Breakfast briefing: All good now but huge unavoidable changes coming

Economy / news

Markets see little risk of weak US labour market data; US & Canada exports rise; freight rates ease lower; world faces historic demographic change; UST 10yr 4.35%; gold oil lower; NZ$1 = 60.4 USc; TWI-5 = 69.4

5th Apr 24, 7:20am by David Chaston

Here's our summary of key economic events overnight that affect New Zealand, with news markets don't seem to be worrying about coming 'bad news' ahead of tomorrow's US March labour markets report.

US initial jobless claims recorded a minor +2000 rise last week from the week before taking the total to 1.94 mln. But that was a big -74,000 decrease as more benefits expired than new ones were added. A year ago there was almost the same number of initial claims as last week.

Updated American job cut data remains incredibly low even if it is rising. US-based employers announced plans to cut 90,300 jobs in March, the most since January 2023, compared to 84,600 in February.

Tomorrow we get the March non-farm payrolls data and markets expect employer payroll jobs growth to rise +200,000. You will recall they rose +275,000 in February.

Meanwhile US exports of both goods and services were +2.1% higher in February than in January. Imports were +2.2% higher on the same basis so the overall trade balance grew fractionally in the month, although year-to-date, the goods and services deficit decreased -2.8% and remains about -2.7% of US GDP. (New Zealand's current account deficit is -6.9% of GDP.)

Canada also reported trade data for February but only for goods trade and their exports rose +5.8% to a new all-time high. Imports rose +4.6%, so their merchandise trade surplus rose to +C$1.4 bln in February.

It is a public holiday in China, Ching Ming Festival, although Hong Kong financial markets will reopen today.

Global container freight rates continued their retreat from their late January peak. They are now down -28% since then, down -3% in the past week alone. But that leaves them still +65% higher than year-ago levels. The slowness of the recent easing points out that the twin problems in both the Panama Canal (drought) and Suez Canal (security) are not going away; the decreases are because the global logistics system is adapting. Bulk cargo rates eased -7% in the past week, and are in fact now back to long-run average levels.

Steel and iron ore prices are back falling, both near their lowest in the past year, probably an early signal markets don't believe Chinese demand will recover any time soon.

And speaking of commodities, a new report says the world's population is shifting in very significant ways in an historical turning point. Also, it is not simply a matter of a static or a declining world population – the nature of that population will also change. It will be much older. The report estimates there will be twice as many people over 80 as under five – nearly 900 million over-80s worldwide by 2100. A period of unprecedented demographic and economic adaption awaits our grandchildren. There seems little doubt that small countries will have many more options than large ones, but that the pressures from 'outside' will be enormous.

And speaking of natural stresses, keep an eye on Sydney weather this weekend. They seem to be facing a rather extreme meeting of two wild and wet weather fronts.

The UST 10yr yield is now at 4.35% and little-changed from this time yesterday. The key 2-10 yield curve inversion is also little-changed at -34 bps. And their 1-5 curve inversion is still at -70 bps. Their 3 mth-10yr curve inversion is now at -102 bps and virtually unchanged as well. The Australian 10 year bond yield is now at 4.19% and up +3 bps. The China 10 year bond rate is holding at just under 2.30%. The NZ Government 10 year bond rate is now at 4.72% and up +2 bps.

Wall Street has opened its Thursday session up +0.2% although that is a retreat from a much bigger rise earlier. The reversal was probably due to this interview. European markets were generally in positive territory with Frankfurt up +0.2%, Paris unchanged, and London was up +0.5%. Tokyo ended its Thursday session up +0.8%. Hong Kong and Shanghai were closed for their public holiday. The ASX200 rose +0.5% but the NZX50 ended another -0.5% lower yesterday.

The price of gold will start today softer by -US$5 from this time yesterday at US$2288/oz. But in between it hit a new all-time high of US$2305/oz.

Oil prices have fallen -US$1 to just under US$84.50/bbl in the US while the international Brent price is now up at just under US$89/bbl.

The Kiwi dollar starts today at just on 60.4 USc and +¼c firmer than this time yesterday. Against the Aussie we are softer at 91.3 AUc. Against the euro we are firmer at 55.6 euro cents. That all means our TWI-5 starts today just on 69.4 and up +20 bps from this time yesterday.

The bitcoin price starts today firmer at US$68,048 and up +2.7% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.3%.

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188 Comments

by Pa1nter | 5th Apr 24, 7:30am 1712255421

The report estimates there will be twice as many people over 80 as under five – nearly 900 million over-80s worldwide by 2100.

The "there's too many people" brigade will be happy their problem went away without doing much more than complain about it.

It's a shame funding education isn't as expensive as keeping humans functional 30 years past their state mandated expiry.

by goldni | 5th Apr 24, 8:37am 1712259443

https://youtu.be/2LyzBoHo5EI?si=1dQodeurDxDf_9Lg

by singautim | 5th Apr 24, 8:51am 1712260285

Even when poverty is at its worst a child under five is unproductive. There are people over 80 who are full of life and working productively both physically and mentally.

State mandated expiry in most developed countries is about 67 so add 30 years and you have 97. Do we need to worry about the cost of caring for the fraction of the population who are over 97? At my U3A the over 90s are slim and mobile; I worry more about the overweight younger Kiwis - when they reach old age their bodies are much more likely to collapse.

by Pa1nter | 5th Apr 24, 9:07am 1712261251

It's hard to escape the reality that our bodies slow down and fall apart. And there's a fairly observable trend between aging and a falloff in economic output.

Historically this was less of an issue, because humans lived in groups where each age supported each other, and everyone had a role. Now we have decompartmentalised that, which is super expensive, and dependent on a steady stream of new humans to support older ones.

by Frank. | 5th Apr 24, 9:20am 1712262048

No one is listening to me. Said it before, will say it again. Easy fix for most problems the world has. Compulsory euthanasia at 70.

by Baywatch | 5th Apr 24, 9:28am 1712262519

Well National have ended suicides in NZ ..time to close that department

Mental Health Minister Matt Doocey scrambled a late evening press release insisting the Suicide Prevention Office was not a victim of the Government’s cost cutting driving, as news of public service cuts continued on Thursday.

Doocey’s assurance was at odds with the Public Service Association, which said the office would close after the Ministry of Health confirmed 134 job losses.

by kiwikidsnz | 5th Apr 24, 9:38am 1712263136

The PSA...really

by mfd | 5th Apr 24, 9:45am 1712263556

I am looking forward to more displays of Ministerial cowardice over the next few weeks and months. Pushing the responsibility to make cuts down to the Ministries and not taking responsibility for the consequences. I'd much prefer them to front up and be honest "we can't afford to run that program/provide that service any more" rather than pretending everything will continue as is, only cheaper.

Of course that would require fronting up to the affected members of the public and who wants that?

by murray86 | 5th Apr 24, 9:34am 1712262863

you can be the first in the line.

by dumbthoughts | 5th Apr 24, 11:11am 1712268691

Yes, it's interesting how the forced depopulation proponents/Logan's Run enthusiasts never seem to volunteer to "eat their own dog food".

by mfd | 5th Apr 24, 12:09pm 1712272174

I've never seen anyone propose a 'kill everyone at 70 except for me' policy - I think it's implied that the person proposing it is included the same as everyone else. Think how easy retirement planning becomes when you know exactly the maximum number of years you can live.

Personally I'd pitch it a bit older, but it's an idea with massive practical benefits despite enormous moral implications.

by OldSkoolEconomics | 5th Apr 24, 1:25pm 1712276754

Excellent suggestion.

Maybe it would be better pitched if it only affected those that had run out of money to pay bills? I reckon kiwisaver contributions would rocket pretty soon! 😍

by peter.may | 5th Apr 24, 12:49pm 1712274584

Set an example Frank - start with yourself!

by meh | 5th Apr 24, 5:13pm 1712290432

Why wait till 70? Why don't you start now?

by Rumpole | 5th Apr 24, 10:31am 1712266303

80 and still working - part time - yes my output is lower but experience and knowledge is still valued and is still higher than the bludgers who can work but wont and waste my taxes - that includes some residents of the Beehive.

by peter.may | 5th Apr 24, 12:54pm 1712274853

I will be 82 in a few weeks. Just paid a $62,000.00 tax bill. Seems as tho I am still contributing!

by Palmtree08 | 5th Apr 24, 2:21pm 1712280117

Unfortunately that's not how the system works. Your 62000 has been digitally shredded. Taxation is an inflation control measure. Government spending magically appears with a stroke on a computer keyboard. Same way mortgage money magically appears and principle payments disappear.

by Rumpole | 5th Apr 24, 2:45pm 1712281511

Good on you seems us Boomers are not as bad as soom Millenials think - oops mistake that Millenials think.

by Final Account | 5th Apr 24, 4:16pm 1712286971

About time.

by Gracey | 5th Apr 24, 5:56pm 1712292988

Thanks for the anecdotal account. But it's not about you, it's about all 80 year olds - and you are not representative. It's important to acknowledge the position you find yourself in, and that it is not the norm. And where you find yourself isn't the norm for an 80 year old.

by Gracey | 5th Apr 24, 6:00pm 1712293223

Knowledge and experience doesn't happen at 82, it happens much sooner. You are unusual for your age group and it insults the readers to suggest otherwise. Congrats on making it to 82 and being able to contribute so much. The rest of your comment suggests a lack of flexible thinking and being quite judgemental about others so the initial part of your statement loses impact. As a mother of a 17 year old, it sounds like you are elderly and set in your ways. Hopefully you are not.

by murray86 | 5th Apr 24, 9:39am 1712263144

What's more important is "why". But I suggest it bodes well for the younger generations. The vast majority of those over 80's will be falling off their perches fairly quickly (or Frank (above calling for euthanasia)) will be pushing them off! #sarc) so for some areas population pressures on available resources will reduce. the problems will be the human responses to it.

by Rumpole | 5th Apr 24, 2:47pm 1712281653

Murray - you are formally invited to my still driving my tractor at 100 party. I expect a significant number of fellow centenarians on their tractors!!

by Foxglove. | 5th Apr 24, 7:39am 1712255971

NZ’s current account deficit -6.9% of GDP. About this time last year recall the IMF had NZ at equivalent -8.6%, as the worst figure for the 40 odd nations it was bothering to record. Long road ahead still, uphill & head wind.

by Pa1nter | 5th Apr 24, 7:43am 1712256227

Almost implies our exports are too dominated by needing to move people around.

by Baywatch | 5th Apr 24, 7:47am 1712256447

So glad we are now on the right track...

by Advisor | 5th Apr 24, 9:06am 1712261212

Read this op-ed before you pop open the champagne: Link

the big mystery is who has been funding the $52 billion that Statistics New Zealand has had to attribute to “errors and omissions”. This discrepancy is even more pronounced in the past two years, with $36 billion of the $62 billion current account deficit seemingly funded by mysterious sources.

Ideally, errors and omissions should be small and average out at zero over such a long period. Australia’s corresponding statistics for “errors and omissions” are much closer to this ideal.

“Our current standard of living might not be as robust as we might think."

Scary stuff

by rastus1 | 5th Apr 24, 9:12am 1712261566

Surely there is a story in that? Anyone elaborate?

by ibas | 5th Apr 24, 9:48am 1712263715

The New Zealand Initiative

Dr Bryce Wilkinson

There is a downloadable pdf

https://www.nzinitiative.org.nz/reports-and-media/reports/the-mystery-o…

by Grattaway | 5th Apr 24, 10:39am 1712266796

The question has not yet really been answered but it does raise issues as to the usefulness/reliability of the statistic -and you would think this will get harder to track as it gets easier to move money offshore via non traditional banking systems. I have often wondered how they know how much I invest offshore or transfer to buy goods and services given I often use the likes of Wise to do so - not that my transactions will be moving the dial much but millions of transactions will

by Eschaton | 5th Apr 24, 7:43am 1712256233

Unlike most other developed economies New Zealand does not tax capital gains. It also not does have any wealth taxes, inheritance taxes, gift duties or stamp duties.

by NZGecko | 5th Apr 24, 8:07am 1712257643

Many of these NEW TAXES will all be here within 5 years. Cost pressures will dictate so.

My god, the Landlording class, will wail and gnash their teeth.....as their birthright to toady taxfree riches is just deflated a little....

by kiwikidsnz | 5th Apr 24, 9:56am 1712264163

"What do you call it when someone steals someone else's money secretly? Theft. What do you call it when someone takes someone else's money openly by force? Robbery. What do you call it when a politician takes someone else's money in taxes and gives it to someone who is more likely to vote for him? Social Justice."

Thomas Sowell

by donny11 | 5th Apr 24, 10:07am 1712264842

Do you drive a car on the road? What pays for the road?

by Pragmatist | 5th Apr 24, 12:11pm 1712272304

It should be petrol tax and RUCs, but petrol tax is currently way too low (probably need at least a 50% increase, and I suspect RUCs would also have to rise if we wanted drivers to fully pay for roading.

by ChrisOfNoFame | 5th Apr 24, 12:39pm 1712273947

What about the vehicles that actually do the most damage (i.e. heavy vehicles) pay the most?

Ooops. That'd be NACTF donors.

by Pragmatist | 5th Apr 24, 12:50pm 1712274652

They already do. https://www.transport.govt.nz/assets/RUC-CAM.pdf 

Heavy vehicles are charged for road surface damage by the forth power rule. Most of the cost of roads is adding another lane for more light vehicles, and all the traffic control, median barriers and all the other crap that is due to the number of vehicles, and most of those vehicles are one occupant in a <2 ton Car/SUV/Ute.

by agnostium | 5th Apr 24, 9:10pm 1712304603

Local roads are funded by rates, they can get a central government contribution of 50% but not always.

by the Joneses | 5th Apr 24, 10:10am 1712265030

Have you ever thought about what society would be like without taxes and government? Serious question.

by singautim | 5th Apr 24, 11:20pm 1712312402

Somalia?

by Rumpole | 5th Apr 24, 5:52pm 1712292742

And those new taxes will solve the population problem as net outward migration takes hold - big problem is the migrants will most likely be the more productive in society and we can change the countries name to New Zimbabwe.

by Noncents | 5th Apr 24, 8:08am 1712257714

So the secret to economic prosperity in NZ is to tax housing?

Work all life and get taxed, use your post tax income to buy a house (at enormous cost and while paying enourmous amounts in interest) and whack on a nice fat stamp duty (Which has not stopped house prices in Oz).

Get old and pay tax on "wealth" because houses cost so much. UNable to sell because tax eats away at gains, and stamp duty makes downsizing more expensive.

Die, estate sells house and get taxed on the capital gains. Then taxed again on the inheritence they receive.

The issue is not the taxation. The issue is housing. Taxation makes it more expensive.

Congrats, we have now taxed the same persons post tax income 5 times. But at least corps, charities, and offshore interests aren't taxed.

by Pa1nter | 5th Apr 24, 8:13am 1712258030

There's a case to be made for re-distributing wealth vs taxation.

There's virtually no case for taxes making houses more affordable.

by murray86 | 5th Apr 24, 9:44am 1712263499

I struggle with the 're-distribution' of wealth concept. I cannot recall any example in history where that concept has been even remotely successful. Indeed there is the possible perspective that tax in some respects but especially a 'wealth' tax is simply one based on jealousy.

I would suggest that a better and more equitable approach would be regulation to ensure fair and equitable access across the board. "Market rates" is just a BS excuse to keep things unaffordable by greedy bastards who decide what the 'market rate' is themselves.

by Advisor | 5th Apr 24, 9:55am 1712264156

I think the argument should be more around tax incentives, rather than wealth distribution.

In theory, a good accountant could help you avoid taxes on the capital value appreciation of your investment property. You obviously don't have that luxury when putting your savings into an investment fund.

Also, successive governments have been practically guaranteeing your gains from property by bringing in large numbers of migrants each year and restricting new housing supply with bad planning rules.

by mfd | 5th Apr 24, 11:07am 1712268423

What is it that makes you think a wealth tax is based on jealousy, but an income tax is not? Are we not just jealous of those with high incomes?

I'd say neither are based on jealousy, but I struggle to understand how you can think one is but not the other.

by kiwikidsnz | 5th Apr 24, 12:59pm 1712275147

Progressive income tax regimes are driven by envy. Proportional tax is fair.

by mfd | 5th Apr 24, 1:48pm 1712278104

Envy, or a recognition that a certain level of income is required simply to survive, justifying lower tax rates on low earners?

by refactornz | 5th Apr 24, 2:10pm 1712279444

Simplify it down to only 2 income tax rates then.

Low rate for income over $50K and even lower rate for income under $50K.

by interesting1234 | 5th Apr 24, 2:57pm 1712282222

Minimum wage, as of 1/4/2024, is now gross $48,152/annum yikes that crept up over the years.

by the Joneses | 5th Apr 24, 1:49pm 1712278175

With proportional tax, the richest contribute more so effectively pay more for their services. How is that 'fair'?

Are you just envious of my wealth?

by kiwikidsnz | 5th Apr 24, 2:26pm 1712280376

You forgot the /sarc

https://en.m.wikipedia.org/wiki/Proportional_tax

https://en.m.wikipedia.org/wiki/Progressive_tax 

by Pa1nter | 5th Apr 24, 11:54am 1712271251

One big problem we have is inherent to capitalism. Governments and most private citizens are getting poorer, and the bulk of wealth is filtering it's way to those that already have it.

This only seems to be a steamrolling process. In every stimulus, most money given to the less well off is spent, ultimately ending up in the hands of the Uber wealthy. In days gone by, the ultra rich were taxed well above 50%.

by earnedincome | 5th Apr 24, 2:15pm 1712279728

The solution to this sort of 'filtering up' has always been political and not economic (e.g. not simply doubling down on lasseiz faire policies).

It happened with Bismarck and the social contract, the labour movement, new deal, etc. In each case it was accepted by the wealthy that they had better give ground or risk losing much more than they otherwise would. An important factor was that operating under a capitalist system was not simply accepted as the natural order of things but a privilege that the ruling class enjoyed with the agreement of the wider population. This is essentially what the social contract is. The wealthy forget it at their peril.

by earnedincome | 5th Apr 24, 12:09pm 1712272175

I cannot recall any example in history where that concept has been even remotely successful.

Ah... but have you considered that taxation is by definition redistribution of wealth (not necessarily in the direction of rich to poor)? The question then becomes where are the examples of successful societies that didn't have taxes? If you can't find any then it should be safe to say that redistribution has existed in all successful societies.

by murray86 | 5th Apr 24, 1:29pm 1712276940

Not necessarily. The current models of taxation are based on the pre-gold standard concept of government having to tax to spend due to constrained amount of money in circulation. our government still spouts that model today.

But the vast majority of tax collected is paid by the middle and lower incomes. If the government were to tax the wealthy (what would that threshold be?) to fund it's spending then I probably would be less concerned. But to tax the wealthy to redistribute that wealth is a big step to far into socialist policies which history has proven not to work.

The wealthy on the other hand demonstrate through their attitudes that they don't believe they should contribute towards infrastructure, education health and so on, all of which they can be seen to benefit disproportionately from.

by ChrisOfNoFame | 5th Apr 24, 12:42pm 1712274127

"I struggle with the 're-distribution' of wealth concept. I cannot recall any example in history where that concept has been even remotely successful."

Say what?

Every country does this. And for 100s of years. It's just a question of degree. (And the most successful countries do it the most!)

by kiwikidsnz | 5th Apr 24, 1:01pm 1712275316

Not "100s of years" at all.

"Income tax was introduced in New Zealand by the Liberal Government in 1891.[5] The tax did not apply to individuals with income less than £300 per annum, which exempted most of the population, and the top rate was 5%."

https://en.m.wikipedia.org/wiki/Taxation_in_New_Zealand#:~:text=worldwi…;

by redheadonist | 5th Apr 24, 3:16pm 1712283385

Wealth Taxes have been around since at least Roman times.

by kiwikidsnz | 5th Apr 24, 3:33pm 1712284426

Not to redistribute to the poor

https://en.m.wikipedia.org/wiki/Taxation_in_ancient_Rome#:~:text=In%20a….

by agnostium | 5th Apr 24, 9:21pm 1712305303

Did you even read the link you posted, it literally describes the taxes that were levied and what they were used for including inheritance taxes (on the rich) to support veterans (the poor).

by Rumpole | 5th Apr 24, 6:02pm 1712293332

The lack of increased productivity in NZ is only partly restricted by Taxation, the big issues are over regaulation over compliance by over paid bureacrats whose waste of resouces compounds the problems by de motivating the productive who no longer see any point in being innovative or inventive so do just enough to maintain their lifestyle. The upcoming generations of the entitled will just makes matters worse and the downward spiral acceleration to a third world country. Im too old to worry but my children are already warned and advised to watch the signs and have an alternative destination well researched.

by Foxglove. | 5th Apr 24, 8:14am 1712258046

For a nation trying to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle. Way back, Churchill was onto it.

by KH | 5th Apr 24, 8:26am 1712258770

Time to realise that when the people can't afford stuff, the government can't afford it either.

Government spending is not free. It comes off the back of the people.

As a nation we need to get more productive, or we go without.

by Baywatch | 5th Apr 24, 8:31am 1712259072

Landlords go without??? madness...

by Pa1nter | 5th Apr 24, 8:43am 1712259836

Probably most of everyone.

It never gets old there's a cohort of people who can spend hours a day complaining no one's investing in productivity.

by Rumpole | 5th Apr 24, 6:04pm 1712293463

You hit t he nail on its head, unfortuantely it seems that on entering the Beehive MPs are fitted with wooden ears and a frontal lobotomy.

by ChrisOfNoFame | 5th Apr 24, 12:43pm 1712274222

"For a nation trying to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle."

It is comments like that which make it very, very clear economics should be a compulsory subject at NZ school!

by singautim | 5th Apr 24, 9:00am 1712260852

"wealth taxes, inheritance taxes, gift duties or stamp duties" - all of which are recipes for keeping accountants and lawyers employed and leaving NZ with a society of cheats triumphing over the honest. None of them can ever have a significant effect on govt income unlike PAYE and GST. The underlying idea is certainly good - helping to level the playing field - increase equality of opportunity, etc but these are the wrong means. Instead of adding new taxes there is a simpler solution that gets to the heart of the matter faster: increase taxes and redistribute as a universal generous child benefit.

by interesting1234 | 5th Apr 24, 10:21am 1712265665

Although this may incentivise, or more readily financially 'allow' more people to choose to have kids, it appears rooted in the mentality, like never-ending growth, that we need to increase the number of humans at an exponential rate to sustain the previous lot. This is not sustainable, but worked for the silent generation at least. We now need to reformulate societal systems to be able to manage a stable population without this assumption being the foundation, and still allow for the benefits of a first-world country. Make no mistake, things will be taken away from some in time by necessity as our current systems and accounts crumble, and not everyone will 'win' or 'benefit' from the required changes.

by Grattaway | 5th Apr 24, 10:58am 1712267885

Sure lets give everybody more money - even though history shows it wont level anything up at all. In NZ it wasnt about giving people money it was about providing opportunity - so really good free education and early childhood health (plunket, Gp's primary care, vaccinations) were the sort of things the govt would provide that would be available to everyone. You could argue that state housing was also part of this. You could take advantage of these services to ensure you could look after yourself and family.

The current thinking appears to be more like the govt will provide everything I need while I sit on the couch watching tik-toxic and becoming obese from eating junk food - and which is all somehow someone's else's responsibility/fault

by WhenwillitEnd | 5th Apr 24, 9:08am 1712261320

The brightline is pretty much a tax on capital gain. It is there and it does affect investment strategy. But that doesn't suit your narrative.

by earnedincome | 5th Apr 24, 9:13am 1712261606

Anyone aware of statistics on how many property sales result in application of a capital gains tax in practice?

by kiwikidsnz | 5th Apr 24, 9:47am 1712263659

"We don't know how lucky we are..."

by K.W. | 5th Apr 24, 11:07am 1712268445

With all of those old people, death taxes would be the best bet. Although along with inheritance tax comes gift taxes to prevent everyone from giving it all away. Dead people cant leave the country to escape them unlike wealth taxes.

by AN Other | 5th Apr 24, 5:42pm 1712292135

New Zealand did have gift duty and estate taxes. It was calculated that it was costing more to enforce them than was actually recovered.

This was back in the 1990s from memory. The difference between the two was marked.

Also, when someone is gifted or inherits money, they often spend it frivilously, which helps with GST anyway.

by profile | 5th Apr 24, 8:08am 1712257714

These grandchildren are going to be so busy that won't even have time to lynch Profile.

"Seventy-four years on, globally there are now about five adults per old person because so many of us live on into extreme old age. By 2100 CE, when the children born in the first third of this century are elderly, and with a low TFR for the rest of this century, this ratio is expected to have dropped to about 2. In other words, when my grandchildren are elderly, the world will have only about two people alive aged between 25 and 64 years for every person alive over the age of 65 years."

https://insightplus.mja.com.au/wp-content/uploads/2024/02/Picture4-1.png

by KH | 5th Apr 24, 8:31am 1712259070

People are living longer because they are healthy. Thus 70+ 80+ need less care than before.

As for incomes, taxing the young to pay for the old sure is unsustainable. Building your resource throughout your life is what you have to do. eg. Compulsory, universal KiwiSaver.

by Baywatch | 5th Apr 24, 8:34am 1712259284

The Superannuation Act, passed by the Labour Government in 1974, established the New Zealand Superannuation Scheme with the following characteristics;

It was compulsory for all employees between 17 and retirement age.
Money could only be taken out early if a contributor left the country permanently.
Each contributor had their own individual and portable account.
Contributions were 8 per cent of gross income, 4 per cent by employees and 4 per cent by employers.
The scheme was not taxable except for stamp and cheque duties.

But few economists would disagree that Robert Muldoon’s decision to cancel the fledgling New Zealand Superannuation Scheme on that day was probably the worst financial decision ever made.

by Foxglove. | 5th Apr 24, 8:41am 1712259678

Aye & to give Winston Peters credit, this he knew. Hence the referendum in the 90’s re compulsory super which was soundly defeated. That does indicate that the mood of the people some twenty years later had not changed since Muldoon’s intervention.The people and Muldoon were wrong, dead wrong.

by Nzdan | 5th Apr 24, 8:51am 1712260319

The thing is, Muldoon made no secrets about it. He even commissioned a television advertisement "Dancing Cossacks" during the election campaign to criticize Labour's communist style Compulsory Super.

The blame sits squarely at the voters of the day.

by Baywatch | 5th Apr 24, 8:55am 1712260532

The blame sits squarely at the voters of the day. ...who still think the same and would scream if Super age where to be raised or means tested!

by profile | 5th Apr 24, 9:05am 1712261135

Chaps - The grandchildren can save all the money they want but hard reality there will only be 2 punters to provide goods and services, rather than 5 today, or 8 for the 1950 baby boomer. It is not about cash nor politicians.

by Grattaway | 5th Apr 24, 11:08am 1712268527

Profile agriculture and primary production is the pointer to the future - the number of people working in primary food production continues to decline while output rises - has been this way for years. It will be the same in other industries, so your grandchildren and great grandchildren will be fine (and your personalised robotic medical provider will pop in shortly as arranged)

by profile | 5th Apr 24, 1:14pm 1712276096

I agree on Ag - healthcare, services, defense, law enforcement will be the issues. I can't see us going robocop. It is amazing that people fret about carbon footprints and other first world "problems" when the angst footprint is about to fall off a cliff. "Assuming the continuation of the current trajectory of our fertility and mortality (and even with some variation), the exponential population growth of the mid-20th century (doubling time of 37 years) is about to flip to an asymptotic decline, with the population halving every about 40 years."

by IT GUY | 5th Apr 24, 9:06am 1712261165

I a for both but it needs to be phased in so people can plan

by singautim | 5th Apr 24, 9:07am 1712261260

Super age must be raised. 65 was chosen because that was average lifespan. So should it now be 81?

It is sufficiently means tested by income tax being applied to it. Means testing it is crazy - a recipe for under the table gifting and other rorts plus adding a large admin cost.

NZ Super is more generous than UK state pension - could the govt tweak it lower?

by Nzdan | 5th Apr 24, 9:36am 1712263006

Ahem, Australia seems to do just fine income and asset testing. Wonder why such a prosperous wealthy nation that posts trade surpluses would feel the need to do this?

Wouldn't necessarily need too much admin costs. Just link bank accounts with IRD numbers, and have the banks IT systems report aggregate annual incoming funds per account holder back to IRD to data match. The admin comes in when account holders exceed the threshold.

https://www.australiansuper.com/retirement/super-and-the-age-pension/in…

https://www.australiansuper.com/retirement/super-and-the-age-pension/as…

by rastus1 | 5th Apr 24, 9:47am 1712263641

You comment shows clearly that you have no idea of the difficulties in asset testing. Here's just one issue. One million arrivals in the last ten years - no reciprocal arrangements for many countries of origin.

Never mind finding those skilled enough to actually do the work.

by Nzdan | 5th Apr 24, 10:14am 1712265245

Australia seem to do it just fine? But okay, maybe it's too hard for us to test for assets and I'm cool with that, not overly fond of kneecapping someone's pension because they own a house. It's not like they can pull a weatherboard off and use that to buy the groceries.

Just stick with income testing and if the test/measure is done at the bank then good luck avoiding it unless people want to walk around with briefcases stuffed with cash.

by Mystery | 5th Apr 24, 3:20pm 1712283630

Just FYI, about "Own the house, weatherboard, etc." - The primary place of residence is exempt from asset testing in Aus (for the purposes of pension calculation).

by Nzdan | 5th Apr 24, 3:31pm 1712284297

Correct. However a second house/bach that does not derive any income at all would fall under an asset test.

by refactornz | 5th Apr 24, 10:14am 1712265263

Agreed. And is Australia really doing a great job in asset testing? With the main home exclusion people just pump most of their wealth into their home then trade down every few years in retirement to release more cash. Maybe that's what's holding Australian house prices up at crazy levels.

by rastus1 | 5th Apr 24, 12:47pm 1712274463

I think you will find basic testing just captures financially unsophisticated locals.

by Foxglove. | 5th Apr 24, 9:21am 1712262091

Perhaps then opportune for another referendum to decide if Kiwi Saver or whatever savings scheme should be compulsory? Kiwi Saver providers would in that case need to be government guaranteed so that would complicate the concept somewhat.

by Pa1nter | 5th Apr 24, 8:46am 1712259979

Thus 70+ 80+ need less care than before.

Health care costs are exploding, because we now have some fantastic ways to keep people alive and functional for a very long time.

So people in their 70s are receiving more expensive medical treatment than ever before - 50 years ago many of these procedures weren't even available. Here's a $20 cane instead.

by singautim | 5th Apr 24, 9:13am 1712261634

Agreed. My wife (cancer survivor 7 years ago) and myself (heart attack survivor a decade ago) have had superb treatment by NZ medical service but that service was paid for by Kiwi taxpayers.

Recent developments with AI will change things. More early detection, greater survival rates - maybe care robots - just a robot that prepared meals, changed beds and did the laundry would resolve most of the costs of old age. Nothing like that exists today but surely will by 2030.

by interesting1234 | 5th Apr 24, 10:26am 1712265989

We have always focused on preserving life, however we have a system unable to sustain life in later years without making substantial changes which will, in all likelihood, penalise those who are currently working. It can also be argued that there is a diminishing return on quality of life for the level of resources invested as someone gets older and medical needs increase. Then comes the ethical question: Do we change the system to be able to fund longer life, including new technologies to prolong life even further, or do we find the point of diminishing returns and allocate resources accordingly. I appreciate this sounds blunt and emotionless, but it is intended to stir debate and thought around the subject as it is a real conundrum.

by Frank. | 5th Apr 24, 10:39am 1712266779

#CEAS

by murray86 | 5th Apr 24, 9:49am 1712263778

I think you're only partially correct (you're being a bit too polarised). New treatments are only one of many contributors to health costs. Our society today is in many respects quite hedonistic. many people choose to undertake activities that are not conducive to good long term health. when the consequences of those activities come back to bite, they expect the health system to fix them. Chloe still thinks it is a good thing to legalise cannabis is an example.

by Pa1nter | 5th Apr 24, 11:12am 1712268768

Our society today is in many respects quite hedonistic. many people choose to undertake activities that are not conducive to good long term health.

Smoking used to be good for you and drunk driving wasnt a problem. Aside from obesity, not much has really changed on balance.

by Grattaway | 5th Apr 24, 11:14am 1712268867

Its a good thing to legalise cannabis - should be available in all aged care facilities

Maybe it will also encourage the grandkids to come visit more often as well :-)

by interesting1234 | 5th Apr 24, 12:50pm 1712274646

The music taste in the homes may change somewhat. Imagine rocking into the dining room to visit the grands hearing snoop dogg blasting XD

by K.W. | 5th Apr 24, 11:23am 1712269394

The good news is that you can decriminalise drugs and kill tons more people. The bad news is that decriminalising drugs kills off mostly young people not the old ones, so will probably make the population problem worse. And the rest of us get to live with the increase in crime and social degradation.

Even the wokest of the woke are now realising they made a huge mistake and are recriminalising drug use. https://www.bbc.com/news/world-us-canada-68716519

"Oregon recriminalises drug possession after overdoses rocket"

by interesting1234 | 5th Apr 24, 12:49pm 1712274560

They have a different geographical conundrum. I've a friend in Oregon, they stated that many of the addicts from elsewhere in the USA moved to Oregon simply due to the lack of risk of prosecution. The result being people nodding off like zombies and/or tweaking out in public everywhere, around schools, middle of the road, anywhere. It has had a different, more positive effect in Portugal and would more than likely have a positive impact in NZ provided opioids and meth were still criminalised.

by K.W. | 5th Apr 24, 1:13pm 1712276036

NZ would end up with all the Australian drug addicts moving here. So same thing will happen, except NZ would have to shoulder an even higher healthcare burden

by K.W. | 5th Apr 24, 11:18am 1712269090

And health care costs are about to get even more expensive as the weight loss drugs get released and every person thinks they can get as fat as they like then just take a drug to make it all go away. Considering NZ is already one of the most obese nations on the planet, this will be a massive burden on the Pharmac and healthcare system. Although I suppose if Labour is in Govt, its a sure fire bet that those drugs will only be made available for people of a certain ethnicity, as they were (and probably still are) under the last Labour Govt.

by HGWR | 5th Apr 24, 8:47am 1712260038

Paper assets like kiwisaver are potentially meaningless - they don't solve the mismatch between physical goods and services in demand, and physical goods and services being produced.

The key is that we need today's generations to invest in things that massively increase labour productivity so that it's possible for the ever shrinking youth to produce enough to meet demand.

Basically that means infrastructure and durable productive capital. Not houses and financial assets.

by Pa1nter | 5th Apr 24, 9:17am 1712261868

It also needs some significant technological barriers being crossed.

Unfortunately much of the kinetic parts of the economy (which is also the part that produces stuff), involves procedures that are cheap from a human labour perspective, but very difficult to automate.

That's not to say there can't and shouldn't be incremental improvements, but that in many cases, you could throw oodles of cash at something in 2024 and not generate viable improvements.

by rastus1 | 5th Apr 24, 9:51am 1712263877

Eh?

Paper assets like kiwisaver are potentially meaningless

I wouldn't consider owning a shares of a power station or other substantive income generating asset as 'paper'.

by Casual Observer | 5th Apr 24, 1:25pm 1712276716

Are they really healthier? Almost all the 70+/80+ yr olds I know, have had some form of heart surgery (stents/bypass etc) or are on medications, without which they would not be 'healthy'. Some are very active - but wouldn't be, without their 'life saving surgical interventions and or medications.

by Caughtinthemiddle | 5th Apr 24, 2:02pm 1712278945

KH - you are as wrong as you could be about living longer being due to better intrinsic health. I work front line in medicine and the reason we live longer is in spite of worsening health burdens. Obesity is the poster child for our declining health metrics on a population basis - there are others. Dementia, and neuro degenerative diseases are more prevalent in an aging population and have a vicious impact on primary relatives as well as costs associated with care etc. The list of examples conflicting your point of view would fill a book.

by KH | 6th Apr 24, 11:35am 1712356524

Well it's said folk are living longer. If that's true why do you think it is so ? With the vast list of 'worsening health burdens' you describe. Genuine question.

On the other hand I have heard it said that young people today are the first generation with a lower life expectation than their parents. (USA quote and obesity) Presumably because of declining health.

Edit

Definitely living longer. But why. Is it because of medical advance. That would be difficult to substantiate.

Example from the link. Male life from 67 to 80 in the last 70 years. Which is a dramatic increase.

https://www.stats.govt.nz/news/growth-in-life-expectancy-slows/

by JimboJones | 5th Apr 24, 2:37pm 1712281041

"People are living longer because they are healthy" - so they can work longer too?

by NZGecko | 5th Apr 24, 8:10am 1712257846

Oils and Gold spiking again right now!!!!

Oil past US$91.00 a barrel, as the dogs of a much larger MiddleEast war bark ever louder.......

Wars are VERY inflationary. So there you have it: HFL

HFL done, JH guaranteed.

by Baywatch | 5th Apr 24, 8:35am 1712259343

Enjoy your pump prices ..

by IT GUY | 5th Apr 24, 9:09am 1712261370

Iran about to exact revenge

by earnedincome | 5th Apr 24, 9:24am 1712262247

Israel are playing a very dangerous game. They're obviously trying to draw the US into a wider war. All the while I'm losing what little confidence I had that the US has the necessary competency to avoid it.

Here's a hot take. Trump (as loathsome as he is) would be better for world peace, if only because his ego would not allow him to put up with the constant humiliation and disrespect dished out by Netanyahu. Also, despite doing his best to appear to be a moron, he is very finely attuned to public and media sentiment. Just look at his latest statements regarding Israel.

by mfd | 5th Apr 24, 9:25am 1712262335

Trump would resolve the war in Ukraine as well. Presumably by convincing the Ukrainians to roll over and allow the Russian Bear to eviscerate them.

I guess that's a kind of win for world peace, but only in the very short term.

by earnedincome | 5th Apr 24, 9:31am 1712262681

Agreed. This would be entirely consistent with his approach.

by Pa1nter | 5th Apr 24, 9:34am 1712262854

So long as no other global leader slights him.

Then you will feel the wrath of 1000 suns.

by interesting1234 | 5th Apr 24, 10:29am 1712266178

If the US goes to war again, it will cripple their global police status as they won't have the resources or balance sheet to fund it again. Their currency is on a slow decline as other countries veer form the USD as the reserve currency and a war would seal the deal for them IMO. i feel they know this due to the state of their accounts and are doing all they can to avoid having to go there.

by mfd | 5th Apr 24, 9:42am 1712263334

And one which would be repeated through as many Baltic and Eastern European states as Putin can get through over the subsequent 4 years.

by earnedincome | 5th Apr 24, 9:47am 1712263623

Invading Nato members would be quite a different matter. Hence Putin's intense efforts to avoid having Nato in Ukraine (a significant reason for the Ukranian invasion in the first place).

by mfd | 5th Apr 24, 11:10am 1712268645

What's the argument there - he needed to invade because it would be strategically more difficult in the future? That's an argument of timing rather than need.

Or just the fear of having a defensive alliance on his doorstep? Conquering Ukraine would just make that an even more pressing reality - brings his borders right against a whole new set of NATO members (none of whom had any desire to attack Russia, not would the alliance have supported them in doing so)

by Grattaway | 5th Apr 24, 11:19am 1712269193

Your first point is correct - he wanted Ukraine before it became embedded in the EU or NATO

and it is difficult to imagine that someone with an expansionist mindset who doesnt give a toss about human life will stop unless stopped

by earnedincome | 5th Apr 24, 12:16pm 1712272570

Conquering Ukraine would just make that an even more pressing reality - brings his borders right against a whole new set of NATO members

The thing to remember here is that from a geographical point of view, Russia is uniquely vulnerable as there are no major natural defences between Moscow and the rest of Europe. Historically, Russia has always sought out a 'buffer' to compensate for this. Yes, it's about having Nato on their doorstep, but it's also about ensuring a buffer.

by mfd | 5th Apr 24, 12:25pm 1712273130

The world is full of countries with exposed borders, I don't think Russia are 'uniquely' vulnerable. What they have is a recent history of imperial expansion. The threat posed by the rest of Europe was miniscule, but will now grow as their defense industries are stepped up in response to Russian aggression and Trump's antipathy to NATO and Europe.

I do appreciate Russia have been bitten by their geography in the past, but again they are hardly unique and other European countries have much more reason for concern.

by earnedincome | 5th Apr 24, 12:49pm 1712274549

The world is full of countries with exposed borders

Europe not so much. Most countries there are defined by natural borders (large rivers, mountain ranges, coastlines). The obvious exception being Poland and their history gives you some idea of the problems that come with that.

by mfd | 5th Apr 24, 1:54pm 1712278495

Yes I admit Poland was the country that came to mind. I'd be more sympathetic towards them wanting Ukraine as a buffer zone rather than Russia.

by KH | 5th Apr 24, 3:24pm 1712283891

Rissia does not appear to be interested in invading much of Ukraine, much less the rest of Europe.

They are very interested in the Russian speaking parts, which is the south.

As for Trump, he says "no more stupid wars". He means it and he is right. From Vietnam on the USA has plunged into several, all disasters, for the USA and the locals both.

by mfd | 5th Apr 24, 3:45pm 1712285133

I think they were very interested in invading all of Ukraine at the start, before ambition ran into reality.

by Zwifter | 5th Apr 24, 4:57pm 1712289469

When Trump gets back into the Whitehouse in November the war will be over pretty quickly after that when they pull the funding for what has been a total waste of lives and money.

by agnostium | 5th Apr 24, 9:34pm 1712306040

It's about taking the salami slice by slice rather than the whole sausage at once. Putin keeps taking slivers here and there, each time he gets nearer, his endgame is the whole of Europe but he hit a wall when he tried to invade Kiev, underestimated the Ukranian resolve and courage and the support from rest of western world.

Never doubt, his ambition is the whole of Europe, nothing less. He is this generation's Hitler.

by murray86 | 5th Apr 24, 9:54am 1712264079

I agree about Israel. The strike on the aid convoy is looking very much a like a deliberate action, knowing exactly what they are doing, and believing no one would ever be able to hold them to account for it. I doubt this is the first time in this action. Someone in Israel is signing off on actions which amount to murder, bringing them to account would be a worthy goal.

by OldSkoolEconomics | 5th Apr 24, 1:39pm 1712277540

The complexity of this situation is enormous and so many parties are at fault for what has happened over a long period of time its almost impossible to untangle.

Its doubtful (unthinkable) Israel would have done this on purpose .. and sadly ans more likely some of their people will have to live with the mistake for the rest of their lives.

I feel for all sides .. but at the heart of this is the need for Hamas to come to the table and negotiate a long term peace... until then we will never fix anything.

Re Iran.. they will need to be seen to do something..but have their own internal issues at present and strategically it's better for them to quietly build nukes than to start old skool wars.

Noone will stop Israel.. they are aware of that and will keep pushing until Hamasaki is finished or finally accepts a solution.

It's all really sad.

by earnedincome | 5th Apr 24, 2:00pm 1712278805

Its doubtful (unthinkable) Israel would have done this on purpose

So, it's worth considering the first official explanation of this 'mistake'. Essentially it boiled down to "we had reason to believe an armed militant was present". They say this because they thought they saw one of them at or leaving the warehouse with the aid workers.

Think about what this means. If it turned out that they weren't wrong and that an armed militant was present then they are saying that the action would have been justified. The aid workers would have simply been 'collateral damage'.

This is the morality of the IDF that they expect us to accept.

by murray86 | 5th Apr 24, 2:06pm 1712279184

"... but at the heart of this is the need for Hamas to come to the table..." this is where I stopped accepting your view and the only place I agree with Israel. Hamas's roots lie in the utter destruction of Israel and they do not care how many of their own people have to die to achieve that. This twisted ideology rooted in intolerance and violence needs to be eliminated.

Israel is no shining light and I have often considered them to be emulating the Nazis more than is comfortable, in the way they have treated the Palestinians. But tIsrael has gone way too far in this battle.

by peter.may | 5th Apr 24, 1:04pm 1712275488

I am concerned that Israel, if there back is to the wall, will resort to their nuclear arsenal- on the basis if they are going down (again!) they will take their enemies real & perceived - with them

by earnedincome | 5th Apr 24, 1:34pm 1712277261

It's a very valid concern. Taken together with their demonstrated difference in opinion from just about everyone on the planet when it comes to what a proportionate response looks like it is especially concerning.

The US are abrogating their responsibility here. If they can't even keep their 'closest ally' in check, what hope do they have of maintaining their global hegemony?

We are witnessing the rapid unraveling of US geopolitical power. They are making the Chinese look like the adults in the room.

by NZGecko | 5th Apr 24, 9:24am 1712262242

When Iran strike Israel proper....the Best Israeli Jets get the green light, to carpet bomb any suspected Iran Nuc sites, back to the rock (all little rocks) age.

by earnedincome | 5th Apr 24, 9:29am 1712262584

Iran's revenge will almost certainly not be a direct strike on Israel proper. They are determined to avoid a wider war with the US and Israel.

If for some reason they were pushed far enough that a direct strike looked like a necessity, it wouldn't be a simple targeted strike or two. Iran's trump card is their massive arsenal of missiles. They will not make a strike and then wait around for US and Israeli airstrikes that target and neutralise their arsenal. If they get involved in a war with Israel, they will deploy that arsenal right away rather than wait and lose it.

by murray86 | 5th Apr 24, 9:58am 1712264338

You're overstepping. You are forgetting about the Sunni/Shia divide. Iran are the significant opponents to the ruling classes in Saudi so if the overstepped the mark the Saudi's would jump at the opportunity to remove the regime there just to take the pressure off themselves. Iran is dancing a fine line here, but if they push too hard and too far it won't be the Israelies who smack them down.

by earnedincome | 5th Apr 24, 10:07am 1712264825

The Saudis would smack Iran down? I doubt that very much. Just look at how they fared in Yemen.

by murray86 | 5th Apr 24, 10:35am 1712266552

In Yemen they are essentially fighting an asymmetric war against the Houthi's. Vietnam should have taught them they can't win without a total invasion to utterly eliminate the fundamentalist groups, but they won't do that. But this is again essentially the Sunni/Shia divide - take away the houthi's bankers and they would vanish pretty quickly, and their bankers are Iran.

by Pa1nter | 5th Apr 24, 9:29am 1712262594

Iran don't have the force projection and regional mates to do much proper.

by earnedincome | 5th Apr 24, 9:37am 1712263052

That is simply not true.

Iran have a proven capability to strike anywhere in Israel.

They have one of the world's largest arsenals of missiles. This includes hypersonics - something the US and Israel do not have and something they don't really have the ability to defend against.

Also, you better believe that a war with Iran will involve Russia.

They don't have much of an ability to deploy troops outside of Iran though, that much I would agree with.

by Pa1nter | 5th Apr 24, 9:42am 1712263366

That is simply not true

- Archaic air force that can't operate long range

- Can't get a conventional ground force there easily

There's only so much war you can wage with missiles only.

by earnedincome | 5th Apr 24, 10:05am 1712264701

Iran have quite deliberately focused on developing deterrence via a missile arsenal and a defensive army because they have no intention of fighting outside of Iran (i.e. they do not have an expeditionary force). In this regard they have a formidable force (helped by geography - any invasion of Iran will be much more difficult than previous western 'adventures').

The whole point of their 'proxies' is to supplement their forces with the ability to respond to US and Israeli aggression without directly escalating into a proper war. Obviously those proxies have their own agenda too.

Any idea that Iran is interested in spilling out and invading neighbouring countries is simply not true. With the exception of Taiwan, it's a similar story with China. Both are playing the cultural and geopolitical game much better than the west.

by ML2 | 5th Apr 24, 10:22am 1712265765

Well said. Thanks for that excellent update. Appreciated. You'll be interested to read anything by the hyperintelligent Jim Rickards. The Wests folly was well explained in his 2011 text Currency Wars. Foretelling Ukraine,Putin, SWIFT, Energy , Gold, sanctions etc etc. His 5 - 6 books since then are just as good.

A Pentagon War Games scenario he was asked to set up pre 2010 showed that when Putin made a valid claim on Eastern Ukraine the worst thing for the US / Western allies to do : for its own people like ....you .... and me) would be to sanction Russian Energy and ban them from SWIFT.

Yet what did the West do in 2022 when Putin did the move : yup all of the above... and here we are in 2024 with a seriously serious geopolitical situation that is unreported by our NZ mainstream media, energy prices eg oil starting to head north and Gold at ATH.

Just like Jim foretold in his 4 - 5 books from 2011 - 2020 after Currency Wars.

by Pa1nter | 5th Apr 24, 11:07am 1712268439

Yeah, so at best, they get to be a nuisance, rather than a credible threat to any other nations' sovereignty.

by earnedincome | 5th Apr 24, 11:16am 1712268996

That's right. The most you could say is that they provide support to groups that threaten other nation's sovereignty. But, as I mentioned elsewhere, they don't provide support for that reason (despite all their bluster about 'The Great Satan' and 'Zionist Devils').

by Ngrrk | 5th Apr 24, 11:00am 1712268006

Iran is very well defended. Israel knows this. If a wider war, which includes direct conflict with Iran, occurs it will be catastrophic. We also have no idea how China and Russia would react. Let's pray this doesnt happen.

by earnedincome | 5th Apr 24, 11:20am 1712269209

Yes. But let's also be frank. There is currently only one actor pushing for this wider war and their 'suzerein' is not proving capable of pulling them into line.

by Grattaway | 5th Apr 24, 11:26am 1712269603

Not sure the Iranian people would agree with you - they have had enough of their autocratic Mullah's - who spend all their money fighting proxy wars including supporting Putin's in Ukraine

by earnedincome | 5th Apr 24, 11:40am 1712270418

I'm not quite sure that I follow. Are you implying that Iran is seeking a wider war?

by dumbthoughts | 5th Apr 24, 11:14am 1712268864

At this rate I'll have to do something drastic like fill the sports car with NPD self-service 95 as opposed to BP 98.

In all seriousness, filling up is starting to feel very expensive again (good job I hardly drive).

by LouB | 5th Apr 24, 8:27am 1712258830

What's happening on global share markets?

I keep an eye on DailyFX and there's a lot of red ink this morning, since the breakfast briefing was posted.

by morepork | 5th Apr 24, 9:18am 1712261908

Richmond Fed President Tom Barkin said in a speech that it is “smart for the Fed to take our time” and that “no one wants inflation to reemerge.”

In a separate talk, Minneapolis Fed President Neel Kashkari said he had penciled in two rate cuts this year in March. But if inflation continues to move sideways, he said, “that would make me question whether we needed to do those rate cuts at all.”

https://www.wsj.com/livecoverage/stock-market-today-dow-jones-04-04-2024

Probably an element of profit taking too since the s&p500 is near all time highs

by IT GUY | 5th Apr 24, 9:18am 1712261917

S & P 500 started falling once Iran type news came out

by kiwichas | 5th Apr 24, 10:23am 1712265833

S&P down 1.3%

by huttman | 5th Apr 24, 8:53am 1712260434

a public holiday in China, Ching Ming Festival,

it's Qing Ming.

by ChrisOfNoFame | 5th Apr 24, 12:51pm 1712274714

The 'Q' is pronounced 'Ch' by English speaking peoples. Thus 'Qing' would be 'Ching'. (And no - don't get me started on the 4 tones!)

And don't get me started on this one ... https://drinkland.co.nz/wp-content/uploads/2020/04/Tsingtao-BTL-640ml-0… ... LOL

by Audaxes | 5th Apr 24, 9:41am 1712263260

Helen Clark:

As I was saying: it is very clear that US sees #AUKUS as part of its military strategy vis-à-vis China. #NZ needs to be a voice for peace & co-operation in #AsiaPacific. Joining AUKUS’ Pillar 2 would deeply compromise NZ’s independent foreign policy. Link

by earnedincome | 5th Apr 24, 10:33am 1712266410

It will be very interesting to see where NZ stands in a geopolitical sense 20-30 years from now. Will we lose significance by choosing to outsource our foreign policy to an ever more sidelined western alliance or will we learn to grow up and engage with the world on our own terms?

by kiwikidsnz | 5th Apr 24, 10:43am 1712267024

We have negligible terms to offer !

by earnedincome | 5th Apr 24, 10:49am 1712267363

Well that's a very defeatist attitude :) We should improve them. All part of the 'growing up' bit.

by murray86 | 5th Apr 24, 10:56am 1712267791

Where have you been hiding EI? I like the way you think and express your views. There are a small number who contribute to these streams who help stimulate some very good discussions. Keep an eye on Foxglove's comments too. He's clearly been around the block a few times too and is worth considering. Welcome. I look forward to some future discussions.

by agnostium | 5th Apr 24, 9:49am 1712263786

So proud that NZ facilitates the ultra rich avoiding paying tax on $684M unearned income in their home countries.

Oh hang on, I'm sure she deserved to inherit $648M due to pulling herself up by her bootstraps and making her own luck by choosing to be born into a super wealthy family?

Well done NZ, supporting the little guy.

https://www.stuff.co.nz/business/350234901/trust-company-claims-swiss-l…

by kiwikidsnz | 5th Apr 24, 10:28am 1712266111

Define "unearned" income.

"Every man is entitled, if he can, to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be"

https://en.m.wikipedia.org/wiki/Duke_of_Westminster%27s_Case#:~:text=Ev….

"You're not spending it that well that we should be donating extra"

https://youtu.be/DBg7DnQjjcY?feature=shared

by earnedincome | 5th Apr 24, 10:50am 1712267417

Define "unearned" income.

For background, you could simply start here: https://en.wikipedia.org/wiki/Unearned_income

I'm certainly not some zealot that thinks all unearned income should somehow be made impossible. But it's widely accepted amongst economists that taxing this type of income is better for an economy than taxing earned income. That is, we should tax income derived from owning things more than income derived from doing things. Currently we do the opposite (which makes a mockery of the usual political refrain of 'encouraging productive activity'). I find this hard to argue with.

by Engineer 11 | 5th Apr 24, 11:33am 1712270014

Most income classed as 'unearned' is the result of someone using taxed wages and investing them in an asset either physical (housing etc) or non physical (shares etc). The money invested is the person's property whether to spend it on themselves (holidays, cars, gambling, drink, food etc) or to go without and invest the money. So why should any gain from said investment be stolen via taxation? Totally unfair to do this. In the case of Landlords, they also provide a service by providing rental property to those who need to rent.

by mfd | 5th Apr 24, 11:55am 1712271323

Why is it theft to steal this income, but not theft to steal that initial earned income?

by earnedincome | 5th Apr 24, 12:22pm 1712272963

None of it is theft and none of it is stealing. I'm not suggesting that taxes can't be too high or too much of a burden but frankly to think it is theft you would have to consider yourself as either an island separate from the rest of society or as a freeloader.

by mfd | 5th Apr 24, 12:27pm 1712273250

I agree - I'm trying to pick apart these distinctions that some commenters have where some taxes are fine and others are immoral for some reason. As far as I am concerned either they're all fine or none are.

by kiwikidsnz | 5th Apr 24, 1:11pm 1712275919

"Mice die in mouse traps because they do not understand why the cheese is free. Just like socialism."

by earnedincome | 5th Apr 24, 1:40pm 1712277637

https://www.youtube.com/watch?v=YvZsg_WFR1k (just 40sec)

by kiwikidsnz | 5th Apr 24, 2:30pm 1712280613

by earnedincome | 5th Apr 24, 12:24pm 1712273089

So why should any gain from said investment be stolen via taxation?

Ask yourself where the gain came from in the first place and then ask yourself if it had anything to do with other people's effort. Be honest.

by Nzdan | 5th Apr 24, 12:44pm 1712274275

So by your logic someone works hard earning a wage saves and invests their money into starting a business, that person shouldn't have to pay company/income tax on any profits because the initial capital to set up the business was derived from tax paid wages?

I spent $10k of my own taxed income on education. An investment....increased my income by $50k p.a. Should that $50k also be exempt from tax?

by kiwikidsnz | 5th Apr 24, 1:07pm 1712275623

Thank you for your common sense, saving me from a response

by E46 | 5th Apr 24, 4:04pm 1712286282

By the same logic we also get double taxed on GST, is that also totally unfair?

by ML2 | 5th Apr 24, 10:00am 1712264435

The Breakfast Briefings are excellent. And Thanks for creating these and reporting on data points.

I'm mindful tho that datapoints reported on don't always illustrate the Full Picture. Joining these datapoints creates a Fuller Picture to chat about at "Morning Tea".

More Specifically

- Yes Gold is near ATH but look at the 15% breakout from a decade long Cup and Handle formation since 2011. Theres a Book of Narrative in that. https://tradingeconomics.com/commodity/gold . Will gold hit US$3K in 2024?

- Price of Oil: the 6 month uptrend is unrelenting. How will this impact us here at home with Inflation and energy sustainability? And place your bets... but if the Middle East breaks out into a Hot War will Oil head back to ATH like Gold is. https://tradingeconomics.com/commodity/brent-crude-oil

- Bitcoin. Yes it may be "softer / firmer" and Volatile BUT this price 6 month appreciation is from the ETF's; just wait for the April halving. US$100,000 in 2025 ? https://tradingeconomics.com/btcusd:cur

So plenty to chew over before Lunch.

Cheers

by Peter M | 5th Apr 24, 11:21am 1712269299

I predict tomorrows US non farm payrolls will disappoint to the downside and trigger a buy the dip rally at Wall Street.

by Audaxes | 5th Apr 24, 11:23am 1712269416

Janet Yellen Arrives In China For High-Stakes Economic Meetings

by @tony | 5th Apr 24, 11:43am 1712270611

USA seems such a mixed bag.

Looks like a big of data (favoured by the press) is that USA is doing great.

But a load of data suggestes the opposite.

Hours worked is plumetting and the usual stupidity is taking place (if you are working 3 jobs then that counds as 3 people working).

Backlog of orders is getting smaller and smaller.

Trucking firms have very little work (like china and NZ).

It's going to end badly.

by Audaxes | 5th Apr 24, 12:53pm 1712274790

Things Are Escalating, Quickly...

by @tony | 5th Apr 24, 1:19pm 1712276371

https://youtu.be/fDHXJjEB_YA?si=j6C_vreVHemmPmLW