they are the right way for an org such as a RB to play the Maori card
But his inability to read the tea leaves and sell those bonds he bought at the worst time ever., that is a sacking offence.
Probably a bit unfair, union reps or soccer coaches for sure but I had heard that NZ First had a lot of supporters from the white flight from the UK, probably baseless and untrue. Apologies to all that were offended.
I am like a human facebook page or social media page deliberately provoking people to get engagement.
I hope this does not detract from the vitriol for Adrian and his policies. Maybe just his policies as Adrian is probably a nice enough person face to face. It is just that his policies and lunacy are denying social mobility and opportunity to a large portion of the population and as noted by David Seymour particularly Maori.
Post edited to be less inflammatory.
June 2021 podcast. I guess we will see if this is still true in a year or two.
https://www.rnz.co.nz/national/progr...ly-column-ever
Interesting that Robertson getting Adrian to consider house prices the wording is "sustainability" not "affordability"
They want to sustain house prices not make them affordable, that is how you win elections.
I have been saying for a while there is no difference between Labour and National on important issues. Jacinda has said the same things as John Key around capital gains tax and national superannuation. They have played around with housing, they may even be partly responsible for the increase in supply but they never addressed demand i.e. immigration and monetary policy that still believes in the trickle down theory.
Don't blame the politicians they can't win unless they pander to the home owners of NZ. Maybe vote for some other party that promises real change at the next election.
Mister Reddell hands Mister Orr an excruciatingly detailed b*ll*cking. . .
https://croakingcassandra.com/2022/0...pomp-and-show/
They talk about keynesian economics but really it is the John Law school of economics that current central bankers are following.
An opinion piece from the NZ initiative so surprising as I would have thought they would be very pro trickle down economics. Maybe even they see the actions of the central banks as too extraordinary since 2008.
https://www.nzherald.co.nz/business/...EU5EGNKLCOYSE/
Confirmation bias reading in the herald this morning. An economist pointing out how the older generation keeps shi**ing on the younger generation and some are starting to give up hope. Points out as I have that neither Labour or National will change this, as selfish older ar*eholes will continue to vote for who ever promises them the most. Labour did it last time with its covid policy last time and I suspect national will this time with tax cuts for the better off half of society(read older generation).
https://www.nzherald.co.nz/nz/robert...6KSDUUOSWMHK4/
I guess being locked out of housing or wealth creating assets unless you want to accept ridiculously low yields and becoming a debt slave. At the same time you are saving for your retirement through Kiwisaver (because we all know that national super will become unaffordable only after the last boomer is on board) while paying off your student debt and paying tax to fund the overly generous and unfunded national superannuation of the older generation who did not save for their retirement.
I still can't understand why young people are not really really angry.
Out of idle curiosity, will NZ Super start to become affordable once the boomers start dying off?
When is peak boomer, anyway?
Boomers were born 1946 to 1964 so peak boomer started in 1946 I guess. As far as entering retirement we are around the middle. Using those dates mark my words any serious talk of raising the retirement age or means testing nz super will only happen after 2030. Denying benefits they received to the next generation is a hallmark of the boomer generation. (think, paying for your own education, saving for your own retirement, affordable housing)
Will nz super be affordable once the boomer bulge dies off? depends what you mean by affordable. By then retirees will be 67-68yrs old making it more affordable and they will have saved for their own retirement with Kiwisaver but they will still be paying for the boomers retirement and healthcare so hard to define "affordable". It is probably "sustainable" (much like boomer house prices) which is the word preferred by Labour and the RBNZ.
Please note when attacking the "boomer" generation I am tarring everyone with the same brush but I am only talking about the selfish ar*eholes who vote for whichever political party offers them the most without regard for the next generation (not including their own kids). e.g. Labour won last time as they promised to save old people from covid one more promise than National. The next generation (or inflation) will pay off that debt. National is likely to win the next election based on tax cuts rather than initiatives around free education, affordable housing or debt reduction/increase in services.
Neither party will suggest means testing nz super and neither party will suggest taxing capital gains especially on owner/occupier housing.
Not RBNZ related but thought of SBQ when I saw this headline and did not know where I should post this. Probably shouldn't post it.
https://www.msn.com/en-nz/news/other...ae692#image=17
SBQs beloved Canada number 8 among the top ten countries to live in. Well done Canada, obviously they have the right policies for a great country.
Hang on, as most of us live in NZ I am sure you are interested to know if Gods Own made the top 10. I will let SBQ read the article if he wishes to waste his time on pointless drivel and he can inform the rest of Sharetrader where NZ ranks compared to Canada.
Reuters concerned Adrian might be too aggressive with rate rises.
https://www.reuters.com/markets/asia...ar-2022-07-10/
If Adrian is the hard ar*se of world central bankers what does that say about the rest of them.
Interest rate declines and more money can't be far away if house prices have declined by 9%, don't want to stop the trickle down.
Looks like Sri Lanka adopting something different to trickle down economics.
Michael Wood pointing out what a huge amount of immigrants they have let in recently.
https://www.nzherald.co.nz/nz/michae...HNRPXAELN64UU/
Still not enough for the "experts" apparently.
https://www.msn.com/en-nz/news/natio...470c90bfbb18ab
More immigration to stop inflation (of labour not capital). Thanks Cameron for your insight. Read some Milton Friedman and get an understanding of what causes inflation.
If more people meant lower inflation what happened over the last 6-7yrs when we had more people than ever coming in? Isn't the low inflation because we exported all our high paying manufacturing jobs to asia because of their cheap labour. What are we doing now importing wage price deflation for the service industry?
In the same herald there is this article.
https://www.nzherald.co.nz/business/...VS5V7D7Q4GAW4/
Labour shortages in the UK has meant dairy farmers have cut production. This might prove Cameron's point as the price of butter has increased. But why are there labour shortages both here and in the UK. What have we done that is similar to the UK. I am unsure about their immigration policies but their central bank has been juicing their economy with easy money and low interest rates. Maybe there is a link to inflation and labour shortages caused by an overstimulated economy. I am not smart enough to know maybe Cameron has an opinion.
I wouldn't mind betting we have had a big increase in people working in house building. NZ a nation of house builders to fit in all the immigrants as we lose one of the things I love about NZ. The lack of people. maybe we should have Dave Dobbyn's song "Welcome Home" as our national anthem. I liked it until I realised what he was singing about.
Don't get me wrong anyone who is in now should be treated with respect and kindness, they are Kiwis. Lets just close the door to anyone else or at least partly close it instead of flinging it wide open.
Also I thought with computers, the internet ,robotics etc we were facing a world with no jobs. So much conflicting information it is hard to know what is true anymore.
Is Bernard Hickey questioning neo liberal economics?
https://www.interest.co.nz/property/...30-gdp-bernard
A brave man, no doubt the experts will correct him in the comments section.
Cheap labour and low interest rates have been doing great haven't they? It is only a problem when you try to raise rates or slow down immigration which is why we see so much angst in the media and on share trader about the RBNZ raising rates too much (2.5% soon if the pundits are correct) we haven't seen any thing like this since 2016 a whole 6 years ago.
Every second article seems to be the pressing need for more immigrants.
A world in "CRISIS", doom I tell you dooooom.
Is Bernard's prescription more debt and dare I say it out loud... more tax? did I read that right? I don't know about more tax making things better but Sri Lanka is a good example of tax cuts not always being good. From what I read the current crisis was kicked off with In late 2019, newly elected President Gotabaya Rajapaksa carried out populist tax cuts, reducing revenues just months before the pandemic devastated the economy,
Looks like the Sri Lankans getting what they wanted out of their elected representatives, good on them.
Wait is this the socialist media trying to fool us once again. Tax cuts are always good aren't they?
Interest.co.nz has a lot of confirmation bias reading today.
https://www.interest.co.nz/property/...e-nothing-more
What is this? the mass emigration we are expecting not being backed up by actual people leaving, gosh.
MYOB (an accounting software company not sure how good their stats team is) did a survey of 500 people and discovered 20% of NZers are thinking of leaving. I have seen this survey quoted in the news on multiple occasion and regurgitated on share trader and Brook Van Velden quoted it in her opinion piece in the herald this morning.
Extrapolated out it discovered 20% of NZers are thinking of leaving. 1 out of 5 people, wow. Personally I would have questioned the survey before sharing because the result on the face of it does appear to be a load of bol*ocks.
Not for our brave news media and politicians though they spread the results like a farmer preparing the soil for planting with a big load of manure. What they hope to reap I am not sure. Possibly sowing the seeds of discontent?
https://www.interest.co.nz/business/...ering-economic
At last a feel good article of sorts. The world doesn't end if GDP stops growing momentarily for two quarters. Someone tell Adrian we don't need unconventional monetary policy because his houses have fallen in value by 20%, they still keep the rain off.
Many thanks for the advice. I won't be voting for National or Labour but will reserve judgement until more policy comes out and hopefully I am not too lazy to read it. Probably will vote for whoever yells and screams the most. A wasted vote no doubt if whoever I vote for does not get a seat or have popular support.
Difficult to out vote the largest generation but young peoples apathy is also part of the problem. At least 60% of the country is happy, more if you count the votes for both national and labour as they are by and large the same party.
I think nz superannuation is great and should be there to help the retired. I just object to it being universal, i.e. if you don't need welfare you should not get it. My view would be different if money had been put aside from the taxes paid by earlier generations to fund it, but that is not the case.
I don't know if the current situation with nz super was "planned", I hope not anyway as it would reflect poorly on earlier generations. Maybe "ignored" so that unfortunately it is the future generations taxes end up paying for it while they "plan" and save for their own retirement through Kiwisaver.
I also appreciate the recognition monetary policy has locked young people out of the housing market. You never know if monetary policy returns to normal and Adrian "grows a set" in the face of the wailing and gnashing of teeth from the home owning majority when their house prices decline we might see opportunity for the next generation if they are willing to work for it.
+.50, 2.5 %
Bernard Hickey agrees with you. A rather long and depressing article but the conclusion at the bottom is the same as you.
https://thespinoff.co.nz/business/25...ation-was-lost
Personally I am anti-immigration so rather than become one I will use my vote in the next election to fight for a fairer society rather than buggering off. Moaning on this site is about it for now.
It will be interesting to compare to CPI when it comes out later this month. Below average (since inception) OCR with inflation rates not seen since the 1990s.
OCR history
https://www.rbnz.govt.nz/monetary-po...licy-decisions
Interesting not exactly 23 years of lower and lower rates but new lower lows in 2000 and 2008 and 2020. In 2020 they ran out of interest rates to cut so started on unconventional monetary policy (New column for Adrian "other tools"). It appears to be all one way so I wonder if it is sustainable or if it really is just kicking the can down the road. If that is the case a distinct lack of leadership from Adrian regarding sound monetary policy. The Kaitiaki of price stability failing miserably.
At least he can cut the OCR 2.5% in the next crisis.
I wonder how winner69 values property companies when interest rates are negative??
I guess responsible monetary policy would see asset prices much lower which is unacceptable, so as an investor what does continuing reckless monetary policy mean?
Still the same conclusion, buy whatever assets you can without getting into unsustainable amounts of debt, although at negative rates how much debt is unsustainable? and in that environment is it possible to pay too much for asset?
7.3% inflation. Because of pandemic, supply chain disruption, war in ukraine (oil going up is a big one) but oil demand and consumption will be is as high as ever, so I wonder why oil demand remains so high despite the switch to renewables.
https://www.statista.com/statistics/...nd-since-2006/
Where is the finance coming from to fund all the activity? Is inflation in housing because "materials are going up in price". Why are they going up? Demand? What is driving demand?
Everything and everyone "except" the central banks are being blamed for inflation. Funny that central banks are responsible for keeping inflation in a 1%-3% range. If the current inflation is due to other factors why would you give the RBNZ the responsibility for what would appear to be an impossible task.
Maybe it is Massive failure by RBNZ and heads should roll.
"National Party deputy leader Nicola Willis said allowing in more immigrants would help stem rising inflation."
https://www.rnz.co.nz/news/business/...st-in-32-years
Maybe stem a rise in builders labour rates, but materials demand would increase as more houses are required. Why do I bother reading this rubbish.
have to show my ignorance.
What does this mean "anchoring of wholesale short-term interest rates at the Official Cash Rate (OCR)."
https://www.interest.co.nz/bonds/116...interest-rates
So banks and other finance companies can deposit money short term with the RBNZ at 2.35%. I don't understand why NZ govt bonds are needed as collateral. The RBNZ has no real limit of money when it comes to repaying deposits.
Where would banks put short term funds currently and at what rates. It must pull short term rates up otherwise banks would get higher rates elsewhere, although credit risk is greatly reduced with the RBNZ.
Not sure what they are trying to achieve.
NZ borrowers are getting dumped on
TD rates are tied to OCR latest NZRB announcement
https://www.interest.co.nz/saving/te...s-1-to-5-years
https://www.interest.co.nz/borrowing
"However, over the last 15 years, this margin has been steadily increasing
Now it sits around 4% above the OCR".
https://www.stuff.co.nz/business/the...ate-home-loans
Not only have kiwi mortgage borrowers got larger mortgages(double?) over the last 10 years now they are now paying twice the margin.
That's a big fat ...... for banks, lucky banks !
Here is a guest post on David Farrar's website that I thought I would post here, mainly to ease Aaron's concerns about things all going wrong. As you can see, we are in good hands and can rely on these alumni and high powered professionals to guide us through the rough waters ahead:
JULY 18, 2022 7:00AM BY DAVID FARRAR
Guest Post: The Reserve Bank Board
A guest post by a reader:
“The Minister of Finance, Grant Robertson, has just released one of his most important press releases of the year, perhaps even this term of Government. He has announced the new Board of the Reserve Bank effective 1 July 2022. The statutory remit of the Reserve Bank board is: “overall responsibility for our strategic direction, functions and operations, and ultimate accountability for the delivery of our outcomes.”
One of the most important Board’s in New Zealand and one might expect stacked with the best and brightest economics and financial people in New Zealand, and from our global diaspora. A mix of heavyweight academics at masters, preferably PhD, level in finance and economics with significant research experience in monetary policy or similar. And balanced against that would be business people with heavyweight real world experience in how economies work and how the Reserve Bank can execute its obligations so there’s an environment where businesses can thrive and help create wealth and prosperity for all New Zealanders: people who’ve who have demonstrated an executive ability to understand and drive the economy, not just get appointed to boards.
You be the judge of the four new appointments. Here they are, referencing their Reserve Bank profiles:
• Jeremy Banks: BSc (Hons) in Computer Science from Otago University. Co-founder and CEO of Plink Software, a software company based in Nelson that produces a free te reo learning app, and similar. In 2019 Plink had 4 staff, but I expect its bigger now. A few minor governance roles.
• Professor Rawinia Higgins: Deputy Vice Chancellor Maori at Victoria University with research expertise in Maori language revitalisation, She has a PhD from Otago University, but the subject isn’t disclosed. Based on the disclosed undergraduate qualification and her current role, we can confidently exclude economics or finance.
• Byron Pepper: LLb and Bachelor of Management Studies (Finance) from Waikato University. 22 years with Goldman Sachs in investment banking.
• Hinerangi Raumati-Tu’ua: Masters in Management Studies (university not disclosed) and fellow of Chartered Accountants ANZ. Previous CFO of Tainui Group Holdings and lots of past governance roles in public, Maori and resources sectors.
The continuing members are:
• Prof Neil Quigley: Vice-Chancellor Waikato University. PhD from Toronto University (doesn’t say what in) but has research interests in industrial organisation, money and finance and economic history.
• Susan Patterson: a pharmacist with an MBA from London Business School and lots of Government and mid-level board experience.
• Rodger Finlay: BCA from Otago. An accountant with lots of Government, Maori related and mid-level board experience.
So there you have it, the seven people who the Minister of Finance believes have the collective wisdom and experience to oversee and guide our Reserve Bank. In summary:
• Two accountants who’ve practiced at mid-size domestic entities.
• A software developer running a small business in Nelson.
• Two academics, one with expertise irrelevant to the core role of the Reserve Bank and the other with expertise peripherally relevant.
• One ex-investment banker.
• No-one with a PhD level qualification in a relevant discipline.
• No-one with substantive treasury experience.
• No-one with a senior commercial banking background.
• No-one with senior executive experience (eg CEO or CFO) of a substantial international company, organisation or research entity, or even an NZX10 company like Spark or Fisher & Paykel Healthcare
• At least three with a deep knowledge of Maori custom , knowledge and language.
• An abundance of mid-level and Government governance roles.
Quite frankly, you couldn’t make this up if you tried.
DPF: I would slightly dispute the characterisation of Professor Quigley as only having peripherally relevant expertise as he in fact lectured me in monetary economics at Victoria University. But I agree with the concern expressed by the reader that the board is very light on people with expertise in monetary policy.
IMO relevant academic credentials means nothing. Warren Buffets makes the claim time and time again that if you're too smart academically, then you ability to make wise decisions will go against you because there's the emotional aspect that clouds their academic thinking. To put it clearly, he points at all those economists and university profs that are "supposedly knowledgeable in the area of finance and economics" and says, "How many of them are really rich?" - they're not because they get it wrong all the time. If they had any real chance of knowing what happens from time to time in the economy, they would certainly be able to take advantage of the outcome... but they don't. They're more than often.. wrong. Therefore, the person with a wider, broad base, of varying academic backgrounds may have the better idea of what goes on in the economy.
No more OCR cuts just now says my mate Rodney. Rodney got no barrow to push / ulterior motives
Quality analysis, unlike that done by the bank economists and Reserve Bank, points to a dire near-term outlook, questioning the case for more OCR hikes at this stage, says Rodney Dickens
https://www.interest.co.nz/public-po...ints-dire-near
I don't know, some seem qualified for Adrian's main focus at the RBNZ at the moment, Maoritanga. Hopefully it is not their only focus at the RBNZ but how much effort and brain power does it take to print money electronically and drop interest rates. I don't think you need a Phd for that. It sort of feels like they are raising rates so they have something to cut.
We are all currently discovering that more money chasing the same amount of goods and services creates inflation so they might be a bit more conservative with the presses next time... I would hope.
I am sure there will be many voices joining with Rodney Dickens to curb interest rate rises and increase immigration and they will have compelling arguments.
More growth more consumption, all good.
Aussie to look at targeting inflation with interest rates.
https://www.abc.net.au/news/2022-07-...gime/101253846
Can't say I have looked hard but wonder who did the study to prove constantly rising prices at a low level is a good thing. Must have been a kiwi as our reserve bank kicked it all off.
...
To quote the article "Many economists think inflation targeting helped Australia's economy record nearly 30 years of uninterrupted growth before the COVID-19 pandemic hit in 2020"
30 years of lower and lower interest rates, we have recently run out of interest rates to cut so I wonder where the "growth" will come from for the future? Money printing?
A scheme to ensure depositors and savers have time and spending power stolen from them through inflation while ensuring home owners and speculators take no risk or suffer no losses. Thanks Adrian.
https://www.interest.co.nz/banking/1...ding-programme
I wonder if this has played any part in the current house price inflation? hmm... the businesses are creaming it but who has provided the demand for new housing. Monetary policy and immigration perhaps?? I am not smart enough to know.
https://www.interest.co.nz/property/...esnt-let-it-or
Confirmation bias at work. Article about passing the buck and the lack of accountability of our current "leaders". Leadership is something Adrian has talked about at length but shows absolutely no ability at it. A weak spinless jellyfish is not the ideal person to be RB Governor.
A government of the homeowners, by the homeowners, for the homeowners. Interesting neither Labour or National want to address the real cause of inflation. We know why, it adversely affects their voter base. Chloe Swarbrick was the only MP who wanted a review but was blocked by labour. Possibly as one of the only MPs without a house (David Seymour does not count). I would hope it is not envy politics or tall poppy syndrome, for me it is about giving everyone a fair go. When did it become the RBNZs role to protect house prices? Their role is price and monetary stability independent of govt as politicians could not be trusted with this. The RBNZ has failed miserably but is not held accountable by politicians from either major party.
Does it matter if the people at the RBNZ worry more about their house prices than their role at the central bank if 60% of the country are happy with the result?
Out of idle curiosity, how much would New Zealand house prices have to fall to conjure up a depression?
Definitely 100% would do it but not sure about falls less than 60%.
For me personally a fall of about 10-20% would cause me to be depressed (most of my perceived wealth is in my house). Not sure about the economy as a whole. Probably a million other things to consider to be able to answer that question.
Do any historians on here know of anything that has preceded previous depressions such as loose monetary policy, excess debt, excess speculation? Falling house prices may be a symptom but maybe not the cause of a depression. Tighter monetary conditions including higher interest rates and less liquidity will depress asset prices, but I am sure Adrian will have the "courage to act" if needs be.
Housing stock would still provide the same amount of shelter for the same number of people so the economy would not produce any less goods or services at a lower house price, but the wealth effect might mean less consumption and less security for business loans as banks tend to want houses as security so less economic activity. This might help alleviate the climate crisis, the labour crisis, the supply chain crisis and the housing crisis all at once?
https://www.interest.co.nz/property/...come-multiples
Looking at that chart house prices could fall 50% and still be more expensive than historical averages.
I would hazard a guess that any fall of more than 10% will depress most home owners and will result in politicians being told to "do something"
Disclaimer I am very risk averse so have very little debt. Higher interest rates and tighter monetary conditions do not worry me as much as some, although a drop off in house construction will hurt a lot of people and my business would take a hit.
You have a lot of idle curiosity, it might be better served by not listening to a moron like myself, but I guess I choose to post despite my lack of understanding and you can choose whether or not to read it.
Today reminds me a bit of 1974 to 1977.
Huge housing boom in 1973/74.The 73/75 third labour govt was spendthrift. Terms of trade dropped(this hasn't happened yet today!). High oil prices. Trade deficit $1b(1975),today $10b(half in terms of gdp today)
You could not sell a house in '76(I'm exaggerating) Labour booted out in' 75,big reversal of landslide in '72.
Cheap houses till the 80's.Then a new boom('82 to 87)
20% fall would still see our house back at levels I'd never imagined back in 2016 ... prob is for those that purchased or leveraged in recent years paying these bubble prices ... seeing a 20% fall would be pretty deflating esp. if they only had 10-20% equity in place pre fall .. then next refinance bank will be asking for a top up in equity or telling the lender to go elsewhere ..
Markets are forward looking
"Central banks in several countries will be forced to reverse course on tightening interest rates as their economies either go into recession, or teeter on the edge of it, independent global economics researcher Capital Economics says."
https://www.interest.co.nz/personal-...y+26+July+2022
Our Adrian not the only one to get it wrong .... even though Grant has a lot to answer for
https://www.ft.com/content/7dfed876-...8-088f20a4e550
and even more hindsight
HOW CENTRAL BANK MISTAKES AFTER 2019 LED TO INFLATION
https://www.nzinitiative.org.nz/repo...-to-inflation/
Coming from one who was probably one of the least effective Governers we've seen
Had trouble with the link as the FT wanted me to pay a sub first. Googled it and got through OK. Is he arguing central banks only dropped rates and loosened monetary policy so as not to go below their inflation target? I don't remember reading any articles about inflation being too low or dropping significantly below 1%. Imagine how terrible the world be if the RBNZ was 3.9% below its bottom target (-2.9%) instead of 3.9% above its top target of 3% (6.9%). Prices falling, people starving to death as apparently they would stop buying anything in a deflationary environment as they would be waiting for prices to fall further. Economic activity decreasing, businesses closing, unemployment rising, end of the world?
Businesses exported manufacturing jobs to China for the cheap labour and CPI prices stayed low thanks to cheap asian labour while asset prices ripped.
CBs have been goosing asset prices since 2008 when they went to war on savers and investors for the benefit of borrowers and speculators.
https://www.zerohedge.com/markets/wh...es-are-bad-you
This guy points out they are still doing it via negative real rates.
I think we have been complaining about CB policy a long time before covid as their actions spurred a massive inflation in asset prices and exacerbated wealth inequality and cut out young people from the property market long before Covid arrived.
Wheeler alludes to mistakes he made in 2014 by raising interest rates. Is that a no no for central bankers or did he cut off the recovery from 2008/09? Winner has criticised him. What did he do wrong?
An article yesterday in the herald did remind us all at the time no one knew what the pandemic or pandemic response might do and it is easy to criticise in hindsight.
So Luxon has also jumped on Graeme Wheelers report and wants a review of stimulus measures.
Good to see the mainstream finally paying some attention to the RBNZ missteps.
Is this Orr sort of saying sorry
https://mailchi.mp/rbnz.govt.nz/mone...1?e=e08aa757c0
Not really an apology but does he have to say sorry? If you are a home owner his reckless actions before during and after covid have benefited you, greatly, at least compared to the people who have no assets. Inflation is getting rid of debt while pushing up asset prices while we all suffer a little as CPI prices rise, it is only the poor who are really paying a proportionally higher price.
The angst is only coming now that Adrian is pretending to fight inflation with higher nominal interest rates and that has stalled asset price rises. Those expressing concern now were pretty silent earlier when it was clear what has been happening since the 1990s.
History says they will destroy the currency before they let asset prices take a significant hit, because that hits wealthy people (voters) proportionally harder.
I wonder if Adrian is learning from Mr Erdogan
https://www.abc.net.au/news/2022-07-...tion/101248214
It starts by saying the policy is unusual, which is not true, it is just more extreme than other central banks. Keep interest rates below inflation to steal from savers and get rid of debt.
A huge success by the looks of it imagine borrowing at 14% while inflation is running at 80%. All the people in the article were poor people. It would be interesting to see what the homeowners in Turkey think of it.
I had heard that in Zimbabwe things weren't half as bad if you had a house or some assets.
Our inflation fighting central bank hard at it.
Sounds like they don't want to stop FLP in case banks forget it is available next time it is needed. That makes sense.
https://www.interest.co.nz/banking/1...nt-ensure-tool
Good time to be in banking, record profits. I wonder why? Good prudent management? or RBNZ gaurantee? back stopped by depositors if needs be through the OBR.
https://www.rnz.co.nz/news/business/...shocks-to-come
Bernard Hickey on the case.
https://www.interest.co.nz/borrowing...nquiry-reserve
by choosing to use the wealth effect to rescue the economy, the Reserve Bank was making both a monetary policy decision and a wealth redistribution decision.
With Robertson's approval. Next time Jacinda Ardern or Labour says they are concerned about poverty, it might pay to point out their words mean nothing as the reality of their actions is the complete opposite of giving a s*it about poor people. No better than National both parties pander to the average selfish self centred home owning middle class. Neither will get my vote.
Although not RBNZ related Chloe Swarbrick highlighting the hypocrisy of Hipkins and Robertson. Obviously they are smart but will fight for whatever is best for them at the time. Like most people myself included but you would hope leaders would put the country as a whole ahead of their own house prices and financial security.
https://www.nzherald.co.nz/nz/politi...BEZ7A4OXBSP4E/
I think Arthur Grimes suggested a long time ago that the inflation target should be lowered, now he sees along with everyone else the "path of least resistance(regret)" RBNZ governor and labour making a mistake, admittedly in hindsight but we should look at it none the less considering the damage it has done to younger generations.
https://www.msn.com/en-nz/news/natio...b43f31fe357253
I appreciate the average self-centred homeowner does not see it as a problem.
Another RBNZ critic piling on.
I assume he would know what he is talking about. I agree QE seems misguided but what is wrong with requiring Australian owned banks keeping some capital in NZ. Complaints about Adrian embracing Maoritanga come across as racist even if it only highlights that Adrian is paid to worry about price stability yet he has failed miserably, while busy with other stuff.
https://www.stuff.co.nz/business/129...der-adrian-orr
Arthur Grimes and Graeme Wheeler also criticised the RBNZ but using your logic anyone who is not currently at the RBNZ has no clue.
Admittedly economics is an arts subject rather than a science but easy money and lower interest rates have been going for 30 years so not much change over the years I would have thought.
Adrian was just a bit more weak than previous governors about maintaining price stability in the (possible) face of declining asset prices and also running out of road to kick the can with the OCR near zero he turned to printing, as noted on the RBNZ website.
As the Monetary Policy Committee's (MPC) ability to lower the OCR became constrained during the COVID-19 crisis, we expanded our monetary policy toolkit. The MPC implemented a Large-scale Asset Purchases (LSAP) programme and a Funding for Lending Programme (FLP).
But I expect there will be some further unconventional policies to boost asset prices if they fall much further. They will have learnt their lesson and future money printing will only go into the banks to boost asset prices while keeping the CPI near 3%. No more helicopter money (govt bond purchases) as this has obviously gone to consumption and CPI inflation rather than assets.
I know nothing but can confidently predict lower interest rates (possibly negative (insane)) and more money printing (sorry, expanded monetary policy toolkit) if house prices fall 20%.
Monpol generally has a few unintended consequences
I may have it wrong but the govt issued bonds which the RBNZ printed up some money and bought, the govt then drops the proceeds of the bond issue into bank accounts all across NZ.
I am guessing you are retired so were not receiving the wages subsidies, resurgence support payments and the other renamed resurgence support payments.
I can't find anything on the total cost of the resurgence support payments but this was the wage subsidy cost after the first lockdown and does not include the wage subsidies from the second lockdown in August 2021.
https://www.rnz.co.nz/news/political...subsidy-scheme
Does anyone have any information on the total cost of these support packages?
https://www.treasury.govt.nz/publica...on-expenditure
I can't find anything with google but the treasury link might break down somewhere how the $61.6billion was spent, a good chunk would have been wages subsidies and various support payments.
If we said half $30billion or $6,000 for every man woman and child in NZ ($30bill/5 mill). That is a lot of moolah dropping into bank accounts. If that is not helicopter money I don't know what is.
Admittedly it offset the money people would have normally "earnt" by going to work and doing something productive.
The govt bonds are a debt that future generations will have to repay, although with Adrian on the case inflation should take care of it provided he can keep suppressing interest rates while inflation runs rampant. Too bad if you are an investor wanting a return on investment. It's a funny old world we live in thanks to central bank economists.
I am not even sure why the RBNZ is on-selling the bonds and inflicting large losses on the bonds to the nz taxpayer. If it is just funny money, use the delete key instead of adding zeros, it is just as easy.
https://www.rbnz.govt.nz/hub/domesti...vernment-bonds
I mean I must be missing something. The RBNZ prints up some money buys the govt bonds, raises interest rates and sells those bonds at a loss to I assume banks or pension funds or private institutions. The govt has guaranteed any losses on the bonds so somehow the taxpayer ends up paying for this. I am obviously not smart as I cannot understand why they are doing it this way. Maybe someone on here can enlighten me. Why can't they hold the bonds to maturity and then it is a money go round with the NZ govt.
I have a vague memory of an article posted on this thread about the massive losses being inflicted by the RBNZ's actions I will have to look back when I have some time.
I wonder if Adrian and his monetary policy committee share this ladies view.
https://www.zerohedge.com/political/...ir-ivory-tower
A slip of the tongue I imagine. They might all feel the same way but unusual for someone to say it out loud. Their policies have been great for people who are well off and look set to continue.
Article in the herald this morning on the "nation of debt" page it had a small article in the bottom corner about the cost of printing money.
https://www.nzherald.co.nz/business/...GVCYVSZ5MEGTU/
It discussed how the RBNZ and govt are joined at the hip. I had thought that the RBNZ was independent of govt but this is not correct. At a quick glance of the Reserve Bank Act I can see nowhere that it mentions independence but just confirms it is a tool of the minister of finance. Not sure why it was set up as a separate body from govt now.
The article pointed out that trading banks were middle men with the RBNZ printing the money and buying the govt bonds off the banks rather than straight off the govt (probably because this looks like money printing). I guess this creates the illusion that the govt is not just printing itself up some cash and the banks probably make a wee margin on the trades so all good.
Other than the trading banks making something out of the deals it is still the RBNZ creating $50-$60billion out of thin air and cheques getting sent to the people that met the criteria or applied (helicopter money).
the Reserve Bank Act does have as its main purpose this broad objective.
3Purposes
The purposes of this Act are to—
(a)
provide for the continuation of the Reserve Bank of New Zealand; and
(b)
promote the prosperity and well-being of New Zealanders and contribute to a sustainable and productive economy.
I would question whether low interest rates and money printing are sustainable as the trend has only been one way for 30 years and getting more extreme each time, but the article did point out the RBNZ now has to sell the govt bonds it purchased so that it can buy them again in the next crisis (more record bank profits no doubt). I assume this is an optics thing, i.e. can't have the govt money printer expanding its balance sheet too quickly. A slight of hand or obfuscation to make sure people don't realise what is happening as the portion of the population currently getting squeezed by inflation could get pretty angry if they appreciated it was their own govt screwing them over. Not only denying them a chance to own a home but making life real hard with inflation so that the people with the collateral and debt (already wealthy people) can get ahead or don't suffer loss, as this will create the wealth effect and the bottom feeders will benefit from the trickle down economy.
At any point if anyone is actually reading this, feel free to point out where my way of thinking or understanding is wrong I would appreciate the help.
I assume that I come across as so ignorant and stupid that it is not worth trying to set me straight.
You are correct inflation from money printing from the likes of CB , GOVTs ,banks is just like another tax on the working classes and works to further divide those with and without .... and of course they are all controlled by the likes of the WEF/WHO/UN groups that pushed for lockdowns (caused much of the issues with supplies=inflation) pushed easy money policy ultra low rates ...
.. then just when the money flows and those trying to secure their first home (shelter) during the good times.. the rug gets pulled and along with all the basics of modern life costs to live going up far higher than wages .
.. they get the CB to hikes rates up the fastest in recent history put the boot in .... and soon many FHB(+first time investors) will hit the wall and be forced by the same banks to sell at reduced rates .
..the very RICH of course will pick up the assets at reduced rates ad sell them back on the next easy money cycle ... of course sometimes turn into a rental ..or just keep empty ...like I see all around where I live ...
Probably not the right thread, but an economist stating the bleeding obvious about education and investing in the future of NZ.
https://www.msn.com/en-nz/news/natio...740a27ab7ebde4
Something neither national or labour are interested in for some reason.
My suspicions of why this is were raised by this opinion piece in the herald. According to Matthew Hooton roughly 150,000 "low information voters" are the focus of the major parties. If I look at the statements both John Key and Jacinda Ardern have said about national superannuation and capital gains tax these voters are most likely older, possibly "boomers". If we said the voting population was 3mill then 5% of the voting population are the focus of the major parties policy initiatives. 5% who are greedy selfish a*seholes who will swing to whoever promises "them" the most are what drives the two main parties.
Sad it is selfish older people driving policy when it is the young people who will create the future for our nation.
https://www.nzherald.co.nz/business/...P35LA4OP3N76M/
What is even more sad is that both major parties are pandering to these people at the expense of the young people and the future of NZ.
It is an erroneous understanding. The net positive stimulus was a small part to households, but the money was never paid by govt into people's bank accounts - it was paid to businesses. This allowed them to keep paying staff their normal rates in most cases, but the largest benefit was the ongoing subsidy to business profits. It was in no way shape or form "helicopter money" in the commonly understood way.
So yes, a renter got to survive and pay the bills. But unviable businesses got propped up for a year with a chance for the owners to squirrely away profits before folding. Foreign residents incorporated sole trader companies, claimed the handouts and then buggered off back to India. A homeowner got their mortgage paid via their "guaranteed income", but then the lower interest rates probably boosted their net worth by 200k+, and the more you borrowed the better off you were. Rates were so low that professionals were using their mortgage as an arbitrage to invest in higher yielding assets, that in turn increased in value due to lower interest rates. This was the inequality piece.
To me the ludicrous part was thinking that lower interest rates were a solution to the govt locking us up inside. As if access to cheaper debt was the constraint. The whole fiscal response was a rort 100x worse than the Cost of Living Payment going to foreigners and dead people. But every abysmal decision from that era gets swept under the carpet.
Real helicopter money would be keeping interest rates at their normal rate (say 3%) and giving everyone the same dollar quantity of time-limited vouchers to spend on goods or services. Existing wealthy people would see little benefit but the people who really needed it, would.
No disrespect from me Aaron as you do make some good observations but you need to drop the mindset that the world owes you a living. How do you think most successful previous generations succeeded. I would suggest they rolled their sleeves up and did whatever it took.
On reflection, my precious comment is a touch simplistic and yes Aaron you and my children's generation are facing a serious headwind.
I have suggested to you previously your generation has been shafted, I agree. But dont let that stop you.
Totally agree, moaning and doing nothing to improve your lot is not desirable. I would suggest they put more thought into who they vote for. I might have suggested they cut back spending and try to save a deposit as well but the actions of Adrian Orr make trying to save money for a deposit a futile endeavour.
I thought I was doing better narrowing it down to only 150,000 selfish old a*seholes. I imagine there are a lot of people old and young who vote labour or national because that is what they have always done.
It is only the people whoring themselves out to the highest bidder that drive the unfair policies. You can't really blame the politicians as they need to do whatever it takes to get into power.
Maybe you are right. By my calculations a sole trader could get $12,916 in wages subsidies and $28,400 in various resurgence support payments. The resurgence support payments admittedly were to cover the businesses fixed costs such as rent and capital investment to keep them going. But the RBNZ created at least $53 billion nz dollars to purchase govt bonds, to keep interest rates down apparently but I imagine govt was issuing a lot of bonds at the time, having them pass through banks I imagine was an optics thing as at $53bill they could have just posted us all a cheque for $10,600 each ($53bill/5mill).
All that new money went into business and personal bank accounts. Some may have even indirectly landed in our accounts through company dividends that may not have happened without the new money. It is still stimulus.
https://www.rbnz.govt.nz/monetary-po...hase-programme
per the RBNZ
The aim of the programme was to lower borrowing costs to households and businesses by injecting money into the economy through the purchase of various government bonds.
When we bought assets, this increased their price and so reduced their yield. That meant the interest rate, in this case on government bonds, fell. This has the effect of ‘lowering the tide’ on other interest rates in the economy, particularly longer-term interest rates of two years or more. It also reduced the cost of borrowing for households and businesses.
Secondly, our asset purchases encouraged the sellers of the government bonds to use the money they received from us to buy other financial assets like company shares, bonds or new lending – helping to inject money into the economy.
So the new money suppressed interest rates on govt bonds and the govt used the money from the bonds to inject it straight into the economy through wages subsidies and RSP payments, banks and other institutions also had money to push up other asset prices. I am not convinced this is not helicopter money other than it not dropping from the sky it went straight into bank accounts across the nation. A shame russia and supply chain problems caused the bad inflation and cost of living crisis around the same time. Unfortunate timing I guess.
A bit of info on the Resurgence support payments.
Just under $23billion if I am correct and add up the totals of each payment.
https://www.ird.govt.nz/about-us/tax...ent-statistics
Adrian trying to help Maori get ahead.
https://www.nzherald.co.nz/business/...3ZD4ZI3O5YR7I/
Here is an idea stop ****ting on poor people with your crazy monetary policies and constantly driving up asset prices.
Maori are disproportionately amongst the poorest in our nation and Adrian has done more to make life harder for them than anyone.
I thought I posted something about record bank profits last year but can't find it. Looks like this year is even better for ASB.
https://www.msn.com/en-nz/news/natio...18bbd207e6a810
I wonder how much they made buying govt bonds off treasury and selling them to the RBNZ? and now buying them back again at a profit. Does anyone on here know how to analyse the bank financial statements to work this out? Would that information even be available as it might outrage a few taxpayers if they understood what was going on.
Nice to see a group of people benefiting from monetary policy. Although I haven't read any stories about bankers or bank shareholders struggling with the cost of living crisis.
Home owners doing OK as well according to ASB CEO Vittoria Shortt. Nice to hear, I always worry about the owners of assets and how they are coping in these difficult times. So much uncertainty as to when interest rates will drop again.
Crazy Adrian and his monetary policies helping out the people more like him while paying lip service to helping Maori and the poor.
Actions speak louder than words, but I guess if you don't support the wealthy there will be nothing to trickle down eh Adrian.
In the interests of fair debate Josie Pagani thinks the RBNZ had a choice between inflation and economic collapse.
https://www.stuff.co.nz/opinion/1295...nomic-collapse
I don't know if the predicted 10% fall in house prices could be described as "economic collapse" but the argument for continuing with lower interest rates and moah money always seems to be because to not do it means the end of the world and this would be a persuasive argument if it were true.
Funding For Lending (FLP) still ongoing. ASB will use it all but makes no money as they pass it on at I assume the rates the RBNZ give them.
https://www.interest.co.nz/banking/1...s-dollars-rbnz
To quote the article.
The Reserve Bank has come under criticism for keeping the FLP running for so long given it's now in an OCR tightening, or increasing cycle, and yet the FLP - a stimulatory tool - remains in place. Interest.co.nz asked Shortt if the FLP public money was actually needed by banks, or remains needed.
"To answer that question I would go back to do we think that we need to support customers with climate transition? Do we think that we need infrastructure in regions? And do we think we need to try and solve the supply of housing in New Zealand? And my answer to those three things is yes."
And ASB plans to tap into more FLP funding. It has access to $5.7 billion in total and expects to use it all.
More money for more houses to house more people consuming more stuff and building the infrastructure to support the extra people all while helping fight man made climate change. Easy money and forward progressive thinkers like Ms Shortt, where is all the negativity coming from in this day and age.
Maybe not battling inflation that hard but what the hell, better than economic collapse.