In this section
Offers for readers
Follow the news from interest
The comment stream
Recent comments
- 1 of 20818
- ››
Editors choice
- 1 of 295
- ››
Finance sector jobs
Lead from the front utilising your strategic, technical and leadership qualities within th...more
New Zealand
Lead from the front utilising your technical expertise in this highly attractive senior li...more
New Zealand
Customer focus, high performance, exceeding client expectations and achieving profitable g...more
New Zealand
Key leadership position in the bank. Be a part of one of the fastest growing banks in New ...more
New Zealand
The news stream
Latest news
Most commented
- Fonterra to tighten TAF rules 67
- Govt eyes NZ$1.4b revenue grab 58
- English defends current account blowout 56
- 90 seconds at 9 am 51
- BNZ cuts most fixed mortgage rates 48
- 90 seconds at 9 am 43
- Thursday's Top 10 with NZ Mint 38
- Budget 2012 reactions 36
- Budget tax moves to target high income NZers 29
- Wednesday's Top 10 with NZ Mint 24
Most viewed
RBNZ's Bollard warns on strong dollar, early recovery hopes and Swine Flu
Reserve Bank Governor Alan Bollard told a business audience in Wellington today that any economic recovery toward the end of the year would be erratic and may not feel like a recovery. Bollard also said buyers of New Zealand dollars who expected a strong recovery may be disappointed. He also said again he was disappointed banks had not passed on the 50 basis point cut in the Official Cash Rate on April 30 to short term lending rates. Bollard said consumers and governments should save more and not to return to their big spending ways in a hurry. Swine flu could delay the recovery if it was severe, he added. Here is the full press release below released after the speech.
Households, businesses, banks and policy-makers should be thinking how they can influence recovery and ensure it is sustainable, Reserve Bank Governor Alan Bollard said today. Dr Bollard told a Wellington business audience that activity in New Zealand was near its low point, the global economy appeared more stable and trading-partner growth forecasts had stopped falling. New Zealand's large fiscal and monetary policy stimuli had bolstered domestic activity. "We expect the economy to begin growing again toward the end of the year, but the recovery is likely to be slow and drawn out. It could also be erratic. To many households it may not feel like a recovery at all, with lower employment, house prices and wage increases into next year." Households and firms were adjusting, cutting back on spending to match slower income growth, less available cheap credit, and falling asset prices. "This adjustment has further to go. It will take a long time to adjust balance sheets, especially for households. While they have largely stopped building up debt, most people have less wealth than before the recession started. "This shock has been so big the nature of the recovery is hugely uncertain, here and overseas. Potential growth rates around the OECD are likely to be lower, but just how much is unclear." For the New Zealand recovery and subsequent expansion to be strong and long-lasting further economic rebalancing was needed. "Growth needs to be export and investment led, rather than consumption led. Household and government consumption need to be more restrained. Saving needs to increase, and the current account deficit needs to reduce. "However, some recent financial market developments, especially the recent upward pressure on the New Zealand dollar, are working against this rebalancing. If markets are buying the New Zealand dollar on the expectation of a strong recovery they may end up being disappointed." Given the uncertainties surrounding the recovery, it is important fiscal and monetary policy can operate effectively. "In this context, we are disappointed that banks have not passed on the April reduction in the OCR to short-term lending rates: they have an opportunity to help New Zealand's recovery by doing so," he said. "Overall, we think the broader tightening in financial conditions seen over recent months risks undermining the recovery before it becomes self-sustaining. "A premature rebound in household spending could jeopardise the next expansion. There is a risk people see the current stabilising of the housing market as a sign of another house price boom and a reason to borrow and spend up large again. We do not believe that would be sustainable. Investors who rely on this could get hurt. And they could make it harder for businesses to invest in the export-led recovery we need. "The world is now being swept by influenza A H1N1 09. It looks likely this will impact the economy by hitting staffing, through sickness, childcare and precautionary behaviour. If the incidence is severe, it would delay recovery."
Against Bollard's muted - <i>Reserve
Against Bollard's muted - Reserve Bank Governor Alan Bollard told a business audience in Wellington today that any economic recovery toward the end of the year would be erratic and may not feel like a recovery - I give the sobriety of an economist, Robert Murphy, dealing with the facts of reality.
Quote: Given all of the huge assaults of the federal government into the private sector in just the past six months, I frankly don't understand how anyone except true believers in Karl Marx can be seeing "green shoots."
What is perhaps worse, laid on top of the stalled output in goods and services, I predict Americans are in store for the worst price inflation in US history. Just as stagflation referred to the combination of high unemployment and price inflation rates in the 1970s "” something Keynesians thought was impossible "” we can use the term hyperdepression to refer to the mix of hyperinflation and a serious recession in real output.
Quotation taken from NotPC's blog ( http://pc.blogspot.com/2009/06/whats-worse-than-stagflation.html )
And moving almost to farce
And moving almost to farce now, Bollard and the Finance and Expenditure Committee continue, as here, to try and talk down bank mortgage rates, yet on the midday radio news someone in the National Government (I didn't catch who), was trying to bully the banks into offering higher term deposit rates to facilitate savings.
Sheesh. The right and left hands of our current government really should hold a meeting - and if they're wise, no drinks will be provided for the duration.
"I frankly don’t understand how
"I frankly don't understand how anyone except true believers in Karl Marx can be seeing "green shoots.""
What pray has Karl Marx go to do with it? lets load up our statements shall we....this isnt a normal reality....libertanz viewpoint possibly?
uh...oh look
http://en.wikipedia.org/wiki/Robert_P._Murphy?
of the Austrian school? [that] "advocates a laissez faire approach to the economy."
I cant see anything in this balls up myself that points at Karl Marx....more like the failed era of Reaganomics and the mantra of the ultra-right / neo-cons GOP with their "laissez faire approach to the economy".
Reality check, just listen to all the right wingers (fox news etc), we have gone from no we are not in a recession to its all fixed and no worries and not a commie in sight.
regards
So you'd prefer Marxism, Steven?
So you'd prefer Marxism, Steven?
So let me get this
So let me get this right. The Good Doctor wants us to save more, but want interest rates to drop at the same time....Must be a dose of real deflation coming if that's the case?
Bollard's changing his tune again
Bollard's changing his tune again for the umpteenth time. Those green shoots seem to have now disappeared. It's amazing that bloggers on this site have been more accurate on the economic future than Bollard. I'd do his job better and only charge $250,000. Are you listening Bill English, I'm available to start immediately.
Janet, that's a much better
Janet, that's a much better way of stating the contradiction I was trying to get to on my second post. This ad hoc policy making will be the end of us.
I think Mark's right -
I think Mark's right - excessive debt caused the problem, and pretending excessive government debt can fix it without someone / everyone suffering is stretching the boundaries of belief.
Einstein is quoted as saying
Einstein is quoted as saying that a fool is someone who continues to do the same thing repeatedly but expect different results. Yet NZ Governments, on both sides of the political spectrum, continually borrow more money while our economic prosperity worsens. Does this make sense to anybody but a politician? It seems to me that borrowing has now reached the exponential stage and no amount of extra borrowing will provide any worthwhile results. However they tell the masses it will be alright this time. I think a good comparison would be with the Finance companies and their (so-called) secured debenture holders. It's all a Ponzi scheme that is only now starting to topple.
"Saving needs to increase, and
"Saving needs to increase, and the current account deficit needs to reduce."
So why dont you raise rates Alan?????????????????????????????????? A -ve after tax retun on savings is hardly an encouragement to save, and recorl low mortgage rates are hardly an incentive to not borrow more. Let bang rates UP, and get an inevitable crash over and done with
Couldn't agree more Jimmy! I
Couldn't agree more Jimmy! I wonder if the reason that Alan won't raise the OCR is because the housebuyers will cry poverty.......
jimmy - excellent insight. However
jimmy - excellent insight. However because it makes economic sense, Bollard won't do it. Also there are far more people up to their eyeballs in debt than there are savers and Bollard has to make sure that the debtors don't suffer because of their own stupidity.
veedub : or, because our
veedub : or, because our peso, sorry dollar, will rocket upwards and squelch those Fonterrible pay-outs even more.
That's the other reason indeed
That's the other reason indeed Roger. Seems crazy to ask people to save more but not do anything to encourage it. It sends the wrong message, hence only the sensible ones (who are saving anyway because they always have and always will, as much as individual circumstances allow anyway) will "do as Alan says" and the rest will keep grabbing at the cheap credit and indebting themselves even further. But that don't matter a thing, 'cause the value of their asset (house/s) will always increase, right? :-)
Bollard is attempting the impossible,
Bollard is attempting the impossible, namely trying to manage a defunct system in collapse.
However, with great reluctance I'm happy to take his job for a mere $50,000 a year (sorry Shuttle for undercutting you but hey that's the free market at work :-) )
A stronger dollar might help
A stronger dollar might help tourism and companies like Fontera, and Fletcher in the short term. That's if there's anyone left to purchase luxury goods. Unfortunately, it will destroy the buying power of the average NZ consumer, and drive personal debt through the roof. Our recent governments have shown that support for the big corporations is of utmost importance. Maybe they are still impressed by Ronald Reagan's 'tickle down' economics.
Simple really - just cut
Simple really - just cut tax on interest earned to somewhere between 0 - 10% and there' will be plenty of savings.
<i>However, with great reluctance I’m
However, with great reluctance I'm happy to take his job for a mere $50,000 a year (sorry Shuttle for undercutting you but hey that's the free market at work :-) )
Sorry Raf, I'll do it for no cash remuneration - hell, I'm simply picking guesstimates out of a hat, how much of my time can that take - just free air fares for myself and the lovely wife for the rest of our lives. (And there's a very good precedent for it).
Oh dear, then Ric ruined my day by saying:
Our recent governments have shown that support for the big corporations is of utmost importance. Maybe they are still impressed by Ronald Reagan's "˜tickle down' economics.
Anything but Ric. Posters voicing this opinion are very good at voicing this opinion, but are yet, given our Central banking Keynesian nightmare economies, and all failed straight command economies, to give an actual alternative to the market itself as the pricing mechanism, in the form of an economy, laissez faire, consistent with us living in free societies.
“The world is now being
"The world is now being swept by influenza A H1N1 09. It looks likely this will impact the economy by hitting staffing, through sickness, childcare and precautionary behaviour. If the incidence is severe, it would delay recovery."
A post was made a couple days ago re the effect media has on markets
Swine flu. along with lead in petrol, the y2k bug, bird flu, have been the biggest legal scams in our life time..
Swine flu is no more, probably less, due to the lack of ppl falling over dead, than the hong Kong flu
It is all media hype fuelled by the chemical companies and Gov bureaucrats justifying their existence and media editors increasing their ratings ....
Bollard in now sounding pathetic.
Bollard in now sounding pathetic. Whimpering like a baby wishing it would all go away. We are in trouble folks. Whats that turkey on? $4-5 hundred thousand a year! Why save? 1-2% after tax. Give your hard earned money out so farmers can run around buying more land, tractors, cattle etc at inflated prices thinking they are clever. While we are at it lets start another house buying boom. We will all have lots more household wealth again, wont we? Increased household wealth makes us all rich so we can spend up all over again.Credit card heaven! Wally, what do you say about Bollard and his mates? God defend NZ!!!!
The "Boy who cried Wolf"
The "Boy who cried Wolf" story comes to mind starting with AB's December "out of recession" faux pa. Has the rise in the NZ$ been created out of bluff...or is it over the bluff for NZ$ when the actual reality of the still unfolding economic shambles becomes apparent?
Just one word on the
Just one word on the RBNZ. They are very helpful to councils
Steptoe : a bit of
Steptoe : a bit of lateral thinking on the Swine Flu : Gumnut encourage the masses to rush out for emergency supplies/TammyFlu/extra clothing/bulk up on food (Americans already got that licked), etc. Retail surges immediately. Recession solved. As a back up precaution, buy a partnership in an undertakers or in a blood&bone fertiilser factory.