Isn't a portion of this Bollard's own fault? He persists in talking up a second half recovery (indeed judging by his comments last December he must still be in a state of surprise we are even in recession), so when markets take him at his word and the NZ$ strengthens and longer term interest rates rise he comes over all shocked and dismayed?

It's a good job he runs a small Central Bank in a small country with a tame and largely ill-informed media................

Andy Hamilton: good post - not really helping promote confidence in the RBNZ is he?
Sorry Mr Bollard: the market is always right-even when it shouldn't be.

-He's doing better than our overseas friends (printing money) though.

Andrewj

A quick perusal of alert - 26/03/09 posted here:

http://www.omo.co.nz/

details the debacle the taxpayers had to endure when the NZDMO raised NZD 150 million term debt last week.

Following the highlighted links willl provide detailed analysis of recent NZ Government borrowings since mid December 2008. They are not insignificant.

Equally, this graph provides net borrowing captions for the same months:

http://www.omo.co.nz/nzd_value2_lv.gif

The month of March 09 issuance should be updated by NZDMO in the next few days.

I should add that the interview with Max Keiser is interesting

also this from the telegraph

http://www.telegraph.co.uk/finance/financetopics/recession/5083987/SandP...

Stephen,
I would have thought that compensated borrowings, where all expenses of a deal are "rolled" into a manufactured FX swap rate to avoid tax etc., would be a thing of the past! This is all very '80's stuff, and I would have expected the IRD's of the world to have jumped on it by now!
Let's get that illuminating answer you're after....

Hi Mr Bollard,

I suggest you do the following:

1. Nationalise all the banks. That way YOU can decide what interest rates they should lend to their customers. Never mind about risk/reward ratios and what nots.

2. Open a new bank (kiwi2 ?) and operte it yourself and fix whatever rates you want...good old days again...

3. Print whatever amount you want of NZD and put them out into the market ....increase supply of dollars will ultimately reduce interest rates ....you can always get the money back and burn them when you want interest rates to increase...hopefully...

Cheers

kin (a mad economist like yourself)

Is the RBNZ arriving at the decision to boost the money supply with
imaginery money dished out to banks at low rates on condition it is loaned out on
fixed terms at equally low rates, with a view to porking the residential construction sector?

I think Bollard should resign, or at least be sacked. He said only a few months a go that NZ was out of the recession, and that NZ may not have even been in a recession according to the reserve banks figures...well those figure must be very flawed, as any intelligent person would have known how wong he was. He has been proven to be very wrong, and really he doesn't have a clue what to do. He should put his money where his mouth is and have some accountability. He has caused NZ a lot of damage with the huge swings in interest rates that have killed both exporters and importers over the last few years. His currently policy is obviously to kill the NZ dollars value so we can have an export led recovery, yet he has killed off many exporters to enable this to occur. It appears that we are almost solely relying on Fonterra to lead NZs recoverey.

Mr Bollard is no more of an expert than the next person, it is funny that everyone has a different opinion, so who is right, why don't they just leave interest rates at around 7% say and let the men sort themselves out from the boys. All I can say if people over committ themselves they deserve to get bitten, isn't that what a democratic society is all about not this so called control by the reserve bank etc. The free market will eventually tell all, these people like Bollard are only stalling things hoping that a recoverery will happen though there intervention, they need to get real because its not working.

@ Troy

Please explain to me how lowering the OCR equates to "printing money".

We read that Key by stating he is not planning to print money has helped ANZ raise a billion. After months of hearing Bernard and banks economist talk of problems raising money overseas it turns out the money was raised quite easily but banks increased rates anyway.

After years of high interest rates during a housing boom, homeowners had been looking forward to some respite during the recession. After about about a month of finally reasonable rates fixed rates go up. A million kiwi home owners demanding low rates and longer terms and the world can't meet the demand. It makes you wonder just how bad were the bad old old days when home owners could get State Advances Loans fixed at 3.5% for 25 years.

Perhaps a regulation requiring Aust banks to provide loans at same rate on both sides of the Tasman is in order. After all its the same banks accessing the same money.

@ The Bank Manager

I suspect you are being sarcastic about the 1%. Whatever he drops it to it won't really matter for the fixed long term rates as the banks are gouging as much as they can right now and playing with NZ Mums and Dads. I think the guts of the global financial crisis is about to hit our shores and I don't think the banks are going to budge on fixed term rates 3yrs and above - the banks are going to screw us for as much as they can and if we go to the wall tough.

So he's talking rates down a bit, so a few more people can be suckered into fixing at the so-called "lows" after missing out the first time around... nice one...

If you have over commited yourself tuff sh**, you should have either invested more money into your financial education rather than spending it on a car or a new flat screen or the holiday you couldnt really afford. There are people who havent over commited themsleves, Chuck the interest rate back up. And lets get real, the party is over. So its time to clean up and not sweep it under the rug.

I agree with rod see below

Rod Says:
April 1st, 2009 at 2:35 pm
Mr Bollard is no more of an expert than the next person, it is funny that everyone has a different opinion, so who is right, why don't they just leave interest rates at around 7% say and let the men sort themselves out from the boys. All I can say if people over committ themselves they deserve to get bitten, isn't that what a democratic society is all about not this so called control by the reserve bank etc. The free market will eventually tell all, these people like Bollard are only stalling things hoping that a recoverery will happen though there intervention, they need to get real because its not working.

Sarah, fixing at 7.5% having just broken at 7.95% at a cost of $14K - means in re-fixing you haven't reduced your cash outgoings enough to take any real interim beneift from the break fee.

I'm no expert but here's my advice.

I'd fix at a sub-6% rate for a shorter term (1-year or 18 mos rates), increase the term of the loan out to beyond 14 years, save as much as you can through the reduced outgoings in the interim period, and if within six months things don't look like lower rates going forward, I'd think about reducing your outgoings through a sale of the property.